Archive for September, 2013

Gulf State foreign Politics: What the Media doesn’t pick up

September 15, 2013 Leave a comment

This Syria crisis thing with Hizballah is a good example of other times of gulf foreign policy that doesn’t get picked up on in the formal state-centirc models. Once again Qatar and UAE have stopped giving visas to Lebanese people. UAE on Shi’i Lebanese and Qatar on all of them. KSA stopped accepting Syrian visas. This isn’t the first time and in fact has happened regularly in the past. It’s an interesting form of foreign policy regulation that seems insidious to me.  These states are pumping money to the rebels in Syria and creating refugees there but they don’t man up and take responsibility for these refugees, they don’t house any of them, and they don’t fund them. What a morally corrupt serpentine foreign policy they have.

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Ideas and Researchers as cause of underdevelopment

September 14, 2013 Leave a comment

Reading CI Jones on role of ideas as generating perpetual growth. Handbook of Economic Growth ch16. Ideas are non-rivalrous and therefore have increasing returns to scale. The productivity of ideas per capita does not depend on the number of ideas produced per researcher: “per capita output depends on the total stock of ideas, not on ideas per person.” (1073). More population more ideas more productivity per capita, regardless of population growth, In fact more population growth becomes better. Economists who focus on ideas want the earth to be flooded with people to get most idea output.

Defining ideas as ways of rearranging material inputs to give more output more efficiently. Since every idea increases the output of all the workers, or all the inputs in an economy one may look at the policy of immigration as a form of under-development assuming researches or high capital individuals produce ideas. This model explains why importation of researches from populous countries is the best policy for developed country. Don’t increase your own population, that would divide total productivity by more people. Instead let other countries carry the burden of population increase and just select those individuals that are researches from their economies and insert them into your economy.

So the home economy doesn’t need to increase population, it doesn’t carry the burden of all the non-researchers produced to get a single researcher, or idea. Even though ideally a world economy would let everyone benefit from the ideas of researchers immigrating, in reality barriers to idea flow mean that only particular economies benefit from new ideas, and those economies that capture more ideas will grow faster.

This is very important, another way that international system contributed to underdevelopment, I just wish I could model it.

William Easterly

September 13, 2013 Leave a comment

“The correlation of per capita income in 1960 with per capita income in 1999 is 0.87. Most of countries’ relative performance is explained by the point they had already reached by 1960.”

From Handbook of economic growth 2005. Easterly writes a fantastic chapter casting doubt on the ability of policy to really change economic outcomes. In another paper (1993) he shows the very high correlation between economic position in 1870 and 1987. This means that the economic position of countries today is highly reliant on the economic legacies of the colonial era and that data from 1960 can only tell us so much. That is why studying the period of the 19th century is so important in understanding contemporary economic growth.

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Time is running out

September 12, 2013 Leave a comment

This is a quick one not really developed yet. If we assume that the current stable growth regime cannot be permanent as economists assume, then the continuous growth rate of 2% on average over the last hundred years will not be sustained. Perhaps this will coincide with the end of cheap oil, perhaps with other limits, but we cannot assume growth per capita to continue like this. Given that assumption, the current international trade regime is creating permanent structural imbalances. The economic growth from developed economies goes to increasing per capita income and in theory increasing human capital. The economic growth in third world economies goes to a large degree to population growth. (Or at least has gone till the 1970s) This means that this limited era of continuous growth will leave the developed countries at a steady stay of per capita which is permanently much higher than third world countries. I do not think that the lack of investment in human capital is an accident, it is a product of the system built on core-periphery dynamics in which peripheries under colonialism were deindustrialized and integrated into an economy centered on the colonial metropole. All of this means that time is ruunning out, the sooner the third world economies switch to human capital and productivity gains enhancement the better. THere is only a limited time to raise GDP per capita before the end of the steady growth regime  or era and when it comes all states better be as high up on that productivity frontier as they can.

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Blaming Unit versus System

September 4, 2013 Leave a comment

James Gelvin in “American Global Economic Policy and Civil Order in the ME” makes a compelling account of the transformations that occurred from WW2, through to the 1970s till today. He shows how three periods define the PE of the world, embedded liberalism after WW2 where capitalism based on national control with development as an aim were the components, then a third world rejection because of the observed increased divergence between the third and industrial countries. The NIEO proposed by the third world along with OPEC would make commodity exports worth more. and then a final period of aggressive pushback from the US in the neoliberal washington consensus mode. Not clear if there is a new global syste in place now, probably not.

3 periods: 1944-1971: International system conducive to national developmentalism. 1971-1980: South deployed power derived from nationalism to challenge the system. 1980-present: Reinvigorated system vanquished economic nationalism in the south.

What is interesting about his account is the focus on who the different actors blamed for the failure of the modernization thesis to come through. Note that both the newly independent states and the industrial states believed in the Modernization thesis.  But where Europe and US placed the blame on failure on national policy, corrupt states, an enamorment with a paradigm of development that was wrong. The third world states saw the problem in the economic system itself that produced similar patterns all over the world. Third world states did not want to take the blame themselves obviously where industrialized states wanted a system that worked for them and designed by them to keep working.

Similarly in Iraq in another text by Hazbun we find the US blaming the fact that IRaq did not turn into a role model for the region on the local Iraqi “Natural” characteristics like Sectarianism and tribalism rather than on the plan of the invasion of Iraq and subsequent policies.

On another note, Gelvin interestingly argues that the deal struck after WW2 that was wholeheartedly embraced by all at firs led to civic orders based on a bargain where people obeyed the state as it provided welfare on a European model. He shows how this bargain or order fell apart slowly in the 80s and coincided with protests. This is an important factor considering what is happening today with the different revolutions.

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Have protests been stable over the years?

September 3, 2013 Leave a comment

This article links to the study on the number of global protests in the world. This is based on a database of news mentions of protests. The PHD student suggests that increased protests is a sign of increased coverage as media technology developed.

In parallel I am reading: James Gelvin on the Political Economy of the ME. In it he lists how the civic order that enshrined stability for the 1950s and 1960s unravelled in 1970s as US pushed back against 3rd world system reform and broke down in the 1980s as IMF structural adjustment came in. He has a list of protests caused by IMF adjustment: (IMF riots in Egypt 1977, Turkey 1980-2000, Morocco 1984, Sudan 1982-1985, Algeria 1988, Jordan 1989-1996, Lebanon 1987.) So maybe the increase in protests could be the pangs of a shifting system. In this light the riotous 70s (which the data shows were not that unique anyway) are just the pains of switching to a new system and we have now settled into it. Perhaps not in the Arab world where there is a delayed adjustment.


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Average Working hours in the past

September 2, 2013 Leave a comment

Finally found a good source that confirms what I had read before about work hours in the past.

The link describes how Capitalism increased the average number of hours worked by wage earners and as starkly contrasted to the 3 day work week equivalent of the past. Maybe increase in production of capitalism could be explained simply by extended working hours put into place. Also it suggests something about the amount of work humans had done “naturally”. This research is only on European peasants, but I suspect similar findings on rural populations in the Arab world as well. Not so sure about the urban inhabitants.

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