Essay on "Growth and Development"
Essay 5 pages (2024 words) Sources: 5 Style: APA
[EXCERPT] . . . .
nation's economic development can depend on many things. One school of thought has argued that geographical factors -- meaning temperate or tropical location, supply of ready labor, level of available natural resources -- are key considerations (Sachs, 2001). This argument makes sense, except when applied to Africa, where countries have the lowest per capita GDP in the world, despite having abundant resources in a variety of locales. Another school of thought places emphasis on the production function (Sharma, 2007) -- meaning the availability, use, and interaction of technology and human capital. This argument fails when applied to nations in Latin America which have grown more quickly than their embrace of technology and improvement of capital alone seems to justify. A third argument gives primacy to institutions -- specifically those which allow for incentives and security that support production and investment. This argument seems well-favored, as it points to a simple, central tenet of economic development: "when investors believe their property rights are protected, the economy ends up richer" (Rodrik, Subramanian, and Trebbi, 2002, p. 152). Robinson, among others, argues credibly that "The most convincing theory of comparative economic development asserts that it is institutions -- the way societies are organized -- that are the fundamental cause of countries' development or underdevelopment" (510). However, if it is true that "institutions rule" (Rodrik, Subramanian, and Trebbi, 2002) what impacts those institutions?This paper argues that the colonial legacy of the European powers plays a crucial role in determining the institutional circumstances and the consequent productive growth of de
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veloping economies. Through a consideration of the colonial legacy in the developing economies of Asia, Latin America, and Africa, an argument will be presented that current day per capita GDP in the nations in those regions is largely a result of institutional structures left behind as part of that colonial legacy. If such a case can be argued successfully, it should lend credibility to the already-building case in the research literature that before developing countries can grow through infusions of capital and integration into the world economy, attention must be paid to political and social structures which are in place.download full paper ⤓
Colonialism and Its Lasting Institutional Impact
In this section a variety of studies which show how colonialism resulted in different institutional legacies will be reviewed in an effort to lay the groundwork for the analysis to come.
Acemoglu, Johnson, and Robinson (2002) review 500 years of history, from the 1500s to the 20th century to show how the European powers' colonizing efforts took different approaches in places as diverse as (what are now called) the Indian subcontinent, Latin America, and North America. They argue, specifically, that in places where there were already well-established economic and political institutions in well-populated areas (such as in India and Latin America), the European powers concerned themselves only with bringing in enough force and administration to set up extractive operations. Europeans relied on forced labor and local infrastructures in such cases in order to expropriate the natural resources they sought. In North American colonies and Australia, on the other hand, the Europeans established integrated institutions and infrastructure programs to obtain resources because the societies they found in these areas were less densely populated and more loosely organized. The result of these different institutional approaches was a "reversal of fortune" between the regions affected, with North American and Australian colonies found poorer when colonialism began but richer in later development after having benefited from institutions left behind, while India and Latin America were richer when colonies were established, but took longer to build institutions suitable for economic take off once the colonizers left. In a study with a similar thesis, Acemoglu, Johnson, and Robinson (2001) argue that in places where Europeans faced higher mortality rates, such as equatorial Africa, they established merely extractive operations and institutions, while in North America and elsewhere they established institutions built around the rule of law because they expected to settle there longer, with a result having the same effects. The point of both of these studies is that those former colonies which were administered with merely extractive intentions -- such as those found in Latin America and Africa -- did not benefit from the establishment of institutional and infrastructural development on the part of the colonizers, a result which may well have depressed later opportunities for economic growth.
Banerjee and Iyer (2002) use a different analysis framework to consider the institutional legacy of colonialism. They review data from the British colony in India to determine where the institutional structures left behind by the British seemed to work toward growth and where they failed. They found that in those areas where power was concentrated in the hands of a minority elite landlord class, growth remained slow for decades after the British left. However, in those areas where the people who cultivated the land were given more power, growth was faster to take off. Angeles (2007) offered a similar analysis to show that in those colonies where there was significant European settlement in the colonized territories such as across Latin America, a legacy of lasting inequality resulted due to concentration of power and land in the hands of those who remained behind when the colonizers left. Where there were few European settlers relative to the local population, as in many Asian colonies, the land rights tended to stay in the hands of the local population and inequalities were not as great. Engerman and Sokoloff (2005) found that where such inequalities were established early in the independent life of formerly colonized nations, they had persistent effects in restricting access to the resources and economic opportunities that were necessary to drive investment and growth.
