Economic Growth: The New Perspectives for Theory and Policy PDF
Preview Economic Growth: The New Perspectives for Theory and Policy
Tai-Yoo Kim · Almas Heshmati Economic Growth The New Perspectives for Theory and Policy Economic Growth Tai-Yoo Kim (cid:129) Almas Heshmati Economic Growth The New Perspectives for Theory and Policy Tai-YooKim AlmasHeshmati DepartmentofIndustrialEngineering/ DepartmentofEconomics TechnologyManagementEconomics SogangUniversity andPolicyProgram(TEMEP) Seoul,Korea,Republicof(SouthKorea) CollegeofEngineering SeoulNationalUniversity Seoul,Korea,Republicof(SouthKorea) Additionalmaterialtothisbookcanbedownloadedfromhttp://extras.springer.com ISBN978-3-642-40825-0 ISBN978-3-642-40826-7(eBook) DOI10.1007/978-3-642-40826-7 SpringerHeidelbergNewYorkDordrechtLondon LibraryofCongressControlNumber:2013954791 ©Springer-VerlagBerlinHeidelberg2014 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionor informationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped.Exemptedfromthislegalreservationarebriefexcerpts inconnectionwithreviewsorscholarlyanalysisormaterialsuppliedspecificallyforthepurposeofbeing enteredandexecutedonacomputersystem,forexclusiveusebythepurchaserofthework.Duplication ofthispublicationorpartsthereofispermittedonlyundertheprovisionsoftheCopyrightLawofthe Publisher’s location, in its current version, and permission for use must always be obtained from Springer.PermissionsforusemaybeobtainedthroughRightsLinkattheCopyrightClearanceCenter. ViolationsareliabletoprosecutionundertherespectiveCopyrightLaw. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. While the advice and information in this book are believed to be true and accurate at the date of publication,neithertheauthorsnortheeditorsnorthepublishercanacceptanylegalresponsibilityfor anyerrorsoromissionsthatmaybemade.Thepublishermakesnowarranty,expressorimplied,with respecttothematerialcontainedherein. Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Preface Thisbookhasbeenwrittenforreaderswhodesiretowitnessasignificanteconomic growth, one that will bring about an enhancement of the national economy and welfare. Important target readers that we have kept in mind include college and graduate students, economic policymakers, politicians, the experts and leaders of economicpolicy.Anyonewithabasicknowledgeofeconomictheorywhowishes to learn more about economic growth, however, will benefit from perusing the contents of this book. The new perspectives of economic growth theory that we introduceherewillproveespeciallyusefultothosewhoquestion,andtothosewho havebeendisappointedwiththelimitedefficacywithwhichtraditionaleconomics andeconomicgrowththeorieshaveappliedtotherealworld. Constructingatheoreticallycorrectperceptionofthenatureofeconomicgrowth, and crafting practical government policies to stimulate actual economic growth, requireafirmgriponthreefundamentalcharacteristicsofeconomicgrowth. Firstofall,thenatureofeconomicgrowthisnotdefinedbythespeedatwhich the economy grows, but by whether or not it accelerates in its growth. In other words,thecurrentspeedofeconomicgrowthisfarlessimportantthantherateofits acceleration(ordeceleration).Thisisbecausetherateofaccelerationisthefactor that indicates the technological nature, or industrial organization, of an economy. Technologicalnatureandindustrialorganizationareultimatelywhatdeterminethe rate of a country’s future economic growth. In any given historical period, therateofaccelerationwasinfactnotonlylinkedtotheeconomiccharacteristics of a country, but also to the social, political, and cultural factors stemming from economics. Thesecondpointtorememberisthateconomicgrowthisafruitoftheexpansive reproductionsystem.Theeconomicgrowthofacountryorsocietyaccelerateswhen the virtuous cycle of an expansive reproduction system is created and maintained. When the country or society falls out of this virtuous cycle, its economic growth stalls; if a malicious cycle is formed, its economy begins to regress. A virtuous cycle is formed when accumulated capital is invested in technological innovation, generating new demand for the new products created by newly developed technol- ogy.Thisspursaqualitativedevelopmentoftheeconomyandthesophisticationof v vi Preface industrialorganization,whichbecomethebackbonesoftheexpansivereproduction system. Qualitative development of the economy allows for mass production and mass supply, gratifying the newly generated demand and keeping up an expansive equilibrium. Ina society where the expansive reproduction system is the engine of economicgrowth,then,technologicalinnovationisitspowerfulfuel. Finally,theroleofvaluecreationineconomicgrowthiscrucial.Anexpanding economy is indicative of generation of new values, which had not previously existed. Traditional industrial classifications, such as primary, secondary, and tertiary, or manufacturing versus service, however, are woefully