Flashcards
All the sources I'll ever need!
Cards in this deck (38)
- 1Potter, Vendana, Desai 2008Defining Development: If dev. is defined by poor countries, then the issue remains to measure and understand poverty. If inequality still remains then economic development isn't the only answer. Rather, human rights and welfare need to be central concerns then, with focuses on self-esteem, self-respect, and the improvement of entitlements.
Measuring Social welfare: Econ. growth is measured by the level of income. Measuring social welfare requires more than just that. Social welfare is often seen as to how economic development, not economic growth, is measured.
Neoclassical Economics: Neoclassical economic theory states that individuals seek to maximize utility from scarce resources with budget constraints and rational individuals make collective choice.
New institutional economics (NIE) retains that, but discards instrumental rationality where everyone makes rational decisions. NIE says that information is distributed asymmetrically and so institution formation is necessary.
History: With the end of the cold war, those who hoped poverty and debt cancellations would be the answers to development were given results not hoped for. - 2Goulet 1971First person to talk about "freedoms" - 3 values are necessary for truly measuring development: life sustenance, self esteem, and freedom.
A high income state or standard of living with low basic provisions is decidedly an underdeveloped state. Self-esteem also has quite a bit to do with independence (from colonialism, for example). - 3Sen 1983, 1999Economic growth should not be an end to itself, but rather as a means for wider social and economic development. Development should focus on and be judged by one's capabilities and entitlements.
- 4Sen 1992
- 5Sen 1992Functionings are the states and activities that constitute a person's being. Ex. being healthy, being safe, having a good job.
Functionings are subject to capabilities referred to in the approach: what we are capable, want to be capable, or should be capable to be or to do. - 6Nussbaum 2000, 2003She frames the capability approach in ten basic principles , arguing that all democracies should support these core capabilities:
(1) Life (2) Bodily Health (3) Bodily Integrity (4) Senses, Imagination, and Thought (5) Emotions (6) Practical Reason (7) Affiliation (8) Other Species (9) Play (10) Control over one's environment
She says this list is not a set-in-stone template but strongly advocates and recognizes the advantages of outlining central capabilities.
Clarity? - 7Sen 2005Sen against Nussbaum - He is reluctant to join the search for universal capabilities, stating that capabilities should be left to the given society to choose based on public reasoning. The richness of the capability approach, he explains, comes from its openness, not being defined by a pre-determined list of certain capabilities.
Human Development Report was set out to create alternative measures to the regular GDP / GNP, which do not measure human well-being nor human development (see Anand, Santos, Smith 2009). This new index would shed light on persistent inequality, poverty, and other capability deprivations despite high levels of GDP growth. - 8Anand, Santos, Smith 2009Generic line: Development policy looks to create an environment for people to live healthy, long creative lives.
Critique of Output-based measures: GDP and GNP not used to measure well-being / development as they really measure the economic state / capacity of a country or the average income on a per person basis.
People value things more than just a monetary income and development is linked to various indicators of life satisfaction, meaning the capability approach is important for well-being (see Sen 1999). - 9Alkire, Black 2005Against Nussbaum saying that her list of global capabilities goes against the thrust of the capability approach in taking development theory towards a more holistic approach to human for all people rather than a reductive focus on a minimally decent life.
- 10Arndt 1981Like Meier, he spoke of history of development economics.
History: Around the time of World War II, many development economists such as Rodan and Staley wrote about poor countries. For example, Rodan spoke of these nations as "economically backward areas" (Rodan 1943). In the years following WWII, the term economic development became synonymous with economic growth. Arthur Lewis in 1944 proposed that the purpose behind economic development is to narrow the gap of per capita incomes between rich and poor nations. In the past half-century, we see that many development economists have moved away from this definition or association of economic development with economic growth - 11Polanyi 1957Great Transformation -
1. Markets are not a natural feature of human society
2. Market mechanisms clash with societal mechanisms
3. Markets have not only created poverty, but allowed for the indifference of poverty due to markets harnessing human ideologies of profit motives in relation to land, labor and money.
4. Markets are prone to failure such as the ongoing 2008 financial crisis
5. Markets create propoganda and allow for extensive misrepresentation of facts. This is part of the market system and can make economic regression look like progression or success.
