Born in 1931, C. T. Kurien contributed to rethinking economics through his various writings, particularly books and his vision for a practical B.A degree in Economics at Madras Christian College (MCC), an autonomous college situated in Chennai, a port city in Southern India. Besides MCC, another institution he contributed to was Madras Institute of Development Studies (MIDS), a research-only institute, also in Chennai. Kurien passed away in July 2024 aged 93.
This blog post provides a brief introduction to Kurienās life and economics.
A major theme that dominates the literature on development economics is the narrative of āStructural Transformationā, which, based on the experience of developed economies, envisages a gradual āmodernisationā of the economy. This process is expected to unfold in a similar way across the economies of global South, where the importance of non-agriculture/high-productivity/capitalist sectors in terms of both contribution to national income and labour employment would increase and that of agriculture/low-productivity/pre-capitalist sectors would fall, ultimately leading to dissolution of this dualist structure of the economy (Lewis, 1954; Kaldor, 1967; Kuznets, 1968). This transformation is expected to bring productivity gains across all sectors, reduce poverty, and lead to high levels of economic prosperity. According to Monga and Yifu Lin (2019), structural transformation is āarguably the single most significant concept and social goal in the global quest for prosperity and world peace.ā
However, many of the economies of the global South have not been able to undergo this expected path of structural transformation. For example, in 2019, for sub-Saharan Africa, the average contribution of agriculture to GDP has been around 14% while the proportion of population employed in agriculture is 53%. The GDP contribution and employment figures range from 8% and 27% for East Asian and Pacific economies to 17% and 42% for South Asia respectively (World Development Indicators, 2021).
The dominant narrative, largely propagated by international agencies like the World Bank, still advocates the validity of the process of structural transformation, continues to use this framework to understand the labour and employment transition in the global South, and advocates policies to achieve the same. In contrast, within various critical strands of literature, there is an increasing realization that the nature and pattern of structural transformation that unfolded in the global North might not be replicable in the global South (Dorin, 2017; Scherrer, 2018; Breman, 2019). Building on some of these criticisms, we argue that the possibilities of attainment of a North-style structural transformation remains bleak in the contemporary global South. This is majorly because the socio-economic and political context which facilitated the process of structural transformation of the economies in the global North is no longer available to the global South. The process in the North was, to a large extent, fostered by colonialism which allowed these economies to undertake expropriation and extraction of resources, without much concern for ecological limits, as well as to transfer a proportion of their population to the newly found lands in the temperate regions. Given the significant changes in the structure of capitalism now as compared to the earlier phase, it is worthwhile to investigate the possibilities of the global South experiencing the envisaged path of structural transformation.
In the following sections, we elaborate on why the received wisdom in development economics no longer provides an adequate framework to understand capitalist development in the global South.
The current remarkable surge in inflation is considered to be a nearly global phenomena (Reinhart and Lucker 2022), affecting both developed and developing nations. While there may be common drivers of inflation, such as factors associated with the Covid-19 pandemic followed by Russiaās invasion of Ukraine, there are considerable variations in the causes of it, especially with reference to developing countries, including Albania. Drawing on Kaleckiās (1976) Essays on Developing Economies, I argue that there are also domestic factors attributed to the increase in inflation that resides in the structural sectoral imbalances of the Albanian economy.
Rising prices in Albania sparked protests across the country in March 2022. The protests highlighted the rise in food prices which increased by more than 9% compared to March in the previous year; with the price of bread being the main contributor to such increase. With Albanians spending more than 42% of their total budget on food, rising prices of ānecessitiesā adds more pressure to the poor households to make ends meet. Nearly a quarter of Albanians, 640,000 people, already live in poverty (Kote 2022) and soaring prices in the economy could push people further into poverty. But what is pushing food prices to soar in a country where agricultural land accounts for 24% of overall land, a good Mediterranean climate, and water resources, all of which are crucial for agricultural development? Despite these favourable conditions, the productive capacity of Albaniaās agriculture sector to meet domestic demand for food and feed meets is only one third (World Bank, 2022a). Ā
The commodity supercycle of the 2000s and 2010s gave rise to a rich debate in the academic literature about the possibility for resource-rich countries to muster the primary commodity price bonanza for development. As in past debates on the rise of Asia as the āworldās factoryā, industrial policy was once again at the forefront of discussion.