A final type of analysis reviewed here suggested that in those regions where the British were the primary colonizers, the institutional legacies were more conducive to growth and development than in those colonies belonging to other European powers. This thesis was supported by a study conducted by Lee and Shulz (n.d.), which found that in sections of Cameroon formerly ruled by the French, growth was limited as a result of that nation's colonial institutional conditioning while in the section formerly ruled by the British, growth was faster. A supportive study was conducted by Lange (2003) who found that in colonies where the British ruled directly, ultimate growth was greater than in those where British rule was indirect. The explanation for this seems to be that the British emphasized the rule of law, land-ownership rights, and other institutional factors which were more conductive to growth than the merely exploitative values held by other colonizers. While these studies point out that this effect can be complicated by a number of other factors, such as post-colonial policy, the important consideration here is that the institutional legacy of the British -- characterized in its best form by the protection of land rights and its emphasis on the rule of law, political checks and balances, and the like -- left an impact on the colonies formerly under its rule that was either more or less conducive to growth depending on the extent to which it adhered to the best ideals of those institutional goals.
Current Day GDP and the link to Colonialism's Institutional Legacy
In the previous section, the literature was reviewed to show that European colonialism has had a lasting legacy characterized, at least in part, by an extractive philosophy in Africa and Latin America that destroyed pre-colonial institutions while preventing establishment of beneficial new ones. Additionally, the literature shows that where power is concentrated in the hands of a few, such as in India and Latin America, inequalities restrict economic growth and opportunity. Finally, in places where the better values espoused by the British, including the rule of law and property rights were more directly enforced, growth should be greater. For the remainder of this paper, a consideration of the three regions which are the subject of this paper will be made to determine if their GDPpc corresponds with expectations generated by this analysis. Economic Data and commentary are taken from the CIA World Factbook and World Bank regional briefs.
Africa. Of the 40 countries in the world with the lowest per capita GDP, 30 are located on the continent of Africa. They include even resource rich nations such as Burundi, Uganda and Ghana. The annual per capita GDP of these least-developed nations range from $200 in Zimbabwe to $1,700 in Cote D'Ivoire. Development is restricted by the lack of institutional stability and enforceable property rights, among other factors. The World Bank makes a telling analysis of the region in pointing that growth in the past decade was driven by increases in commodity prices, and that this development "was accompanied by" political stability and accountability. Due to the institutional legacy of colonialism, the political environment is not yet capable of leading growth.
Latin America. Countries in this region are generally grouped in the middle of the pack among the nations of the world in terms of… READ MORE
Quoted Instructions for "Growth and Development" Assignment:
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Select ONLY ONE question of the following 5 questions and write and essay about it, I leave it to the ***** to determine which one suits his resources and knowledge (preferably a ***** with good grasps of economics and has a background in growth and development).
now I will copy and paste the instructions as given to me by my instructor:
"
CENTRE FOR DEVELOPMENT STUDIES
University of Glasgow
ESSAY QUESTIONS FOR GROWTH AND DEVELOPMENT 2009
Students will be required to write one essay of no more than 1,500 words (i.e. about five typed pages) exclusive of bibliography, graphs and tables. The word limit should be strictly observed. Students should aim for argument and analysis. Essays significantly in excess of the stated length will be penalised.
1. An***** the process of growth and economic development in Japan between 1868 and 1913. Your approach should be analytical and so draw attention to critical factors, how they fit together and indicate their relative importance in growth as a process.
