The Industry oriented Asian Tigers and the Natural Resource based Pacific Alliance Economic Growth Models

Briceño Avalos, Hernán Ricardo (2013): The Industry oriented Asian Tigers and the Natural Resource based Pacific Alliance Economic Growth Models.

Abstract

The aim of this thesis is provide “Pacific Alliance” of Latin America with a bundle of recommendations to make a successful economic integration with “Asian Pacific” region. It seems that following the Comparative Advantage theory developed by David Ricardo (1772-1823), under the incipient technological progress has damaged some developing economies, to such an extent that their specialization on exploiting and exporting raw materials are condemned them to live in a vicious circle. This is a compelling situation between getting high rents from natural resource exports, low investment in Research & Development to innovation, reaching also poor Human Development Indexes (“The Curse of Natural Resources”). On the other hand, there is a virtuous circle between manufacture exports by developing high-tech industries, high investment in Research & Development to innovate, reaching also high Human Development Indexes; such as Asian Tigers in the last decades (“Learning by Exporting”). These two central hypotheses have been testing under cross section econometric assessment, including more than one hundred countries for the three last decades (1981-2010). There are evidences to fulfilling both. The exports of Ores and Metals and other raw material oriented goods have negative impacts, while manufacture exports positive impact on the economic growth. Similarly, service exports have led the economic growth in the last decades due to Technology & Communication and International Commercial activities are increasing faster. They are significant and robust explanatory variables. Therefore, governments from raw material export oriented countries, like “Pacific Alliance”, should take into account Pragmatic Innovation Agenda and Technology Policies to get better sustainable living conditions. Otherwise, they will still suffering from the volatility of commodities demand and prices, low Research & Development investment, poor Human Development Index and social conflicts.

• Item Type: MPRA Paper
• Language: English
• Keywords: Asian Tigers; Pacific Alliance; Natural Resource based Countries; Industrialized oriented Countries
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

References

Barro, Robert (1996). Determinants of Economic Growth: A Cross Country Empirical Study. National Bureau of Economic Research. Working Paper No 5698.

Barro, Robert and X Sala-i-Martin (2004). Empirical Analysis of a Cross Section of Countries. (Chap. 12). Economic Growth. 2nd ed. MIT-press.

Chirinos Cabrejos, Raymundo (2006). Una Revisión de la Hipótesis “Learning by Exporting”. Documento de Trabajo del Banco Central de Reserva del Peru.

Dornbush, Rudiger and Edwards, Sebastian (1991). The Macroeconomics of Populism. In Dornbush, Rudiger and Edward, Sebastian (Eds.). The Macroeconomics of Populism in Latin America. Chap. 1. (Pp. 7-13). The University Chicago Press.

Fagerberg, Jan and Godinho, Manuel Mira (2004). Innovation and Catching-up. In Fagerberg, Jan; Mowery, David and Nelson, Richard (Eds.) The Oxford Handbook of Innovation. Chap. 19. (Pp. 514-542).

Franco, Gustavo (1995). The Real Plan. Working paper presented at Seminar “Economics and Society in Brazil: New trends and perspectives”. Chicago.

Franko, Patrice (2007). Import Substitution Industrialization. In Franko, Patrice (Editor). The Puzzle of Latin American Economic Development. Chap. 3. (Pp. 51-78). Third edition.

Gereffy, Gary and Martinez, Martha (2005). Mexico’s Economic Transformation under NAFTA. In Crandall, Russell (Ed.). Mexico Democracy at Work. Chap. 6 (Pp. 119-150). USA.

Gil-Diaz, Francisco (1997). The Origin´s of Mexico 1994 Financial Crisis. The Cato Journal. Vol. 17. No 3. http://www.cato.org/pubs/journal/cj17n3-14.html.

Hachette, Dominique (2000). La Reforma Commercial. In Larrain B., Felipe and Vergara M., Rodrigo. La

Transformación Económica de Chile. Chap. 8 (Pp. 295-338). Santiago. Centro de Estudios Publicos (CEP).

Hausmann, Ricardo and Klinger, Bailey (2008). Growth Diagnostic in Peru. Center for International Development at Harvard University. Working paper No 181. (Oct.)

Hausmann, Ricardo; Hwang, Jason and Rodrik, Daniel (2005). What you Export Matters. National Bureau of Economic Research. Working paper 11905. (Dec.)

Ito, Keiko (2012). Sources of Learning by Exporting Effects. Does Exports Promote Innovation? Economic Research Institute for ASEAN and East Asia (ERIA). Discussion Paper Series. Senshu University, School of Economics. (June).

Krugman, Paul (1994). The Myth of Asia’s Miracle. Foreign Affairs. (Nov/Dec). Vol.73, Iss. 6; Pp. 62, 17.

Lefort, Fernando. Crecimiento Económico en Chile: Evidencia de Panel (1997). Documento de Trabajo del Banco Central de Chile Nº 18. (Oct.) Santiago.

Levine, David and Jellema, Jon R. (2007). Growth, Industrialization, and the Intergenerational Correlation of Advantage. Industrial Relation. Vol. 46, No. 1 (Jan.)

