On being asked by Bertrand Russell if he ever told lies, the famous Cambridge philosopher G.E. Moore answered, ‘Yes.’ Russell believed this was the only time Moore had lied. It is possible to argue that Russell's deduction was, for once, wrong, and that Moore had got the better of him. If Moore had told lies before giving that answer to Russell, then clearly his answer was not a lie. Now suppose that he had never told a lie before, then in answering yes he ensured that his answer was right.

Lying and honesty are intriguing subjects that have engaged philosophers for centuries. Social scientists took very little interest in them. This has suddenly begun to change. It is a much more mundane concern with lying and honesty that has been engaging economists and political scientists in recent times, but it's a concern of some pervasive importance.

Social analysts, notably Francis Fukuyama and Robert Putnam, have argued that societies with a high level of trust—i.e. where people tend to be honest, adhere to promises, and respect contracts—tend to prosper. So, faster growth is not just a consequence of appropriate economic policy, savings rate, human capital, and fiscal deficits, but, somewhat surprisingly, the level of honesty in the citizenry.

This is one area in which the Indian citizenry can do with a little bit of brushing up. The damage usually gets done early, when children are taught that ‘honesty is the best policy’.

Introduction: Rapidly Changing Global Economic Scene

The geo-political and economic map of the world is rapidly changing. Global institutional arrangements borne out of the historical experiences of the midto late twentieth century will need to adjust to the new global political and economic context that is now evolving, even as the post-World War II issue of promoting the development of developing countries continues to remain at the centre of international economic policy debates.

A major aspect of this new context is the development of new international policy regimes and the institutional architecture relating to these regimes that have an impact on developing countries' development policies and prospects. These include a new institutional architecture on global trade policy represented by the World Trade Organization (WTO), complete with a more comprehensive set of trade rules that are binding on countries, and whose work both influences and is influenced by the work of other existing trade-related global institutions such as the UN Conference on Trade and Development (UNCTAD).

Another aspect of this new context is the increasing share and influence of developing countries in global economic affairs – both in terms of shaping global economic policy and in terms of actual weight in the global economy.

Introduction

The following contains a comparative analysis of some important structural background features of national systems of innovation (NSI's). The sample is limited to 21 OECD countries. The empirical source is OECD's Trade by Commodities (foreign trade by ‘visible’ goods). This kind of data can only serve as an incomplete illustration of the conceptual framework derived in earlier chapters. However, the material offers some advantages worthwhile to exploit, e.g. time series covering more than a quarter of a century. Certain features of international export specialisation will be used as indirect proxies of more general economic development patterns of the OECD countries.

In chapter 4 the so called ‘structural thesis’ emphasises (domestic) production and linkage patterns as important determinants of substantial shares of not only non-professionalised learning and innovation, but also professionalised R&D. The arguments stress the incremental character of innovation and its path dependency. The changes of products and processes – it was argued – follow trajectories, to a large extent determined by inherited production and trade patterns. History matters; present and future innovation possibilities are highly dependent on existing structural features of the economy. Structure, as a reflection of history, matters.

It is no simple task to illustrate this line of reasoning, let alone to deliver outright empirical proofs on an international comparative basis. However, some of the ‘propositions’ of 4 may be confronted with empirical evidence. In the empirical part of this chapter it will be shown that the international specialisation patterns of the OECD countries fruitfully may be analysed in terms of life cycles.

Introduction

Europe has long history of engagement with Africa after the Second World War and invested hugely politically and economically on the continent. China has also been engaging for decades with African countries, but the present Chinese approach to Africa shows its nuance, with more and more priorities in economic domain. The new Chinese engagement with Africa, especially its focus on resource extraction and non-interference principle that relates to the governance issue of Africa, has been raising serious concerns in European capitals.

