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Jonathan Jetmundsen
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The nature and flow of capital from developed to developing countries is major point of focus for economists. I remember studying a very similar paper with Professor Grajzl that posed the question about why capital doesn't flow like some might expect. A huge take away from this paper for me was the direct impact that interest rates and debt markets in large industrial nations has on the ability of developing nations to attract investment. It is very important to remember that at the end of the day, most lenders who would provide capital are looking for the best return on their investment in the firm of higher yields than other places they could allocate their capital. It is crucial for developing countries to attract capital for investment and growth, yet it is difficult for them to do so. This paper makes an important point showing how really tied together the economies of the world are. Even though small developing countries might seem disconnected, economic and financial markets all over the world have impacts on them.
Toggle Commented Nov 19, 2015 on ECON 280 for Thursday at Jolly Green General
Going in to this article, I come from a background where most people I was surrounded with growing up and are heavily conservative. Most adults I know scoff at the idea of global warming, and look down upon it as almost a pseudo science. Even when Americans consider the possibility of global warming, most probably only consider it an issue if temperatures were to rise drastically. This article is shocking in that just a 4 degree increase would have completely transformational impacts on the world. This report almost makes me feel like it is something that will be read in 100 years after it is too late and people will wonder why nothing was done. The problem, which we discussed in class, is that the pollution and other human byproducts causing warming are negative externalities and thus makes it unappealing for anyone to cover the cost of them. As the report noted, the most serious changes will occure in the tropics where many of the developing countries we study are located. The countries are less industrialized and are contributing a lot less to the problem than major countries, so it will be interesting to see how much developed countries are willing to prevent a problem that will be most severe in poorer nations.
Toggle Commented Nov 12, 2015 on ECON 280 for next Thursday at Jolly Green General
Very much to echo what others have said, it is astounding to me the devastating impact that malaria can have on a country, and how I feel that most Americans are relatively unaware. That fact that 2,000 children die daily from malaria shows the potency of the disease and the negative effects it can have on a nation's health and growth. We have talked so much in class about the importance of no growth factors, such as health and education, and their extreme importance for development. One of the major indicators that undeveloped nations share in common is a relatively high mortality rates and lower life expectancies. Being able to eliminate malaria would most likely have a strong positive effect on a nation's development. As we have also studied in class, the majority of low-income nations are centered in the tropics or subtropical climate regions. Malaria is also most concentrated in the tropics in subtropics. It would be interesting to see who much of the climate region effect is a cause of malaria, or if other factors relating to the climate region (resources, weather) are the main reasons linking low-income and climate areas. Policy makers and economists spend a large amount of time studying how they can strengthen institutions or spark growth or boost investment. These are all widely held to be important aspects of development. I think this paper does a great job of opening up new explanations for why some countries have failed to develop, and looking at other less studied factors, like the environment, could give us insight into new policies that could better help development than traditional avenues.
Toggle Commented Nov 5, 2015 on econ 280 for Thursday at Jolly Green General
I really like how right off the bat begins to make the distinction between growth strategies in different countries, and how the unique situations each one affect economic growth. I also think it is important, as others have noted, how Rodrik makes the separation between sparking growth and maintaining it. This is useful to policy makers who often make the mistake of believing that the same policies will work throughout a growth cycle. A great example of how much more effective policy can be when forming it with one country in mind, is the case study of China at the start of Section III. It starts by explaining how a western-minded economist would have approached kickstarting China's economic growth. Most of the suggestions involved policies that would be counter to Chinese customs or current government ideas, such as abolishing the state order system and privatizing the ownership of land. While these ideas might make perfect sense for free market thinkers they might not necessarily apply in a completely different state like China. The interesting part of this example, is that China took an almost opposite approach to what western recommendations would have been, and they were still able to reach the same economic goals. China did not follow some of the classic ideas such as property rights or market competition, instead following a different route that yielded similar results.
I think this paper is a great way to develop a competent framework when evaluating or creating models. Economic models can seem frustrating to depend on because they require important assumptions to be made and often the results can be generalized. Krugman makes an important point though emphasizing the difference between economics and sciences (like physics). When someone is studying physics, they are looking for an exact equation to explain the way forces in nature work. The problem is that people take this same approach to economics expecting an exact explanation for how economic forces work. Although sometimes economic models seem inadequate to explain major topics, as some people have already mentioned, some of the most complex parts of economics can be effectively explained by very simple models. I also liked Krugman's map analogy, describing how advances in mapping of Africa helped more accurately determine Africa's boundaries, but at the same time overrode previous beliefs about the interior, some which were true and some which weren't. Over time some of the old beliefs were incorporated back in to maps as they were proven true. The move in economic modeling towards focused, mathematical based models has overridden older, less specific theories such as high development. It will be very interesting to see how as economic modeling progresses, which older ideas are brought back and how they are able to fit in with modern theories.
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Sep 16, 2015