Licona Michel, Angel (Dec., 2011). Política Económica y Crecimiento en México: Cinco sexenios en búsqueda de la estabilidad. In LASAK-Korean University (Ed.) International Conference: “Rethinking Socio-Economic Transformation in Latin America”. (Pp. 77-92). Seoul, Korea.

Licona Michel, Angel and Rangel Delgado, José (Jun., 2011). Liberalismo y Eficiencia Económica de las Instituciones: Corea del Sur y México 1980-2010, en Revista Asia y América, Vol. 11, Núm. 1 (junio 2011), Instituto de Estudios de Asia y América, Universidad Dankook, Corea. ISSN 1598-8279.

Loayza, Norman and Soto, Raymundo (2002). The Sources of the Economic Growth: An Overview. In Loayza, Norman and Soto, Raymundo (Eds.). Economic Growth: Sources, Trends and Cycles. (Pp. 1-39). Chilean Central Bank. Santiago.

Lundavall, Bengt-Ake and Borrás, Susana (2004). Science, Technology and Innovation Policy. In Fagerberg, Jan; Mowery, David and Nelson, Richard (Eds.) The Oxford Handbook of Innovation. Chap. 22. (Pp. 599-639).

Misekell, Raymond and Zinser, James (1973). The Nature of the Savings Function in Developing Countries: A Survey of the Theoretical and Empirical Literature. American Economic Association. Journal of Economic Literature. Volume 11. No 1. Pp. 1-26.

Nallari, Raj and Griffith, Breda (2011). "Understanding Growth and Poverty". In World Bank (Ed.). Technology, Entrepreneurship and Productivity. Chap. 15. Pp. 319-335.

Nelson, Richard and Pack, Howard (1999). The Asian Miracle and Modern Growth Theory. The Economic Journal, 109 Pp. 416-436.

Ocampo, Jose Antonio (1988). Latin America and the world economy in the long twentieth century. In Thorp (1998a) and Cárdenas, Ocampo & Thorp (2000a, 2000b).

Onis, Ziya (1991). The Logic of the Developmental State. In Ph.D. Program in Political Science of the City University of New York (Ed.). Comparative Politics. Vol. 24. No. 1. Pp. 109-126.

Radelet, Steven and Sachs, Jeffrey (1998). The Onset of the East Asian Financial Crisis. National Bureau of Economic Research. Working paper 6680.

Reina, Muricio and Zuluaga, Sandra (2012). The Impact of Globalization on Latin America: The Case of Colombia. Associate Researchers Fedesarrollo. Bogotá. September.

Rielded, James (1976). The Hong Kong Model of Industrialization. Kieler Discussion Paper No 29.

Rojas, Patricio; Lopez, Eduardo; and Jimenez, Susana (1997). Determinantes del Crecimiento y Estimación del Producto Potencial en Chile: El Rol del Comercio. Documento de Trabajo del Banco Central de Chile Nº 24. Santiago.

Romer, Paul (1994). The Origins of Endogenous Growth. The Journal of Economic Perspective. Vol. 8. Issue 1. Pp. 3-22.

Romer, Paul (1986). Increasing Returns and Long-Run Growth. The Journal of Political Economy. Vol. 94. No 5. Pp. 1002-1037.

Sachs, Jeffrey and Warner, Andrew (2001). The Curse of Natural Resource. Centre for International Development, Harvard University. European Economic Review No 45. Pp. 227-238.

Saxa, Branilaz (2008). Learning by Exporting or Managerial Quality? Evidence from the Czech Republic. Center for Economic Research and Graduated Education. Charles University. Prague (August).

Szirmai, Adam (2012). Industrialization as an engine of growth in developing countries, 1950-2005. Structural Change and Economic Dynamics. UNU-MERIT.

Stock, James and Watson, Mark (2007). Introduction to Econometrics. Second Edition. Pearson Education Editorial.

Urrutia, Miguel (1991). On the Absence of Economic Populism in Colombia. In Dornbush, Rudiger and Edwards, Sebastian. The Macroeconomics of Populism in Latin America. The National Bureau of Economic Research. University of Chicago Press (September).

Van Den Berg, Hendrik (2012). Economic Growth and Development. World Scientific Publishing Company Incorporated. Singapore. 2nd edition. Ch. 6-17 (Pp. 233-850).

Vanvakidis, Athanasios (2002). How Robust is the Gross Openness Connection. Journal of Economic Growth. No 7. Pp. 57-80.

Verspagen, Bart (1991). A new empirical approach to catching up or falling behind. Structural Change and Economic Dynamics, Vol. 2, No 2. UNU-MERIT.

World Bank (2008). Technology and Technological Diffusion in Developing World. In Global Economic Prospect 2008: Technology Diffusion in the Developing World. Chap. 2. Washington DC: Author.

Zagha, Roberto; Nankani, Gobind and Gill, Indermit (2006). Rethinking Growth. Finance and Development. International Monetary Fund. Vol. 43. No 1.

The World Bank (2013). World Development Indicators. Data Base. www.worldbank.org

PWT 7.1 Alan Heston, Robert Summers and Bettina Aten, Penn World Table Version 7.1 Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, Nov 2012.