« ECON 280: Reading for Friday's Discussion | Main | Krugman for Friday »



Austin Lee

I really found this paper enlightening. From previous classes and having family in China that the Chinese economy has grown substantially over the past century, but never really dug into how it was made possible. One common theme I found between most of the fast-growing economies were the materials they were producing. In most cases these countries were able to get a jump start on manufacturing technology. Also, many of the Asian fast-growing economies were able to offer cheap labor. This incentivized foreign countries to take hand in these Asian countries. These two qualities for the Asian countries were very attractive to foreign investors and played a significant role in the economic boom they experienced. These characteristics are also something the authors make note of towards the end of the paper. The authors state, “There has been a lack of both export diversification and production sophistication (p. 275).” For this reason, many of the lag behind countries are still focused on agriculture. Of course, it is not fair nor realistic to compare the Asian countries to the African or Latin American countries due to different social infrastructure and environmental differences. However, it is worth making note of the successes of some of the Asian countries in order to reevaluate the structure of the lag behind countries. One of my main takeaways from this paper is that there are many factors that must be taken into account, but it seems that production diversification and sophistication are too many components that make your economy seem attractive.
-Austin Lee

Mercer Peek

A common theme among Chile, Brazil, and Argentina’s “lag-behind” economies is import substitution. Promoted as a developmentary tactic in the mid 20th century, import substitution means replacing foreign goods with domestically manufactured products wherever possible. As we see in the paper, import substitution can lead to short-term growth in the manufacturing sectors, but is does not lead to long-term economic gains. In the long run, domestic production and therefore GDP expansion are smaller than what they would be as part of the world market. It also concentrates power at the top of countries that, which as the paper notes, suffer from massive governmental corruption. I can’t help but draw parallels between import substitution and President Trump’s policies regarding our manufacturing sector. In fact, one could define his proposed policies to “protect American jobs” by not importing what we can make ourselves as import substitution. Especially given the increasing corruption within and cronyism between our government and top 1%, we should think long and hard before adopting such policies.


Seamlessly transitioning from Development as Freedom by Amartya Sen, Institutional Barriers and World Income Disparities by Ping Wang, Tsz-Nga Wong, and Chong K. Yip emphasize the role of institutional factors and their contribution to either the catalyst or disincentive of nations’ economic growth. The article quantitatively proves total factor productivities alone cannot tell the whole story. It is TFP alongside institutional barriers that are responsible for nations that have found themselves labeled as laggards or trapped in poverty. As mentioned, countless times before, global income disparities, using GDP as the benchmark, have considerably widened. Wang et. al. point to Institutional factors more specifically referring to the quality of infrastructure, presence of high-tech industries, and strength of government, among others to have all been observed to affect long-term economic growth within a nation with as much influence as income. Looking at the “development laggard” country of Comoros, this section listed the region as burdened with political interruptions, fear of hunger, low education levels, and government deficits. Additionally, Côte d’Ivoire, another African trapped-behind economy, can blame, decreases in capital investment and dependency on raw commodities for its fall in economic growth. Knowing a more in-depth description of the conditions in the nation reveals context to the growing income disparity. Both these examples seem to provide sound support around Sen’s statement, “Unfreedom can arise either through inadequate processes… or through inadequate opportunities,” Côte d’Ivoire and Comoros were noted to be extremely corrupt and have eventually become reliant on foreign aid. With the institutional barrier of bad government practices these countries cannot efficiently encourage enrichment or enlargement of any sector.

Eric Schleicher

After reading this paper, I can begin to see how some of the ambitions of the Sustainable Development Goals that we have read about seem to already apply to the economic successes and downfalls of different nations around the world. In fact, in table 4 of this reading, we can see that some of the most important factors contributing to lagging economies in the 10 poorly performing nations surveyed are either directly tied or somewhat dependent on the functioning of government and its representation of the people. Factors such as government misallocation, corruption, unnecessary protectionism, and even financial instability are all related to government or could be improved through acts of government. This was one of the key sustainable development goals that many of us had discussed last week. The importance of well-functioning governments is key to ameliorating the economic standing of some of these more impoverished nations. It is also one of the responsibilities of these governments to observe economic and worldly trends and help to allocate resources to better adjust to a modernizing world in which each nation can better improve their industries and technology. Nations such as Mauritius, that observed the potential for investing in the tourism industry and out of agricultural production have seen dramatic improvements in economic standing. Same with the other well-performing nations that adjusted resources to become more export-dependent. In contrast, as other people have already touched upon, the import substitution policies and investment in outdated industries have kept some of the poor-performing nations in economic stagnation or backwards movement. Although adjusting to the changing preferences and trends of the modern age may call for an upheaval of the way things were traditionally done, they seem to have positive effects for nations that are able to embrace change and the niche they fill within the increasingly connected global economy.

