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Post-War Re-Globalisation and the Twentieth Century's "Growth…
Post-War Re-Globalisation and the Twentieth Century's "Growth Miracles"
Big-push of industrialization
Required capital (i.e. factories, mills etc)/ factors of production for 'big push' industrialization to be built at the same times
Built ahead of supply and demand
Different degrees of success: catch up growth
Japan, South Korea China
Soviet Union, Turkey
Why were countries able to begin catch up growth?
Building development states
Developing banking
Local-contenting management
Opening some markets to foreign transactions and keeping other closed
National firm formation
How do they build development states?
Finding funds for industrializaiton
Institutions: Developing Bank
Raises capital domestically and abroad in order to buy shares/lend money -> Subsidize and fund building of factories
Where are the funds from?
Deposits (from commerical banks)
Foreign Direct Investment through dev. banks
Pension Funds
Forced savings (USSR)
Who to fund
Fund as many industries as possible
Not based on comparative advatage
Copying of existing industries (other countries( that have available tech/markets within the economy
Making sure funding works
Threat: Protectionism and import substitution
Shields inefficient industries from competition
Encourage firms to be efficient
Performance standards
Success of industralization
Challenges of Industrialization
Capability of an economy
Success dependent on tech, administrative, bureaucratical and entrepreneurial capability
Requires politically minded people who are not corrupt
Fraud
Interaction of gov policies with macroeconomic objectives of a country
Success dependent on extent of a country pursuing dev aid unhindered by other macro objectives
Greater heterogeneity
Makes industrialization harder
Certain sectors benefit by at the expense of other sectors
Pursuit of different policies
Technological challenge
Minimum efficient size frequently changes over time
Hard to expand industry and keep global competitiveness
Rapid tech advancement
Growing capital intensity
More expensive tech -> upfront cost from scratch
Inability to keep up with pace
What policies did these countries pursue, and how effective were they? What were the benefits, costs, or difficulties involved?
Japan
China
South Korea