Growth has negative effects on the quality of life: Many things that affect
the quality of life, such as the environment, are not traded or measured in
the market, and they can lose value when growth occurs.
Growth encourages the creation of artificial needs: Industry cause consumers
to develop new tastes, and preferences for growth to occur. Consequently,
"wants are created, and consumers have become the servants, instead of the
masters, of the economy."
Resources: The 2007 United Nations GEO-4 report warns that we are living far
beyond our means. The human population is now so large that the amount of
resources needed to sustain it exceeds what is available. Humanity’s
environmental demand is 21.9 hectares per person while the Earth’s biological
capacity is, on average, only 15.7 ha/person. This report supports the
basic arguments and observations made by Thomas Malthus in the early 1800s,
that is, economic growth depletes non-renewable resources rapidly.
Distribution of income: The gap between the poorest and richest countries in
the world has been growing. Note that this does not necessarily imply
that the gap between the poorest and richest persons has been growing.
Other intellectuals report that the narrow view of economic growth, combined
with globalization, is creating a scenario where we could see a systemic
collapse of our planet's natural resources.
There are concerns with the environmental and ecological effects of economic
growth, especially relating to growth in mining, forestry, agricultural and
industrial activities. Many researchers feel these sustained environmental
effects can have an effect on the whole ecosystem. They claim the accumulated
effects on the ecosystem put a theoretical limit on growth of these activities.
Some draw on archaeology to cite examples of cultures they claim have
disappeared because they grew beyond the ability of their ecosystems to support
them. Since it is axiomatic that it is impossible to grow indefinitely within a
finite system, economic growth as it is now conceived must, of logical
necessity, fail at some time, just as the growth of bacteria in a Petri dish
must come to an end. The problem lies in the throughput of materials
(mine-manufacture-use-dispose) in the economy as it is presently set up. In
making the transition to a more stable and sustainable economic system, growth
in the green sector of the economy will occur naturally.
The rate or type of economic growth may have important consequences for the
environment (the climate and natural capital of ecologies). Concerns about
possible negative effects of growth on the environment and society led some to
advocate lower levels of growth, from which comes the idea of uneconomic growth,
and Green parties which argue that economies are part of a global society and a
global ecology and cannot outstrip their natural growth without damaging them.
The Austrian School argue that the concept of "growth" or the creation and
acquisition of more goods and services is dependent upon the relative desires of
the individual. Someone may prefer having more leisure time to acquiring more
goods and services. Also, they claim that the notion of growth implies the need
for a "central planner" within an economy. To Austrian economists, such an ideal
is antithetical to the concept of a free market economy, without the presence of
governmental intervention. As such, Austrian economists believe that the
individual should determine how much "growth" s/he desires.
Most growth in economic activity necessitates some growth in consumption of
resources - for instance, it is impossible to produce goods without resource and
energy inputs, and it is impossible to have the economy running without the
further input of energy to transport people and goods. Steady growth is, by its
nature, an exponential function. A quantity that grows according to an
exponential function exhibits a doubling in size at a regular time interval
(called the doubling time). If the rate of consumption of a non-renewable
resource is growing steadily (for instance, 5% per year), then that rate will
double regularly. At 5% growth per year, in approximately 14 years the
consumption rate will have doubled. After another 14 years the rate will have
quadrupled. After a century of 5% annual growth, the resource will be consumed
at a rate 130 times the original rate.
Canadian scientist, David Suzuki stated in the 1990s that ecologies can only
sustain typically about 1.5-3% new growth per year, and thus any requirement for
greater returns from agriculture or forestry will necessarily cannibalize the
natural capital of soil or forest. Some think this argument can be applied even to more developed economies.
Saturday, December 6, 2008
Short-term stabilization and long-term growth
Economists draw a distinction between short-term economic stabilization and
long-term economic growth. The topic of economic growth is primarily concerned
with the long run like long term.
The short-run variation of economic growth is termed the business cycle, and
almost all economies experience periodical recessions. The cycle can be a
misnomer as the fluctuations are not always regular. Explaining these
fluctuations is one of the main focuses of macroeconomics. There are different
schools of thought as to the causes of recessions but some consensus- see
Keynesianism, Monetarism, New classical economics and New Keynesian economics.