Gus Wise

I enjoyed reading this paper and seeing the reasons for why countries have developed or lagged. Like Austin said, it is difficult to compare the economies of countries in different parts of the world because there are so many different variables to take into account. With that being said, countries that have experience growth have made strides for similar reasons such as transitioning into different types of exports and services.
I thought the analysis of Brazil was very interesting because of the reasons for its development lag such as import substitution and corruption. Like the article said, Brazil has the largest national economy in Latin America, along with large, highly developed cities like Sao Paulo and Rio de Janeiro. It reminded me of Sachs' article on SDGs where over half of people with very low incomes live in countries that are capable of stimulating development on their own. I don't know the exact numbers associated with income disparity in Brazil, but looking at the very developed major cities and comparing them to the poorer areas around those cities and the rural areas of the Amazon, I would assume there is a substantial wage gap in Brazil. It's a shame that something like government corruption is hindering growth and development in a country that has the potential to help itself.

Jack Parham

Similar to Eric, I could not help but think about the Sustainable Development Goals and the questions that have been raised such as "what is good governance?". While reading the SDGs I was constantly wondering what exactly good governance means economically and what kind of policies would need to be put in place in order for economic development to occur. This paper begins to answer many of those questions. We see very clearly that institutional barriers such as extreme protectionism, corruption and financial instability have made it incredibly difficult for some countries to develop and grow efficiently and effectively. However, avoiding these institutional barriers is far easier said than done. I think foreign policy often focusses on how monetary aid can help to grow and develop other countries. What is not often considered but should be is the mindset of the institutions in question. How is the government of that country going to change their policy in order to develop?

Didi Pace

This study focuses on development in the sense of the key institutional barriers driving or hindering economic development via income disparities. In contrast, Sen argues that development is the expansion of the freedoms that people enjoy. Freedom is the ultimate end and primary means of development. As an end, we have freedom through the avoidance of starvation and premature mortality, and political and market participation. The means of rights/opportunities/entitlements that expand human freedom include political freedom, economic facilities, social opportunities, transparency guarantees, and protective security.

None of the above aligns with the development-enhancing factors outlined in the study. The two contrasting pieces must have fundamentally different ideas of what development means and looks like. Sen's version concentrates on individuals and the freedoms they enjoy, while this study focuses on the institutions, policies, incentives, infrastructure, etc. Does industrialization, exports, and IT truly make a country "developed"? I don't think it does. Similar to Sen, I think development needs to be rooted in a capability/freedom approach (health, education, living standards, as well as income). Development is not merely sustained economic growth.

Sydney Goldstein

The biggest takeaway for me in this paper was how fast growing countries adopted export-led development strategies and set up environments that encourage FDI, whereas the trapped and lag-behind countries had strategies involving import substitution and protectionism. I was curious to learn more about the economic development zones (EDZ) since a detailed description of how those functioned was not given, beyond that they adopted policies that favor production and foreign investment. I did some research into what specific policies were used to promote EDZ and FDI thus inspiring growth and development and found an interesting paper by Xiao Wang called, “The Role of Economic Development Zone in National Development Strategies: The Case of China”. The reason no concise structure for EDZs was given is that there are several types with slightly different structures that cater to specific industries. China has over 10 different types of EDZ. Most EDZs however used financial incentives to encourage businesses to move into these zones and for individuals/groups, especially foreigners to invest. One of the major incentives commonly used are favorable tax policies and exemptions, including exemptions on duties. Other prominent strategies include free trade, fostering development through agglomeration, and fostering science and technology, both in innovation and advancement and enlargement. This couples with what we talked about in class Monday relating to Gary Fields’ dualistic development. With EDZs China is doing some combination of enriching and enlarging the modern sector. It also relates to our discussion on economies of scale and how in many countries the barriers of entry are too high. EDZs may provide a solution to some barriers to entry since they promote agglomeration which leads to cost savings. This makes EDZs largely favorable which is likely why they exist in over 130 countries.