Based on the fifth point, it goes to show that the understanding the limitations and failures of markets is essential for creating a better society; one based on more humane values than those generated by market societies where everything is for sale. - 12Hayek 1945Use of Knowledge in Society -
Argues against the establishment of a Central Pricing Board (advocated by Lange) by presenting the benefits of the organic and dynamic nature of market price-fluctuations.
Centrally planned market could not match the efficiency of an open market because any individual knows only a small fraction of all of which is known collectively. With this kind of information spread, a decentralized economy is complementary. - 13Sachs, Warner 1995Economic Reform and the Process of Global Integration
Integration: He talks about integration of national economies with the world economy. Integration means not only market based trade and financial flows, but also institutional harmonization in regards to trade policy (upon joining WTO and IMF, basic principles governing trade of goods and services had to be codified).
Trade liberalization = trade openness and orientation to the world economy. It puts economies into world system and governments under pressure of international system.
Convergence: We should see economic convergence of backward or developing nations (by importing capital and modern technologies) but we have not seen convergence. The authors say that this is due to trade regime of open economies tending to converge vs. closed economies who do not.
History: Power of trade to promote convergence is probably the most venerable tenet of classical and neoclassical economics, dating back to Adam Smith.
Even before then though, capitalism began to take shape through instruments of violent conquests and colonial rule through economic reform / development of international institutions: Britain in China through Opium wars (~1840) and India (~1857), France into North Africa, and Japan after Meiji Restoration (~1868). By 1870 a global market was shaping up. This 1850-1914 period was crucial for onset of economic growth in much of the developing world. With western powers challenging traditional societies with low tariff regimes and tech/institutions, great convergence between regions of the world was experienced. - 14Reinert & Reinert 2005Mercantilism -
(from wiki) - Mercantilism is an economic theory and practice common in Europe from the 16th to the 18th century that promoted governmental regulation of a nation’s economy for the purpose of _augmenting state power_ at the expense of rival national power.
Argued against the conclusions of Smith's Midas fallacy approach and the "low tariff regime" described by Sachs and Werner? These authors, on the other hand, thought that mercantilist policies were actually wise policies given the conditions / circumstances at the time.
Firstly, they believed that UK/US preached liberal economics after using illiberal means to achieve a dominant spot in the market. They initially protected and promoted the manufacturing of industries and institutions followed. They believe in the three levels of the dynamic spread of rents: 1) the entrepreneurs in the form of rents, 2) employees in the form of employment, and 3) government in the form of taxes. They argue that a core objective of mercantilism was to achieve the hugely positive-sum game from this three-level rent-seeking. Also, they argue that mercantilists who influenced economic policy were obsessed with strengthening domestic production and that basic mercantilist insights -- in the right contexts -- have proved right: 1) national wealth cannot be created or based on raw material production in the absence of a manufacturing/increasing returns sector; 2) an inefficient manufacturing/increasing returns sector provides a much higher standard of living than no manufacturing sector. Instead of convergence (as explained by Sachs and Warner), he said there was a clear distinction between those nations that industrialized and those that did not.
Germany: They had a production strategy that allowed them to build trade and industry and break away from the dependence on agriculture. Agriculture could only be transformed in relation to developing manufacturing (Hudson 1992). Chancellor Bismarck was convinced by economists from the Association for Social Policy to address social welfare; a modern welfare state was developed.
Agriculture: Agri grew as industrialization occurred, not necessarily as a prerequisite.
Some more on mercantilism vs. free trade: Mercantilism was a theory that the prosperity of a nation depended on the supply of capital and the global volume of international trade was unchangeable. It supported encouraging exports and discouraging imports.
This contrasts with free trade which believes that a country is best off concentrating on its strengths and that the volume of trade leads to greater prosperity. Under free trade, a government does not take active steps to encourage exports or discourage imports although this does not mean that they abandon all controls and taxation of imports. - 15Gerschenkron 1962He said that in Germany there was evidence of industrialization and development through forceful state intervention.
This goes along hand in hand with what Reinart said of Germany and Chang in relation to other developed nations such as US and the UK. - 16Chang 2002 (with some Friedrich List)Kicking away the ladder
He talked of the protection of infant industries initially posed by Friedrich List. This argues that developed nations have climbed up the ladder of greatness and then subsequently kicked it away. The UK, US and Germany all protected infant industries and operated under trade protectionist policies. This allowed the infant industries to grow until they reached economies of scale. In developing nations, these same infant industries cannot grow with the propositions of free trade from developed nations, who have now grown their industry sizes. Chang argues that it is easy to note benefits of free trade once a nation has established such an industry.