Oil shocks, war and harvest failure are obvious causes of recession. Short-run
variation in growth has generally dampened in higher income countries since the
early 90s and this has been attributed, in part, to better macroeconomic
management.
The long-run path of economic growth is one of the central questions of
economics; in spite of the problems of measurement, an increase in GDP of a
country is generally taken as an increase in the standard of living of its
inhabitants. Over long periods of time, even small rates of annual growth can
have large effects through compounding. A growth rate of 2.5% per annum will lead to a doubling of GDP within 28 years, whilst a growth rate of 8% per annum (experienced by some Four Asian Tigers) will lead to a doubling of GDP within 9 years. This exponential characteristic can exacerbate differences across nations. For example, the difference in the annual growth from country A to country B will multiply up over the years. A growth rate of 5% seems similar to 3%, but over two decades, the first economy would have grown by 165%, the second only by 80%.
In the early 20th century, it became the policy of most nations to encourage
growth of this kind. To do this required enacting policies, and being able to
measure the results of those policies. This gave rise to the importance of
econometrics, or the field of creating measurements for underlying conditions.
Terms such as "unemployment rate", "Gross Domestic Product" and "rate of
inflation" are part of the measuring of the changes in an economy.
In mainstream economics, the purpose of government policy is to encourage
economic activity without encouraging the rise in the general level of prices
(in other words, increase GDP without creating inflation). This combination is
seen as, at the macro-scale (see macroeconomics) to be indicative of an
increasing stock of capital. The argument runs that if more money is changing
hands, but the prices of individual goods are relatively stable, then it is
proof that there is more productive capacity, and therefore more capital,
because it is capital that is allowing more to be made at a lower cost per unit.
(Adapted from en.wikipedia.org)
long-term economic growth. The topic of economic growth is primarily concerned
with the long run like long term.
The short-run variation of economic growth is termed the business cycle, and
almost all economies experience periodical recessions. The cycle can be a
misnomer as the fluctuations are not always regular. Explaining these
fluctuations is one of the main focuses of macroeconomics. There are different
schools of thought as to the causes of recessions but some consensus- see
Keynesianism, Monetarism, New classical economics and New Keynesian economics.
Oil shocks, war and harvest failure are obvious causes of recession. Short-run
variation in growth has generally dampened in higher income countries since the
early 90s and this has been attributed, in part, to better macroeconomic
management.
The long-run path of economic growth is one of the central questions of
economics; in spite of the problems of measurement, an increase in GDP of a
country is generally taken as an increase in the standard of living of its
inhabitants. Over long periods of time, even small rates of annual growth can
have large effects through compounding. A growth rate of 2.5% per annum will lead to a doubling of GDP within 28 years, whilst a growth rate of 8% per annum (experienced by some Four Asian Tigers) will lead to a doubling of GDP within 9 years. This exponential characteristic can exacerbate differences across nations. For example, the difference in the annual growth from country A to country B will multiply up over the years. A growth rate of 5% seems similar to 3%, but over two decades, the first economy would have grown by 165%, the second only by 80%.
In the early 20th century, it became the policy of most nations to encourage
growth of this kind. To do this required enacting policies, and being able to
measure the results of those policies. This gave rise to the importance of
econometrics, or the field of creating measurements for underlying conditions.
Terms such as "unemployment rate", "Gross Domestic Product" and "rate of
inflation" are part of the measuring of the changes in an economy.
In mainstream economics, the purpose of government policy is to encourage
economic activity without encouraging the rise in the general level of prices
(in other words, increase GDP without creating inflation). This combination is
seen as, at the macro-scale (see macroeconomics) to be indicative of an
increasing stock of capital. The argument runs that if more money is changing
hands, but the prices of individual goods are relatively stable, then it is
proof that there is more productive capacity, and therefore more capital,
because it is capital that is allowing more to be made at a lower cost per unit.
