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Economy South and Southeast summary lecture 1-6
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Economy South and Southeast summary lecture 1-6
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Economy SSEAOctober 21, 2021: No class
October 28, 2021: Midterm exam
Textbooks and Readings
For data, we expect students to be able to use:
Our World in Data from University of Oxford and the Global Change Data Lab.
The World Development Indicators from the World Bank.
The Penn World Table from University of Groningen.
Economist Intelligence Unit Country Profile and Report. Available from Leiden Library
Database access. You need to go and sign in to your Leiden library account first –
then go to the E-journal list.
Lecture 1
Readings:
Smith, Noah. 2021. Bangladesh is the New Asian Tiger
Basu, Kaushik, 2021. Bangladesh at 50
GDP: The GDP is the total of all value added created in an economy. The value added
means the value of goods and services that have been produced minus the value of the goods
and services needed to produce them, the so called intermediate consumption. productive
capacity don’t care about inflation
,Lecture 2
Readings:
**Bank, Asian Development. 2020. Asia’s Journey to Prosperity: Policy, Market, and
Tech- nology Over 50 Years. Asian Development Bank. URL
https://dx.doi.org/10.22617/ TCS190290. Chapter 1.
It summarizes underlying factors that can explain Asia’s development performance, as well as
the large variations across the region and time periods. In particular, the book focuses on the
role of policy, market, and technology in promoting structural transformation, human capital
development, trade and investment, infrastructure, macroeconomic stability, poverty
reduction, gender equality, environmental sustainability, development finance, and regional
cooperation and integration.
Developing Asia’s phenomenal growth has been accompanied by a dramatic
structural transformation. In the 1960s, more than two-thirds of the labor force
was employed in subsistence agriculture. Today, more than 65% work in industry
and services—and 85%–95% in some economies (such as Kazakhstan; Malaysia;
the ROK; and Taipei,China). As one of the most open regions in the world,
developing Asia accounted for 30.7% of global exports and 29.3% of global
imports, and attracted 35.9% of global inward foreign direct investment (FDI) in
2018.
Substantial investment in transport and energy has significantly improved its
infrastructure. Developing Asia’s electrification rate has reached 90%. The region
now operates three-quarters of the global high-speed rail network. Technological
progress, especially advances in information and communication technology
(ICT), has fueled the growth of developing Asia’s high value-added service
industries in recent years. The region is now home to many global e-commerce
and tech giants.
Despite the success, developing Asia still faces many challenges, as discussed in
section 1.5. Priority areas that governments should tackle include persistent
poverty; increasing income inequality; remaining large gender gaps;
environmental degradation and climate change; and access to education, health
services, electricity, and safe drinking water. There is no room for complacency.
This book argues that Asia’s postwar economic success owes much to creating
better policies and institutions. These policies and institutions helped develop
and nurture market economies and a vibrant private sector which, in turn, led to
sustained technological adoption and innovation. This process benefited from
governments’ (i) pragmatism in making policy choices, including the practice of
testing or piloting major policy changes before full-scale implementation; (ii)
ability to learn lessons from its own and others’ achievements and mistakes; and
(iii) decisiveness in introducing (sometimes drastic) reforms when needed.
The policies pursued in Asia that led to the region’s rapid economic growth,
poverty reduction, and broader development achievements are not so different
from those prescribed by the Washington Consensus. They were also in line with
standard economic theories. These include trade theory that predicts gains from
trade when countries produce and export goods and services where they have
, comparative advantage; public economics that sees the need for governments to
address externalities, provide public goods, and correct market distortions arising
from imperfect competition including natural monopolies; theories related to
information asymmetry, agglomeration and economies of scale, and coordination
problems; and new institutional economics that highlights the importance of
institutions and governance.
The state is needed to establish strong institutions, intervene where markets fail
to work efficiently, and promote social equity. Strong institutions ensure orderly
functioning of markets and accountability of the state.
The role of markets and the state has been shaped by changes in development thinking.
Since the 1980s, there has been growing recognition in development thinking
that the quality of governance and institutions matters. In recent years,
developing Asia has intensified efforts to strengthen government effectiveness,
regulatory quality, the rule of law, and anticorruption policy. These have been
complemented by increased efforts to promote transparency and accountability,
and widen citizen participation.
Asia’s rapid structural transformation was a key element to its postwar economic
success. Most economies followed the experience of high- income countries:
agriculture’s share of output and employment declines as industry’s share grows,
followed by “deindustrialization” as services become dominant
In its early stage of development, the region’s success was primarily based on
effective resource mobilization. Subsequently, it began to rely more on
technological progress and efficiency gains—also known as “total factor
productivity” growth.
Asian governments made significant efforts to (i) strengthen education and
create a growing pool of engineers, scientists, and researchers; (ii) build national
innovation systems that include research institutions, national laboratories, and
science parks; (iii) introduce legal and institutional frameworks including an
intellectual property regime; (iv) support private sector R&D including through
tax incentives; (v) invest in ICT infrastructure such as high-speed broadband and
mobile networks; and (vi) create a competitive market environment to stimulate
innovation.
Asia’s success in building human capital has been a key contributor to rapid
growth and transformation. It also led to better well-being of Asian people.
Developing Asia’s initially high fertility rates, decreasing mortality across all ages,
and increased life expectancy led to rapid population growth and a rising share of
the working-age population.
Large investment in infrastructure, financed by both public and private resources,
has been one of the most important characteristics of fast- growing Asian
economies.
Asia’s economic success during much of the past half century has come at the
expense of the environment—under an approach of “growth first, cleanup later.”
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