Critically examine the contrasting approaches to the causes of growth in the developing world

Critically examine the contrasting approaches to the causes of growth in the developing world

– outline of the presentation
– introduction of definitions of growth and the competing views
– indication of the conclusion

a. Changing development perspectives in the last decade:
– only the tigers and NICs have done well, most of the LDC remained behind.
– no convergence ? divergence
– which countries done well?
– is GNP/capita increase is a good kind of growth ? human rights, inequality gap, democracy

b. Success stories
– Which countries comprise the NICs – Brazil, China, India, Mexico, South Africa, Malaysia, Philippines, Thailand and Turkey.
– what is remarkable about their progress?
– South-East Asia high absolute rate of growth ? compared to the first world that is slowing down

c. Which elements of economic policy do neo-classical writers highlight as being the main reasons for this growth?
– open borders (WTO)
– globalisation
– great private ownership
– exports
– Williamson?s Washington Consensus ? not all elements were adopted but it provided a framework for success
– Solow model ? counterpoint to the Harrold-Domar model: open markets will allow foreign (Western) technology to flood in e.g. China inviting Dell.

d. Is there evidence that these can explain the rapid growth?
– YES, for example Ireland, China, South Korea

e. What do structuralist writers argue? Why do they argue that it is not possible to derive a universal blueprint for industrial success?
– BUT, it is not that simple ? Rodrik, Stiglitz, Cruger, Collier
– speed ? shock therapy (Naomi Klein) e.g. Latin America, Chili Russia
– sequencing ? state ownership to rapid privatisation. e.g. Soviet Union went disastrous
– Stiglitz ? don?t go for rapid financial deregulation, each country?s individual space
– Dutch disease ? the example of Thailand
– Rodrik ? second best option. There were many things in place before opening up markets in the NICs
– Ha Joon Chang ? the success of NICs reading
– Todaro

f. What do they see as the structural obstacles that other poor countries will need to overcome?
– rigid market structures ? national/international
– distribution of technology, labour and capital
– country endowments
– Collier four traps
– poverty and inequality is a major drawback
– stable governments and institutions
– strategies for industry building

g. On balance what are the structural changes that are needed if countries are to harness their market potential and what is the role of the state in achieving this?
– political and economic stability
– artificially engineered development ? e.g. South Korea and ship building
– whole set of policies (land reform, food security, education and health care reform e.g. Japan) before industrialisation
– import substituting industrialisation
– state protection, subsidies
– active industrial policy ? protecting infant industries
– whole set of policies before opening up to world markets
– state created capitalism
– to what extent it is up to the market AND the state?
– when and how to take out government protection?

– Current debate is around a structuralist argument ? Rodrik, Stiglitz
– We reach development and growth through well directed institutions
– debate is about to what extent it is up to the market and the government.