Globalization may yet repeal the Biblical adage that the poor will always be with us. But for now there are enough losers to go along with the winners that a slide back toward fragmentation and protectionism is a distinct possibility, as was also the case at the turn of the 20th century. Our contributors in this section offer their advice on how to make globalization work for everyone.
Defense date: 29/11/2010 ; Examining Board: Prof. Arpad Abraham, EUI Prof Rick van der Ploeg, supervisor, University of Oxford Prof. David Levine, Washington University in St. Louis Prof. Massimo Morelli, Columbia University and EUI ; Natural resources represent a good opportunity for economic growth and development in many resource-rich countries. However, not all these countries have benefited from the wealth stemming from natural resources. The empirical evidence shows that the economic performance of many resource-rich countries is poorer than the average. This has come to be known as the "natural resource curse". The interesting questions are why do some countries perform badly despite their natural wealth, what are the mechanisms that cause lower growth rates and how can they be avoided. Different arguments have been proposed to explain the natural resource curse. Some authors claim that resource abundance elicits corruption and rent seeking. Others argue that the high volatility of commodity prices lead to macroeconomic volatility, and volatility harms economic growth. However, the soundest explanation for the natural resource curse is based on the notion of the Dutch disease. The first chapter of the thesis analyses the mechanism behind the Dutch disease. The extra wealth generated by the sale of natural resources induces an appreciation of the real exchange rate and a corresponding contraction of the traded sector. If we consider that most of the economic growth is caused by technological progress acquired through "learning-by-doing" (LBD) which is mainly present in the traded sector, a temporary decline in that sector may imply lower economic growth. A number of oil producing countries have attempted to avoid the Dutch disease through stabilization funds. The second chapter of the thesis analyses the economic consequences of stabilization funds. These funds permit oil producing countries to adjust government spending and cushion the domestic economy from the sharp and unpredictable variations in oil prices and revenue. Given that natural resources are exhaustible, the last chapter of the thesis looks for an optimal revenue distribution between current and future generations. Previous models based on the permanent-income hypothesis are enriched, including essential features of resource-rich countries, productive government spending and Dutch disease effects.
This book analyses the role of local content policy in the economic development of five resource rich countries: Brazil, Kazakhstan, Norway, Russia and the UK
This book analyses the role of local content (LC) policy in the economic development of five resource-rich countries: Brazil, Kazakhstan, Norway, Russia and the UK. The authors situate LC policy within a framework of sustainability in the form of industrial diversification and innovation-led growth, and examine how effective LC policies are in facilitating sectoral and economy-wide catching up. Structured in five chapters, the book begins with an introduction and then presents an overview of LC definitions and situates LC policies within a framework of economic development. The third chapter compares specific examples of LC development and highlights variations in practice as well as learning across case countries. The fourth chapter focuses on macro-economic, micro-economic and institutional challenges conditioning LC development and the ability of LC policies to assist innovation-led growth. The authors conclude by examining what the future holds for LC policies and their role in promoting economic growth and addressing the wider social, political and economic challenges in resource-rich countries.
We document empirically that rich countries are more politically cohesive than poorer countries. In order to explain this regularity, we provide a model where political cohesion is linked to the emergence of a fully functioning market economy. Without market exchange, the welfare of inherently selfish individuals will be mutually independent. As a result, political negotiations, echoing the preferences of the citizens of society, will be dog-eat-dog in nature. Whoever has greater bargaining power will be willing to make decisions that enhance the productivity of his supporters at the expense of other groups in society. If the gains from specialization become sufficiently large, however, a market economy will emerge. From being essentially non-cohesive under self-sufficiency, the political decision making process becomes cohesive in the market economy, as the welfare of individuals will be mutually interdependent due to the exchange of goods. We refer to this latter state as "capitalist cohesion".
Introduction to the 2019 edition -- Introduction to the 2007 edition -- Discovering types of economic theories -- The evolution of the two different approaches -- Emulation : how rich countries got rich -- Globalization : the arguments in favour are also the arguments against -- Globalization and primitivization : how the poor get even poorer -- Explaining away failure : red herrings at the end of history -- Palliative economics : why the millennium goals are a bad idea -- 'Get the economic activities right', or, the lost art of creating middle-income countries -- Appendices. David Ricardo's theory of comparative advantage in international trade ; Two different ways of understanding the economic world and the wealth and poverty of nations ; Frank Graham's theory of uneven development ; Two ideal types of protectionism compared ; Philipp von Hörnigk's nine points on how to emulate the rich countries (1684) ; The quality index of economic activities ; The quality index expressed in real US data (1899-1937).