In the UK we had Henry VIII (15th century) and Elizabeth I (16th century), who promoted production at home. In the US there existed a protection policy on domestic industry for 150 years. Friedrich List spoke of Alexander Hamilton, who favored strong governments and a national bank in public debate on infant industry in 1791. - 17Balassa 1970Argues against the infant industry argument, suggesting that it minimized gains from international specialization: NO COMPETITION.
Instead, what will happen in developing nations is the development of a wide range of industries without specialization.
There are also static costs of protection? - 18Meier 1985Meaning of Development: The term development economics was barely used before 1940s. In fact, it was mostly a practical subject for governments for policy to raise their own nations out of chronic poverty. The three authors that emerged were Mandelbaum, Rodan, and Staley.
Mandelbaum showed a quantitative model of industrialization showing the 'depressed' areas of the Eastern/Southeastern Europe to suffer from lack of industrialization.
Kuznets - meaning began to take shape in quantitative terms as he noted per capita changes in a nation but also the structural implications behind it -- the social and institutional conditions under which the increased product per capita is attained.
Debates: Most of mainstream development economics may have been shaped around trade pessimism, emphasizing planned investment in new physical capital, adopting import substitution industrialization (ISI) policies, embracing central planning of change, and relying on foreign aid... but there also existed an atmosphere of vigorous debate over leading issues that still go on today. - 19Rodan 1943He looks at the possibility and potential pitfalls of state-planned industrialization with an approach fitting Eastern and Southeastern Europe into the world economy. This would be achieved through foreign capital lending and international division of labor.
Large scale planned industrialization can allow for mobilizing and training of the agrarian population to work. This is in response to laissez-faire methods not working here as entrepreneurs have no incentive to provide labor training... so this kind of mobilization is something the state can do. LSPI can also allow for achieving complementary industries, one that provides for a whole world system with world output rather than one that focuses on one industry and output that might not sell.
If sufficient capital is available for investment in basic industries then the multiplier effect can take place, allowing for further industrialization. However, this assumes smooth working of the equilibrium of balance of payment and capital movement, which this author notes is unlikely.
He notes the aim of industrialization in international depressed areas is to produce a structural equilibrium in the world economy by creating productive employment for the agrarian excess population. - 20Hirschman 1968He discusses how the situation in Latin American industrialization is different because they are late-late newcomers (after those nations like Germany and much after those like Britain). This led to various differences in the process of industrialization.
He says that the failures of ISI have been overstated. Many nations in LA (Ecuador, Venezuela, Peru, and Central America) achieved notable economic gains in postwar decades.
He did address most issues that Baldwin brought up in his critique of ISI. - 21Baldwin 1969He argues that most people accept the ISI theory and, if they find faults, are usually done through empirical methods.
He questions the effectiveness of tariffs in achieving socially efficient allocation of resources.
A decrease in social welfare may result from infant industries' inability to achieve socially efficient allocation of productive resources and how infant-industry duties distort consumption. - 22Rodrik 2007Know this author!!
China / Dev Policy: He talks about how development policy in the past has been not revealing too many positive results. China, on the other hand, has lifted more than 400 million people out of poverty (more than population of US) since 1980. He argues that growth is not a panacea, but nothing has served societies more than economic growth in improving life chances, especially those at the bottom. He also believes principles of property rights, rule of law, sound money, and honest public finances need to be put into practice with account for different conditions in different nations. There's no single, simple recipe for growth.
FDI: He argues against relying on foreign direct investment, writing "careful studies have found very little systemic evidence of technological and other externalities from foreign direct investment, some even finding negative spillovers. In these circumstances, subsidizing foreign investors is a silly policy as it transfers income from poor-country taxpayers to the pockets of shareholders in rich countries with no compensating benefit."
He also says that we cannot have globalization, nation-states and democracy all at once, only any two of the three. So if we want a nation-state and a democracy, we must limit our participation in the global economy.
Integration: He also states that integration with the world economy is an outcome but not a prerequisite of a successful growth strategy. He cites Haiti as a nation that should be the 'richest country in the world' if trade liberalization brought wealth. He says there's no convincing argument of trade lib. leading to economic growth.