Link to paper: https://www.rand.org/content/dam/rand/pubs/rgs_dissertations/RGSD300/RGSD320/RAND_RGSD320.pdf

Frances McIntosh

I found it very interesting the distinct separation of the exports of fast-growing economies and the exports of lagging or trapped economies. Most of the fast-growing Asian economies produce and export technology products. These products bring in a lot of profit, not to mention their governments are setting up policies to aid and protect exporters. For example, the article specifically mentions Chinese incentives, regulation, and policy efforts. Although the lag behind countries are exporting, they are producing mainly agricultural exports. These exports are not as profitable as the tech exports of fast-growing economies. One part of the paper I found most interesting is how some governments essentially blew their chances at economic growth with poor economic leadership. This pertains mostly to Latin American countries like Argentina, Chile, and Brazil that all suffered from severe inflation problems, corruption, and government misallocation. This paper emphasizes the importance of product diversification and institutional/government commitment in sustained economic growth.

Sarah Hollen

After reading this article, one of the things that intrigues me most is the relationship between industrialization, technology, and institutional barriers. Clearly, the nature of industrialization matters for the sustainable development of a country, as Brazil for example ran up significant foreign debt in order to meet the import requirements of industrialization. On the other hand, industrialization in Malaysia moved a mining and agriculture based economy to a more multi-sector one, which contributed to rapid economic growth. Mauritius also succeeded in transforming its economy by transitioning from a reliance on sugar production to investment in a different industry- tourism. Though neither of these countries have an economy particularly driven by technology or the tech sector, there are many high growth countries that do, such as South Korea and Taiwan. I am curious about how access to technology and investment in technology affect sustainable economic development through industrialization. Specifically, are there particular institutional barriers that discourage investment in the tech industry and limit access to technology? I think it is interesting to look at a case such as Singapore, which set high-tech industries as priorities for development and became a world technology leader in electronics and biotech industries (and its economy has grown rapidly). Though I think it is clear technology is a key to sustainable development, I wonder if entrance into the tech industry will become the goal for all countries seeking to industrialize successfully. After considering this, I have many questions. Can lagging economies enter successfully into the tech industry, and if not, what are the specific institutional barriers that prevent them from doing so? If countries with low growth can in fact enter the tech industry, should they? How far into this industry should they venture? Or should they simply seek to access technology as a tool for industrialization in other sectors?

Christina Cavallo

I walked away from this article learning that institutional barriers have a heavier impact than TFP has on country growth. The study found that institutional barriers account for “more than half of the economic growth in fast growing and trapped economies and for more than 100 percent of the economic growth in the lag behind countries”. More than half seemed like a significant amount to me, but when I continued to read that it accounted for more than 100% in lag behind countries, it was obvious that this barrier holds a lot of power. I wasn’t surprised about the factors that they stated led to lack of economic growth - unnecessary protectionism, government misallocation, corruption, and financial instability - since all of these factors are heavily related and are commonly associated with struggling countries. Something that stood out to me as I was reading the article was the discussion on agriculture based economies and the problems that arose from too much dependence on these cash crops. Specifically in regard to the example of Côte d’Ivoire, the article stated that the problem of their economy “was caused by its dependence on cocoa production”. This reminded me of discussions we have been having in my Environmental Studies class. We have been talking about the importance of biodiversity and the security that it provides as, say if one crop is hit with a problem, others can make up for the unexpected event. When I read about Côte d’Ivoire, the concept of diversity as security in the environment came to mind. As it is true in the environment, too much reliance on one thing is risky, and it is true in economies as well.