On the one hand, orthodox scholars insisted that the use of market distortions to channel resources towards industrialisation would be a risky gamble with little guarantee of success. Instead, as the Asian ātigersā and China before them, developing countries would do well to make good use of the market to identify their comparative advantages. In this view, industrial policy continues to be inefficient and wasteful, especially as it creates plenty of opportunities for corruption rather than development. On the other hand, heterodox researchers argued that state intervention was crucial to divert resource rents to specific nascent industries that would never be able to withstand international competition without sustained support. As both the Asian ātigersā and China more recently used robust industrial policy to develop globally competitive industries, developing countries should also use targeted policy intervention to āupgradeā to higher value-added manufacturing for export.
Still, one question that eludes both orthodox and heterodox literature concerns why, for decades, multinational corporations would consistently invest in manufacturing in resource-rich countries such as, for instance, Argentina, Brazil, and Egypt. This has been the case despite the small scale and high costs of production in these markets (making them inefficient, per orthodox scholars), whose output is mostly sold domestically rather than exported (pace heterodox scholars).
In a in Competition & Change, I applied Argentinian scholar ās on Marx to the under-researched case study of the car industry in Uzbekistan to answer precisely this question. I found this same orthodox-heterodox binary to dominate the literature on ātransitionā from the command to the market economy in Uzbekistan, too. Orthodox researchers averred that state-owned auto company UzAvtoSanoat failed to develop due to inefficiency and corruption, in particular due to the distortions of the governmentās industrial policy. Heterodox scholars instead found industrial policy to be the very reason behind the creation of a successful export-oriented car industry, in particular during the commodity supercycle when part of total output was exported mostly to Russia. Neither, however, could explain why Korean Daewoo Motor Company (DMC) and American General Motors (GM) entered into a joint-venture with UzAvtoSanoat, despite the small domestic scale (hence high costs) of automobile production in the country, which is mostly purchased domestically.
Next January the next United Nations Programme of Action for least developed countries (LDCs) will launch in Doha. It will set the framework for the next 10 years of international support for the worldās 46 officially poorest and most structurally disadvantaged countries, home to around a billion people.
LDCs are low-income countries confronting severe structural impediments to sustainable development. Membership of the category is based on : income per capita, human assets and economic and environmental vulnerability.
for LDCs currently falls under three categories: trade, aid and a range of ad hoc measures broadly aimed at help with taking part in the international system, such as lower contributions to the UN budget and support for travel to international meetings like the annual UN General Assembly.
Support is largely based on the premise that LDCs are artificially or temporarily excluded from global commerce. Preferential market access, temporary development assistance and help with participating in multilateral processes are intended to tackle this defect, in turn helping the LDCs ācatch upā.
Dating to 1971, the category is the only one recognised in UN and multilateral legal texts. There is no official ādeveloping countryā or āmiddle incomeā category with associated support measures. Low income countries are not specifically targeted, and the small and vulnerable states are only recognised as a working group at the World Trade Organisation. They are not acknowledged in the legal texts.
Although donors donāt meet aid pledges and support doesnāt go far enough, official targets are possible because the LDC group is officially recognised in the UN system and has legal bearing. An example of such a target is the commitment by developed countries to deliver 0.15-0.20% of gross national income (GNI) in development assistance to LDCs. The European Union offers duty-free, quota-free market access to LDC exports under its Everything But Arms (EBA) trade scheme for LDCs.
The theory behind support for LDCs is implicitly based on the mainstream economics view that LDCs lag behind because they arenāt exposed enough to correct market prices and conditions. The removal of so-called distortions like overseas tariff and non-tariff barriers, alongside temporary development assistance and help taking part in the global system, is supposed to free up these economies to play a fuller role in the international economy. Economic growth will drive development and reduce poverty.
The evidence shows that for most LDCs this theory never worked. Until the pandemic the economies of some LDCs were performing well. Up to 12 could leave the category in coming years. A few, like Bangladesh, Cambodia and Myanmar, were able to take advantage of lower tariffs for their garment exports. These three countries account for 87% of imports to the EU under EBA.
