Contents
1.1 Applying Interdisciplinary Analysis to the Study of Growth ...................1
1.2 Authorship.................................................................................................5
1.3 The Relationship Between Interdisciplinarity and Disciplines ................7
1.4 A Starting Assumption..............................................................................9
1.5 A Critical Insight Regarding the Complexity of the Growth Process ......9
1.6 Motivation (Is Growth Good?) ............................................................... 10
1.7 The Integrative Process ........................................................................... 15
1.8 Plan of Book............................................................................................ 19
1.9 The Nature of the Guiding Question....................................................... 21
1.10 Defining Economic Growth .................................................................... 23
1.11 Defining ‘Causes’....................................................................................26
2 The Key Phenomena that Potentially Cause Growth................................ 27
2.1 The Causal Link Approach .................................................................... 27
2.2 Causal Links Within and Beyond Disciplines ....................................... 29
2.3 Classifying Human Science Phenomena ................................................ 30
2.4 The Sources of Economic Growth ......................................................... 36
2.4.1 The Nature of Economic Growth................................................. 36
2.4.2 Emergent Properties..................................................................... 43
2.4.3 Links to Other Phenomena........................................................... 45
2.5 The Importance of Precise Definitions of Phenomena .......................... 51
3 The Most Relevant Theories and Methods................................................. 53
3.1 Theories................................................................................................... 54
3.1.1 Classifying Theory Types ............................................................ 54
3.1.2 Theory Types and Economic Growth.......................................... 57
3.1.3 Theories of Economic Growth..................................................... 59
3.2 Methods .................................................................................................. 82
3.2.1 Strengths and Weaknesses of the Dozen Scholarly Methods...... 83
3.2.2 Triangulation Across Methods, Maintaining Standards ............. 85
3.2.3 The Rule Critique ........................................................................ 88
3.2.4 Mathematical Models .................................................................. 89
3.2.5 Statistical Analysis ...................................................................... 91
3.2.6 Case Studies ................................................................................ 94
1 Interdisciplinarity and Economic Growth....................................................1
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Acknowledgments...................................................................................................xi
List of Tables........................................................................................................ xiii
Contents
4 Relevant Disciplines and Disciplinary Perspectives .................................. 99
4.1 Which Disciplines Should be Engaged? ................................................ 99
4.2 The Nature of Disciplinary Perspective ............................................... 100
4.3 Does Disciplinary Perspective Really Matter? .................................... 102
4.4 Disciplinary Perspectives of Relevant Disciplines .............................. 103
4.4.1 Economics..................................................................................103
4.4.2 Economic History ...................................................................... 111
4.4.3 History........................................................................................113
4.4.4 Business History ........................................................................ 114
4.4.5 Cultural Studies.......................................................................... 115
4.4.6 Development Studies ................................................................. 116
4.4.7 Political Science......................................................................... 116
4.4.8 Sociology ...................................................................................122
4.4.9 Geography..................................................................................125
4.4.10 Anthropology .............................................................................126
4.4.11 Marxian Approaches.................................................................. 130
4.4.12 Science and Technology Studies ............................................... 131
4.4.13 Psychology.................................................................................132
4.4.14 Philosophy .................................................................................134
4.4.15 The Other Humanities................................................................ 134
5 An Interdisciplinary Literature Survey.................................................... 135
5.1 The Literature Survey Performed, with Advice for its Extension ........ 135
5.2 A Tangential Diatribe ........................................................................... 139
6 The Causes of Economic Growth: Investment, Trade,
Technology, Geography.............................................................................. 141
6.1 A First Lesson from Economic History ............................................... 142
6.2 Investment ............................................................................................ 144
6.2.1 Encouraging Useful Investment ................................................ 148
6.2.2 The Capital Goods Sector.......................................................... 150
6.2.3 Foreign Investment .................................................................... 150
6.2.4 Foreign Aid ................................................................................ 151
6.2.5 Microfinance.............................................................................. 152
6.2.6 Psychology and Investment ....................................................... 153
6.3 Openness to Trade ................................................................................ 153
6.3.1 The Empirical Literature............................................................ 153
6.3.2 An Alternative to Comparative Advantage ............................... 156
6.3.3 Trade and Institutions ................................................................ 158
6.3.4 Trade and Resources.................................................................. 159
6.3.5 Costs and Benefits of Openness ................................................ 159
6.4 Technology............................................................................................ 162
6.4.1 Interdisciplinarity and Technology............................................ 162
6.4.2 Technology as a Cause of Growth............................................. 162
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Contents
6.4.3 The Course of Technological Innovation (Endogeneity) .......... 163
6.4.4 Clustering, General Purpose Technologies................................ 167
6.4.5 Research and Growth................................................................. 169
6.4.6 Product Versus Process Innovation ........................................... 170
6.4.7 Technology Transmission.......................................................... 171
6.4.8 Links to Technological Innovation ............................................ 174
6.4.9 Technology and Social Structure............................................... 185
6.5 Geography ............................................................................................. 186
6.5.1 Climate and Location................................................................. 186
6.5.2 Resources ................................................................................... 187
6.5.3 Country Size............................................................................... 188
6.5.4 Regional Clusters ....................................................................... 189
6.5.5 Environment............................................................................... 190
7 The Causes of Economic Growth: Institutions.........................................191
7.1 Institutions and Growth......................................................................... 191
7.1.1 Institutions and Investment ........................................................ 195
7.1.2 Institutions and Infrastructure .................................................... 196
