{"id":435073,"date":"2018-05-05T22:10:30","date_gmt":"2018-05-05T22:10:30","guid":{"rendered":"https:\/\/essaypaper.org\/explain-five-ways-that-the-world-is-globalising-plus-first-and-second-waves\/"},"modified":"2018-10-24T09:03:52","modified_gmt":"2018-10-24T09:03:52","slug":"explain-five-ways-that-the-world-is-globalising-plus-first-and-second-waves","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/explain-five-ways-that-the-world-is-globalising-plus-first-and-second-waves\/","title":{"rendered":"Explain five ways that the world is globalising, plus \u201cfirst\u201d and \u201csecond\u201d waves."},"content":{"rendered":"
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How do researchers attempt to untangle the factors that contribute to economic growth and development?<\/h6>\n

May 5, 2018<\/span><\/p>\n

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What should the government do if the price as determined by the free market for essentials like housing and food, if the free market price is too high for many people to afford?<\/h6>\n

May 5, 2018<\/span><\/p>\n

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Week 2: The process of development, why simplifying a complex process of development is useful, and how is evidence used to support\/contradict theories of growth?<\/p>\n<\/div>\n

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Course objective<\/p>\n

Provide you with a set of historical facts to provide context to debates about growth and globalisation.<\/p>\n

Learn some of the core and contemporary theories and learn the \u201clanguage of economics\u201d. This will help you when conducting your own research.<\/p>\n

Foster a critical mindset about how to interrogate theories and evidence for\/against them, and an appreciation of details!<\/p>\n

Simulate an interest in economics.<\/p>\n<\/div>\n

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Recap<\/p>\n

Malthusian trap<\/p>\n

GDP invented \u2013 correlates with many \u201cwell-being\u201d measures<\/p>\n

Use of Log transformation for charts \u2013 what does it do?<\/p>\n

Five ways that the world is globalising, plus \u201cfirst\u201d and \u201csecond\u201d waves.<\/p>\n

Convergence not the norm, hence the interest in Asian tigers<\/p>\n

Global inequality pattern \u2013 elephant chart<\/p>\n<\/div>\n

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What now?<\/p>\n

Why is it useful to simplify a complex process of development with simple theories?<\/p>\n

How is evidence gathered to support\/contradict theories of growth?<\/p>\n

Ultimately seek to be able to create informed policy to get what we want in terms of growth, well-being and international trade outcomes.<\/p>\n<\/div>\n

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No shortage of candidate explanations. Are there other \u2018factors\u2019 or \u2018causes\u2019 of growth and development people have heard?<\/p>\n<\/div>\n

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Proximate cause: Because the ship failed to change course to avoid it.<\/p>\n

Ultimate cause: Because the ship was under autopilot and the autopilot\u2019s data was inaccurate.<\/p>\n

(even stronger): Because the shipwrights made mistakes in the ship\u2019s construction.<\/p>\n

(stronger yet): Because the scheduling of labor at the shipyard allows for very little rest.<\/p>\n

(in absurdum): Because the shipyard\u2019s owners have very small profit margins in an ever-shrinking market.<\/p>\n

Why did the ship hit the rock?<\/p>\n<\/div>\n

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Ultimate causality<\/p>\n

Some ultimate reason for biological existence<\/p>\n

Geography lent itself to domestication of plants\/animals by humans leading to larger tribes (Jared Diamond)<\/p>\n

War selected better organised tribes and those with better war technology (Peter Turchin + Jared Diamond)<\/p>\n

Winner are those with better \u201cinstitutions\u201d and \u201ctechnology\u201d<\/p>\n

Repeat.<\/p>\n<\/div>\n

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Society is complex<\/p>\n

Societies are the emergent outcomes many individual interactions and feedback loops arising from them.<\/p>\n

They are not linear.<\/p>\n

We have to accept that many factors could lead to growth, and that each will apply in particular circumstances.<\/p>\n

Some factors can independently help (substitutes), others work in conjunction (complements \u2013 one only works with the other).<\/p>\n<\/div>\n

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Examples of substitute and complementary policies \u2013<\/p>\n<\/div>\n

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Complementarities<\/p>\n

For example, if there is no road access to a village, then people can\u2019t travel to access healthcare, teachers can\u2019t get to schools in order to teach and farmers can\u2019t get their goods to market.<\/p>\n