Stephanie Sezen: Although I appreciated the clarity of the paper and its distinction between the 10 fast-growing countries and the 10 lagging countries based on institutional differences, I thought that its criteria for economic growth was narrow. The article emphasizes the gaps between the 2 groups of countries by focusing on GDP yet overlook the economic disparities within each country. I think it would have been interesting to see how through economic growth/in spite of economic growth, how have these countries attained socioeconomic growth. For example, despite stalled economic growth, through the Bolsa Familia program, Brazil managed to shrink the wealth gap between upper and lower income groups. Brazil also prioritized education and welfare programs to lower income groups. However, it should be noted that although Brazil did manage to raise the lower-class, its efforts either were not adequate or were not sustained. Hence, judging economic growth based on GDP alone is not enough; even the top 10 growing countries continue to endure inequalities that are contrary to socioeconomic growth. Overall, I thought the paper provided a great summary on the economic institutions that impact individual country's capacity to grow.

Adelaide Burton

This paper provided a really interesting analysis of different connections between lagging and fast growing economies. Although I found the analysis in table 3 a little hard to understand, the country profiles were helpful in explaining the factors that affect economic growth over time.
Many of the fast growing countries benefited from modernizing their industry into technology and manufacturing, and had strong, diversified export strategies. While the article cites this as strong government planning, I think there is a distinction between the “good governance” we’ve discussed that leads to personal freedoms, and the governance described in this article that leads to economic growth without necessarily guaranteeing personal liberties or improved living conditions. Without any analysis of population well-being, the economic growth in these 10 countries seems positive, but not necessarily an ideal model for development.
The connections between the “laggard” countries were consolidated into four problems: unnecessary protectionism, government misallocation, corruption, financial instability. I also found that many of these laggard countries had economies dependent on a single source, often an agricultural cash crop, and many of these countries suffered from population growth, inflation, and market instability. The article proposes opening markets to international trade and capital markets and modernizing industry. Although these solutions aren’t the focus of the article, the proposal seems oversimplified, because in many cases these corrections would require replacing a country’s government, retraining the population to work in modern industrial jobs, building infrastructure, and overcoming hard-set barriers that have slowed their development.

Ben Graham

Last Winter Semester, I had the chance to take Professor Grajzl's Institutional Economics class, where we discussed much of the material mentioned in the article. Accordingly, I am familiar with the argument that poor institutional quality hinders economic growth. As mentioned in the article, unnecessary protectionism, government misallocation, corruption, and instability can explain why some countries have fallen into the poverty trap or lagged behind others in terms of economic growth. What was specifically interesting to me was what institutional features were most common among high-growth countries: export-led open policy, foreign direct investment incentives, solid infrastructure for businesses, promotion of high-tech industries, and pro-market reforms in labor and financial markets. I have explored this issue myself in my econometrics class, where I researched what factors could explain differences in growth between African countries. I found that strong judicial institutions (efficient courts) and social institutions (lack of "disorder events"...terrorist acts, protests, riots) were strongly correlated with economic growth. If I had to change one thing about this paper, I would recommend that the author includes more countries in their analysis. They only study 20 here, and I think the paper could be bolstered by adding additional ones.

Julia Foxen

Wang’s piece about the significant impact institutional barriers play in economic growth speaks to the extent to which politics and economics are inextricably intertwined. This entanglement became especially clear to me when Wang began discussing the countries that are development laggards in section 4.2. Each of the countries - Comoros, Côte d’Ivoire, Ghana, Kenya, Uganda, Argentina, Brazil, Chile, Greece, and the Philippines - have experienced major recent political upheaval, often involving a complete change in government type and leadership. Further, it was noted that many of these countries did not even receive their independence until late into the 20th century. This lack of political stability and good governance leads directly to harmful institutional barriers in these countries. Wang finds that “unnecessary protectionism, government misallocation, corruption, and financial instability have caused the trapped and the lag-behind countries to be unable to develop along a sustainable growth path” and have created barriers to capital markets, trade, and industrialization. On the other hand, the fastest growing economies are found to be driven by “export-led open policy, FDI incentives, solid infrastructure for business, and promotion of high-tech industries” alongside pro-market reforms in governance.

In finding that the economic cannot be separated from the political when it comes to a country’s development goals, I am reminded of the Sen reading from earlier this week. Sen notes the advantages of democratic pluralism in creating incentives for good and fair governance, while also noting that it is “not surprising” that no famine has ever taken place in a country with a functioning democracy (16). Both Wang and Sen’s pieces convey the momentous role politics plays in economic development.


