Economic growth towards development

Artículo de opinión por: Catalina Tamayo Posada (catalinatamayop1@gmail.com)
Estudiante de Economía. Universidad EAFIT, Medellin, Colombia.

Since the most recent financial crisis, the world has been trying to reach the pre-crisis levels of growth, unemployment rates –which increased with the crisis-, investment, trade, domestic demand, among other economic variables.

As for growth, there have been lower levels since the 2008 crisis, which was caused by the developed countries. Nevertheless, in 2014 the modest improvements have been fostered by the developed economies, specially, the European Union (EU). While growth in some countries of the EU is explained by the increase in the domestic demand and the recovery of consumer and mortgage credits, some other countries still face weakness in the banking sector. In developing and transition economies from Asia, growth is mainly because of the rise of domestic and public demand. In contrast, sub-Saharan economies are doing well because of high commodity prices, improvements in agriculture and the recovery from civil conflicts. Some Latin American economies have lost momentum due to a decrease in the domestic demand. However, hydrocarbons and mineral exporters are reporting high rates of growth (UNCTAD, 2014)

These slow but considerable improvements in economic growth have to be seen from a new perspective since the world is changing towards a new paradigm in which development plays a key role. According to the Trade and Development Report (2014), progresses in growth must be supported by policies taken by governments to direct the economy to achieve better life standards and to reduce the growing levels of inequality. In order to do it, it is necessary that countries make their best efforts to incentive investment and to raise their levels of human capital and technological know-how. Additionally, increasing per capita incomes is a priority for which it stimulates consumption and therefore the economy as whole, this increase should be the consequence of government’s efforts to improve industries’ productivity. Moreover, developing economies should enhance policies focused on diversifying their economies, strengthening income policies and creating measures to help mitigate the consequences of financial internationalization.

In pursuance of achieving the goals mentioned above, some developing countries and the least developed countries face, among many, a huge problem in terms of financial resources. The poor access they have to these services makes it difficult for the economy to grow. In addition to this, the transfer of technological know-how is urgent in order to develop countries’ own production capabilities (UNCTAD, 2014). The international community faces the challenge of ensuring that these countries –developing and least developed- manage to get the infrastructure required to effectively access to financial services and to implement any new technologies acquired, which in the end is what makes the economy more productive and –with good policies- more inclusive. If done so, economic recovery would be faster, more “global” and guided to development.

References

UNCTAD. (2014). Trade and Development Report 2014. New York and Geneva: United Nations.

Taking the human factor into account when designing development policies

Opinion article by: David Ricardo Murcia * (dmurcias@gmail.com)

Political Sciences student, Universidad EAFIT, Colombia

There is one thing that is usually forgotten when someone design a complex system to give a population the key to development, especially when those designs are made by a mostly economic perspective. For instance, assuming that the individuals are rational and that they are circumscribed to an institutional frame were actors –collective or not- are constrained to certain rules, which determine the actions that could be done, it would be  naive statement.

This column is not pretending that the economic perspective lacks on value to the development thought, but it, by itself is not enough. There they left the sociological and political structure of the peoples they’re willing to help without attention, and that course they attempt to failure.

Let me explain myself with a real example. Professors Oughton, Landabaso and Morgan make a significantly contribution to the institutional thought of development in their joint paper The RegionalInnovation Paradox (2002). There they sustain that for acquiring a greater impact in helping people develop there should be more governmental support to programs “promoting inter-organizational learning, improving existing regional innovation capacity and exploiting possibilities for investment and innovation activity”, going further the mainstream programs that rely on the increase of external inversions, and the isolated attempts of the public sector and universities to give the region an opportunity of growth (Oughton, Landabasoand Morgan, 2002).

That’s quite a point. If the state promotes ways in which regions actually learn how to innovate in coordination with universities and, the private and public sector, there for sure are the creation of a functional program for development. But, what the authors of the paper left behind are the social-political character of the regions they study. All are place in the EU: the most highly develop regional political institution, which have the capacity to intervene in its on jurisdiction with little resistance of the folk. That would give the paper and its conclusions reduce space of validity for a global application.

It is not, that what is done by de European Union in Europe could be done in other region. For example, the UNASUR has got low power to help intra-state region develop, and even if it has a way to actually intervene, the people of South America wouldn’t react so softly due to their political customs and social constitution. There, in Europe, the people have gain used to obey the institutional actors: organizations with little link to the person. But here, we are used to see people as the power and the closer the person in power is, the more obedient the folk are. In these sense, if national leaders as presidents are incapable of gaining the control of its entire legal jurisdiction, something as far as UNASUR couldn’t be more irrelevant in order to organize, or even help society.

As a short coming conclusion the institutional agreement proposed by Oughton, Landabasoand Morgan (2002) could only be applicable to Europe due to the sociological political structure of the region and can’t easily be transported to other global regions, just as one would think, they pretended. Each region requires a deep study of the social and political structure before proposing a development scheme. It would be premature to said so, but South America needs the state to stop pretending a transliteration of external programs and start figuring out how to use the human factor that actually exists. 

Reference:

Oughton, Christine; Landabaso, Mikel & Morgan, Kevin (2002). The Regional Innovation Paradox: Innovation Policy and Industrial Policy. The Journal of Technology Transfer. Vol. 27(1), pp. 97-110.