Posts tagged economic development

The basic economic foundations of industrial capitalism as we’ve known them for the past 150 years or so have an activist state at their core…. the intuition that there’s some coherent account of what the ‘market distribution’ would be absent public policy is mistaken. You have policy choices all the way down.

Matthew Yglesias (via tofias)

Yes. It’s important to remember that capitalism (and the whole idea of “free markets” as we understand them) were only made possible with the emergence of modern states. States provide not only the security & stability necessary for markets, they also provide (at public expense) the basic infrastructure, jobs training (public education), the legal structure that protects property rights and enforce contracts, and more. To admit that doesn’t make someone a socialist or a proponent of interventionism.

But ignoring that reality makes one underestimate the fragility of capitalism and markets. There’s a reason why economic growth is steady and constant (minus the odd recession here and there) in Sweden, but not in Somalia.

"What is it about Singapore?" | Parag Khanna

A friend of mine (who lives in Singapore) sent me this link. It’s about the rise of an “Asian” entrepreneurial model that is challenging the traditional Western one. It’s a fascinating read.

Via publicradiointernational: alexanderpf: Stratfor: Chinese Investments in Africa via chrislindsay While the U.S. is concerned about China’s influence in Africa, “the U.S. government is not in a position to do what China is doing nor would we necessarily want to,” said Todd Moss, a former State Department official who now runs The Emerging Africa Project at the Center for Global Development in Washington. More. This offers an interesting look at three issues: 1) the new investment “boom” in Africa, 2) the emergence of China as a global power, and 3) the question of whether economics should be treated as a strategic policy arm (and if so, what are the consequences?).

Via publicradiointernational:

alexanderpf:

Stratfor: Chinese Investments in Africa via chrislindsay

While the U.S. is concerned about China’s influence in Africa, “the U.S. government is not in a position to do what China is doing nor would we necessarily want to,” said Todd Moss, a former State Department official who now runs The Emerging Africa Project at the Center for Global Development in Washington. More.

This offers an interesting look at three issues: 1) the new investment “boom” in Africa, 2) the emergence of China as a global power, and 3) the question of whether economics should be treated as a strategic policy arm (and if so, what are the consequences?).

ritholtz.com

From adam-wola: The International Labor Organization’s new World of Work report [PDF] estimates that, of 62 developing countries measured, only six saw income inequality increase since 2002. Five of the six are Latin American countries: Chile, Costa Rica, El Salvador, Honduras and Mexico. Why is income inequality so endemic to Latin America? Why hasn’t continued, steady economic development reduced inequality in the region—and particularly in Mexico and Chile? In contrast, why is income inequality reduced in relatively similar countries like Brazil and Argentina?

From adam-wola:

The International Labor Organization’s new World of Work report [PDF] estimates that, of 62 developing countries measured, only six saw income inequality increase since 2002.

Five of the six are Latin American countries: Chile, Costa Rica, El Salvador, Honduras and Mexico.

Why is income inequality so endemic to Latin America? Why hasn’t continued, steady economic development reduced inequality in the region—and particularly in Mexico and Chile? In contrast, why is income inequality reduced in relatively similar countries like Brazil and Argentina?

Via theatlantic: Where the Global 1% Live Now There are now 63,000 households worldwide with $100 million or more in assets, up 29 percent since 2006 and projected to rise even higher in the future. The top ten current preferred locations for the ultra-rich are: London New York Hong Kong Paris Singapore Miami Geneva Shanghai Beijing Berlin The report also asked respondents to predict the most important cities in 10 years. The projected key cities of 2022 include: London New York Beijing Shanghai Singapore Hong Kong Paris São Paulo Geneva Berlin What’s behind these rankings? According to the report, the ultra-rich value cities that offer “personal safety and security” most, followed by “economic openness” and “social stability” which top “luxury housing” and “excellent educational opportunities.” […] But the rise of global superstar cities also has a dark side. Read more. [Image: Shutterstock]

Via theatlantic:

Where the Global 1% Live Now

There are now 63,000 households worldwide with $100 million or more in assets, up 29 percent since 2006 and projected to rise even higher in the future. The top ten current preferred locations for the ultra-rich are:

  1. London
  2. New York
  3. Hong Kong
  4. Paris
  5. Singapore
  6. Miami
  7. Geneva
  8. Shanghai
  9. Beijing
  10. Berlin

The report also asked respondents to predict the most important cities in 10 years. The projected key cities of 2022 include:

  1. London
  2. New York
  3. Beijing
  4. Shanghai
  5. Singapore
  6. Hong Kong
  7. Paris
  8. São Paulo
  9. Geneva
  10. Berlin

What’s behind these rankings? According to the report, the ultra-rich value cities that offer “personal safety and security” most, followed by “economic openness” and “social stability” which top “luxury housing” and “excellent educational opportunities.” […] But the rise of global superstar cities also has a dark side.

Read more. [Image: Shutterstock]

Evidence that China’s development is for real.  From theatlantic: China Takes Aim at the Profitable Heart of U.S. Manufacturing For a long time, Americans have channeled their fear about China’s factories into an exasperated, four-word refrain: They’re stealing our jobs! By offering low-wage competition to U.S. workers, the Chinese picked off low-end manufacturing work for multinational corporations, whether it was stitching shoes for Nike or assembling iPads for Apple. In the last few years, though, the anxiety has shifted a bit. Instead of worrying we’ll be undercut on the price of manual labor, the concern is we could actually be out-competed in higher-end markets. You hear it when Democrats like President Obama talk about China winning the race on green jobs. And it came to my mind this week, thanks to a piece in Bloomberg Businessweek on China’s growing prowess in heavy industry. While China transformed itself into the world’s top exporter by building light goods and electronics, the biggest chunk of its exports are now large, high-margin goods such as ships, locomotives, and construction equipment, as illustrated in the Businessweek graph above. Not only are China’s capitalists moving in this direction, but they’re getting a hand from the government. As Businessweek reports, “Equipment manufacturing, shipbuilding, and cars are among the industries slated to receive $2.5 billion from the government this year to improve technology and product quality.”   This should be of some concern to U.S. policy makers. Heavy machinery and transportation equipment are at the heart of the U.S. industrial base. They’re part of our Big Six manufacturing sectors, along with food, chemicals, electronics, and metal products. These are businesses where labor is a relatively small part of the overall cost of making the product, and where America’s technologically advanced factories have traditionally given us an edge. If they founder, there’s not much left to replace them.  Read more. [Image: Bloomberg Businessweek]

Evidence that China’s development is for real. 

From theatlantic:

China Takes Aim at the Profitable Heart of U.S. Manufacturing

For a long time, Americans have channeled their fear about China’s factories into an exasperated, four-word refrain: They’re stealing our jobs! By offering low-wage competition to U.S. workers, the Chinese picked off low-end manufacturing work for multinational corporations, whether it was stitching shoes for Nike or assembling iPads for Apple.

In the last few years, though, the anxiety has shifted a bit. Instead of worrying we’ll be undercut on the price of manual labor, the concern is we could actually be out-competed in higher-end markets. You hear it when Democrats like President Obama talk about China winning the race on green jobs. And it came to my mind this week, thanks to a piece in Bloomberg Businessweek on China’s growing prowess in heavy industry.

While China transformed itself into the world’s top exporter by building light goods and electronics, the biggest chunk of its exports are now large, high-margin goods such as ships, locomotives, and construction equipment, as illustrated in the Businessweek graph above.

Not only are China’s capitalists moving in this direction, but they’re getting a hand from the government. As Businessweek reports, “Equipment manufacturing, shipbuilding, and cars are among the industries slated to receive $2.5 billion from the government this year to improve technology and product quality.”  

This should be of some concern to U.S. policy makers. Heavy machinery and transportation equipment are at the heart of the U.S. industrial base. They’re part of our Big Six manufacturing sectors, along with food, chemicals, electronics, and metal products. These are businesses where labor is a relatively small part of the overall cost of making the product, and where America’s technologically advanced factories have traditionally given us an edge. If they founder, there’s not much left to replace them. 

