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09/19/2019

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Julia Moody

In “THE FALL AND RISE OF DEVELOPMENT ECONOMICS,” Krugman explains how Albert Hirschman changed the field of development economics, in his eyes, for the worse. High development theory, which basically asserts that modernization causes more modernization, was the dominant theory before Hirschman entered the conversation. High development theory lacked a strong mathematical base and the typical models that underly most economic theories because economies of scale are difficult to put into formal models. Hirschman changed the way people thought about development by completely discarding the idea of formal models all together and instead opting for metaphors and a more abstract approach. Krugman clearly views this change in the way economists study development as a “dead end” in terms of further exploring the development process.
In order to show that one can formally model the ideas behind high development theory, Krugman uses a simple equation showing the relationship between the labor market and production in a scenario of a “traditional” and a “modern” sector. He makes a point to convey that the model is not perfect and probably leaves the reader with some blanks to fill in and questions to ask. I liked how Krugman emphasized that that uncertainty in the model is okay and should drive further exploration on the subject. This kind of intellectual curiosity being sparked could lead to new discoveries and maybe even more complete models being created in the future. I agreed with his viewpoint that just because a model is not complete or formalized, it should not be completely discarded as knowledge from the topic at hand. However, I also support the idea that studying topics in the social sciences does not always need to have a traditional base of mathematical models. I liked how in the conclusion, Krugman encouraged readers to not turn away from non-traditional or abstract methods of learning.

Jack_curtis25

I found it very interesting the depths to which Krugman describes his issues with the broader economic community and how the field has itself developed over time. Since our ability to analyze, process, and interpret data has increased exponentially over the past century and even the past few decades, increasing the rigor for certain ideas and theories has had its drawbacks. Fultz's dis-pan model is very simple yet so effective at describing the world at large. Sometimes the simplest things yield the money relevant and succulent results. It almost seems as there is a cyclical nature to the pattern of theory development where a narrow and rigorous methodology less to some ad advancement but at the cost of overall breadth of ideas generated.

Maggie Kidder

In Paul Krugman’s “The Fall and Rise of Development Economics,” he compares the trend of research in development economics to the evolution of cartography in Africa from the 15th to 19th centuries. He explains how the increase in European’s knowledge of Africa did not induce a corresponding increase in accurate map-making, rather it became even less precise in some regards. Although these maps were misleading in a multitude of ways, they provided information on Africa’s interior that was lost in the future map versions. People began to discard myths and second-hand information and solely pursue the knowledge they knew to be true. I believe due diligence is important and I am not necessarily encouraging spreading false facts, but I think as a society it is important to not disregard old stories and theories at the emergence of new ones and we should holistically examine all possibilities in order to come to a more concise view of reality.

I found this analogy compelling in its relation to development economics. Areas of inquiry and speculation were de-emphasized at the expense of pursuing what economists knew to be true. As Krugman points out, what would have happened if economists had modeled the role of increasing returns and circular causation 35 years ago? We will never know, and it is a lesson for society to not risk losing knowledge in the future. In Africa in particular, economic growth has been deemed to have a “double deficit”- a deficit in economic growth, as well as deficit in understanding the actual economic growth deficit. By not exploring these theories out of a fear of not being accurate we are doing ourselves a huge disservice. I think we can often learn most from stories of failure and by examining the pitfalls in why something won’t work out in order to better understand the overall picture, leading us closer to the truth.

Nicholas Tierney Watson

I think Krugman raises a really interesting point about the evolution of economics and the introduction of economic modeling as the primary way of exploring and understanding the economic phenomena. In my mind, Krugman in this piece is exploring how over time, with the introduction and reliance on economic modeling, the study of economics has lost some of what it started with.
The way I see it is that Economic Modeling is a whole new language that we created in the 1950s, and we are continuing to develop as we primarily use it to describe the complex economic systems that we, ourselves, created. Just like trying to translate English into German, what happens when we try to translate and understand what is going on in these complex economic systems into simpler models? Inherently, something is lost in that translation. Krugman notes the importance of modeling in the study of economics, but also address its limitations. I had never really thought before about the true limitations of modeling. It had never occurred to me that, through the production of these models, while I was gaining insight into some kind of economic phenomena, some aspect of that system the model was describing had been lost.
With the increasing focus on building models to understand aspects of economics, what are we losing in the process? If we lose more than we gain from using economic modeling, how do we get back what we lost in the process? Krugman never shies away from the importance of economic modeling, but his understanding of the limitations of them is key. Models can’t explain the world, but they certainly can help us understand it.


Travis_Dover

I found the simple model that the author put together at the end to be the most interesting part of the article. Krugman’s evaluation of our history of overlooking intuitive facts as we move to focusing on empirical data was striking, and the simplicity of the model he built illustrates conclusion. The findings from his model present, in my opinion, an opportunity for developing countries to “industrialize.” As we have learned, access to financial institutions is one of the main issues for the poor in developing countries as there are few in the first place and collateral is often hard to come by. It takes a lot of money to obtain the funds to pay for the upfront fixed costs in acquiring a factory or any other means of “modern” production. We have also learned that the poorest of the poor in developing countries are often in rural areas that rely on agriculture for their income. This is a problem that is difficult to fix and could take decades to rectify, but government investment in the capital and technology to build these factories is something this model could be used to advocate for. The article said that even if the economy can produce on a modern level, it must still be profitable for the individual entrepreneur to invest in this production when considering the cost of wages as well. This seems to be a lot to ask of an entrepreneur in a developing country with little access to capital. For this reason, once again I think the government could step in and pay these wages that could take people away from low-income agricultural jobs to modern jobs that will contribute more to the economy. We have seen some of the success publicly owned industry’s in booming places like South Korea, and they could work in places that have been stagnant in their income per capita numbers. My question is does the world bank lend to developing countries to invest in capital and hire workers, and how accessible are those loans? The Solow model has illuminated the positive relationship between saving, and thus capital investment and income per capita, and Krugman further demonstrated this in his simple model at the end of this article. The difficulty is in taking the next step as a developing country to acquiring the savings to invest, and I think the World Bank can help with this issue (Thank you for the extension to 10 PM!)

drewwoodfolk

Wow! What an interesting piece that seems to tie in well with our previous class discussion about the origins of development economics.

First off, I found the struggle of the early high development theory thinkers to be incredible interesting. From an outsiders perspective on economics, I've always thought the economics issues and models we would discuss in class would have been figured out and perfected a very long time ago. It was incredibly interesting to learn that development economics didn't really begin to develop as a field at all until the post World War II era and took many decades after to begin to perfect. Furthermore, it was quite eye openning to learn that the publications of well respected economic thinkers like Rodan and Hirschman didn't always receive the respect that their work probably warranted. On one hand, I couldn't imagine the frustration that these early development economic must have faced. While their economic theories were fairly simple to articulate in words and generally intuitive, thinkers like Rodan and Hirschman must have been incredible frustrated that their theories didn't get accepted into the main stream of economic thought. At the same, I couldn't see my self taking anyones work seriously who lacked the mathematical modeling to back up their theories. Reading this article did make me wonder about other perhaps missed theories that may have been presented in either economics or any other field of study. I'm endlessly curious to know, how many ideas potentially valid and innovative theories have been brushed aside by the economic community.

Second, I did find the model fairly confusing. While I'm throughly happy that a model as eventually developed for what seems to be a well thought out theory, I found some of the underlying assumption made in the mathematical models of "Big Push" theory to be fairly unconvincing. The assumption of the only resource in an economy being labor and the traditional sector being characterized by perfect competition seem like big just to make in my opinion. I'd love to unpack this more in class!

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