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This document summarizes key lessons from successful developing economies and characteristics of top economic growth performers. The main points are: successful economies exploited global demand and imported technology, maintained macroeconomic stability, had high savings and investment rates, and adhered to market systems with credible and capable governments. Top performers commonly received state support for strategic industries and maintained undervalued exchange rates. While development strategies varied, common themes included exploiting comparative advantages, maintaining stable environments, and targeting specific industries.

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Phil Louis
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48 views2 pages

Paper Topic

This document summarizes key lessons from successful developing economies and characteristics of top economic growth performers. The main points are: successful economies exploited global demand and imported technology, maintained macroeconomic stability, had high savings and investment rates, and adhered to market systems with credible and capable governments. Top performers commonly received state support for strategic industries and maintained undervalued exchange rates. While development strategies varied, common themes included exploiting comparative advantages, maintaining stable environments, and targeting specific industries.

Uploaded by

Phil Louis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Class 6 Readings

Lessons from successful catch up countires \: 2008 Growth Comission report focusing on successful
econs

Need to design econ development strategies consistent with a country’ss comparative advantage – tsate
play a crucial role in creating conditions for privat-sector development

Poverty reduction can not be separated fro mdevelopment and econ growth

Growing awareness that except for ASEAN China and India, other develop countires need to accelerate
their rates of growth significiantly to catch up with first world.

First point of resemalnce of all 13 succcesful catch up economies – total exploitation of wthe world
econoy – imported ideas tech and know how and exploited global demand an almost infinite market for
their goods.

Second fact: Stable macroecon environment

Third characteristic – high savins and investment rate – forgo consumption in favour of higher incomes
in future - Mandatory savings schemes v imoortant – neeed to generate return on investment

Fourth point; Adherence to market system to allocate resources – well fncaitoning market syste –
creative destruction led to structural transformation and urbanisaiton

Fifth characteristics – Committed, credible and capable govts – Strong state either liaissez fiare or hands
on

Bad ideas that should be avoided: Energy subsidies, civil service jobs overfill, over portecating domestic
firms, banning exports, price controls, ignoring environmelta issues, allowing exchange rate to
appreciate

Commission report notes that political leaders play pivoal roles in success of econ developmet

Author believes

Author believes comparative advantage determined by its endowments structure is key to econ success

If a ountry develops industires with comparative advantages, its econ will be competitive in domestic
and intl markets and its ODMESTIC FIRMS WILL BE VIABLE – no need to subsidise a la Soviet Union

EU has consistently set active industrial policy – intervention ad intergovt cooperation on strategic
industries
What Characterises Top Growth Performers

3 types of countries – a few tiny niche economies, some petroleum exporters , and a large number of
countires that use undervalued Forex rate and deliberate industrial policy

Economists for decades have used many different variables for sources of econ growth – including
political stability, low inequality, colonialism, freedom, homogeneity, legal system, amrektst etc

Democracy no direct effect on econgrowth but an indirect one through human capital accumulation,
ower inflation, lowep olticial instability. Corruption hurts econ growth

Using random variables can often lead to statistically significant outcme even when it does not exist

Of the many countires that depend on petroleum exports – only wo made into group of top performers
1980 -2013

None of the economies had a significantly overvalued Forex rate and most had a strongly undervalued
rate.

Industrial policy and deliberate development strategy – Asian tigers have had common State
nvolvement in development process – clear vision of which sectors to support and promote – top
performers

Even Hong Kong’s very laisssez faire approach still planned and subsidized transport infrastructure which
made I a perfect place for an entrepot. – deliberately becam strong trading link between World and
Chinese mainland.

3 Different strategies that can lead to successful development

Find oil and limit negative effects from resource curse

Find a niche in world market

Produce cheaply and use price advantage to upgrade technology

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