Read more. [Image: Bloomberg Businessweek]

I’m going to have to pay more attention to Tunisia. Could it become another South Korea or Brazil (authoritarian regime that transitioned to democracy and boomed economically)? If so, then it’s following the Turkish model. From theatlantic: Can Tunisia Become the Silicon Valley of the Arab World? TUNIS — Last November, dozens of young Arabs lined up for the chance to meet him. When he spoke of his struggles and triumphs, they hung on his every word. And when only one of the 50 attendees was chosen for training, some of the young Arabs grew frustrated and complained of being excluded. A jihadist back from battling Americans in Afghanistan? A recruiter for al Qaeda’s North African affiliate? A Hamas member looking for volunteers to attack Israel? No, the visitor was a Tunisian-American eBay executive who has worked for Apple and Oracle, and founded two Silicon Valley startups. His audience? Young Tunisian entrepreneurs and programmers who dream of turning this city into the Arab world’s Silicon Valley. “There is a lot of potential,” Sami Ben Romdhane, the eBay executive, told me in a telephone interview this week. “I don’t see any difference between students who are graduating there and students who are graduating here and in Europe.” Read more. [Image: Reuters]

I’m going to have to pay more attention to Tunisia. Could it become another South Korea or Brazil (authoritarian regime that transitioned to democracy and boomed economically)? If so, then it’s following the Turkish model.

From theatlantic:

Can Tunisia Become the Silicon Valley of the Arab World?

TUNIS — Last November, dozens of young Arabs lined up for the chance to meet him. When he spoke of his struggles and triumphs, they hung on his every word. And when only one of the 50 attendees was chosen for training, some of the young Arabs grew frustrated and complained of being excluded.

A jihadist back from battling Americans in Afghanistan? A recruiter for al Qaeda’s North African affiliate? A Hamas member looking for volunteers to attack Israel?

No, the visitor was a Tunisian-American eBay executive who has worked for Apple and Oracle, and founded two Silicon Valley startups. His audience? Young Tunisian entrepreneurs and programmers who dream of turning this city into the Arab world’s Silicon Valley.

“There is a lot of potential,” Sami Ben Romdhane, the eBay executive, told me in a telephone interview this week. “I don’t see any difference between students who are graduating there and students who are graduating here and in Europe.”

Read more. [Image: Reuters]

The Danish welfare state

If you’d like to tag along with my POL 102 class this semester, here’s your chance. 

This week we’re discussing political economy, and our additional “text” is a pair of NPR Planet Money podcasts about Denmark:

Both podcasts aired in 2010, but they’re still relevant. In addition to a great deal of information about Danish political economy (and its extensive social welfare system), the podcasts also debate the costs/benefits of the Danish system. 

For those of you familiar with the rhetoric about “European socialism,” Denmark is the poster child. The Danish state has one of the highest tax rates in the world, as well as one of the most extensive social safety nets in the world. Remarkably, it also has a dynamic economy and a (historically) low unemployment rate (though it has recently crept up to 7.8%—it was 4.2% in 2010 when the podcasts were produced, and had reached a low of 1.9% in 2008; by comparison US unemployment was 9.6% in 2010 and is currently 8.3%).

If you want to go a step further, here’s a module I created (with support from a grant from my university’s Center for Teaching and Learning) about welfare states called, not surprisingly, “The Welfare State” (hosted on Rice University’s Connexions open source learning platform). Beyond a short description of welfare state (as a concept), it provides data tables and discussion questions using economic indicators from Sweden, Japan, the US, Britain, France, Germany, and Denmark.


The 23 Best Countries for Work-Life Balance (We Are Number 23) | The Atlantic A comparative look at how well the various developed countries do, in terms of “work-life balance” indicators. 

The 23 Best Countries for Work-Life Balance (We Are Number 23) | The Atlantic

A comparative look at how well the various developed countries do, in terms of “work-life balance” indicators. 

The Atlantic

Economist Daily chart: fastest growing nations. Global economic growth is originating almost exclusively from the emerging world, according to a new forecast from the International Monetary Fund.

Economist Daily chart: fastest growing nations. Global economic growth is originating almost exclusively from the emerging world, according to a new forecast from the International Monetary Fund.