Comments on: Elusive Gains

By: Roger Sweeny

Roger Sweeny — Thu, 01 Jan 1970 00:00:00 +0000

The study seems to be saying that no matter how much you eat, it won’t do you much good if your metabolism can’t do much with the nutrients.

By: R Wood

R Wood — Thu, 01 Jan 1970 00:00:00 +0000

A very quick review of the paper suggests that its conclusions are what anyone who’s lived in a developing (more precisely, an underdeveloped) country would say: the drag of an inefficient political economy is a much greater factor than is the benefit of increased access to foreign capital.

Further research needs to focus on questions such as the following:

How productive is the population? (e.g., poor health, low levels of education, a culture that is not oriented toward modern operations)

How much does the government detract from efficiency? (e.g., red tape, corruption, misallocations due to statist investment decisions, insecure contract and property rights, and tax disincentives)

Although the report’s main conclusion was not particularly surprising, a rather startling statement appears on page 24: “On the basis of our sample, we can identify eight countries that closed more [than?] 30 percent of their productivity gap with the U.S. between 1960 and 1995…. The list includes Korea, Botswana, Barbados, Isreal, Cyprus, Mauritius, Hong Kong and Singapore.”

Botswana Even allowing that it probably started from a very low base, making a productivity catch-up easier, how often do we hear of an economic success story in sub-Saharan Africa. Good for them!

By: dsquared

dsquared — Thu, 01 Jan 1970 00:00:00 +0000

Well done Botswana indeed, although its development model (“discover diamonds”) may not be replicable elsewhere.

By: Damien Smith

Damien Smith — Thu, 01 Jan 1970 00:00:00 +0000

This is not new. THe IMF had a report saying the same thing back in March. Click here:

http://www.imf.org/external/np/res/docs/2003/031703.htm

By: zizka

zizka — Thu, 01 Jan 1970 00:00:00 +0000

Botswana aside, Barbados, Cyprus, Mauritius, Hong Kong and Singapore are all small or tiny countries seemingly reliant mostly on entrepot trade and offshore banking. Singapore and Hong Kong are trade cities whose hinterlands are in different political jusrisdictions.

Korea, like some of the other success stories of the last half century (Japan, Taiwan) developed under a protectionist regime and had a very favorable relationaship with the US based on a miltary alliance.

I don’t know anything about Cyprus.

By: Kieran Healy

Kieran Healy — Thu, 01 Jan 1970 00:00:00 +0000

Damien,

the second author on the paper is an economist in the IMF’s research department. The report you’re talking about was co-authord by the head of that department (Ken Rogoff) and cites the Gourinchas and Jeanne paper.

By: Crooked Timber

Crooked Timber — Thu, 01 Jan 1970 00:00:00 +0000

Capital Mobility

Daniel’s post on the Cancun trade talks explains that their failure was rooted in disagreement about restrictions on foreign investment and capital controls. This reminds me that it’s time you all re-read Pierre-Olivier Gourinchas and Olivi…

By: Crooked Timber

Crooked Timber — Thu, 01 Jan 1970 00:00:00 +0000

Capital Mobility