Improving the clinic in the nearby town, or paying teachers extra to show up on time, or creating a mobile phone price information system, has little impact, because of the constraints of the existing infrastructure.<\/p>\n

On the other hand, building the road doesn\u2019t, in itself, improve the clinic, change incentives for teachers, or resolve agricultural market failures.<\/p>\n

http:\/\/www.fight-entropy.com\/2011\/07\/complementarity-in-economic-development.html<\/p>\n<\/div>\n

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Example<\/p>\n

We think that education independently causes growth. In other words, in the absence of any other change made, a region that increases education inputs has higher overall growth.<\/p>\n

It\u2019s a plausible story. Smarter people are better able to invent new and more productive ways of doing things and are able to make better use of capital (like computers, vehicles, machines, etc). Focussed input has broad output.<\/p>\n

How do you know if simply adding more \u2018education\u2019 into a country\/region works?<\/p>\n<\/div>\n

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Untrained workforce<\/p>\n

Lack of education<\/p>\n

Economic decline<\/p>\n

Low investment and productivity<\/p>\n

More skilled workforce<\/p>\n

More education<\/p>\n

Economic improvement<\/p>\n

Higher investment and productivity<\/p>\n

From this<\/p>\n

To this<\/p>\n

But still not really clear?<\/p>\n<\/div>\n

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A thought experiment<\/p>\n

The highly educated German people (83mill) move to West Bengal, while the West Bengalese (92mill) move to Germany.<\/p>\n

Will this radically increase GDP in West Bengal and lower it in Germany because of the transfer of \u201chuman capital\u201d?<\/p>\n

Germany GDP per capita is 30x that of West Bengal.<\/p>\n

Alternatively, add even more doctors and engineers to Cuba.<\/p>\n<\/div>\n

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Causality<\/p>\n

Actually a really tricky concept.<\/p>\n

Proximate causes seem easy to identify. For example, more teachers and schools, plus compulsory schooling, lead to more education.<\/p>\n

But what causes more teachers and a public policy decision to make schooling compulsory?<\/p>\n

And so on\u2026<\/p>\n<\/div>\n

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Untrained workforce<\/p>\n

Lack of education<\/p>\n

No funds for school<\/p>\n

Economic decline<\/p>\n

Low household incomes<\/p>\n

Low investment and productivity<\/p>\n<\/div>\n

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Skilled workforce<\/p>\n

Increased education<\/p>\n

Pressure to fund public schools<\/p>\n

Economic growth<\/p>\n

Payoff to schooling<\/p>\n

High investment<\/p>\n

and productivity<\/p>\n

High returns<\/p>\n

to investment<\/p>\n

More capital<\/p>\n

investment<\/p>\n

Economies of<\/p>\n

scale<\/p>\n

Competitive<\/p>\n

exports<\/p>\n<\/div>\n

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Skilled workforce<\/p>\n

Increased education<\/p>\n

Economic growth<\/p>\n

High payoff<\/p>\n

to schooling<\/p>\n

High investment<\/p>\n

and productivity<\/p>\n

High returns<\/p>\n

to investment<\/p>\n

More capital<\/p>\n

investment<\/p>\n

Economies of<\/p>\n

scale<\/p>\n

Competitive<\/p>\n

exports<\/p>\n

Depress<\/p>\n

exchange rate<\/p>\n

Subsidise desirable<\/p>\n

investments<\/p>\n

Use public agency<\/p>\n

to make desirable<\/p>\n

investments<\/p>\n

Create public<\/p>\n

school system<\/p>\n<\/div>\n

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How to untangle<\/p>\n

Seems like at first glance that doing what rich countries do in any loop will work. But the question is what constraint is binding?<\/p>\n

Your car engine is not starting. It needs fuel, air, and heat for combustions. If you have fuel and air, but no heat, the heat is the binding constraint \u2013 adding more of the other \u201cingredients\u201d won\u2019t help!<\/p>\n

Finding the binding constraint for different regions and addressing that first is the basis of Hausman, Rodrik, Velasco\u2019s \u201cGrowth Diagnostics\u201d approach. No \u201cone size fits all\u201d<\/p>\n

http:\/\/siteresources.worldbank.org\/INTDEBTDEPT\/Resources\/468980-1218567884549\/mindbook.pdf<\/p>\n<\/div>\n