This chapter is an attempt to analyse the trilateral relations among Africa, China and Europe, with Sino-European relations as a starting point. The chapter begins with an analysis on the dualities and thus also complexity of China, relevant to the trilateral relations. Secondly, I will describe the static and dynamic features of the trilateral relations. Thirdly, I will discuss the ideological background of the Chinese and European approaches to Africa. Fourthly, I focus on the Chinese engagement, with particular reference on the motivations and attractiveness of China in Africa. Fifthly, I will make a contrast between the Chinese and European approaches to Africa, in the dichotomy of good governance vs. effective governance. In conclusion, I argue that though on the surface the Chinese and European approaches to Africa show the contradiction between each other, they in fact can be complementary to a certain extent, and more coordination and cooperation are needed in this area.

Back in Bangalore after several years, I find that the city lives up to its avant-garde reputation. The large dotcom hoardings, the cyber cafes, the sleek restaurants offering cuisines ranging from Coorgi to French, and the pubs lining the road are impressive.

But equally impressive is the rapidity with which all this disappears as one drives out of the city. Within miles of cruising west the modern buildings give way to modest tenements. Another hour or two of driving and the landscape changes to open fields, with gigantic boulders, eucalyptus clusters, coconut groves, and banyan trees disfigured by the human quest for firewood. The simple huts and hovels of the poor are a reminder of the sameness of India—a sameness dominated, even now, by poverty.

Our first halt is at the Magadi Taluka headquarters, where the executive officer (EO) explains the development work going on in the region. He is currently involved in a housing subsidy scheme under which any poor villager can get a grant of Rs 20,000 for building a house. There are conditions, of course. The house must be built using labour-intensive technology; the original owner cannot sell the house; and the building must include a toilet, presumably to wean away residents from the lure of the fields. The EO is pained that villagers resist the toilets, and even after he persuades them, on occasion he has bumped into residents returning from the field, lota in hand.

The uncontested acceptance of Bollywood as the only available term for conceptualizing the Hindi film Industry in our times and the re-conceptualization of female sexuality in the films produced since the 1990s points towards a symbiotic relationship between the two cultural phenomena. This chapter will draw from the symptoms of the shifting paradigm of (female) sexuality, trying to understand the changed/changing symptoms not only as a dimension of performance, but, also in a larger sense, as a set of relations between the elements internal to the script as well as those which constitute its field: its audiences, its socio-economic structure and its ideological milieu. Approached from this angle, the gender matrix of ‘Bollywood’ may well offer insights into the changing modalities of Indian national identity and a redefinition of what may be termed the Indo-feminine in a global cultural context.

Bollywood: A Derivative Discourse

The best starting point for such a discussion is the highly contested terrain of ‘Bollywood,’ which has been copiously analyzed by Madhava Prasad and Vijay Mishra among others. According to Prasad in his article ‘This thing called Bollywood,’ ‘Bollywood’ has a commodious control specifically as it has an indeterminate (‘ill-defined’) purview, demonstrating a somewhat unbiased incorporation of all the existing models of the Bombay film industry, from the regressive, the popular to the ideological model.

Dating back over 150 years, with heavy wooden doors, ceilings reaching into the skies, a sprawling verandah overlooking a yard with ancient banyan trees, the Circuit House in Bankura is a curious mixture of the Raj and independent India. The latter adorns the wall in the form of portraits of artists like Ramkinkar Baij and Jamini Roy, and the bookshelves, where tomes left behind unwittingly by visiting bureaucrats (Do-it-Yourself Plumbing and Heating, The Economic Development of India by Brian Davey) rub shoulders with those that may not be there quite as purposelessly, for, read carefully, they could just win the CPM a few more adherents among the vulnerable: Das Capital, three volumes, and the collected works of V.I. Lenin.

My visit to Bankura and, just before that, to the Sunderbans had nothing to do with tourism. It was driven by curiosity. On most indices of development, Bengal is trailing. Its rank, on India's interstate scorecard, has slid not just in terms of per capita income but even on social indices such as literacy, morbidity, and the progress of higher education. Talk to a random person in Kolkata and he will tell you the disaster that the CPM government has been for the state. How then does one explain the CPM's electoral popularity and unwavering rural support? It is this conundrum that compelled me to cut into my Kolkata vacation and travel.