(Adapted from en.wikipedia.org)
scholarship
PhD Scholarship in Economic and Social
Thursday, 03 April 2008
Scholarships Graduate Center of Economic and Social Research The
Graduate Center of Economic and Social Research at the German Institute
for Economic Research (DIW Berlin) welcomes applications from highly
qualified post-graduated students from all over the world to attend its
structured doctoral training program in economics and social sciences.
Applicants must hold a MA degree or a diploma in economics, business and
administration or social sciences in order to apply. Degrees from other
related fields (such as civil engineering or statistics) also fulfil the
admission requirements of the program. Students with a degree in economics
follow the economic track that leads to a PhD in economics; students with
a degree in sociology follow a social science track which leads to a PhD
in sociology. There is a number of core courses that both groups of
students will attend.
The German Institute of Economic Research DIW Berlin is one of the leading
economic research institutes in Germany. We are an independent, non-profit
institute involved in economic research, service and policy advice. We
co-operate closely with universities in Berlin and Brandenburg and in
international academic networks.
The goal of Graduate Center`s activities is to provide young, outstanding
doctoral students with a research environment and a training structure
that will develop their talents in an accordingly exemplary manner. It
leads them to a deep understanding of economic and social processes and
offers them the opportunity to apply their knowledge within the
professional research environment of one of the leading economic think
tanks in Germany.
The 3-year program follows a dual training approach. It offers
* high-level core and field courses in the first year
* one research internship in Berlin
* a three month stay in Washington DC including advanced courses
byUS-based scholars and research activities at international renowned
think tanks
* on-the-job training within research projects of the DIW Berlin in
the 2. and 3. year.
After successfully finishing the programme students have submitted a
number of papers to refereed scientific journals. They will receive a
certificate confirming participation together with a doctoral degree.
The Graduate Center offers a scholarship of 1000€ per month in the first
year to each doctoral student admitted. After successful completion of the
first year the doctoral students are assigned to the research departments
of the Institute. Research positions are offered depending on the volume
of research projects under work.
Thursday, 03 April 2008
Scholarships Graduate Center of Economic and Social Research The
Graduate Center of Economic and Social Research at the German Institute
for Economic Research (DIW Berlin) welcomes applications from highly
qualified post-graduated students from all over the world to attend its
structured doctoral training program in economics and social sciences.
Applicants must hold a MA degree or a diploma in economics, business and
administration or social sciences in order to apply. Degrees from other
related fields (such as civil engineering or statistics) also fulfil the
admission requirements of the program. Students with a degree in economics
follow the economic track that leads to a PhD in economics; students with
a degree in sociology follow a social science track which leads to a PhD
in sociology. There is a number of core courses that both groups of
students will attend.
The German Institute of Economic Research DIW Berlin is one of the leading
economic research institutes in Germany. We are an independent, non-profit
institute involved in economic research, service and policy advice. We
co-operate closely with universities in Berlin and Brandenburg and in
international academic networks.
The goal of Graduate Center`s activities is to provide young, outstanding
doctoral students with a research environment and a training structure
that will develop their talents in an accordingly exemplary manner. It
leads them to a deep understanding of economic and social processes and
offers them the opportunity to apply their knowledge within the
professional research environment of one of the leading economic think
tanks in Germany.
The 3-year program follows a dual training approach. It offers
* high-level core and field courses in the first year
* one research internship in Berlin
* a three month stay in Washington DC including advanced courses
byUS-based scholars and research activities at international renowned
think tanks
* on-the-job training within research projects of the DIW Berlin in
the 2. and 3. year.
After successfully finishing the programme students have submitted a
number of papers to refereed scientific journals. They will receive a
certificate confirming participation together with a doctoral degree.
The Graduate Center offers a scholarship of 1000€ per month in the first
year to each doctoral student admitted. After successful completion of the
first year the doctoral students are assigned to the research departments
of the Institute. Research positions are offered depending on the volume
of research projects under work.
