Club Convergence And Imitation in Endogenous Growth Models: The Case of East Asia In the last class we argued that poor countries can grow fast through.

Slides:



Advertisements
Similar presentations
Trade Policy in Developing Countries
Advertisements

Trade in Developing Countries 2/27/2012 Unit 2: Trade Policy.
The Solow Model When 1st introduced, it was treated as more than a good attempt to have a model that allowed the K/Y=θ to vary as thus avoid the linear.
Economic growth in developing Asian countries
Application: High Performing Asian Economies. Per capita Growth Differences Time Period High performance Asian economies (HPAE) refers to: Singapore,
15 CHAPTER Growth, Inflation and Cycles © Pearson Education 2012 After studying this chapter you will be able to:  Define economic growth rate and explain.
Copyright © 2012 Pearson Addison-Wesley. All rights reserved. Chapter 11 Trade Policy in Developing Countries.
17:Long-Term Economic Growth
Chapter 1 A Tour of the World. Chapter 1: A Tour of the WorldBlanchard: Macroeconomics Slide #2 Chapter Topics The United States The European Union Japan.
Diffusion of Development: The Late- Industrializing Model and Greater East Asia Alice Amsden Amsden, Alice H. (1991), “Diffusion of Development: The Late-Industrializing.
Long- run Growth and Convergence In Endogenous Growth Models In the last class we argued that capital accumulation models cannot deliver positive long.
RELEVANT QUESTIONS ON GROWTH AND POVERTY REDUCTION In the last class we argued that, with important reservations, high growth could potentially reduce.
1 Developing and Developed Economies About ¾ of the world’s people live in less- developed countries (LDCs) / Emerging Market Economies / Third World countries.
The Structure of Structural Change and Growth
Kimberly Husa ; Miri Nam. The Asia’s Experiences  East Asian countries were remarkable in developing world until 1997  Rapid growth rate brought them.
Trade Policy in Developing Countries
Slides prepared by Thomas Bishop Chapter 10 Trade Policy in Developing Countries.
1 © 2010 South-Western, a part of Cengage Learning Chapter 17 Growth and the Less- Developed Countries Microeconomics for Today Irvin B. Tucker.
EAST AND SOUTHEAST ASIAN NIEs: 1. Achievements of these economies World Bank, The East Asian Miracle.
Jennifer Moore Xiong Ye Explaining East Asian Growth.
Long Run Growth Chapter 26. Wide Variation in Income per Capita, 2000.
Latin America & East Asia Compared Lecture # 12 Week 6.
Population Growth and Economic Development
Country Study: Malaysia. Overview In 1948, the British-ruled colonies on Malay Peninsula formed a Federation of Malaya, which became independent in 1952.
Where Are More and Less Developed Countries Distributed?
Technological Progress
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 2e by Dornbusch, Bodman, Crosby, Fischer, Startz Slides prepared by Dr Monica Keneley.
C h a p t e r ten © 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien—1 st ed. Prepared by: Fernando & Yvonn Quijano.
The Global Economic Environment
Copyright ©2001, South-Western College Publishing Contemporary Economics: An Applications Approach By Robert J. Carbaugh 1st Edition Chapter 10: Gross.
Chapter 10.  Import substituting industrialization  Trade liberalization since 1985  Export oriented industrialization Copyright © 2009 Pearson Addison-Wesley.
Prepared by Nguyen Minh Duc DOES TRADE BENEFIT GROWTH? – EVIDENCE FROM THAILAND Duc Minh Nguyen Dept. of Economics, Auburn University, USA.
The Rise of China & India. Rapid Economic Growth in China Economic Growth rates of 9.5% are expected to continue Economic Growth rates of 9.5% are expected.
Economic Systems Ohio Wesleyan University Goran Skosples 12. East Asia.
Economic Development of Asia Introduction and Overview
Pro Poor Growth Manmohan Agarwal Centre for International Governance Innovation* * This research is part of a research project supported by the ORF.
Macroeconomics Chapter 5
MACROECONOMICS UNDERSTANDING THE GLOBAL ECONOMY The Wealth of Nations The Supply Side Copyright © 2012 John Wiley & Sons, Inc. All rights reserved.
Developing Countries and Globalization Lecture 20.
East Asian Economic Miracle: Some Lessons. Modern Economic growth Global poverty for thousands of years. Two centuries of modern economic growth divided.
The Global Economic Environment The Coming Boom Wealthy Industrial Countries Developing Countries East Asia South Asia Latin America
The Global Economic Environment Global Marketing.
Macroeconomics Chapter 51 Conditional Convergence and Long- Run Economic Growth C h a p t e r 5.
Asian Century? Pacific Asia’s pre-1997 high growth.
1 An East Asian Renaissance Ideas for Economic Growth Indermit Gill and Homi Kharas with Deepak Bhattasali, Milan Brahmbhatt, Gaurav Datt, Mona Haddad,
The World Today. After the Cold War, the world had to change After the Cold War, the world had to change –No more communism in Europe No more separation.
Udviklingsøkonomi - grundfag Lecture 4 Convergence? 1.
Energy Demand Outlook by Mohamed Ariff Based on Data from The Institute of Energy Economics, Japan.
Modern World Economic Issues Unit 20. NORTH – highly industrialized – high literacy rate – high standard of living SOUTH – industry not yet developed.
An East Asian Renaissance Philippines Manila June 4, 2007.
Warm Up What do you think causes the economies of some less developed nations to grow rapidly?
Summary of Endogenous Growth Theories applied to ‘East Asian Miracles’
1 The Macroeconomics of Labor Market Outcomes in MENA over the 1990s: How Growth has Failed to Keep Pace With a Burgeoning Labor Market.
DIVERSITY IN THE CONVERGENCE PROCESS OF ACCESSION COUNTRIES Urmas Varblane University of Tartu ASIAN CENTURY? – THE GROWING ROLE OF ASIA Urmas Varblane,
Slides prepared by Thomas Bishop Chapter 10 Trade Policy in Developing Countries.
Theoretical attempts to explain disparities in development.
Trade Policy in Developing Countries
International Trade, Foreign Capital Flow and Aid in Development
GLOBALISATION.
Trade Policy in Developing Countries
ECON 331 INTERNATIONAL TRADE and ECONOMICS
Shandong Leadership Group Michael Bar, Economics
Import Substitution Policy and Export Promotion Policy
Chapter 4: Economic Growth Rates
FMA 601 Foreign Market Analysis
Trade Policy in Developing Countries
Trade Policy in Developing Countries
Trade Policy in Developing Countries
Import Substitution Policy and Export Promotion Policy
Principles of Macroeconomics Chapter 12
Presentation transcript:

Club Convergence And Imitation in Endogenous Growth Models: The Case of East Asia In the last class we argued that poor countries can grow fast through technical progress or adaptation In today’s class, I would like to address two important questions: 1) Why do we find “convergence clubs” in which per capita income levels seem to have converged to that of reach countries for a select group of countries and regions? 2) To what extent endogenous growth models can deliver an explanation of convergence clubs based on imitation?

1) Convergence clubs: The Example of the East Asia A well-known report by the World Bank (1993) focuses on the recipes for success of 8 East Asian countries: Hong Kong, Indonesia, Japan, Malaysia, South Korea, Singapore, Taiwan, and Thailand 1965 – 1990: Growth in those countries (6 -7 per cent per annum on average) was faster than all other regions in the world Fast growth in that group of (geographically closed) countries was then attributed to many factors, but most importantly to the following..

Unlike many equally poor countries that followed import-substitution industrialization (ISI), East Asia followed an export-led strategy, and, in particular, the World Bank report suggests: “…the relationship between exports and productivity growth may arise from exports’ role in helping economies adopt and master international best practice technologies. High levels of labor force cognitive skills permit firm-level adoption, adaptation, and mastery of technology. Thus, exports and human capital and human capital interact to provide a rapid pace of productivity growth…” However, in this report there was no explicit attempt to explain the experience of the East Asian miracle in “regional or neighborhood effects”

Interestingly, though, the entire region seems to have drawn earlier to the developed world by prospects of mutually beneficial exchange of goods, capital, and ideas. Now, different parts of East Asia are being pulled towards by the same motives and modes. The result is rapid regional integration in the exchange of goods, capital, and ideas, which rivals those in the European Union and in North America By 2010 more than 95% of the region’s population will be reaching the standards of middle income countries Intraregional trade and investment flows in East Asia have grown faster than its trade and financial links with the rest of the world

2) Convergence clubs in endogenous growth theories In a nutshell: Poor countries that are endowed with good educational systems are not just capable of generating their own ideas (last class), but are also capable of imitating technologies that are invented in rich countries (today’s class). A bit of math should help, but is not compulsory for this course

Now: Poverty has decreased in East Asia

But there is growing concern about income inequality Next class: Acemoglu et al (2006). See course web site