2. In 1400 per capita income in China was on a par with Europe. But over the next 500 years China fell continuously behind European income and development levels. An***** the reasons for stagnation in the Chinese economy. Your approach should be analytical and so draw attention to critical factors, how they fit together and assess their relative importance in China*****s growth stagnation. You may also wish to explain how China generated sufficient growth to maintain a relatively stable per capita income despite a rising population.
3. Assess, with particular reference to post-1954 Vietnam, the concept of collective agriculture, its aims and the barriers to a successful implementation of collectivization.
4. Analyze the key components in, and factors relevant in explaining, Malaysian economic growth and development since 1957. What are the lessons and policy implications of Malaysia*****s development experience?
5. Assess the argument that colonialism in Latin America, Africa and Asia is a principal determinant of current per capita GDP in countries in these continents. How might the historical relationship between a country*****s production function and its geography interact to help to explain countries***** current per capita GDP?
Per capita income and population data can be found in Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003). Online at http://www.theworldeconomy.org/
User name: historicalstatistics Password: insight 1
Some possible readings:
Japan
Kelly, Allen C. and Jeffrey G. Williamson, *****˜Writing history backwards: Meiji Japan revisited*****, Journal of Economic History 31, 4 (1971), pp. 729-76.
Kelley, Allen C. and Jeffrey G. Williamson, Lessons from Japanese Development: An Analytical Economic History (Chicago and London: University of Chicago Press, 1974).
Klein, Lawrence and Kazushi Ohkawa (eds.), Economic Growth: The Japanese Experience since the Meiji Era (Illinois: Richard D. Irwin, Inc., 1968).
Patrick, Hugh, *****˜A Dynamic Model of Japanese Economic Development, 1887-1915*****, Journal of Asian Studies 35, 3 (1976), pp. 475-82.
Ranis, Gustav, *****˜The Financing of Japanese Economic Development*****, Economic History Review 10 (1959), pp. 440-54.
Rosovsky, Henry, *****˜What are the Lessons of Japanese Economic Development***** in A. J. Youngson, ed. Economic Development in the Long Run (London: George Allen & Unwin, 1972), pp. 229-53.
China
Brenner, Robert and Christopher Isett, *****England*****s Divergence from China*****s Yangzi Delta: Property Relations, Microeconomics, and Patterns of Development*****, Journal of Asian Studies, 61, 2, 2002, pp. 609-662.
Huang, Philip C. C., *****Development or Involution in Eighteenth-Century Britain and China? A Review of Kenneth Pomeranz*****s The Great Divergence: China, Europe, and the Making of the Modern World Economy*****, Journal of Asian Studies, 61, 2, 2002, pp.501-538.
Huang, Philip C. C., *****Further Thoughts on Eighteenth-Century Britain and China: Rejoinder to Pomeranz*****s Response to my Critique*****, Journal of Asian Studies, 62, 1, 2003, pp. 159-167.
Landes, ***** S., *****Why Europe and the West? Why not China?*****, Journal of Economic Perspectives, 20, 2, 2006, pp. 3-22.
Maddison, Angus, Chinese Economic Performance in the Long Run (Paris: Organisation for Economic Co-operation and Development, 1998).
Pomeranz, Kenneth, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton: Princeton University Press, 2000).
Pomeranz, Kenneth, *****Beyond the East-West Binary: Resituating Development Paths in the Eighteenth-Century World*****, Journal of Asian Studies, 61, 2, 2002, pp.539-590.
2
Agricultural Collectivization
Robert C. Allen, Farm to factory: a reinterpretation of the Soviet industrial revolution (Princeton: Princeton University Press, 2003), pp. 97-110, 117-20, 173-75, 183-86.
Do, Quy-Toan and Lakshmi Iver, *****˜Land tilling and rural transition in Vietnam*****, Economic Development and Cultural Change, 56, 3 (2008), pp. 531-79.
Gittinger, J. Price, *****˜Communist land policy in North Vietnam*****, Far Eastern Survey, 28, 8 (1959), pp. 113-26.
Lin, Justin Yifu, *****˜The household responsibility system in China*****s agricultural reform: a theoretical and empirical study*****, Economic Development and Cultural Change, 36, 3 (1988), pp. 199-224.