But half were supposed to meet the criteria by 2020, according to international targets. 12 graduations falls well short. The six that have left since the formation of the category in 1971 have not all done so because of better international market access or special support measures. Commodity exports, tourism or improved health and education are mostly responsible.
The remaining LDCs arenāt catching up.Ā The gap is widening.Ā The pandemicĀ Ā group.Ā Gross domestic product (GDP)Ā shrank 1.3% on averageĀ in 2020, with the economies of 37 contracting during the yearĀ and extreme poverty in the group rising by a staggering 84Ā million. But even beforeĀ Covid, average realĀ GDP per capitaĀ for the groupĀ had long divergedĀ fromĀ other developing countriesĀ and theĀ rest of theĀ world.Ā Ā
āThe inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstepā¦ā This was how John Maynard Keynes described the globalisation of the Belle Epoque before the First World War. London, and by extension Britain, was at the centre of the world economy: not just a global manufacturing powerhouse, but also the ruler of a vast colonial domain upon which the sun famously never set. The global division of labour was stark: Britain and other Western nations largely produced manufactured goods. But they also exported a whole range of temperate agricultural goods like wheat, beef and barley. Elsewhere in the European colonial empires, products like cotton, cocoa and coffee were exported, often at very low prices and sometimes with forced labour, to sate a growing demand in the global economic core for tropical luxuries.
More than a century has passed since World War I heralded the collapse of this world order. Today, another globalization wave that has shaped the world since the 1980s is ebbing. The question we ask in our ESRC Rebuilding Macroeconomics project is simple: what is the legacy of the First Globalization of the late nineteenth and early twentieth centuries on the economic fortunes of countries during the Second Globalization? Or in other words, to what extent have countriesā positions in the international economic order been persistent across the two globalizations with some trapped at the bottom and others floating on top?
To answer this question, we have assembled a large new database of global commodity exports from 1897-1906. We exploit the fact that this period was the high point of colonial trade statistics and use a large variety of primary sources in five languages. To the best of our knowledge, ours is the most ambitious census of world trade for the previous globalization to date. This allows us to investigate the long-term wealth of nations in ways that arenāt possible with GDP data. The latter is sparse and unreliable for large parts of the world before the Second World War.
Assessing industrial policies in Chile remains a rather contentious and divisive topic. Chile has long been held up as an almostātextbook example of the success of āletting the market workā, as there was a broad agreement among mainstream economists that Chile has largely succeeded in promoting strong and stable growth because it has embraced free market policies. At first glance, this may seem believable. Afterall, Chile has one of the fastest growth rates in Latin America since its neoliberal turn in the 1970s. Despite the continuing significance of copper, it has also managed to diversify into other sectors and acquire new competitive advantages between the 1960s and 1990s. The dominant view sustains that the successful emergence of new competitive sectors in Chileās export basket are the result of four decades of commitment to liberalization and free market policies. However, this post, which is based , shows that Chileās export diversification was not the result of free market policies, but of carefully crafted government interventions. The idea of Chile as a āfree-market miracleā, as first described by Milton Friedman, is therefore one of the most enduring myths associated with recent economic development history.
It is well known that, during the 20th century, the pharmaceutical industry became extremely powerful at the international level, alongside financial, energy, technology, and manufacturing companies (Wells, 1984). The internationalization of the pharmaceutical industry only rose after the internationalization of patent protection in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs Agreement) (). This industry is highly concentrated around a small number of very large transnational groups (65% of global sales are made by the 20 largest players ā the ābig pharmaā) that operate worldwide through subsidiaries in 150 countries, on average. Revenue in the worldwide pharmaceutical market increased at a considerable rate, even during the global slump of 2008, and was estimated at an astounding USD1.143 trillion in 2017 (). Recently, we published on pharmaceutical value chains, which investigates how they are embedded in an international division of labor, from a new-structuralist theoretical perspective. We ask: how global are the pharmaceuticals value chains? Are there centers and peripheries in pharmaceuticals value chains, and if so, which countries are in each pole?
Ā鶹ֱ²„ 