Friday, December 5, 2008
Arguments supporting economic growth
Supporters argue that global income inequality is in fact diminishing, and
that the rapid reduction in global poverty is in large part due to economic
growth, according to World Bank. The decline in poverty has been the slowest
where growth performance has been the worst (ie. in Africa). Happiness
increases with a higher GDP/capita, at least up to a level of $15,000 per
person. Many earlier predictions of resource depletion, such as Thomas
Malthus (1798) predictions about this inevitable causing continuing famines in
Europe, The Population Bomb (1968), Limits to Growth (1972), and the Simon-Ehrlich wager (1980) have, according to critics, been proved false, one reason being that advancements in technology and science have continually allowed previously unavailable resources to be utilized economically. The book The Improving State of the World argues that the state of humanity is rapidly improving.
Those more optimistic about the environmental impacts of growth believe that,
although localized environmental effects may occur, large scale ecological
effects are minor. The optimists claim that if these global-scale ecological
effects exist, human ingenuity will find ways of adapting to them.
Mainstream economists would argue that economies are driven by new technology
and ongoing improvements in efficiency — for instance, we have faster computers
today than a year ago, but not necessarily computers requiring more natural
resources to build. Also, physical limits may be very large if considering all
the minerals in the planet Earth or all possible resources from space
colonization, such as solar power satellites, asteroid mining, or a Dyson
sphere. The book Mining the Sky: Untold Riches from the Asteroids, Comets, and
Planets is one example of such arguments. However, depletion and declining
production from old resources can sometimes occur before new resources are ready
to replace them. This is, in part, the logical basis of the Peak Oil phenomenon.
The predicted rate of economic growth has important implications for climate
change policy with regards to a reduction in economic growth due to a reduction
in greenhouse gas emissions, versus the economic threat of climate change in the
next 100 years.
Some insurance industry analysts claim that the rate of increase in property
destruction due to the effects of climate change are projected to exceed the
world's total economic output by 2065.
The Stern Review, published by the United Kingdom Government in 2006, concluded
that an investment of 1% of GDP per annum would be sufficient to avoid the worst
effects of climate change, and that failure to do so could risk global GDP being
20% lower than it otherwise might be.
Although not related to climate change, if economic growth is sustained over the
long term, future generations may be so wealthy that they will have nothing to
fear. Nigel Lawson claimed that people in a hundred years time would be "seven
times as well off as we are today", therefore it is not reasonable to impose
sacrifices on the "much poorer present generation"
that the rapid reduction in global poverty is in large part due to economic
growth, according to World Bank. The decline in poverty has been the slowest
where growth performance has been the worst (ie. in Africa). Happiness
increases with a higher GDP/capita, at least up to a level of $15,000 per
person. Many earlier predictions of resource depletion, such as Thomas
Malthus (1798) predictions about this inevitable causing continuing famines in
Europe, The Population Bomb (1968), Limits to Growth (1972), and the Simon-Ehrlich wager (1980) have, according to critics, been proved false, one reason being that advancements in technology and science have continually allowed previously unavailable resources to be utilized economically. The book The Improving State of the World argues that the state of humanity is rapidly improving.
Those more optimistic about the environmental impacts of growth believe that,
although localized environmental effects may occur, large scale ecological
effects are minor. The optimists claim that if these global-scale ecological
effects exist, human ingenuity will find ways of adapting to them.
Mainstream economists would argue that economies are driven by new technology
and ongoing improvements in efficiency — for instance, we have faster computers
today than a year ago, but not necessarily computers requiring more natural
resources to build. Also, physical limits may be very large if considering all
the minerals in the planet Earth or all possible resources from space
colonization, such as solar power satellites, asteroid mining, or a Dyson
sphere. The book Mining the Sky: Untold Riches from the Asteroids, Comets, and
Planets is one example of such arguments. However, depletion and declining
production from old resources can sometimes occur before new resources are ready
to replace them. This is, in part, the logical basis of the Peak Oil phenomenon.
The predicted rate of economic growth has important implications for climate
change policy with regards to a reduction in economic growth due to a reduction
in greenhouse gas emissions, versus the economic threat of climate change in the
next 100 years.
