1. How does Owen Barder define development? How does he extend Amartya Sen’s definition to include the idea of complexity?
He believes that development is a property of the economic and social system itself. He says that judging development by its effects on people does not mean development is the sum of improvements and the wellbeing of people or output of firms. He expands on Sen’s definition of development, by including development as an aspect of the economic and social system.
2. Barder compared the economic growth of South Korea and Ghana between 1960 and 2010. Why did he make this comparison? What did this comparison demonstrate when used as the basis to validate economic models?
He made this comparison in order to understand distribution rather than average income per individual. He says that average income per person is not a complete measure of wellbeing, instead the distribution of wealth.
3. What was the toaster project? What did Thomas Thwaites attempt to do? Was he successful? What is the significance of this example in the context of complexity?
The toaster project illustrates the hypothesis of the lecture which is that development is better thought of as a characteristic of the economic/social/political system. Thomas Thwaites attempted to make an electric toaster entirely from scratch, finding the raw materials and producing it into an electric toaster. It took him 9 months to construct it, but it was only successful for 5 seconds. Considered a partial success. The project showed that even making the simplest toaster requires an array of technologies and parts. The economy has to be rich and complex in order to supply all these materials and working parts. Development is not an increase in output, rather than an emergence of a system of economic, political, legal institutions in order to provide citizens the opportunity to live happy and healthy lives.
4. What was the Harrod Domar growth model? What are the two fundamental variables in this model? Who was Walter Rostow and what was the impact of his work on development?
It said that in order to make unit of output, you need to combine a certain amount of capital and labor. A firm increases its output if it increases capital and labor. Walter Rostow published “the stages of economic growth”, which claimed development is a virtuous circle. If Investment could be increased, then capital can be increased, growth can be increased, then income be increased, and savings be increased, which then goes back to investment. It showed the importance of saving and additional investments in order to calculate aid.
5. What was the Robert Solow model? How did it address the limitations of the Harrod-Domar model? Was this model successful at predicting economic growth?
Harrod-Domar model bears no resemblance to reality. Neoclassical growth theory that introduced a third component on top of capital and labor which was Exogenous technical change. Helped fit the data of South Korea and Ghana much more than Harrod-Domar’s model. Yes, it was successful.
6. What was the Ajaokuta Steel works? How did it illustrate the transition from a focus on policies to institutions? How did Acemoglu & Robsinson’s book Why Nations Fail address governance and politics? How is their argument a response to the previously failed idea regarding engineering prosperity by providing the correct economic advice?
One of the largest investments in steel production in the world. Institutions were the reason for the failure of no production. The reason is poor management and corruption. The book addresses governance and politics, by saying mainstream development practice is built on an incorrect assumption that poor countries are poor because their rulers have mistaken views on how to run their country and tolerate corruption. Poor countries do not have weak institutions because they don’t know any better, because it suits powerful elites to to run the nation that way.
7. According to Barder, how successful have economic models been at describing and predicting growth over the past 50 years?
Fastest progress in history (1): most successful period in history in reducing poverty, increasing incomes, and increasing life expectancy. No explanation for the difference (2) on economic growth or decline. Missing ingredients (3) for determining how and why economic growth happens in impoverished nations. All endogenous (4) characteristics of the system itself.
8. What was the significance of Schumpeter’s idea of creative destruction? How does it relate to firms and institutions? What is co-evolution and why is it significant?
Schumpeter’s idea of creative destruction is a theory that assumes that long-standing arrangements and pre-conceived assumptions should be destroyed in order to free up resources and energy to further innovation and development. This relates to firms and institutions, in that companies should innovate and remove their assumptions and arrangements that are bringing them down. Co-evolution is when each agent in the complex adaptive system of the economy is evolving in the light of the environment.
9. What is a complex adaptive system? What are some of its important features?
The complex adaptive system is a system that consists of a dynamic network of adaptive agents, all of which are co-evolving. Some of its important features are: Adaptive, Non-Linear, Unpredictable, self-organized, cooperative, etc.
10. Who was Haile Sellasie? What is the significance of Kapuscinski’s book The Emperor? How did Ethiopia exemplify the suppression of emergent systemic change? Do you agree with this analysis?
Hallie Sellasie was the emperor of Ethiopia (1930-1974). The significance of Kapuscinski’s book: The emperor, which chronicled the last days of Emperor Hallie Sellasie. All decisions went through Sellasie, which exemplified the suppression of emergent systematic change. Problems of poverty and hunger were forbidden to be brought up to the emperor. I do agree with Barder’s analysis of the book and Kapuscinski’s analysis on Ethiopia under Emperor Selassie.
11. Why does Barder recommend resisting engineering as a policy implication? What did he mean by iso-morphic mimicry?
Barder recommends resisting engineering as a policy implication because it is very difficult to engineer solutions in a complex adaptive system. The first reason is that at the level of specific improvements, the evolutionary processes often outperform design. At the level of the system as a whole, the nonlinear dynamics means that it is generally impossible to predict what will happen as a result of any particular change. This makes engineering solutions almost impossible. Iso-morphic mimicry is when something or someone mimics another rather than expending the energy to actually do the thing they are mimicking. In relation to this lecture, Barder says that in development it is easier to create an organization that looks like a police force, than it is to create an organization that can institute law.
12. What did Barder mean by “resist fatalism”? Who was Norman Borlaug and what is the green revolution?
This means that if we are smart, we can both accelerate and shape evolution, rather than just accepting out fate of evolution. Norman Borlaug was the man who brough about the green revolution by intervening in the evolutionary process to develop high-yield disease resistant wheat varieties.
13. Barder also recommended to promote innovation, embrace creative destruction and shape development. What did he mean by these recommendations?
He is trying to say that promoting innovation, embracing creative destruction, shaping development, embracing experimentation, and acting globally all foster human development. He says that the all these when combined ushers true human development, and people and governments should not fear all of these features.
14. Who was Nicholas Georgescu-Roegen and what was his insight about economic systems and evolution?
Nicholas Georgescu-Roegen was a Romanian mathematician, statistician, and economist. He is known for utility theory, consumer choice theory, production theory, biophysical economics, and ecological economics. Roegen relates very similarly to Barder’s insights about economic systems and evolution, and both strive for human development through these systems.