Introduction

In economic terms, Argentina is a special case. It occupies a central place in accounts of economic history and financial newspaper headlines. The beginning of the 21st century saw Argentina's longest and largest economic crisis, which has been followed by recovery and expansion at rates of economic growth equalling those of China.

This recovery has reopened the debate on Argentina's long-term development strategy. Several authors emphasize the need to strengthen and promote Argentina's non-traditional tradable sectors, to consolidate the recent economic process and to finally overcome Argentina's recurrent internal and external imbalances (Gerchunoff and Ramos, 2005; Kacef, 2004; Porta, 2005).

Between 2003 and 2008 positive international conditions and the competitive exchange rate policy followed by the government are both said to have encouraged strong macroeconomic fundamentals in Argentina (see Serino 2007). The implications of global conditions and the exchange rate policy for productive and export diversification, however, need to be discussed in more detail – especially as Argentina's structural features, commonly overlooked in aggregate macroeconomic studies, do play a role.

Discussion of productive diversification in Argentina and the impact of natural resource shocks and policies hypothesized in this research, needs to take account of one of the country's most important structural features: a resource sector whose natural advantages make it more competitive internationally than other tradable sectors, and which produces wage-goods that are exported and consumed domestically. These structural characteristics matter for two reasons.

Introduction

Four major financial crises have struck middle-income developing countries (DCs) since the 1982 debt-crisis: Mexico in 1994 (and the subsequent ‘Tequila-effect’ in Argentina); East and Southeast Asia in 1997; Brazil in 1999; and Argentina in 2001.

Two common characteristics of the these crises are that the countries involved had recently open up their capital accounts, and that they had done so at a time of high liquidity in international financial markets and slow growth in most OECD economies – i.e., at a time when an over-liquid, highly volatile and under-regulated international financial market was anxiously seeking new high-yield investment opportunities.

The first part of this paper will attempt to show that no matter how diversely these financially liberalised DCs tried to deal with the absorption problem created by sudden surges in capital inflows, they inevitably ended up in financial crisis via a Kindlebergian cycle of ‘mania, panic and crash’. However, there is a clear distinction between the Latin American and the East Asian crisis-building pattern; furthermore, within Latin America there is a further distinction between Brazil (where there was a major policy attempt to avoid the Kindlebergian cycle via an aggressive sterilisation of inflows) and the other crises countries of the region.

Introduction

As we have seen in earlier chapters, the concept ‘National System of Innovation’ may be used in two senses: in a broad sense it encompasses all institutions which affect the introduction and diffusion of new products, processes and systems in a national economy; and in a narrow sense it encompasses that set of institutions which are more directly concerned with scientific and technical activities. This book is mainly concerned with national systems in the broad sense and has stressed the importance of the interactions between the production system, the users and innovation. In this chapter, however, we focus more on the narrower set of formal institutions and attempt to outline some major stages in the evolution of these institutions.

Chapter 1 has pointed out that flexibility in the economy does not only derive from market institutions. This chapter shows that the capacity to adapt to major changes in technology has depended historically on the development of a network of scientific and technical institutions, both in the public and private sectors. Whereas chapter 7 has focused mainly on the role of the public sector as user of innovation, this chapter concentrates more on its role as producer.

In the early days of the industrial revolution contact between science and industry was certainly already important (Musson and Robinson, 1969) but it was largely on an individual basis and not on a systematic, continuous basis. Firms were very small and science was largely the province of individual enthusiasts, loosely linked in scientific societies and in national academies.

Humans are changing the metabolism of the planet to a degree previously unknown. We are fundamentally altering the gases in the atmosphere, the bodies of water and the complex web of species that constitutes life on Earth. The Economics of the Yasuní Initiative appears at a time when the dangers to the world's resources have become clear to the naked eye. Rates of extinction are now 1,000 times higher than the rate inferred from the fossil record. Climate change seems to be accelerating. For humans, this means rising seas, ferocious floods, prolonged droughts and erratic weather patterns. In 2010, we may see over 50 millions climate refugees worldwide. The problem is global in nature. There is nowhere to hide.