The paper focuses on the helps and hindrances to economic development with regards to income around the world. With the fast-growing economies, what struck me most was the importance of close trade relationships with developed giants. In particular, Japan was mentioned as an important source of information for business structures in South Korea and agricultural technology in Taiwan. The paper acknowledges that this relationship provided crucial benefits during the development of these countries. The question is then raised: what does this mean for the trapped and lagging countries? The paper sites a variety of reasons that each country’s economy has decreased or ceased economic growth. The primary reasons are cited as corruption, poor government monetary and fiscal policy particularly with regards to inflation, and the failure to transition to an industrial society. Most of the lagging or stagnant countries in this study, however, are in Africa or South America. These countries do not have a stable economic giant near by with which to benefit from. In Africa, even the strongest economies are strongly tied with agriculture or natural resources. Very few are experiencing major growth due to technology and industry. I wonder if the rise of even a single country on the continent would display significant spillover effects for the rest. With regards to the South American countries, the question is perhaps more about an example of a stable and just government (relatively speaking of course). Chile despite being labeled as a lagging country, is described as “one of the healthiest economies in Latin America” in the paper. This creates a rather low bar for the region, but Chile did seem to approach its economic problems differently by having free market reform. The disengagement of likely corrupt governments allowed significant changes in exportation and economic livelihood. I wonder if Chile or another Latin American country were to emerge as major economic player and an example would other countries experience reform and growth. How important is proximity and strong economic ties to growth?

Danny Lynch

Danny Lynch
Wang et al. (2018)

Reading this paper was particularly interesting because I’m in Comparative Institutional Economics with Professor Grajzl. In terms of theory, this paper was similar to a paper we read in that class by Mancur Olsen (although the Wang et al. paper was more empirical in nature). The most direct connection that I noticed is that both papers emphasized that the typical neoclassical aggregate production function was not enough to explain the differences in a country’s income and economic growth. There were some technical differences between the arguments (for example, Olson argued that institutional quality was one of the reasons that the total factor productivity was excessively large rather than seeing institutions and TFP as separate). However, both papers put forth the same general argument. One factor that I appreciated about this paper was that it specifically pinpointed what institutional factors hindered and helped growth (in contrast, the Olsen paper simply argued that institutions are important). What’s interesting to me is that the economic institutions mentioned are very political in nature. For example, three out of the four detrimental institutional qualities that the paper mentions are directly related to government action and policy (unnecessary protectionism, government misallocation, and corruption), while the fourth (financial instability) is likely a result of government action and is thus closely related. If these are the economic institutions that are failing, it would seem that they’re failing mainly because of ill-advised government action. I think an interesting follow up study could empirical assess what types of governments and government policies lead to the development of stronger economic institutions.

carrie morrison

I found this article very insightful on how different institutional barriers and government policies or instability can influence a countries growth. Furthermore, I like that there were quantitative values to support their claims. I found the link between the lagging countries and the poverty trap countries interesting. Most of them have struggled developing their economies due to government corruption and instability. This reminded me of the SDG article and the Sen chapters. In the SDG article Sachs argued that one of the important focus of the SDGs needs to be "good governance" and in the Sen chapters it was argued that political freedom was also essential for development. The lack of good governance has lead these countries to suffer from poor policy and an accumulation of external debt. Moreover, the lack of political freedom has prevented citizens from participating and helping to regulate the government and their policy decisions. So, despite the initial promising states these countries have been unable to keep up with the fast growing countries, falling into poverty traps or lagging behind.