inadequate for a properunderstandingoftheroleofvaluecreationineconomicgrowth.Economic policies basedonthe traditionalclassificationsandtheorieshavethusoftencaved intoskewedandunproductivecontroversies.Insteadoftryingtoascertaindifferent categories of economy, it is more important to understand that an economy develops through the cycle of the processes of creation, expansion, and transmis- sion of value. The rise and fall of every state in history, then, were inextricably linked to the processes of value creation in various societies in different time periods,betheylargeandpowerful,ortinyandinsignificant. Wehopethatourneweconomicgrowththeorywillofferusefulandapplicable suggestions for countries seeking to stimulate new economic growth, for both developingcountries trapped inamaliciouscycleofchronicallylowgrowthrates and poverty and advanced industrial states struggling with economic crises and recession.Webelievethatourtheorywillnotonlyofferexcitingnewsolutionsfor theeconomiesofindividualcountries,butforthecommongrowthandprosperityof theglobaleconomyatlarge. We are deeply grateful for the support ofthe National Research Foundationof Korea (NRF), Grant No.2010-0026178, near the time of the publication of our research. Without Editor Toby Chai, the staff, and the Springer publishing com- pany, this book would never have seen the light of day. Although we cannot reiterate all the names of our co-authors here, their dedicated and creative efforts were what enabled the completion of our theory and book. Their names can be foundintheindividualchapterstowhichtheycontributed.Ifanymistakesorerrors are still to be found in the following pages, it is due solely to the negligence and shortcomingsoftheauthor. Seoul Tai-YooKim August2013 AlmasHeshmati Contents 1 IntroductiontoandSummaryofEconomicGrowth: TheNewPerspectivesforTheoryandPolicy. . . . . . . . . . . . . . . . 1 Tai-YooKimandAlmasHeshmati 2 DeceleratingAgriculturalSociety:Theoretical andHistoricalPerspectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Tai-YooKim,AlmasHeshmati,andJihyounPark 3 AcceleratingEconomicGrowthinIndustrialSocieties: TheProcessofExpansiveReproduction. . . . . . . . . . . . . . . . . . . . 57 Tai-YooKim,SeunghyunKim,andJongsuLee 4 DeterminantsofEconomicDivergenceAmong AcceleratingSocieties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Tai-YooKim,SeunghyunKim,andJongsuLee 5 TheFaster-AcceleratingDigitalEconomy. . . . . . . . . . . . . . . . . . 163 Tai-YooKim,EungdoKim,JihyounPark,andJunseokHwang 6 TheFasterAcceleratingGrowthoftheKnowledge-Based Society. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Tai-YooKim,Mi-AeJung,EungdoKim,andEunnyengHeo 7 TheCatch-UpIllusion:WhyDevelopingNationsthat ExperienceRapidEconomicGrowthCanNeverCatchUp withAdvancedCountries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 Tai-YooKimandSeunghyunKim 8 War,PeaceandEconomicGrowth:ThePhoenixFactor Reexamined. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 Tai-YooKim,GicheolJeong,andJongsuLee vii viii Contents 9 TheRelationshipAmongStockMarkets,Banks,Economic Growth,andIndustryDevelopment. . . . . . . . . . . . . . . . . . . . . . . 279 Tai-YooKim,JungwooShin,YeonbaeKim,andJeong-DongLee 10 TheNecessityofaNewIndustrialClassification BasedonValue-CreationBehavior. . . . . . . . . . . . . . . . . . . . . . . . 293 Tai-YooKim,YoonmoKoo,DongOokChoi,andYeonbaeKim BiographyoftheAuthors. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . 309 AuthorIndex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 SubjectIndex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Lists of Contributors Dong Ook Choi ESSEC Business School and THEMA, Universite´ de Cergy- Pontoise,Cergy-Pontoise,France Eunnyeng Heo Department of Energy Resources Engineering, 38–314, Seoul NationalUniversity,Seoul,SouthKorea AlmasHeshmati DepartmentofEconomics,SogangUniversity,Seoul,SouthKorea JunseokHwang DepartmentofIndustrialEngineering/TechnologyManagement EconomicsandPolicyProgram(TEMEP),CollegeofEngineering,SeoulNational University,Seoul,SouthKorea Gicheol Jeong Science and Technology Policy Institute (STEPI), Dongjak-gu, Seoul,SouthKorea Mi-AeJung ScienceandTechnologyPolicyInstitute(STEPI),Seoul,SouthKorea Eungdo Kim The Graduate School of Health Science Business Convergence, ChungbukNationalUniversity,Cheongju,Chungbuk,SouthKorea Seunghyun Kim Science and Technology Policy Institute (STEPI), Seoul, SouthKorea Tai-Yoo Kim Department of Industrial Engineering/Technology Management Economics and Policy Program (TEMEP), College of Engineering, Seoul National University,Seoul,SouthKorea Yeonbae Kim Department of Industrial Engineering/Technology Management EconomicsandPolicyProgram(TEMEP),CollegeofEngineering,SeoulNational University,Seoul,SouthKorea Yoonmo Koo Engineering Research Institute, Seoul National University, Seoul, SouthKorea ix
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