Approximately 80% of humanity lives in the developing world, often amidst valuable natural resources. Ecuador is a microcosm of that world and its UNESCO Biosphere Reserve – Yasuní – is exemplary of resources in their original state. However, Yasuní sits atop a huge oil reserve. As is the case in many other carbon-rich developing nations, roughly half of Ecuador lives in poverty. Understandably, the government is tempted to exploit the oil of Yasuní and expand the agricultural frontier simply to feed its population despite the negative global impacts on the environment – just as industrialized countries did at a similar stage of their economic development.

The conflict between basic needs and resource exports is as acute as it is cruel. In the case of Ecuador, the lion's share of export income comes from petroleum sales and the majority of its people enjoy no benefit.

Abstract

The objective of this study is to examine the impact of Foreign Portfolio Investment on India's economy and industry. As FPI essentially interacts with the real economy via the stock market, the effect of stock market on the country's economic development will also be examined. The findings of this chapter show that the perceived benefits of foreign portfolio investment have not been realized in India. From the results of this study it can be said that the mainstream argument that the entry of foreign portfolio investors will boost a country's stock market and consequently the economy, does not seem be working in India. The influx of FIIs has indeed influenced the secondary market segment of the Indian stock market. But the supposed linkage effects with the real economy have not worked in the way the mainstream model predicts. Instead there has been an increased uncertainty and skepticism about the stock market in this country.

On the other hand, the surge in foreign portfolio investment in the Indian economy has introduced some serious problems of macroeconomic management for the policymakers. Uncertainty and volatility associated with FPI have not only reduced the degrees of maneuverability available to the policymakers but have also forced them to take some measures which impose significant fiscal cost on the economy.

Though this study focuses on India and draws policy implications based on the Indian experience, the results and policy implications of this study can be used to draw lessons for other developing which are at the same or similar level of development.

Abstract

This chapter discusses the shifting character of the Brazilian State in several major debt crises throughout this century including its more recent one that started in 1999 and is considered to end in 2005 when Brazil paid in advance its debt with IMF. The intention here is to review the role of the Brazilian State during these debt crises. It is shown that pressures from the international capital market and the country's private sector forced the Brazilian State to assume the debt risk and obligations of the private sector. This process is called “the nationalization of the debt” of the Brazilian external debt. Our major purpose is to see whether the recent debt process (1994–1998) and its repercussion until 2005 shows the same trend as the 1976–1982 period – that is, to see whether the State ended up bailing out the risks of the huge amount of portfolio investment that the country received.

The tendency for external debt “nationalization” is present in the recent external debt of Brazil (1992–1998). But, contrary to the debt cycle of 1967–1982, the external debt “nationalization” of the 1990s follows the pattern similar to the external debt cycle of 1947–1962.

Objective

The objective of this chapter is to analyze the role of the State in the process of the external debt of Brazil. Specifically, our thesis is to find out if historically the State assumed all the risk by “nationalizing foreign obligations” – in which economic losses are socialized while economic gains are privatized – as was the case in the 1982 debt crisis (Cruz 1984).

Introduction

Theories in the social sciences may be regarded as ‘focusing devices’. Any specific theory brings forward and exposes some aspects of the real world, leaving others in obscurity. That is why a long lasting hegemony of one single theoretical tradition is damaging both in terms of understanding and policy-making. In the field of economics, the dominating neo-classical paradigm puts its analytical focus upon concepts such as scarcity, allocation, and exchange, in a static context. Even if these concepts reflect important phenomena in the real world, they only bring forward some aspects of the economic system. One aim of this book is to demonstrate the need for an alternative, and supplementary, focusing device which puts interactive learning and innovation at the centre of analysis.

Through more than a decade, a group of economists at Aalborg University, the IKE-group, has worked together studying industrial development and international competitiveness from such a perspective. This book presents results from this work in relation to one specific subject; national systems of innovation.

Our choice of perspective and subject is based upon two sets of assumptions.

First, it is assumed that the most fundamental resource in the modern economy is knowledge and, accordingly, that the most important process is learning. The fact that knowledge differs in crucial respects from other resources in the economy makes standard economics less relevant and motivates efforts to develop an alternative paradigm.