In this paper, the authors attempt to explain the income disparities between fast-growing economies and development laggards and find that various forms of institutional barriers rather than total factor productivities play a more important role in long-term economic development. Like many others, one of the main differences I saw in the lagging economies and those that have fallen into the poverty trap was the adoption of import substitution as a means of industrialization. Countries such as Hong Kong, South Korea, and Malaysia took an export oriented industrialization path. They developed their manufacturing industries, which were low-cost and labor intensive, and expanded industrialization efforts through increased domestic export revenue. On the other hand, some development laggards adopted import substitution. As a result, many of these countries often experienced short term economic growth, but were unable to effectively protect industries producing industrial goods and the labor-intensive jobs, lacked a comparative advantage or export diversification, and took unnecessary protective measures against imports. Also, as the authors stated, country specific economic conditions and institutions must be taken into account when analyzing and attempting to explain income disparities between nations. One of the issues or questions that came to mind while reading this paper was the ability for lagging and trapped countries to adopt an export oriented industrialization strategy rather than adopting import substitution. I wonder how much government corruption and inefficient capital markets may hinder a nation’s ability to advance and grow its manufacturing industry while also remaining competitive and providing protection of these industries.

Andrew Frailer

I found this paper to be a very interesting explanation about how some countries have been able to successfully maintain growth while others lag and fall behind. The first thing that stuck out to me is the relationship with the paper discussing MDGs and SDGs. In this paper, Sachs says that the achievement of any one of the goals depends on the achievement of all of the goals. I think that this paper illustrates how important government policy is to development. In all of the countries which experiences sustained growth, the governments adopted open policies and were export oriented. One specific example that illustrates this is the case of India. The author said that India initially lagged behind China in terms of growth because the Chinese government adopted open policies and encouraged technological development. India, on the other hand, began the research period under much tighter government control of the economy, which created harsh conditions for economic growth. After the government encouraged growth by switching to more of an export dominant strategy and relaxing regulation, the country quickly turned towards a position of growth. In the other countries, those that the author calls laggards or countries that are stuck, the governments have failed to make similar adjustments and the country's economies have paid the price for it. In Ghana, the author discusses how low R&D investment, particularly that carried out by enterprises, has served to exacerbate the effects of economies that suffer due to their reliance on imports which are attractive because they attract foreign investment. One thing that i found to be sad which shows how these studies are all related was the case of Botswana. Botswana is referred to as the African miracle due to its geographic location which is home to a huge supply of diamonds, contributing to a massive portion of GDP. Even though compared to other countries in the regions Botswana has experienced far more rapid growth, the economy is being depressed because of AIDS which effects 39% of 15-49 year olds. I am guessing that this is a combination of low medical innovation and information available to the public, as well as limited access to health care. However since I am not at all educated about the virus or the country of Botswana, I could be completely off. The last thing I wanted to mention briefly was the reoccurring theme that many of the fastest growing countries had connections with many larger more stable economies. Japans connection with several of the Asian countries was mentioned repeatedly, as well as Thailand's tech connection with the United States. I am sure that such a partnership will have many positive effects on a developing economies growth. Potentially one of these effects could be increased levels of foreign investment? All in all i thought this was a very interesting paper showing us one of the most important factors contributing to or limiting economic growth, institutional barriers.

Bridget Bartley

Of all the countries resulting on the list under the 4.2 Development Laggards, seeing a country like Greece really threw me for a loop. When I think of Greece, I think of destination vacations, Mamma Mia!, and dozens of Pinterest pictures I immediately repost. It’s hard to grasp such a country to be lagging in development. Tourism industry can be a good and bad thing. I remember from a summer spent living in Savannah, a tourist dependent city, many residents are left relying on informal jobs in the tourism sector that do not necessarily pay a livable wage. I am sure that Covid and travel restrictions has not helped Greece on its path toward development whatsoever. It hurts me to think of wealthy Americans travelling to such a naturally beautiful country to snap a few Instagram pictures and exploit loads of native Greeks.

With many of the other countries listed under 4.2 Development Laggards, ecotourism negatively impacts their populations as well but often in addition to voluntourism. You continue to see religious mission trips to all the countries that are not surprisingly a part of the list of development-lagging countries. I’m sure we all know what voluntourism, but it was just very striking to me that nearly every country that was a part of these results of development-laggards is exploited through ecotourism, voluntourism, or a combination of both plus an immense amount of other negative disproportionately felt impacts.

