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Tom Kellogg
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Duflo challenges the notion that gender equality and rights for women improve when poverty declines and development increases. Kofi Annan said that “achieving gender equality is a “prerequisite” to achieving the other Millennium Development Goals” (1053) as it leads to a great efficacy for women and increases in development. Duflo does submit that economic growth can have an important positive impact on gender equality, but the effects are not enough. Duflo points out that fertility decreases with rises in income, and age at first birth increases with those rises. This is an especially important point, as “very young mothers are more likely to die or have complications in childbirth,” (1056) which in itself reduces the number of missing women by decreasing the chances a woman dies in childbirth. The paper hits especially on educating women, how female education leads to more employment opportunities which causes women to be treated better within and without the household. Accordingly, an increase in female or mother income by “7 U.S. dollars per month (10 percent) translates into a 1 percentage point increase in the survival rate for girls” (1057). We can see that it is extremely important to educate women, who then are able to find employment outside of the household, leading to a higher survival rate for girls. However, sex identification and abortion can be a huge problem, as families are more apt to select boys in childbirth (potentially skewing the statistics of missing women because many are never even more). As James Wolfensohn put it “education for girls has a catalytic effect on every dimension of development… [enabling] more and more women to attain leadership positions at all levels of society…in turn, [changing] the way societies will deal with problems and [raising] the quality of global decision-making” (1064). Duflo sums it up perfectly “women’s empowerment and development mutually reinforcing each other” (1076) means that economies will begin to be brought into the worldwide economic fold with and by a culture that encourages and relies on women to spur development and growth.
Toggle Commented Oct 18, 2018 on ECON 280 for Friday at Jolly Green General
Krugman describes the economic background of that has spawned much of development economic theory through the 1950s to 1970s. He describes high development theory as “modernization [breeding] modernization,” and concludes that some countries, typically those lagging behind the rest of the world, are not included in this modernization cycle and “remain stuck in a low level trap”. Krugman, like the article on institutional barriers we read, concludes that government activism is a great way of breaking out of this trap. Krugman also points to the modern sector as being “more productive than traditional,” but concludes that adoption of modernization in developing countries needs to be started on a large scale, so as to make it self sustaining. Krugman is also pretty bearish on many of the formal economic models used during the 50s, stating that they were traditional based on large economies, and the inherent assumptions of those models failed to hold up in developing, smaller economies. Krugman’s model favors modern sector development for developing economies, stating that as long as the advantage of modern production is sufficiently large, then it is favored. However, he goes on to emphasize that it is important to look at the profitability of individual entrepreneurs, concluding that individual entrepreneurs will continue to produce, but they must take into account the paying of a premium wage (premium over wages in the traditional sector) which is determined by the ‘decisions of all the other entrepreneurs” as well. He sees that development economists created their models fully ignoring many of the factors that spur development in the modern sector (they framed their models in terms of highly developed countries, undeveloped countries). I value Krugman’s model as an effective way of demonstrating how employment of a labor force in the modern sector definitely creates a greater output than traditional sector employment. Furthermore, I appreciate that he understands that the assumptions behind these models may fall through in developing economies.
Toggle Commented Sep 27, 2018 on ECON 280 for Friday at Jolly Green General
I found Wang, Wong, and Yip’s paper to be especially interesting in its ability to dissect growth, or lack thereof, and draw relevant and economics backed conclusions to why fast-growing and trapped economies differ in terms of relative GDP growth. In Section 3.2, the authors point to institutional barriers as the leading cause of divergence between the different economies, citing 52.63% and 66.31% and 101.70% growth for fast-growing, trapped, and lag behind economies. The paper concludes that these “institutional barriers…hinder the process of their structural transformation” (264) causing the lag-behind countries to underperform in terms of GDP growth relative to the United States. If we examine a fast-growing economy, for example South Korea, against a laggard country, Argentina, we really begin to understand how much institutional barriers can hamper growth. South Korea “pursued a government led, export-oriented growth strategy” in the 1960s, which was then paired with the promotion of “heavy industries through the supply of cheap credit” in the 1970s and a dedication to “its strategy of long-term investment in high-tech exports” (266-267) during an overinvestment period in the 1980s. This demonstrates the South Korean government’s pursuit of decreasing institutional barriers as it set low interest rates, encouraged a commitment to an export oriented economy, and invested in a long-term commitment to technology exports. In contrast, Argentina failed to assuage “chronic inflation” due to “growing government spending, large wage increases, and inefficient production” (273). Inflation definitely hampered Argentina’s growth; contractionary fiscal policy would have been a very prudent way of dealing with a rate of inflation that averaged “more than 300 percent per year during 1975-91” (273). State-run enterprises, stagflation, and large government borrowing eventually led to the collapse of the Argentinian economy in 2001, when “GDP declined by nearly 20 percent in four years” (273). The comparison of South Korea to Argentina typifies a divergence in government commitment to eradicating institutional barriers. South Korea’s government encouraged exports, cheap credit, and technological innovation, whereas Argentina’s failed to act amidst tax evasion, huge foreign debt, and catastrophic stagflation. These two examples demonstrated just how important it is for a country to reduce the amount of institutional barriers are present in its economy if it wants to grow its GDP.
Toggle Commented Sep 20, 2018 on ECON 280 for Friday at Jolly Green General
I agree with most of what Sachs is arguing with in his suggestions of Sustainable Development Goals for 2015-2030. I feel that his inclusion of lessons and principles from Millennium Development Goals in his evaluation and suggestion is especially well conceived. His approach to the private sector, encouraging firms to support SDGs in their “policies, production processes, and engagement with stakeholders” (2210), is a very realistic and hopeful tenant. Sachs realizes that although government may get together and decide upon goals, the larger portion of our world’s economy is the private corporations that employ people, make products, and shape our world. Emphasizing the necessity of the private sector’s commitment to the SDGs is one of Sachs strengths, and I do not feel as if this article would carry as much weight if he failed to mention the private sector’s importance. However, I do think that a few of his goals, specifically SDG 3 and 4, overestimate the inherent good of governments and the people running them. SDG 3 mentions that governments should enable all citizens “irrespective of class, gender, ethnic origin, religion, and race” (2209). This is a noble recommendation, yet I feel as if it will struggle to be implemented, as governments, and people in general, often do what is best for themselves and the people that they consider “like” them, therefore excluding minorities and dissimilar individuals. SDG 3 is noble and we should strive toward its implementation, yet I fear that it may not be as practical as Sachs or I would like. SDG 4 does seem to be a bit idealistic as well; it states that “governments at all levels will cooperate to promote sustainable development worldwide” (2209). This principled approach to government promotion of sustainability seems to overestimate the efficacy that smaller countries and even local governments have in promoting development on a worldwide scale. Given the fact that many countries are trying to assist their own citizens in overcoming poverty, I do not feel that every government would promote sustainable development externally. Therefore, it just be left up to the countries that are already well-off to carry out the standards detailed by Sachs.
Toggle Commented Sep 13, 2018 on ECON 280 at Jolly Green General
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Sep 13, 2018