This chapter explains how the market process creates the right capital and technology to promote the process of development. It explains how an institutional environment of economic freedom best promotes the process of development and provides empirical evidence to support this view. It then reviews how economic freedom has evolved in countries that had sweatshops identified in the first edition of this book.

Chapter 6 studies East Asian economic growth and development strategy. It starts with a section on how economic growth and the theory of growth have been constructed. It then discusses the East Asian economic miracle – rapid growth in GDP per capita with relative equity. Most East Asian countries have chosen a hybrid path, often emulating each other and building on recent successes. Most adopted the developmental-state strategy to different degrees and at different points, and they generally view modernization as a way to regain their past glories. This chapter focuses on material wealth production, with a particular emphasis on how East Asian nations adapt and innovate. It also discusses the consequences of East Asian growth in terms of the rise and fall of nations, the “rich nation, strong army”, the contest of political systems, and the environment. Uneven economic growth is a source of a shifting balance of power.

Innovation is at the core of economic development, growth, and structural change. Yet, it does not spur in nor flow to all corners of the world. This chapter reviews and describes empirically the uneven geographical distribution of innovation and its dynamics, at both the national and subnational levels. It also compares such distribution in relation to other indicators of economic activity. The chapter then examines the potential consequences of such unequal distribution, particularly for its possible influence on inter-regional income inequality, and discusses how inevitable they might be. In light of available evidence, it explores what the role of policy could be.

Women do not receive their fair share when it comes to patenting and are far less likely to own patents. This disparity is due in part to the inherent biases in science, technology, and the patent system and in part to the high costs of the patent application process. This chapter therefore proposes an unconventional new regime of unregistered patent rights to relieve women and other disadvantaged inventors of such costs and biases and thereby increase their access to patent protections. To explain the proposal, this chapter details the challenges facing women and other disadvantaged inventors in applying for patents as well as the fact that other intellectual property regimes, such as copyright and trademark, allow such unregistered rights. The chapter also addresses a number of objections that the proposal would inevitably raise. In particular, it shows that, because the proposed unregistered patent system would grant rights for only three years and protect only against direct and knowing copying, these rights would be unlikely to deter incremental or complementary innovation. Such rights would also be fully subject to invalidation under a preponderance of the evidence standard.

Without enhancing their innovation capabilities, latecomer countries will be subject to the middle-income trap, and global inequality will not be reduced. This chapter thus discusses the roles of diverse forms of intellectual property rights (IPR) in promoting innovation among latecomers. It argues, first, that utility model or petit patents can be a useful form of IPR for recognizing and encouraging innovation by latecomers in their earlier stage of development, and, secondly, that latecomer firms in sectors involving tacit knowledge can rely on trademarks, rather than regular patents, as the main forms of IPR in their innovation and growth pathways. This chapter further discusses the negative impacts of strong IPR protection in Northern economies on the exports by Southern or catch-up economies to Northern markets. As a means to overcome this barrier, the chapter discusses the role of leapfrogging strategy, where latecomers pursue different technological trajectories from those of incumbent countries.

Examining a sixteen-year period of oil labour history in Iran, beginning with the inauguration of Iran’s Third Development Plan in 1962, this analysis highlights a timeline where rapid economic growth persisted until 1976, subsequently leading to an economic crisis in 1977 and culminating in the revolution of 1978–79. Contrary to typical revolutionary patterns, this study argues that the Iranian Revolution was precipitated not merely by the short-lived economic recession but by more than a decade of rapid economic expansion beforehand. Despite varying interpretations of the economic and political roots of the 1978–79 revolution, there is a consensus among scholars about the decisive role played by the oil industry workers’ entrance into the revolutionary scene, which was pivotal for the revolution’s significant momentum. Revisiting the chronology of the revolution, this exploration delves into how workers in the Iranian oil industry prominently emerged during these upheavals and investigates how an industry, whose labour movements were historically shaped by a secular work and life culture, gradually came to embrace the Islamic leadership of Ayatollah Khomeini. Ultimately, this analysis seeks to examine the evolution of the positions of Iran’s oil working class in the year leading up to the collapse of the monarchy in Iran, striving to achieve a broader understanding of the determinative power of labour movements in political upheavals.

This chapter proposes a framework for estimating the investment in human capital from health improvement or activities that improve life expectancy and reduce morbidity rates. The measurement framework builds on and extends the Jorgenson-Fraumeni income-based approach for estimating human capital to account for the effect of health on human capital. This economic approach to measuring health human capital differs from the welfare-based approach that estimates the economic effect of health improvements on the quality of life and well-being of individuals. The framework is then implemented for Canada, and the investment in health human capital for the period from 1970 to 2020 is estimated. The estimated investment in health human capital based on the income approach was found to be lower than health expenditures in Canada. This suggests that much of the health expenditures should be classified as consumption rather than as an investment that increases earnings.

While reaction ruled, Germany was in the midst of rapid industrialization, urbanization, and overall modernization, and the Jews were often considered as prime agents of this development. However, a close look discloses Jewish communities living mainly in small towns, working in local commerce and in traditional branches of industry. Still, it seems that they were moving forward more quickly than others, more easily accepting change, enjoying more favorable demographic trends, and quickly improving their educational level. As a typical example, the chapter presents a sketch of one family history, that of the Liebermanns, who held on to their commercial interests in cotton and silk, but then slowly expanded to become larger-scale industrial entrepreneurs, centered in Berlin and later in Silesia too, gradually moving to more modern and more large-scale production sectors. On the whole, the Jewish way of modernization added one more route to the multiple varieties of such routes in Germany. Through their unique perspective, the various possibilities of moving towards modernity are more easily perceived, enriching the overall picture of this process as a whole, especially in Germany.