He believes that all countries have the right to protect their own institutions and development priorities; none has the right to impose its preferences on others. He opposes any country that uses the World Bank, IMF and the WTO to enforce its views. He writes, "Trade rules should seek peaceful coexistence among national practices, not harmonisation"
Institutions: Criticizes AJR by asking how can we see rich and poor nations that have never been colonized if contrasting colonization experiences are the root of underdevelopment? He cites examples of Ethiopia on one end of spectrum with Japan on the other. This author doesn't believe institutions necessarily lead to economic growth, and that in the short run, large scale institutional reform is rarely necessary to accelerate growth. - 23Singer 1950W4 - Distribution of gains between investing and borrowing countries
He argues that that a flow of international investment into the underdeveloped nations will contribute to their economic development only if absorbed by the economic system: i.e., if complementary domestic investment is generated and the requisite domestic resources are found. - 24Saith 2008China vs. India
Socialism vs. democracy debate.
China beats India in many indicators of human development and per capita growth.
Author argues that China's success over India actually dates to before 1978 reforms.
Author says that it was the institutional design in rural areas. China had a mass mobilization before the reform and social revolution broke path dependence.
Author also argues that state could introduce a succession of institutional changes to pursue sustained material advancement and national strength. Lin doesn't address this.
Lin argues institutional arrangements allowed for great growth but with heavy industry came the cost of personal livelihoods. - 25Lin 2012He argues institutional arrangements allowed for great growth BUT focusing on heavy industry left light industry in the background. He also talks about how in 1970s China launched a satellite, tested an atomic bomb, etc. Heavy, military, and aeronautics industries were regarded as efficient and developed. There was low urbanization (farmers/youth couldn't come to the city) and 70% labor force in agriculture. While industries grew, consumption was still low. During the time, Lin argues, living standards were barely satisfactory.
- 26Nolan 1996China's rise included:
- Human rights: Improved drastically with improved health, education, freedom to migrate, employment opportunities, better food, clothing housing, etc.
- Psychology: Massive success of late 1970s brought a renewed sense of national pride
- Inequality: Growth created inequalities. However, China's rural population experienced faster growth of income than did urban population.
Poverty: you know from Rodrik.
Consumption: Level of food intake greatly improved. Goods availability increased. - 27Naughton 2010Beijing Consensus and China: It doesn't accurately describe what happened in China. Six distinctive features of China is at the root of developmental features.
None are easily copied by other developing nations because it shows the intertwining of the state and market and these government and business relations have been structured -- cannot be replicated. - 28Sachs and Woo 2001Interpreting the Chinese experience of growth. Two types:
1) Experimentalist school: China has been growing towards a unique Chinese model with gradual and evolutionary reforms. The process nor the objective was envisioned beforehand. Reducing state's monopoly led to new firms entering market. With competition, state began responding to the market. Gradual price decontrol occurred and lots of profits came about. The government had to become concerned with profits and led to stronger state-sector performances. Naughton 1995 is a proponent of this school of thought.
2) Convergent school of thought where Chinese institutions are gradually converging with those of non-socialist market economics, especially those in East Asia. This school puts great stress on China's economic structure at the start of reforms as a major explanation of rapid growth. Freeing up the large agri sector led to rapid results. Sachs and Woo include themselves in this school of thought and think that China's policy choices will be more towards harmonization with capitalist East Asian neighbors rather than innovation. They cite the example of China joining the World Trade Organization. - 29Lange, Mahoney, Hau 2006These authors believed that different authors lead to different outcomes (unlike AJR and Green):
- Spanish colonialism guided by mercantilism - extracting precious metals with indigenous labor/rents. Less colonialism was better for dev.
- British colonialism guided by liberalism, promotion of private property, free trade, and coherent state institutions. More colonialism better for dev.
- Spanish lightly colonized Argentina, Chile, Venezuela - did better than heavily colonized Ecuador, Mexico, Peru
- British heavy rule US Australia and Canada better for dev vs. indirect rule in African colonies and hybrid colonialism in India, West Indies, etc. - 30Bernhard 2004Colonialism - British
- British focused on native languages
- Parliamentarism, education, indirect rule, transportation, etc.
