1. Chapter 3 Economic Development in Historical Perspective
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2. Economic Development in Historical Perspective
Evolutionary Biological Approach
World Leaders in GDP per cap.,
International Spreads GDP per cap,
Beginnings of Modern Economic Growth
Why Capitalism First Successful in West
Economic Modernization in Non-Western World
Growth in the Last Years
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3. Diamond’s Evolutionary Approach to Development
Domesticated animals & plant species
East-West axis – same climate & ecological zones, innovations transmitted
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7. Why was capitalism first successful in the West?
Breakdown authority of medieval Roman Catholic Church, together with Protestant Reformation of the 16th & 17th centuries.
Rise of strong national states between 16th & 19th century
Enlightenment 17th & 18th century Europe, with scientific discoveries.
Liberalism advocating self-regulating market.
Political revolutions in England, Holland, & France.
Prodigious capital accumulation in 16th & 17th centuries, with flow of gold & silver from the Americas.
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8. Economic modernization in the non-Western world (pp. 61-74)
Japanese development model
Korean-Taiwanese model
Stalinist (Soviet) model
Indian adaptation of Soviet model
China’s market socialism
Lessons from non-Western models
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9. Japanese development model
Economic autonomy
Guided capitalism, selling industrial properties to business people
Gradualism
Land tax
Technological borrowing & improvement
High educational standards
Market exchange rates
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10. End of Japan’s economic miracle
Exhausted benefits from internal & external economies, learning by doing, & catch-up
Industrial policy encouraged cartelization
Keiretsu-laden banking system had high bad debts ration
Iron Triangle of politicians, bureaucracy, & big business more incestuous
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11. Korean-Taiwanese model
Guided capitalism, building infrastructure, tax incentives, subsidized export credit
Investment in education
High quality of economic management
Contested markets
Market-clearing exchange rates
High educational standards
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12. Stalinist development model
Transfer collective agriculture to state-owned industry
Communist Party & planners in command
High rates of investment in capital goods
High rates of capital formation, labor force participation & education but no emphasis on technological change
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13. China’s Market Socialism
Socialism with Chinese characteristics
Step-by-step changes
Household responsibility system in agriculture
Private & town-village enterprises increase share relative to state
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15. The Golden Age of Growth
After 1820, fastest growth in last
half of the 20th century,
especially
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16. Fig. 3-3. GDP p.c. by Region (1995 US$) (Rodrik 2004)
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17. The Convergence Controversy
Figure 3-4 shows rich countries growing faster than poor countries, divergence “big time” over the long run, 1870 to 1990.
Figure 3-5 shows country divergence over the short run, 1980 to 2000.
However, population-weighted Figure 3-6, in which China and India loom large, shows convergence between rich and poor individuals.
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