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Growth II: The Long-Term Economic Failure in Developing Countries. CEPR Basic Economics Seminar Series Mark Weisbrot October 6, 2005. Growth II. Economic growth is important (see Seminar 2)

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growth ii the long term economic failure in developing countries
Growth II:

The Long-Term Economic Failure in Developing Countries

CEPR Basic Economics Seminar Series

Mark Weisbrot

October 6, 2005

growth ii
Growth II
  • Economic growth is important

(see Seminar 2)

  • In general, it is even more important for low and middle income countries than for high income countries such as the United States
  • Basic measure: Gross Domestic Product (GDP) per capita
  • Need benchmark: compare growth

(and progress) to past decades

economic reforms over the past 25 years
Economic Reforms Over the Past 25 Years
  • Reduced restrictions on international trade and financial flows
  • Tighter fiscal and monetary policies (higher real interest rates)
  • Privatization of state-owned enterprises
  • Labor market and public pension reforms
  • Abandonment of state-directed industrial policies or development strategies
  • Increased accumulation of foreign

reserve holdings

slide4

Over the last 25 years, there has been a sharp slowdown in economic growth for the vast majority of low- and middle-income countries

slide8

As would be expected in a period of reduced economic growth, there has also been a decline in progress on health and education outcomes for the vast majority of low- and middle-income countries

china s reforms are different from those implemented elsewhere
China’s reforms are different from those implemented elsewhere
  • Liberalized trade after it could compete in world markets. (Average tariff still over 40 percent in 1992)
  • Gradual and careful transition
  • Banking system dominated by state-owned banks
  • Government shapes and uses foreign investment in accordance with development goals
  • Strict controls over international currency flows
conclusion
Conclusion
  • Sharp slowdown in economic growth in the vast majority of developing countries
  • Social and human consequences are very important
  • Most of the reduced progress on social indicators probably due to growth slowdown, rather than any increases in inequality
  • Economists and policy makers should be trying to figure out what has gone wrong
reading list
Reading List
  • Milanovic, M (2005). “Why Did the Poorest Countries Fail to Catch Up?”Washington, DC: Carnegie Endowment, Carnegie Paper No. 62. http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=17557
  • Milanovic, B (2005). “Worlds Apart : Measuring International and Global Inequality,” Princeton, NJ: Princeton University Press.
  • Weisbrot, M, Baker, D and Rosnick, D (2005). “Scorecard on Development: 25 Years of Diminished Progress,” Washington, DC: Center for Economic and Policy Research. http://cepr.net/publications/development_2005_09.pdf
reading list continued
Reading List (continued)
  • Weisbrot, M and Sandoval, L (2006) “Bolivia's Challenges,” Washington, DC: Center for Economic and Policy Research. http://www.cepr.net/publications/bolivia_challenges_2006_03.pdf
  • Weisbrot, M and Cibils, A (2002) “Argentina's Crisis: The Costs and Consequences of Default to the International Financial Institutions,” Washington, DC: Center for Economic and Policy Research. http://www.cepr.net/publications/argentina_crisis.htm
  • Cibils, A, Weisbrot, M and Kar, D. “Argentina Since Default: the IMF and the Depression,” Washingon, DC: Center for Economic and Policy Research. http://cepr.net/publications/argentina_2002_09_03.htm
growth ii the long term economic failure in developing countries26

Mark Weisbrot

weisbrot@cepr.net

Center for Economic and Policy Research

www.cepr.net

Growth II:

The Long-Term Economic Failure in Developing Countries