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International Trade and the Economic Mechanisms of Underdevelopment
... The fact that neoclassical economics treats most environmental factors (such as pollution, biodiversity, and forest preservation) as "externalities", because there are no markets in which their prices can be set, evidences the inadequacy of neoclassical theory for dealing with Adapted from Reinert (1980). economy-environment interactions and effectively enacting conservation strategies. ...
... In relation to the need for insights for major European policies in the Adapted from Reinert (1980). field of environment and climate, consideration of increasing versus diminishing returns may play an important role to adjudicate among alternative policy options given the importance of manufacturing in the context of infrastructural transitions. ...
... The fact that neoclassical economics treats most environmental factors (such as pollution, biodiversity, and forest preservation) as "externalities", because there are no markets in which their prices can be set, evidences the inadequacy of neoclassical theory for dealing with Adapted from Reinert (1980). economy-environment interactions and effectively enacting conservation strategies. ...
... In relation to the need for insights for major European policies in the Adapted from Reinert (1980). field of environment and climate, consideration of increasing versus diminishing returns may play an important role to adjudicate among alternative policy options given the importance of manufacturing in the context of infrastructural transitions. ...
... This point on rigidity of the centre's wages made by Prebisch was later to be picked by Samir Amin (1974: Vol. 1, 83-84 It is worth noting that the terms of trade debate is in no way settled, and the long-term direction of the terms of trade between the core and periphery is still under investigation (e.g. Reinert 1980;Ocampo and Parra-Lancourt 2004;Caraballo and Jiang 2016). There is a growing body of evidence that supports this insight that declining terms of trade may be associated not so much with what a country is exporting, as with the institutional and economic structure of the less-developed countries (UNCTAD 2016). ...
... These theories all make a simple distinction between economic activities subject to diminishing returns to scale (where one factor of production is limited by nature) that will cause production costs to increase after a certain point, and those subject to increasing returns to scale , where increased production causes increased productivity and falling costs. In his PhD dissertation of 1980, one of the authors (ER) ( Reinert, 1980 ) showed how the main export items of three Latin American countries -Bolivia, Ecuador, Peru -were producing well into the area of diminishing returns: whenever the volume of production was reduced, production costs fell . A recent OECD report on Chile proved that the same mechanisms are at work in Chilean copper mining ( Organisation for Economic Co-operation and Development, 2018 ). ...
Three decades after the fall of the Berlin wall and one and a half decades after the Big Bang enlargement of the European Union (2004-2007), we revisit contrasting narratives about the benefit of both free trade and the EU enlargement for Central and Eastern European (CEE) countries. We distinguish old, pre-2004 EU countries from CEE countries that joined the EU in 2004-2007, as well as from the CEE countries that have not become part of the EU, in particular Belarus, Moldova, and Ukraine. Our analysis looks at two temporal windows: one from 1991 – the demise of the Eastern European free trade zone (COMECON) – to today, and the second zooming on the period following the enlargement process of 2004-2007. Our analysis points to an unfavourable turn of events for CEE countries, which appear to have experienced significant losses in their process of rapid integration in the world and EU economies. We are comparing these events in Central and Eastern Europe with the patterns of de-industrialisation and migration that took place in Latin America after a similar free trade shock starting in the 1970s.
... We maintain that a shock-wave of free trade between a relatively advanced nation and a relatively less advanced nation, or group of nations, will tend to kill the most advanced industries in the least advanced countries. We refer to this effect as the Vanek-Reinert Effect (Reinert 1980(Reinert & 2004a. This effect can be observed from the 19 th century unification of Italy, when Southern Italian industry suffered, to the Czech computer industry as perhaps the earliest casualty of the fall of the COMECON block. ...
The article reviews the literature on economic development, critiques neoliberal economic theories, and advances the theory of infant industry promotion as an alternative model for development in Africa. The essay argues that for developing countries to catch up to developed countries requires contextualizing development theory, applying selective economic policies to industries where productive capacities can be developed, and localizing the policy lessons to develop the productive abilities of local industries. The role of state in development and implementation of protective measures such as tariffs, import bans on key raw materials, and rebates on industrial inputs is discussed. To escape the Resource Curse, African states will have to develop an alternative source of employment, an industrial base, and strengthen the productive powers of infant industries if those industries are to survive fierce international competition. To be durable in the African context, economic policy must reflect local conditions, vary from one historical context to the next, use readily available resources, and adequately respond to local problems.
In contrast to neo-classical mainstream approaches to economics, this innovative Modern Guide addresses the complex reality of economic development as an inherently uneven process, exploring the ways of theorizing and empirically exploring the mechanisms with which the unevenness manifests itself. It covers a wide array of issues influencing wealth and poverty, technological innovation, ecology and sustainability, financialization, population, gender, and geography, considering the dynamics of cumulative causations created by the interplay between these factors.
This study examines the impact of non-renewable and renewable energy consumption on economic growth, differentiating between manufacturing and services growth. We derive our empirical model from an endogenous growth framework with expanding variety of intermediate capital goods embedding non-renewable and renewable energy inputs. Controlling for well-established growth determinants, we estimate the effects of non-renewable and renewable energy consumption, differentiated by type of use — industrial, residential, and total final energy consumption — on manufacturing and services growth. We find that renewable energy enhances growth in high-growth sectors, i.e. the services sector in high-income economies and the manufacturing sector in middle-income economies. In the case of high-income countries, renewable energy is a complement to non-renewables, whereas in the case of middle-income countries the two are substitutes. The growth effects are primarily due to industrial energy consumption. T Based on our findings, we propose that an effective renewable energy incentives policy for middle-income countries should be directed at manufacturing enterprises, and in high-income countries these incentives should be directed at the services sector.
These are times of crisis. Almost daily, newspapers inform us of human misery and human migrations caused not only by wars and terrorism, but also by sheer economic necessity. Why do around 1 billion people — as the United Nations has calculated — experience hunger in a world of plenty? Why do so many people every day risk their lives fleeing Africa attempting to reach the shores of the European Union? Why do people who cannot find employment in Eritrea — a country with just over 40 inhabitants per square kilometre — have few problems finding a job when they arrive in Holland, where the population density is more than 400 per square kilometre? Why has more than 20% of the Latvian population left the country during a period of a few years? Why do Ukrainian economists estimate that ten million people will leave the country if it is subjected to a free-trade shock with the European Union? Why do EU researchers — contrary to expectations — find that EU incomes are not converging as expected, but rather follow the path that is establishing two convergence groups, one of wealthy countries and one of considerably poorer ones?1
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