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08/28/2020

Comments

Katie Timmerman

Like Ben who commented above, I'm currently in Prof. Grajzl's Comparative Institutional Economics class, so I'm also really interested in the specificities of what makes a highly efficient and functioning economy. This analysis of income disparities as due to institutional sources was intuitive but simultaneously well-laid out and explained in fairly clearly and simply. I feel that, in line with Amartya Sen's ideas described in Development as Freedom, the institutions and government policies that were focused on in this study lead to either more or fewer freedoms, which in turn lead to greater individual happiness and fulfillment. When governments are corrupt or follow misguided policies, the real choices of citizens decrease. I think that Didi made a good point in her critical look at purpose of development. However, rather than promoting either technological advances and industrialization OR the health and wellbeing of citizens, there should be a balance. They should be inextricably linked, because one is an investment in the other, and economic health and vitality should facilitate and reinforce the general wellbeing of a country's citizens- otherwise, what's even the point?

YoungJae

I couldn't help but find this piece's insight and analysis of South Korea's growth interesting. Growing up, I knew that South Korea went through a period of exponential economic growth in the early 1970s and that a mindset of diligence and "working hard for the future generation" became imprinted into the minds of the Koreans of this period. However, if someone had asked me to explain the economic phenomenon and the gears that propelled the country's growth, I wouldn't have been able to. I think reading Wang's piece helped me better understand what happened from an economic standpoint and better appreciate this field of study. A government with a good mission, the shift from import substitution to export-oriented industrialization, focus on manufacturing sectors, the adaptation of pre-existing Japanese systems, and appropriate policies all played a big role in making South Korea what it is today.
I also found it interesting to compare the "formula" of South Korea's and similar countries' success to that of countries that have lagged behind. For example, it seems like many of the countries that Wang describes as the "laggards," such as Ghana, Argentina, and Brazil, have held on to the import substitution system (while S. Korea didn't). As Mercer explains above, import substitution isn't as fruitful in the long-run, and it seems its effects (or lack thereof) are showing in these countries. It was also interesting to see Brazil in the "laggard" party because the country has the largest GDP in South America, and yet it's failing economic policies and government corruption have put it on this list.
(After some Googling, I learned that Cambodia's industrial policy also highly relies on import substitution (https://www.brookings.edu/wp-content/uploads/2016/07/L2C_WP7_Chhair-and-Ung-v2-1.pdf), and I already knew that the Cambodian government is pretty corrupt. It was cool to see these parallels and apply what I learned from this paper to better understand another country's economy. Maybe I really will write a paper on Cambodia)
All in all, this paper was very insightful, and I enjoyed learning about my country's growth from an economic standpoint.

Matthew Todd

I found the article to be very interesting as I hadn't given much thought to this previously. I enjoyed being able to see the differences between the fast-growing economies and those that were more stagnant. Many of the fast growers were in the same areas of the world, in pockets. It was interesting to see the connection between most of the fast-growing Asia economies focusing on exports, particularly in manufacturing. The ones lagging have a lack of both diversity in their exports and in a lack of product sophistication, leading to them being outcompeted. It's interesting to think whether there is a concrete formula for efficiently growing an economy, or if it is linked to other regional, social, and political factors in a way that policy alone can't fix.

Olivia Indelicato

In addition to the institutional barriers this paper discusses, I was most interested by the paper’s discussion of technology adoption and the role this plays in leading some countries to flourish while others are left lagging, especially considering our research this summer (shoutout to Acemoglu). It was interesting to read about the countless tech sector advancements and adoptions that have led nearly all ten sample countries toward economic growth, and the lack thereof in the lagging countries. I think it could have benefitted the paper to discuss the role of technology and increased capital as an institutional barrier, which obviously works in tandem with the various other institutional barriers discussed. Additionally, relating back to the SDG’s and last week’s discussion on the importance of the role of good governance, I found it particularly disheartening to read in this paper that many of the countries that are lagging suffer from poor governance and corruption, albeit unsurprised. More generally, I wonder what the possible policy implications may be, and the ways different countries could work together to sustain economic growth especially in the struggling countries that the paper mentions. I am aware that many struggling countries resort to assistance from the IMF in an attempt to move toward economic growth, and the paper mentions the way IMF interventions have been successful in countries such as India, Cote d’Ivoire, and partially in the Phillipines. I also know that IMF intervention in other countries, such as Argentina, sometimes leave countries in a worse position than they were before. It would be interesting to know what the authors suggest as an institution that not only tears down the institutional barriers, but also promotes growth across the globe- perhaps an institution is not even necessarily the answer.

Mason Shuffler

Wang et al. explore several different factors that have contributed to the growing income disparities between fast-growing economies and development laggards. Such income disparity has grown significantly in the past five decades, as countries that have increased exportation of goods across the globe have tended to do significantly better than their counterparts. One thing that I found particularly intriguing about this paper is that the authors grouped countries of similar regions together to show their economic trends. This idea is evident in the Asian Tigers and Trapped Countries group, as the Asian Tigers represent fast-growing Asian countries and the Trapped Countries show African nations that have had stagnant economic growth. My thought is that wouldn't it be more interesting for the researchers to link together countries of similar economic patterns that are from different regions? For example, it would be fascinating to compare countries several Asian and, say, European countries to see their economic trends and to look at similarities / differences to see how those trends came about. There is little doubt that the same factors of government misallocation of resources, corruption, etc. also tend to have the same detrimental economic effects on countries in other regions of the world. Moreover, looking at countries in the same region may have similar economic trends due to other macro economic occurrences in other parts of the region. I studied this idea in Professor Blunch's Spring Term course, where we examined one case study in Western Africa where there was a supply chain disruption for a textile business in one country, and that negatively impacted the entire textile trade throughout the region. Although this is ultimately not what Wang et al. studied in their paper, it is certainly an interesting consideration.

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