Some insurance industry analysts claim that the rate of increase in property
destruction due to the effects of climate change are projected to exceed the
world's total economic output by 2065.
The Stern Review, published by the United Kingdom Government in 2006, concluded
that an investment of 1% of GDP per annum would be sufficient to avoid the worst
effects of climate change, and that failure to do so could risk global GDP being
20% lower than it otherwise might be.
Although not related to climate change, if economic growth is sustained over the
long term, future generations may be so wealthy that they will have nothing to
fear. Nigel Lawson claimed that people in a hundred years time would be "seven
times as well off as we are today", therefore it is not reasonable to impose
sacrifices on the "much poorer present generation"
Exogenous growth model
The notion of growth as increased stocks of capital goods (means of production)
was codified as the Solow-Swan Growth Model, which involved a series of
equations which showed the relationship between labor-time, capital goods,
output, and investment. In this modern view, the role of technological change
became crucial, even more important than the accumulation of capital. This
model, developed by Robert Solow and Trevor Swan in the 1950s, was the
first attempt to model long-run growth analytically. This model assumes that
countries use their resources efficiently and that there are diminishing returns
to capital and labor increases. From these two premises, the neo-classical model
makes three important predictions. First, increasing capital relative to labor
creates economic growth, since people can be more productive given more capital.
Second, poor countries with less capital per person will grow faster because
each investment in capital will produce a higher return than rich countries with
ample capital. Third, because of diminishing returns to capital, economies will
eventually reach a point at which no new increase in capital will create
economic growth. This point is called a "steady state".
The model also notes that countries can overcome this steady state and continue
growing by inventing new technology. In the long run, output per capita depends
on the rate of saving, but the rate of output growth should be equal for any
saving rate. In this model, the process by which countries continue growing
despite the diminishing returns is "exogenous" and represents the creation of
new technology that allows production with fewer resources. Technology improves,
the steady state level of capital increases, and the country invests and grows.
The data does not support some of this model's predictions, in particular, that
all countries grow at the same rate in the long run, or that poorer countries
should grow faster until they reach their steady state. Also, the data suggests
the world has slowly increased its rate of growth.
was codified as the Solow-Swan Growth Model, which involved a series of
equations which showed the relationship between labor-time, capital goods,
output, and investment. In this modern view, the role of technological change
became crucial, even more important than the accumulation of capital. This
model, developed by Robert Solow and Trevor Swan in the 1950s, was the
first attempt to model long-run growth analytically. This model assumes that
countries use their resources efficiently and that there are diminishing returns
to capital and labor increases. From these two premises, the neo-classical model
makes three important predictions. First, increasing capital relative to labor
creates economic growth, since people can be more productive given more capital.
Second, poor countries with less capital per person will grow faster because
each investment in capital will produce a higher return than rich countries with
ample capital. Third, because of diminishing returns to capital, economies will
eventually reach a point at which no new increase in capital will create
economic growth. This point is called a "steady state".
The model also notes that countries can overcome this steady state and continue
growing by inventing new technology. In the long run, output per capita depends
on the rate of saving, but the rate of output growth should be equal for any
saving rate. In this model, the process by which countries continue growing
despite the diminishing returns is "exogenous" and represents the creation of
new technology that allows production with fewer resources. Technology improves,
the steady state level of capital increases, and the country invests and grows.
The data does not support some of this model's predictions, in particular, that
all countries grow at the same rate in the long run, or that poorer countries
should grow faster until they reach their steady state. Also, the data suggests
the world has slowly increased its rate of growth.
Economic growth concept
Economic growth is the increase in the amount of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the
price of the goods and services produced. In economics, "economic growth" or
"economic growth theory" typically refers to growth of potential output, i.e.,
production at "full employment," which is caused by growth in aggregate demand
or observed output. As an area of study, economic growth is generally distinguished from development economics. The former is primarily the study of how countries can advance their economies. As economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure.
price of the goods and services produced. In economics, "economic growth" or
"economic growth theory" typically refers to growth of potential output, i.e.,
production at "full employment," which is caused by growth in aggregate demand
or observed output. As an area of study, economic growth is generally distinguished from development economics. The former is primarily the study of how countries can advance their economies. As economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure.
scholarship
University of Tsukuba offers Policy Management master program.This Program has
been operating from April 1995 and it is the oldest Partner Program in Japan of
the Joint Japan/World Bank Graduate Scholarship Program, a large scholarship
program funded by the Government of Japan and managed by the World Bank
Institute in Washington. In addition to that sponsorship, which ensures the
award of ten scholarships to successful applicants to this Program, the
University of Tsukuba hold similar arrangements with the Inter-American
Development Bank.
