Late developers are nowadays confronted with the problem of having to earn foreign currency to finance structural transformation under extremely unfavourable conditions. The dependency on forex is rooted in the international financial architecture and represents a major pitfall for countries trying to catch up. However, this structural impediment to transformation is not paid much attention to by the dominant development economics.Read More »
Do stronger countries always get what they want in trade negotiations? My new book – 鈥� suggests not. In it, I ask how African, Caribbean and Pacific (ACP) countries were able to extract a series of concessions from the European Union in negotiations for free trade agreements over the last two decades. In doing so, I explore the underlying reasons why power relationships in trade politics are more complex than they appear at first glance. Read More »
叠测听Erik Reinert听补苍诲听Richard Itaman.
At the OECD鈥檚 origin, we find the 1947 Marshall Plan that re-industrialised a war-torn Europe. At the very core of the Marshall Plan was a profound understanding of the relationship between a nation鈥檚 economic structure and its carrying capacity in terms of population density. We argue that it is necessary to rediscover this theoretical understanding now, in the mutual interest of Africa and Europe.Read More »
鈥楾his tendency to Diminishing Returns was the cause of Abraham鈥檚 parting from Lot, and of most of the migrations of which history tells鈥� wrote the founder of neo-classical economics, Alfred Marshall, in the first edition of his textbook (1890). In a footnote he refers to the Bible鈥檚 Genesis xiii : 6: 鈥楢nd the land was not able to bear them that they might dwell together; for their substance was great so they could not dwell together鈥�. (Marshall 1890: 201)
Marshall鈥檚 observation also applies to today鈥檚 migration patterns: from countries where most activities are subject to constant or diminishing returns to countries whose key economic activities are subject to increasing returns to scale. Diminishing returns occur when one factor of production is limited by nature, which means that it occurs in agriculture, mining, and fisheries. Normally the best land, the best ore, and the richest fishing grounds are exploited first, and 鈥� after a point 鈥� the more a country specialises in these activities, the poorer it gets. OECD () shows how this occurs in Chilean copper mining: every ton of copper is produced with a higher cost than the previous ton.
In Alfred Marshall鈥檚 theory, the 鈥楲aw of Diminishing Returns鈥� is juxtaposed with 鈥楾he Law of Increasing Returns鈥�, also called economies of scale. Here we find the opposite phenomenon; the larger the volume of production, the cheaper the next unit of production becomes. Traditionally economies of scale were mainly found in manufacturing industry, and increasing returns combined with technological change has for centuries been the main driving force of economic growth. Increasing returns creates imperfect competition, market power and large barriers to entry for challengers 鈥� companies or nations 鈥� making it difficult for them to enter these industries. In contrast to the rents produced under conditions of increasing returns, raw materials 鈥� commodities 鈥� on the other hand, are subject to perfect markets, and productivity improvements spread as lowered prices. This is the essence of the theory which explains why former World Bank Chief Economist Justin Yifu Lin was correct hen he asserted that 鈥楨xcept for a few oil-exporting countries, no countries have ever gotten rich without industrialization first鈥� ( : 350).Read More »
Uber鈥檚 usual tricks — to provoke price wars in an attempt to increase their share of markets, evade taxes, and undermine workers鈥� rights — are alive and well in Africa.
I have lately been grappling with the question of how African states came into being, not just as political, but especially economic territorial units. Connected to this are questions of how experts, especially economists came to influence and account for what became national economies. At the center of the state, economy and society are critical question of development and welfare. How did independent African countries make sense of their inheritance and what mechanisms did they deploy to transform themselves into coherent nations of multiple but entangled identities with disparate circumstance but common material goals united by the logic of a national economy? As I grappled with these issues, a great new monograph informed by an impressive historiography has arrived. The author grounds his work in an archivally based history of the transformation of the Sudan into an economic unit between the 1940s and the 1960s. 鈥檚 new book: (Cambridge: Cambridge University Press, 2017) is centred on addressing these question using the history of a territory that transformed from being an Anglo-Egyptian Sudan condominium into the independent state of Sudan.Read More »
The recent global financial crisis sparked renewed debates, both within academia and policy-making circles, about regulating highly mobile cross-border money-capital flows. A particular type of policy tool has received considerable attention: capital controls (CC). Within mainstream economics and policy-oriented circles (including policy-makers in central banks, finance ministries, and international organisations such as the IMF and the G20) there has been a growing recognition that unregulated cross-border money-capital flows can considerably disrupt capital accumulation, and debates have accordingly focused on the potential role and effectiveness of temporary CC in limiting the destabilising potential of those flows, while maintaining a long-term commitment to an open capital-account and free capital mobility.[1] By contrast, the Left (including organised labour, progressive economists, and civil society organisations) has been largely critical of capital-account liberalisation, and has denounced its detrimental effects in terms of constraining policy options for development and long-term industrial development.[2]Read More »
This July and August, I led an international group of experts in preparing an Economic Report on the role of the BRICS countries (Brazil, China, India, Russia and South Africa) in the world economy and international development. 聽The was commissioned as an input to the that took place in early September 2017 in Xiamen, China.
It surveys the BRICS countries鈥� sizable contribution to global growth, trade and investment, evaluates the prospects for this to continue in the future, and explores the possible role that these countries can play in bolstering the global economy, in reshaping international economic arrangements and in contributing to the and to international development generally. An important conclusion in the report is that continued BRICS growth as well as policy initiatives can substantially benefit other developing countries (the report uses the IMF category of Emerging Market and Developing Countries, or EMDCs) 鈥� and developed countries too. 聽I will 聽be pleased if the report will be circulated widely, and welcome all reactions.Read More »
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