- British might have done well not because of British colonies, but rather Protestant missionaries - 31Grier 1999Spanish and French colonialism
- May have had slower economic growth and poorer education outcomes after independence than former British colonies.
- Might be due to centralized / autocratic appraoch in France vs. decentralized approach in UK (what does this mean?)
- Enrollement ratio of 55% in former French vs. 70% in former British. - 32AJR 2001AJR says in parts of the world that had health hazards towards would-be colonizers , well settler mortality rates from three centuries ago could help identify which nations would have received good institutions and which did not.
Argument: Areas of high settler mortality rates Europeans did not settle but instead established extractive institutions. With low mortality rates, settlers demanded good institutions and representative government. Lack of settlers means Europeans could set up authoritarian governments.
- Institutions are sticky, so extractive institutions still persist to this day. Bad institutions -> risk of appropriation -> low econ. growth / low investment.
By using settler mortality as an IV for extractive institutions we avoid problem of endogeneity.
Criticisms from many on quality of data (i.e. data from soldiers, not settlers)
Critics: Rodrik 2007, Fielding and Bezemer 2009, Austin 2008 - 33Gareth Austin 2008AJR ignores African/native agency. He ignores the effects of pre-colonial history on colonial and post-colonial outcomes.
- 34Gerring et al 2011Direct (centralized decision making) and Indirect rule (decentralized framework with power delegated to weaker entity)
- India states such as Baroda, Hyderbad, Kashmir, etc. and African kingdoms like Buganda and Kano....
Author says positive correlations between degree of pre-colonial political centralization and subsequent indirect rule.
Where authority instituted between units is grossly unequal in political power, it's often a product of the degree of political organization existing within the weaker unit prior to establishing a formal relationship. Specifically, indirect forms of rule would be established where the weaker party enjoys a more statelike form of rule. This theory explains why areas which avoided full colonization were centralized kingdoms. - 35Glaeser et al 2004These authors argue that economic growth and human capital accumulation cause institutional improvement rather than the other way around.
South and North Korea were poor in the 1950s. SK had per capita income of $1589 and NK $768. In 1980, SK began to democratize and NK stayed dictatorship. They say SK's economic progress linked to choices made by dictators, not to emergence of democratic institutions, which only happened subsequently. They argue that institutions have a second order effect on economic performance, the first being human and social capital, which in turn shape institutional and productive capacities of society.
They criticize the three commonly used indicators of institutional strength:
1. risk of property expropriation by government
2. effectiveness of government
3. constraints on the executive / rule of law because first two are outcomes and the third often reflects electoral results rather than enduring institutional constraints. They think institutional economics should focus on actual rules rather than fuzzy assessments of institutional outcomes. (What do others think about these indicators?)
Argue for good-for-growth dictators, not of institutions constraining them... shows success of East Asia. Countries that emerge from poverty gather human and physical capital, then likely to improve institutions. - 36Kohli 2004 on SKColonialism:
Japan transformed SK. There was direct colonialism where by 1937, 52,270 Japanese officials in SK and Korean bureaucrats and trained employees grew from lower to senior positions in the government because of integration in the work force. There was a focus on creating an educated work force and there was industrialization due to Japanese need to export capital. State intervention was deep, quite brutal. It turned SK from an agrarian bureaucracy into a highly authoritarian, penetrating organization. SK formed the ability to extend vertical control to the peripheries of the state. SK also became heavily export-heavy of manufactured products. - 37Kohli 2004 on IndiaIndia suffered from a hybrid colonialism. The laissez-faire colonial state was partly to blame. Instead, the modern interventionist state that replaced the laissez-faire state led to modest economic growth and industrialization. The state's multiclass character also led to the state's inefficiency (another author said it still persists today, who?).
British colonialism did not lead to much effectiveness in state spending on education, agriculture and industry. Majority of British in India were in the army. - 38Acemoglu Robinson 2012Why Nations Fail
Nations get it wrong not only because of culture, geography or ignorance, but because those who have the power make choices creating poverty. Economics is not the only thing that needs to be used to explain world inequality as political systems and decision making -- who makes decisions, how are they made, and why people decide to do what they do -- is a very important process.
Information
- Description
- DV400 Flashcards on All the sources I'll ever need!, created by patelkedar91 on 08/05/2014.
- Created by
- patelkedar91 · May 2014
- Updated
- Feb 19, 2016
- Views
- 51
- Rating