Applicants admitted to the Program in Economic and Public Policy Management are
eligible for scholarships provided by the Joint Japan/World Bank Graduate
Scholarship Program (JJ/WBGSP) of the World Bank and the Japan-IDB Scholarship
Program of the Inter-American Development Bank provided that they meet the
specific requirements of each program as described below.
Fifteen scholarships are provided by the JJ/WBGSP for this purpose. To be
eligible, a candidate must be a national of a World Bank member country that is
currently eligible to borrow from the Bank. In addition, Executive Directors,
their alternates, and staff of the World Bank Group,including consultants, as
well as their close relatives, are excluded from consideration.
Candidates should also be aware that, according to the general selection
criteria of the World Bank, while applicants from allWorld Bank member
countries may apply for a JJ/WBGSP scholarships, the program gives priority to
World Bank member countries currently eligible to borrow,especially low and
middle-income countries.The program also gives priority to: women; applicants
with few other resources and from lower social and economic classes;applicants
who have not had previous opportunities for graduate study outside their home
country; and applicants who do not already hold a graduate degree from an
industrialized country (for further information, see http://www.worldbank.org/wbi).
In addition to these fifteen scholarships, the Japan-IDB Scholarship Program of
the Inter-American Development Bank offers no less than two scholarships to
applicants from countries in Latin America and the Caribbean. Applicants from
this region will be advised on their options at the proper time (see more at
ttp://www.iadb.org/int/eng/japan_scholarship.htm).
The scholarships benefits cover:
economy class travel between the home country and Tsukuba, plus a travel
allowance of US$ 500 for each one-way trip tuition and other Program fees
a monthly stipend for subsistence needs roughly equivalent to that given by
the scholarships program of the Ministry of Education, Culture, Sports,
Science and Technology of Japan (currently 170,000 yen monthly)
medical insurance costs
These benefits cover only the scholarship recipient and are not extendable to
family members. Other costs not covered by the scholarship:
additional travel during the course of the Program
expenses related to research,supplementary educational materials,or
participation in workshops,seminars, or internships while at the University of
Tsukuba.
The maximum period of funding is two years.
Recipients of JJ/WBGSP scholarships will not be eligible for employment with the
World Bank for a period of three years after the completion of the Program.
Those obtaining a scholarship from the Japan-IDB Scholarship Program of the
Inter-American Development Bank are required to return to their native country
for at least two years upon completion of their degree. As in the case of the
World Bank, Executive Directors, staff and their close relatives are excluded
from consideration.
been operating from April 1995 and it is the oldest Partner Program in Japan of
the Joint Japan/World Bank Graduate Scholarship Program, a large scholarship
program funded by the Government of Japan and managed by the World Bank
Institute in Washington. In addition to that sponsorship, which ensures the
award of ten scholarships to successful applicants to this Program, the
University of Tsukuba hold similar arrangements with the Inter-American
Development Bank.
Applicants admitted to the Program in Economic and Public Policy Management are
eligible for scholarships provided by the Joint Japan/World Bank Graduate
Scholarship Program (JJ/WBGSP) of the World Bank and the Japan-IDB Scholarship
Program of the Inter-American Development Bank provided that they meet the
specific requirements of each program as described below.
Fifteen scholarships are provided by the JJ/WBGSP for this purpose. To be
eligible, a candidate must be a national of a World Bank member country that is
currently eligible to borrow from the Bank. In addition, Executive Directors,
their alternates, and staff of the World Bank Group,including consultants, as
well as their close relatives, are excluded from consideration.
