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economic growth

China’s Special Economic Zones and Industrial Clusters: Success and Challenges

Douglas Zhihua Zeng 曾智华's picture

In the past 30 years, China has achieved phenomenal economic growth, an unprecedented development “miracle” in human history. Since the institution of its reforms and Open Door policy in 1978, China’s gross domestic product (GDP) has been growing at an average annual rate of more than 9 percent (figure 1). In 2010, it has surpassed that of Japan and become the world’s second-largest economy.

Structural Change, growth and jobs

Merrell Tuck-Primdahl's picture

Structural transformation is a key determinant of productivity growth and explains two-thirds of the difference between superior East Asian growth and more muted Latin American growth in the past two decades.

Given the multi-speed paths that regions and countries take as they transform, with some succeeding spectacularly and some struggling to compete, it may be time to consider new industrial and labor policies to ensure that a huge swath of the lower middle class in the developing world doesn’t get left behind in the race to compete in today’s unforgiving global marketplace.

Can service exports drive growth?

Saurabh Mishra's picture

Services can now be stored, traded digitally, and are not subject to many of the trade barriers that physical exports have to overcome. Services are no longer exclusively an input for trade in goods, but have instead become a “final export” for direct consumption. Importantly, services not only have become more tradable, but can also be increasingly unbundled: a single service task or an activity in the global supply chain can now be fragmented and done separately at different geographical locations. This has led to a new channel of growth, what we call sophistication in service exports.

Beyond tumult to transformation: Whither the MENA region

Merrell Tuck-Primdahl's picture

Countries of the Middle East and North Africa (MENA) are a cauldron of wrenching social change. For years pundits have attributed the region's tense social fabric to relatively high population growth rates, a lack of economic diversity, autocratic governments, and, in many countries, on an over-reliance on oil.

Howard Pack, eminent business and public policy Professor at the Wharton School, came to the World Bank earlier this week to share his views on the question of why MENA countries never came close to the equivalent of an East Asian miracle and how they might get on a more successful economic path.

Underutilization of capacity and Ricardian equivalence

Justin Yifu Lin's picture

In a recent blog post “Ricardian Confusions”, Paul Krugman commented on my paper “Beyond Keynesianism and the New New Normal” delivered at the Council on Foreign Relations on Feb. 28. He points out that the government’s fiscal stimulus generally is temporary and households will not increase savings by the full amount of the stimulus. As a result, the stimulus is expansionary even if Ricardian equivalence holds. His comment triggered a series of discussions (Antonio Fatas and Ilian Mihov, Mark Thoma, Paul Krugman, Nick Rowe, and Brad Delong).  
 
I have no disagreement with Paul about the possibility of an expansionary effect of a temporary fiscal stimulus. But if the effect exists and the stimulus does not increase productivity as in his example, there will also be a contractionary effect after the exit of stimulus and the increase of tax to retire the public debts. At the end the issue of underutilization of capacity, which my paper attempts to address, will still be there. 

Gender Equality and the 2012 World Development Report

Justin Yifu Lin's picture
Photo: istockphoto.com

Equality between men and women matters for development, which is why the 2012 World Development Report  (WDR) will focus on this vital topic. Since the 100th anniversary of International Women’s Day is March 8, we thought it an auspicious day to launch the WDR 2012 website.

Gender was chosen as the focus for next year’s WDR in part because gender equality can lead to better development outcomes and because, as Amartya Sen  asserted, development is a process of expanding freedoms equally for all individuals. This view assumes that gender equality is a core goal in and of itself and that people’s welfare shouldn’t be determined by their birthplace or whether or not they were born male or female. 

The 2012 WDR will analyze the wide swath of literature on gender and development and it will highlight the impressive progress in gender indicators on many fronts. However, it will also reveal that in many domains—whether in the realms of power and decision making or maternal health – outcomes for women have improved very slowly or not at all.

Economic development in resource-rich, labor-abundant economies

Justin Yifu Lin's picture

Tackling poverty and inequality through appropriate growth strategies is at the core of the World Bank’s mission. In my view, achieving sustainable and inclusive growth depends on a well-functioning market and to a significant extent also the degree to which government policies facilitate private firms’ upgrading and diversification into industries that are aligned with an economy’s comparative advantages.

To smooth the way and allow this dynamic process to function optimally, we need to answer many questions that are unique to different types of economies. For example, how is it possible to successfully tap a developing country’s comparative advantage when it is rich in resources and has an abundant labor supply?

Developing Countries, Trade Openness and Growth

Merrell Tuck-Primdahl's picture

Debates over the relationship between trade openness and growth have been going on for around 160 years. A key aspect of that debate is how important growth is for poor countries as they strive to catch up with the best-of-the best in a competitive world. For openness to succeed, you must first put in place ports, roads and other building blocks for prosperity, and you need well functioning bureaucracy to help build the foundation for a strong trade sector. Passionate free-trader Arvind Panagariya, Columbia University Economics Professor and Jagdish Bhagwati Professor of Indian Political Economy, spoke eloquently about this at his February 16 Development Economics (DEC) Lecture at the World Bank. His research has entailed cross-country case studies of what he terms ‘debacles’ and ‘successes’ in Asia, Africa and beyond. On the one hand, Panagariya admitted that free trade is no panacea to overcome stagnation and he acknowledged that trade liberalization has failed to catalyze and sustain growth in many instances. On the other, he argued that there are many more examples of countries failing to stimulate growth through protectionism.  Panagariya expressed skepticism about industrial policy, but cautioned that its presence cannot prove either the beneficial or harmful impact of openness on growth. You can watch the interview with Professor Panagariya here.

Choosing countries as models for industrial growth

Justin Yifu Lin's picture

Train station. India. Photo: © Curt Carnemark / World Bank

Shanta’s thoughtful comments on our Growth Identification and facilitation (GIF) paper are most welcome. The issues of industrialization and structural transformation are at the heart of economic development. Following comments already made by my co-author Célestin Monga on this blog, let me offer a few thoughts to this exchange.

First, the GIF approach explains the economic success of a very diverse group of countries: China (with 1.3 billion population), Japan (100 million); Taiwan-China (20 million); Korea (40 million); Singapore (5 million); or Mauritius (400.000). The framework has also been applied in large Western countries such as Germany, France, and United States, and small European countries like Sweden, Norway, Finland, and Ireland. The political systems of those economies are also very different, some are democratic and some are authoritarian.

China, the US and clean energy cooperation

Justin Yifu Lin's picture
 Photo: istockphoto.com

Presidents Hu and Obama created buzz earlier this week in Washington when they met on pressing bilateral issues, including US-China business and investment regulation, trade, currency imbalances and security concerns. US-China clean energy cooperation is an important part of that bilateral dialogue (see transcript of my intervention at a January 18 US-China Strategic Forum hosted by Brookings).

Why?
Cooperation between the two countries can yield big economic benefits.  The world is recovering from the worst economic crisis since the Great Depression. In this context, taking advantage of clean energy opportunities is crucial to fueling a sustained global recovery. 

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