Increase in life expectancy will affect future welfare through changes in the stock of human capital and financial wealth. In projecting these changes it is important to differentiate between the direct demographic effect (a change in the population age structure) and the indirect behavioural change (a change in age-specific economic characteristics). Using a multi-country dynamic (general equilibrium) economic model, this chapter assesses the effects of increasing life expectancy on economic growth and inequality in European countries. The economic model accounts for both the direct effect of changes in the age structure of the population, given the economic characteristics, and the indirect effect of population changes on age-specific economic behaviour in a globalized economy. Projections for the period 2020-2100 show that future life expectancy improvements: (1) will have a negative impact on consumption and output per capita; (2) will negatively affect the accumulation of assets (more so in high-income compared to middle-income European countries due to the more generous pension systems in high-income countries); and (3) will lead to an increase in the intergenerational income inequality due to the fall in asset income at old age. However, it also finds that more generous old-age public transfer systems mitigate the negative impact of life expectancy gains on inequality.

This chapter starts by delimiting the scope of the book and making clear that we focus on various types of domestic political violence but that international wars are touched upon as well. We clearly define these terms and provide examples that illustrate the differences between distinct forms of violence, before moving to a discussion of the costs that these forms of violence impose on society. Strikingly, some people believe that wars and conflicts are good business. They are not. This chapter shows that wars not only destroy millions of innocent lives, but they are also poison for the economy. In particular, wars may be lucrative for the few but disastrous for the many. The detriments of war are manifold and include human, economic and social costs. This is illustrated by a series of historical examples. Drawing on recent cost estimates, it is also shown that the costs of a given war spread well beyond the borders of the country at war, with continental if not worldwide consequences.

Chapter 1 sets the scene for this book, providing the requisite background for the chapters that follow. It begins with a short overview of the military regime, focusing on repression and the gradual restoration of democratic freedoms, highlighting the role the latter played in facilitating the country’s burgeoning environmental movement. It then turns to the dictatorship’s plans for industrial growth and energy production. The chapter closes with an overview of the symbolism that surrounds big dams and an introduction to the influential generals and engineers responsible for orchestrating the dictatorship’s dam-building campaign. This chapter also lays the groundwork for the book’s first argument, that political pressures encouraged the military regime to build big dams quickly and with little regard for their social and environmental impacts.

This chapter analyzes the importance of insolvency law for the promotion of economic growth as well as the goals and strategies of insolvency law. It is argued that, even though insolvency law seeks to solve similar economic problems across jurisdictions, the intensity of these problems and the desirability of a particular insolvency response depend on a variety of country-specific and firm-specific factors. Unfortunately, many emerging economies have adopted insolvency laws that usually replicate practices existing in countries with totally different market and institutional environments. As a result, it is not surprising that insolvency law has failed to deliver the expected outcome in emerging economies. The chapter concludes by providing a general overview of the structure of the book and the underlying reasons justifying the need to reinvent insolvency law in emerging economies and beyond.

This chapter provides a macroeconomic perspective of artificial intelligence’s impacts on labor markets and economic growth – although the analysis remains grounded in microeconomic functions. In this chapter, we provide an economic growth model wherein AI as a possible substitute for human labor is modeled, taking into account the nature of AI as an automation technology. This goes to the heart of the current focus of economists on AI, namely its implications for labor markets, and specifically unemployment and skills requirements. The crucial points that we make here are that economists need to go further than indirectly modeling AI through assumptions on substitution elasticities and need to take the specific nature (narrow focus) of AI into explicit account.

In this chapter, we take the production function enriched with AI abilities from Chapter 4, and apply it to study the implications for progress in AI on growth and inequality. The crucial finding we discuss in this chapter is that understanding the nature of AI as narrow ML and its effect on key macroeconomic outcomes depends on having appropriate assumptions in growth models. In particular, we discuss the appropriateness of assuming, as most standard endogenous growth models today do, that economies are supply driven. If they are not supply driven, then demand constraints, which can arise from the diffusion of AI, may restrict growth. Through this, we show why expectations that AI will may lead to “explosive” economic growth is unlikely to materialize. We show that by considering the nature of AI as specific (and not general) AI and making appropriate assumptions that reflect the digital AI economy better, economic outcomes may be characterized by slow growth, rising inequality, and rather full employment – conditions that rather well describe economies in the West.

Chapter 3 analyses the normativity of sustainable development in international law and politics as expressed beyond the questions on its present (domestic) manifestations or the endless struggle to place the concept within general legal (normative) registers. It highlights how international law tends to subordinate non-Western experiences in its elevation of sustainable development into a global standard. What emerges from this process is that the more the world pursues sustainable development in its current form, the more we unwittingly contribute to the global dissemination of a particular strand of Eurocentrism. Sustainable development thus reveals itself as an amalgam of power and knowledge while simultaneously establishing itself as a vital component in international legal governance. What emerges in this chapter is that, although the concept of sustainable development is always at the forefront of international public discourse, little is done, in fact, to achieve its presumed objectives. Thus, while sustainable development’s quick ascent to become a universalist concept is central to this book, the concept’s character must be understood as quietly operating to mute global ecological violence that disproportionately affects marginalised peoples in the Global South.