Candidates should also be aware that, according to the general selection
criteria of the World Bank, while applicants from allWorld Bank member
countries may apply for a JJ/WBGSP scholarships, the program gives priority to
World Bank member countries currently eligible to borrow,especially low and
middle-income countries.The program also gives priority to: women; applicants
with few other resources and from lower social and economic classes;applicants
who have not had previous opportunities for graduate study outside their home
country; and applicants who do not already hold a graduate degree from an
industrialized country (for further information, see http://www.worldbank.org/wbi).
In addition to these fifteen scholarships, the Japan-IDB Scholarship Program of
the Inter-American Development Bank offers no less than two scholarships to
applicants from countries in Latin America and the Caribbean. Applicants from
this region will be advised on their options at the proper time (see more at
ttp://www.iadb.org/int/eng/japan_scholarship.htm).
The scholarships benefits cover:
economy class travel between the home country and Tsukuba, plus a travel
allowance of US$ 500 for each one-way trip tuition and other Program fees
a monthly stipend for subsistence needs roughly equivalent to that given by
the scholarships program of the Ministry of Education, Culture, Sports,
Science and Technology of Japan (currently 170,000 yen monthly)
medical insurance costs
These benefits cover only the scholarship recipient and are not extendable to
family members. Other costs not covered by the scholarship:
additional travel during the course of the Program
expenses related to research,supplementary educational materials,or
participation in workshops,seminars, or internships while at the University of
Tsukuba.
The maximum period of funding is two years.
Recipients of JJ/WBGSP scholarships will not be eligible for employment with the
World Bank for a period of three years after the completion of the Program.
Those obtaining a scholarship from the Japan-IDB Scholarship Program of the
Inter-American Development Bank are required to return to their native country
for at least two years upon completion of their degree. As in the case of the
World Bank, Executive Directors, staff and their close relatives are excluded
from consideration.
Classical growth theory
Growth can occur with and without bounds. Logistic growth is an example for a
bounded growth which is limited by saturation: In the picture the blue curve
could depict the development of the size of an imaginary market with logistic
growth. The red curve then would describe the growth of that market as the 1st
derivative of the market volume. The yellow curve is the growth weighted by the
size of the market. As for logistic growth, the yellow curve shows, that even a
large market size cannot strengthen growth when approaching saturation. Logistic
growth never is negative, but in the saturation area, the growth is as small as
before the market took off. (In the example all curves are scaled to cover the
range between 0 and 1.) The modern conception of economic growth began with the
critique of Mercantilism, especially by the physiocrats and with the Scottish
Enlightenment thinkers such as David Hume and Adam Smith, and the foundation of
the discipline of modern political economy. The theory of the physiocrats was
that productive capacity, itself, allowed for growth, and the improving and
increasing capital to allow that capacity was "the wealth of nations". Whereas
they stressed the importance of agriculture and saw urban industry as "sterile",
Smith extended the notion that manufacturing was central to the entire economy.
David Ricardo would then argue that trade was a benefit to a country, because if
one could buy a good more cheaply from abroad, it meant that there was more
profitable work to be done here. This theory of "comparative advantage" would be
the central basis for arguments in favor of free trade as an essential component
of growth.
Income per capita was essentially flat until the industrial revolution. This
period of time is called the Malthusian period, since it was governed by the
principles explained by Thomas Malthus in his "Essay on the Principle of
Population." In essence, Malthus said that any growth in the economy would
translate into a growth in population. Thus, although aggregate income could
increase, income per capita was bound to stay roughly constant. The mainstream
theory of economic growth states that with the industrial revolution and
advancements in medicine, life expectation increased, infant mortality
decreased, and the payoff to receiving an education was higher. Thus, parents
began to place more value on the quality of their children and not on the
quantity. This led to a drop in the fertility rates of most industrialized
nations. This is known as the breakdown of the Malthusian regime. With income
increasing faster than population growth, industrialised economies substantially
increased their incomes per capita in the next centuries.