7.2 Which Functions?.................................................................................. 198
7.2.1 Ownership (Property Rights) ..................................................... 198
7.2.2 Exchange.................................................................................... 199
7.2.3 Finance ....................................................................................... 199
7.2.4 Production .................................................................................. 200
7.3 Which Institutions? ............................................................................... 200
7.3.1 Property Rights .......................................................................... 202
7.3.2 Financial Institutions.................................................................. 204
7.3.3 Labor Markets and Work Effort ................................................ 204
7.4 Institutional Change .............................................................................. 207
7.4.1 Economics Approaches.............................................................. 207
7.4.2 Economic History ...................................................................... 209
7.4.3 Sociological Institutionalism ..................................................... 214
7.4.4 An Insight from Anthropology .................................................. 217
7.4.5 Institutions and Psychology ....................................................... 217
7.4.6 Politics and Institutions.............................................................. 218
7.4.7 Business History ........................................................................ 223
7.4.8 Integrating These Approaches ................................................... 224
8 The Causes of Economic Growth: Cultural and Social Determinants .. 233
8.1 Culture................................................................................................... 233
8.1.1 Culture and Institutions.............................................................. 233
8.1.2 The Nature of Culture ................................................................ 235
8.1.3 Cultural Change ......................................................................... 236
8.1.4 Culture and Growth.................................................................... 238
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7.4.9 Democracy ................................................................................. 229
Contents
8.1.5 Which Values?........................................................................... 243
8.1.6 Culture as Economic Asset........................................................ 249
8.1.7 Cultural Capital.......................................................................... 249
8.1.8 Cultural Influences on Politics................................................... 249
8.2 Entrepreneurship .................................................................................. 250
8.3 Social Capital ....................................................................................... 254
8.3.1 Effects of Social Capital ............................................................ 255
8.3.2 Sources of Social Capital........................................................... 256
8.3.3 Limitations to Empirical Analysis ............................................. 257
8.3.4 Scholarly Biases Favoring Social Capital.................................. 258
8.4 Community Development .................................................................... 258
8.5 Population ............................................................................................. 259
8.6 Health .................................................................................................... 261
8.7 Social Structure .................................................................................... 261
8.7.1 Inequality ...................................................................................263
8.7.2 Ethnic Divisions.........................................................................264
8.7.3 Gender........................................................................................266
8.7.4 Family Structure ........................................................................ 266
9 Causal Arguments Under-studied in the Literature ............................... 267
9.1 Sectoral Interactions ............................................................................. 268
9.1.1 Technology and Sectoral Interactions ....................................... 271
9.1.2 Catching the Wave..................................................................... 272
9.1.3 Firms ..........................................................................................273
9.2 Networks ............................................................................................... 276
9.2.1 Networks and Technological Innovation................................... 276
9.2.2 Investment in Physical Capital .................................................. 278
9.2.3 Investment in Human Capital .................................................... 279
9.2.4 Institutional Change................................................................... 279
9.2.5 Trade ..........................................................................................281
9.2.6 Other Links ................................................................................ 281
9.2.7 Advantages and Challenges of Network Analysis .................... 282
10 Emergent Properties of the System of Causal Links .............................. 285
10.1 Aggregate Growth Dynamics: Is There a Poverty Trap? .................... 285
10.1.1 Convergence ..............................................................................289
10.1.2 Common Ground Between Optimists and Pessimists ............... 291
10.1.3 The Poor are Different ............................................................... 292
10.2 Macroeconomics and Growth .............................................................. 292
10.2.1 The Medium Term .................................................................... 293
10.2.2 Long Waves ...............................................................................294
10.2.3 Implications of Growth Theory for Fluctuations....................... 296
10.2.4 Implications of Macroeconomic Theory for Growth ................ 300
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11 Integrating Diverse Views of the Role of Government............................ 305
11.1 The Role of Government....................................................................... 305
11.1.1 The Washington Consensus....................................................... 307
11.1.2 Property Rights ..........................................................................309
11.1.3 Public Ownership.......................................................................309
11.1.4 Public Spending and Taxes, Federalism .................................... 311
11.1.5 Public Goods..............................................................................312
11.1.6 Government Intent .....................................................................320
11.2 The Developmental State ...................................................................... 323
11.2.1 The Idea of the Developmental State ........................................ 324
11.2.2 The Essence of the Developmental State .................................. 326
11.2.3 Sources of the Developmental State.......................................... 328
11.2.4 Summing Up.............................................................................. 329
12 Reflections on the Results of Integration .................................................. 331
12.1 Reflect on One’s Own Biases ............................................................... 331
12.2 Reflect on Steps Omitted ...................................................................... 334
12.3 Reflect on the Weaknesses of the Theories and Methods Used in
One’s Comprehensive Vision ............................................................... 334
13 Possible Tests of the Results of Integration .............................................. 335
13.1 Empirical Tests......................................................................................335
13.2 A Holistic Test in Application .............................................................. 336
14 Concluding Remarks ..................................................................................339
14.1 Insights into Economic Growth ........................................................... 340
14.2 The Value of the Process for our Understanding of Growth ............... 344
References ........................................................................................................... 353
Index .................................................................................................................... 365