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Traditional Methods<\/p>\n

Cross-country panels Take longitudinal data from a number of countries\/regions, and look to find the common patterns that correlate with high growth, controlling for as many other factors as possible.<\/p>\n

Growth accounting Decomposes growth in terms of the amounts contributed by the accumulation of physical capital of various sorts, human capital of different kinds and labor (talk more in Wk 4). More limited for practical use.<\/p>\n<\/div>\n

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Example<\/p>\n

Barro, R. (2003). Determinants of Economic Growth in a Panel of Countries. Annals of Economics and Finance. 4, 231\u2013274<\/p>\n

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What about number of years as open economy? Could that be spurious and simply catch the already rich countries which growth faster except in rare cases of convergence?<\/p>\n

Likelihood of GDP in mining being above 95% depends on weighting the summation of likelihood distributions.<\/p>\n<\/div>\n

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http:\/\/www.ecostat.unical.it\/aiello\/didattica\/economia_Crescita\/CRESCITA\/CRESCITA_Sala-i-Martin-AER-1997.pdf<\/p>\n

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Magic happens<\/p>\n

More Confucians, Buddhists,<\/p>\n

Catholics, or Protestants?<\/p>\n

Economic growth<\/p>\n

Social stability<\/p>\n

High returns<\/p>\n

to investment<\/p>\n

More capital<\/p>\n

investment<\/p>\n

Don\u2019t export<\/p>\n

primary products<\/p>\n

Something?<\/p>\n

No financial<\/p>\n

sophistication measure<\/p>\n

No education measure<\/p>\n

No scale effects<\/p>\n

(population growth weak<\/p>\n

-ve correlation)<\/p>\n<\/div>\n

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Growth accounting<\/p>\n

The contribution of a factor to total growth is its rate of growth weighted by the share of national income accruing to that factor.<\/p>\n

Has a history in traditional economic theories of \u201cland, labour, capital\u201d, and a data gathering method developed in National Accounting systems.<\/p>\n<\/div>\n

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Y = A f(K, L, Z)<\/p>\n

%\u2206A = %\u2206Y \u2014 (capital share x %\u2206K) \u2014 (labour share x %\u2206L) \u2014<\/p>\n

(other factor share x %\u2206Z)<\/p>\n

A is the residual (often called technology, but is everything non-labour, capital, or land)<\/p>\n<\/div>\n

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Example<\/p>\n\n\n\n\n\n\n\n\n
Growth<\/td>\nFactor Share<\/td>\n<\/tr>\n
Land<\/td>\n1%<\/td>\n10%<\/td>\n<\/tr>\n
Labour<\/td>\n2%<\/td>\n60%<\/td>\n<\/tr>\n
Capital<\/td>\n2%<\/td>\n20%<\/td>\n<\/tr>\n
Output (GDP)<\/td>\n3%<\/td>\n\n<\/tr>\n<\/tbody>\n<\/table>\n

How much of total growth is caused by<\/p>\n

Increase in labour<\/p>\n

Increase in capital<\/p>\n

Multifactor productivity?<\/p>\n<\/div>\n

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Better methods<\/p>\n

Natural experiments Use naturally occurring randomisation to test for the marginal impact of certain policies.<\/p>\n

Randomised controlled trials (RCTs) Implement a policy with a random component to create an identifiable and traceable treatment and control group.<\/p>\n

Case studies In depth analysis of finer details of policy implementation in certain regions to help tease apart mechanisms of effect.<\/p>\n<\/div>\n

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Natural experiments<\/p>\n

\u201cSince many vouchers were awarded by lottery, we use a quasi-experimental research design comparing educational and other outcomes of lottery winners and losers.\u201d<\/p>\n

\u201cLottery winners scored just over 0.2 standard deviations more than lottery losers, though this difference is (not surprisingly, given the small test sample) only marginally significant.\u201d<\/p>\n

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Follow up test was 3yrs after the program.<\/p>\n

How would you critically analyse this in terms of development? Sure, you can improve relative test scores, but not everyone can be high paid.<\/p>\n<\/div>\n

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RCTs<\/p>\n

Help decipher effects in small parts of the big causal picture.<\/p>\n

Also called \u201cfield experiment\u201d. Usually done in poorer countries.<\/p>\n

