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Michael Adams
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I found Krugman's article to be both interesting and informative. His use of the African map and weather metaphors helped me to wrap my mind around the somewhat abstract idea of the evolution of understanding in economics following the widespread adaptation of models. While Albert Hirschman had some great insights, it took the later development of more sophisticated models to reaffirm his findings. In the meantime, some of the understanding into development economics that Hirschman provided was lost. Krugman made a good case for the emergence of rigorous models while acknowledging that models are just that, models. On a related note, reading Krugman's discussion of the limitations of any model, no matter how well specified, reminding me of our earlier discussion of neoclassical economics and its relationship to development economics. In Economics 100 we studied the assumptions inherent in this model and discussed how they are not always accurate. Sometimes, however, when considering the behavior predicted by the neoclassical framework we forget these fundamental assumptions that may not necessarily hold true. This is important in the field of development economics as we consider the policy choices suggested by the neoclassical model, and perhaps implemented with success in Western countries, may been ill-suited to developing economies.
Toggle Commented Sep 27, 2018 on ECON 280 for Friday at Jolly Green General
Throughout this paper Wang et al identify institutional barriers as playing a critical role in development, or lack there of. It makes intuitive sense that countries which promote strong exports and economic diversification will see stronger growth than those which do not. Going off of that, in reading this paper I was interested in the discussion of foreign direct investment (FDI) and its impact on development. In econometrics last winter I studied the relationship between FDI and economic growth using the Latin American sovereign debt crisis as a case study. While our project affirmed the widely held view, repeated by Wang et al, that FDI promotes growth, I was most interested in the wide body of literature addressing the impact of government policies on FDI. In this paper Wang et al discuss in some detail how civil war and unrest in Uganda spooked foreign investors and decreased FDI. While not as obvious, the government policies pursued by several Latin American countries that contributed to the sovereign debt crisis in the 1980s-1990s had a similar impact on FDI. Simply put, bad public policy, or institutional barriers, inhibit FDI and by extension development because they tend to scare off investors. While Wang et al rightly identify FDI incentives as a development-enhancing factor, I would have liked to see more information about how this played out in the so-called Asian Tiger countries as part of their discussion of each.
Toggle Commented Sep 21, 2018 on ECON 280 for Friday at Jolly Green General
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Sep 20, 2018