Joey Dickinson

While reading this, the main thing that stood out to me was the incredible contrast between the challenges that individual countries faced when trying to achieve developed status, expand their economies, or increase the freedoms that their citizens enjoy. Like others have mentioned, it seems that 'good governance' as mentioned in our overview of the SDGs continues to be a key theme here, and maybe those ideas of what good governance is have begun to be explored, but I feel that this is just a very brief overview of what good governance might look like; the myriad of challenges facing developing countries could imply that good governance means something quite different for different nations, especially when you take into consideration various cultural values and practices. To tie this back to Sen again, this is my thought process when summarizing the challenges we (assuming 'we' are a developed nation collaborating with other nations to aid in their development): how do we 1.) identify the freedoms that are important to individual, diverse nations, knowing that they could vary; 2.) ensure that our definition of 'good governance' aligns with these prioritized freedoms in a way that respects varying cultural norms; 3.) enact policy that will expand these freedoms?

Hayden Ludt

The part of this paper I found my interesting was the country descriptions and analyses of what made some countries surge ahead in development and which areas were cause for concern fo the countries that were failing to meet their economic development goals. The fast and steady growing Asian countries like Hong Kong, Taiwan and South Korea compared to the countries failing to keep up like the Philippines as well as comparing them against giant boomers like India and China, was an interesting part to see how differences can arise in countries that are similar in culture, location, and background. This just paints an even clearer picture of the effects that institutional issues such as corruption and failure to govern can have on an economy. One of the most stark differences found between these countries was the growing economies commitments to achieving global growth through manufacturing and exporting. We saw examples of this global initiative in Singapore and South Korea where the shift towards forward thinking production and increased technology raised the wages of the manufacturers through the use of capital and no longer labor intensive production models. Taiwan is another example where the shift towards manufacturing exports helped sustain long term growth. I believe that struggling countries in Africa and South America should want to be able to mirror this behavior. Starting with governmental reforms and effective policies.

John Lavette

In their paper, Wang et al. delve into the factors which drive growth in developing nations as well as those which hinder certain trapped and lagging countries. There were many interesting points discussed throughout the paper, and I appreciated the focus placed on TFP and institutional barriers. There are a few important conclusions which I found especially interesting. Firstly, the success present in Southeast Asia is astounding. These nations have strong political institutions which were able to effectively develop export-oriented growth strategies. After establishing strong manufacturing industries, many of these nations were able to provide cheap credit and transition towards high-tech or service industries. Conversely, many South American and African nations faced problems with both credit as well as reliance on raw resource production. With little diversification, setbacks are inevitable and especially difficult to deal with for developing nations. In those nations which were able to develop manufacturing sectors, such as Ghana, protectionism led to declining growth rates. Another major factor which seems to lead towards market volatility is copious amounts of government spending and large deficits. These can cause problems as developing nations are often seen as riskier endeavors to foreign investors. If a nation becomes too reliant on foreign capital or lacks the ability to stabilize their currency, they are bound to face economic crisis which inhibit their growth. Wang et al. discuss the influence of political corruption. I am interested in discussing the factors which contribute to strong institutions, as corruption is a decisive element which seems to hold back lagging and trapped nations.

Jackie Tamez

The reading on world income disparities emphasized that institutional barriers have played a key role in discouraging economic development and widening the gaps between countries at different levels of development. I thought about the points made regarding government misallocation and corruption being amongst the main causes and how this applied to Latin American governments, which I am most familiar with. Nonetheless, the reading made me wonder if this lag would still be present if these issues were resolved. It would take more than just addressing this to get anywhere near the US or any developed country’s economic stability. At this point, countries like China and the US have already established trade relations that might be too late to intervene with and barriers to entry might be too great to overcome. The reading seemed to somewhat place the blame on impoverished countries by saying they fell into the “poverty trap” but I do not think the countries are singlehandedly responsible for the current economic conditions they are in. Other countries have exploited these poor conditions for cheap labor and to take the resources available in these lands for an unfair cost. Given that globalization has completely transformed and dominated the economic panorama, it makes sense to turn away from solely analyzing how a country “caused its own economic collapse” but rather how international relations and tensions have accumulated into a financial impediment that is becoming increasingly challenging to control as poor countries get poorer and the rich get richer. It would be interesting to see how more collaborative policies amongst countries would change the current rankings and disparities, although that does not seem too feasible given the capitalist and consumer-driven agendas that are prioritized.

The comments to this entry are closed.