\u201cThe reform changed the traditional fund ow practice by instead conditioning fund disbursement for wage payments on incurred expenditure as re ected in worker detail entry on a new electronic platform. This reform reduced the number of administrative tiers associated with wage disbursement and changed the informational requirements for requesting and disbursing program funds. We nd that program expenditure and reported employment declined by 25%, but with no discernible impact on actual employment as measured by independent surveys.\u201d<\/p>\n<\/div>\n

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https:\/\/economics.mit.edu\/files\/10565<\/p>\n

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Case studies<\/p>\n

Japanese institutional reforms after WWII that led to one of the largest reductions in inequality in human history.<\/p>\n

In week 8 we will read this case.<\/p>\n

Case studies help to unpick some of the proximate causes, then compare them between cases to look for commonalities.<\/p>\n

https:\/\/press.princeton.edu\/titles\/10921.html<\/p>\n<\/div>\n

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Limits of evidence<\/p>\n

RCTs can\u2019t really help understand the effect of public goods, since they are non-excludable.<\/p>\n

Failure of RCT does not help to understand why it failed, nor does the success help understand why it worked (and how translatable it is to other circumstances)<\/p>\n

Mix of evidence of different types provides more confidence about the reality of a relationship, particularly a causal one.<\/p>\n<\/div>\n

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How to approach evidence critically<\/p>\n

What evidence do they have?<\/p>\n

Are they making claims of causality?<\/p>\n

Is there a plausible alternative explanation? (Does it pass the \u201csniff test\u201d?)<\/p>\n

How complete is the mechanism it describes?<\/p>\n<\/div>\n

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Example<\/p>\n

Export promotion programs \u2014 do they help a country to increase economic growth through \u201cexport discipline\u201d?<\/p>\n

\u201cwe partnered with a US-based non-governmental organization (NGO) and an Egyptian intermediary to secure export orders from foreign buyers through trade fairs and direct marketing channels.\u201d<\/p>\n

http:\/\/cdep.sipa.columbia.edu\/sites\/default\/files\/cdep\/WP%2023%20-%20Atkin.pdf<\/p>\n<\/div>\n

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Evidence<\/p>\n

RCT with rug manufacturers in Egypt. Treatment encouraged take up of export orders.<\/p>\n

\u201cwe asked all firms in our sample to manufacture an identical domestic rug using identical inputs and a common loom in a workshop that we leased (a \u201cquality lab\u201d). The rugs that treatment firms produce received higher scores along every qual- ity metric and were more accurate in terms of the desired size and weight; moreover, treatment firms do not take longer to produce these rugs despite their higher levels of quality.\u201d<\/p>\n<\/div>\n

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Causality<\/p>\n

Claim causal chain is: Exposure to export markets -> Discipline in quality and price -> Learning -> More profits<\/p>\n

Research also finds that there is no \u201cspillover\u201d of skills from exporters to other rug makers, as their quality does not improve.<\/p>\n<\/div>\n

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Sniff test<\/p>\n

Did the exporters just get more orders then hire the best staff from other firms?<\/p>\n

Were they always able to make better rugs but didn\u2019t because they did not have high-price buyers?<\/p>\n<\/div>\n

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Mechanism<\/p>\n

Claim concerns \u201clearning by doing\u201d with the mechanisms identified involving feedback from more discerning international buyers.<\/p>\n

Increasing output might involve some scale effects.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

\u00a0<\/p>\n

“PLACE THIS ORDER OR A SIMILAR ORDER WITH BRAINY TERM PAPERS AND GET AN AMAZING DISCOUNT”<\/h4>\n

\"\"<\/p>\n

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Like this:<\/h3>\n

Like<\/span><\/span> Loading…<\/span><\/p>\n

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How do researchers attempt to untangle the factors that contribute to economic growth and development? May 5, 2018 What should the government do if the price as determined by the free market for essentials like housing and food, if the Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[144,16,145,146],"tags":[],"class_list":["post-435073","post","type-post","status-publish","format-standard","hentry","category-academic-papers","category-academic-writing","category-academic-writing-service","category-academy-management-assignment-help"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/435073","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=435073"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/435073\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=435073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=435073"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=435073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}