Question 1. How does Owen Barder define development? How does he extend Amartya Sen’s definition to include the idea of complexity? Owen Barder states that development is part of the complex adaptive process in society and economy instead of the separate individuals become more productive and have increase in output. Development is a process that a positive change occurs in the society and the society gradually adapts the new idea or change, resulting in an expansion of freedom in multiple dimensions. Based on Amartya Sen’s idea that development is the expansion of freedom, Barder further argues that the process of development is nonlinear; the societal development is so complex that it is hard to predict the outcome of an action.
Question 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? In the 1960s, the income per capita of South Korea is worse than that of Ghana; however, in the upcoming decades, the economy of South Korea exploded exponentially while little economic progress can be seen in Ghana. Through comparison the scientists can see clearly what factors have driven the prosperity of South Korea and what factors have hindered the economic development of Ghana.
Question 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? Toaster project is an idea by a British student Thomas Thwaites who attempted to manufacture a toaster from scratch entirely by himself. He bought the cheapest toaster in the market as a model but found that there were still over 200 parts of complex components that builds up the toaster. He did his best to collect raw materials and assemble a similar toaster. The toaster Thomas Thwaites created has a much larger cost of the market price and it burned down after functioning for five seconds. The toaster project illustrates the complexity of the system of economics in which numerous individuals work collaboratively in the society to contribute to the production of final products while keeping the cost low.
Question 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? Harrod Domar growth model is a outdated economic growth model the states the only two fundamental variables to contribute to economic growth are labor and capital. The output increases whenever labor or capital increases. Walter Rostow is an economist and he claimed that the development is a circle that a large increase in domestic investment will trigger the positive circular chain-reaction that allows a nation to be economically self-sustained.
Question 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? Robert Solow model is an improved version of the Harrod Domar model. It introduces a third variable technological change that also affects economic growth. It is much more successful at predicting economic growth than the outdated Harrod Domar model, but it lacks explanation of the important concept of technological change. It fails to provide a trustworthy answer of the giant development gap between East Asia and Africa.
Question 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? Ajaokuta Steel works is one of the largest investments in steel industry in Nigeria, the poor management and corruption has prevented it from producing and profiting. The economists and investors saw that it is the implementing institutions that block the economic development, so the scientists and policy makers started to focus on the efficiency of institutions. Why Nations Fail explores why many nations failed to break the poverty cycle. It points out that the poor nation’s politic elites do not wish to see the economic development because they are able to benefit from exploiting the vast majority of the people; thus the idea of providing correct advice failed because the governing body does want to listen.
Question 7. According to Barder, how successful have economic models been at describing and predicting growth over the past 50 years? According to Barder, the traditional economic models failed to explain, describe, and predict the growth over the past 50 years since some nations have made great economic progress while other countries were unable to break the poverty trap. He argues the factors that trigger economic growth is missing from those classic models.
Question 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? The Schumpeter’s idea of creative destruction emphasizes that the firms and industries must continue to evolve and adapt to new technology and social trends. Nokia successfully adapted to the phones industry but failed to evolve to the smart phone industry. Products, technologies, people do not evolve separately; instead, they adapt to each other that creates a co-evolution which holds the principle of the survival of the fittest. Co-evolution represents the future social trends and the direction of technology advancement.
Question 9. What is a complex adaptive system? What are some of its important features? A complex adaptive system is a system of co-evolving agents that are adapting to each other. Examples of complex adaptive systems include human brain, bird flocks and weather patterns. The complex adaptive systems are difficult to predict; It has emergent properties and tends to have greater complexity so that it will not go to reach a simple equilibrium that economists like but a stable outcome that sometimes has unexpected changes.
Question 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? Haile Sellasie was the Emperor of Ethiopia. Kapuscinski’s book The Emperor argues that the elite ruling class in poor country (Ethiopia) suppress and exploit its people, block the development efforts because it is against the ruling class’s private interest. It emphasizes the importance of democracy but notes that the issue is more than a democratic institution. I agree with this analysis since development is a multi-dimensional effort that applies the complex adaptive system.
Question 11. Why does Barder recommend resisting engineering as a policy implication? What did he mean by iso-morphic mimicry? Since human development is nonlinear, engineering solutions are almost impossible in this situation. Barder argues against iso-morphic mimicry, a copy of important institutions from functioning states to the weak states, since a functioning institution looks very similar to a institution that pretends it is functioning.
Question 12. What did Barder mean by “resist fatalism”? Who was Norman Borlaug and what is the green revolution? Resist fatalism means people have the ability to reject the outcome of a revolution and can shape its progress. Norman Borlaug started the Green Revolution; he intervenes in the evolution process of agricultural products by crossbreeding to get a higher yield of output. He has saved many from starving.
Question 13. Barder also recommended to promote innovation, embrace creative destruction and shape development. What did he mean by these recommendations? Barder highlights the importance of feedback loops since innovations also requires selections; an example will be the failed regimes who does not have an effective feedback mechanism. Barder has also recommended the state support for firm’s innovation effort by providing a safe environment.
Question 14. Who was Nicholas Georgescu-Roegen and what was his insight about economic systems and evolution? Nicholas Georgescu-Roegen was a Romanian economist. He argues people need to pay more attention to the social well-being rather than the GDP or economic growth by numbers alone.