Oi, Walter and Elizabeth Clayton, *****˜A peasant*****s view of the collective farm*****, American Economic Review, 58, 1 (1968), pp. 37-59.
Pingali, Prabhu L. and Vo-Tong Xuan, *****˜Vietnam: Decollectivization and rice productivity growth*****, Economic Development and Cultural Change, 40, 4 (1992), pp. 697-718.
White, Christine Pelzer, *****˜Agricultural planning, pricing policy and co-operatives in Vietnam*****, World Development, 13, 1 (1985), pp. 97-114.
For the current situation of land ownership in Vietnam, see ***** Ravallion and Dominique van de Walle, *****˜Does rising landlessness signal success or failure for Vietnam*****s agrarian transition?***** Journal of Development Economics, 87, 2 (2008), pp. 191-209.
Malaysia
James B. Ang, Financial development and economic growth in Malaysia (London: Routledge, 2009).
Henry J. Burton, Sri Lanka and Malaysia: the political economy of poverty, equity and growth (Oxford: Oxford University Press, 1992).
John H. Drabble, An economic history of Malaysia, c. 1800-1990: the transition to modern economic growth (Houndmills: Macmillan, 2000).
Halim Mohd Noor, et al. Multinational enterprises and technological effort by local firms: a case study of the Malaysian electronics and electrical industry*****, Journal of Development Studies 38, 6 (2002), pp. 129-41.
Danny M. Leipziger, ed. Lessons from East Asia (Ann Arbor: University of Michigan Press, 1997), pp. 277-479 for useful country studies on Malaysia, Thailand, Indonesia and the Philippines.
3 4
Prema-chandra Athukorala and Jayant Menon, *****Outward orientation and economic development in Malaysia*****, World Economy 22, 8 (1999), pp. 1119-39.
Prema-chandra Athukorala and Jayant Menon, *****Developing with foreign investment: Malaysia*****, Australian Economic Review, 1st quarter (1995), pp. 9-22.
Colonialism
Daron Acemoglu, Simon Johnson and James A. Robinson, *****The colonial origins of comparative development: an empirical investigation*****, American Economic Review 91, 5 (2001), pp. 1369-1401.
Daron Acemoglu, Simon Johnson and James A. Robinson, *****Reversal of fortune: geography and institutions in the making of the modern world income distribution*****, Quarterly Journal of Economics 117, 4 (2002), pp. 1231-94.
Luis Angeles, *****Income inequality and colonialism*****, European Economic Review, 51 (2007), pp. 1155-1176.
Abhijit Banerjee and Lakshmi Iyer, *****History, institutions, and economic performance: the legacy of colonial land tenure systems in India*****, American Economic Review 95, 4 (2005), pp. 1190-1213.
William Easterly and Ross Levine, *****Tropics, germs and crops: how endowments influence economic development*****, Journal of Monetary Economics 50 (2003), pp. 3-39.
Stanley L. Engerman and Kenneth L. Sokoloff, Colonialism, inequality, and long-run development, National Bureau of Economic Research working paper 11057 (January 2005) http://www.nber.org/papers/w11057
Robin M. Grier, *****Colonial legacies and economic growth*****, Public Choice 98 (1999), pp. 317-35.
Matthew K. Lange, *****British colonial legacies and political development*****, World Development 32, 6 (2004), pp. 905-22.
James A. Robinson, *****States and Power in Africa by Jeffery I. Herbst: A Review Essay*****, Journal of Economic Literature 40, 2, (2002), pp. 510-19.
Dani Rodrik, *****Institutions rule: the primacy of institutions over geography and integration in economic development*****, Journal of Economic Growth 9, 2 (2004), pp. 131-65.
"
I will send a clear copy of the instructions by email too in case this is hard to read.
I would recommend using at least 3 references from the instructions given, otherwise the ***** may choose any adequate/academic resource they see fit.
Please notify me as soon as possible if you find or could not find a ***** for this subject, as the last time I was left hanging for more than a day till I got a response with no ***** available.
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Rayes
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