bounded growth which is limited by saturation: In the picture the blue curve
could depict the development of the size of an imaginary market with logistic
growth. The red curve then would describe the growth of that market as the 1st
derivative of the market volume. The yellow curve is the growth weighted by the
size of the market. As for logistic growth, the yellow curve shows, that even a
large market size cannot strengthen growth when approaching saturation. Logistic
growth never is negative, but in the saturation area, the growth is as small as
before the market took off. (In the example all curves are scaled to cover the
range between 0 and 1.) The modern conception of economic growth began with the
critique of Mercantilism, especially by the physiocrats and with the Scottish
Enlightenment thinkers such as David Hume and Adam Smith, and the foundation of
the discipline of modern political economy. The theory of the physiocrats was
that productive capacity, itself, allowed for growth, and the improving and
increasing capital to allow that capacity was "the wealth of nations". Whereas
they stressed the importance of agriculture and saw urban industry as "sterile",
Smith extended the notion that manufacturing was central to the entire economy.
David Ricardo would then argue that trade was a benefit to a country, because if
one could buy a good more cheaply from abroad, it meant that there was more
profitable work to be done here. This theory of "comparative advantage" would be
the central basis for arguments in favor of free trade as an essential component
of growth.
Income per capita was essentially flat until the industrial revolution. This
period of time is called the Malthusian period, since it was governed by the
principles explained by Thomas Malthus in his "Essay on the Principle of
Population." In essence, Malthus said that any growth in the economy would
translate into a growth in population. Thus, although aggregate income could
increase, income per capita was bound to stay roughly constant. The mainstream
theory of economic growth states that with the industrial revolution and
advancements in medicine, life expectation increased, infant mortality
decreased, and the payoff to receiving an education was higher. Thus, parents
began to place more value on the quality of their children and not on the
quantity. This led to a drop in the fertility rates of most industrialized
nations. This is known as the breakdown of the Malthusian regime. With income
increasing faster than population growth, industrialised economies substantially
increased their incomes per capita in the next centuries.
The history of economic growth theory
In 1377, the Arabian economic thinker Ibn Khaldun provided one of the earliest
descriptions of economic growth in his famous Muqaddimah (known as Prolegomena
in the Western world):
"When civilization [population] increases, the available labor again
increases. In turn, luxury again increases in correspondence with the
increasing profit, and the customs and needs of luxury increase. Crafts are
created to obtain luxury products. The value realized from them increases,
and, as a result, profits are again multiplied in the town. Production there
is thriving even more than before. And so it goes with the second and third
increase. All the additional labor serves luxury and wealth, in contrast to
the original labor that served the necessity of life."
In the early modern period, some people in Western European nations developed
the idea that economies could "grow", that is, produce a greater economic
surplus which could be expended on something other than mere subsistence. This
surplus could then be used for consumption, warfare, or civic and religious
projects. The previous view was that only increasing either population or tax
rates could generate more surplus money for the Crown or country.
Now it is generally recognized that economic growth also corresponds to a
process of continual rapid replacement and reorganization of human activities
facilitated by investment motivated to maximize returns. This exponential
evolution of our self-organized life-support and cultural systems is remarkably
creative and flexible, but highly unpredictable in many ways. Since science
still has no good way of modeling complex self-organizing systems, various
efforts to model the long term evolution of economies have produced few useful
results.
During much of the "Mercantilist" period, growth was seen as involving an
increase in the total amount of specie, that is circulating medium such as
silver and gold, under the control of the state. This "Bullionist" theory led to
policies to force trade through a particular state, the acquisition of colonies
to supply cheaper raw materials which could then be manufactured and sold.
Later, such trade policies were justified instead simply in terms of promoting
domestic trade and industry. The post-Bullionist insight that it was the
increasing capability of manufacturing which led to policies in the 1700s to
encourage manufacturing in itself, and the formula of importing raw materials
and exporting finished goods. Under this system high tariffs were erected to
allow manufacturers to establish "factories". Local markets would then pay the
fixed costs of capital growth, and then allow them to export abroad,
undercutting the prices of manufactured goods elsewhere. Once competition from
abroad was removed, prices could then be increased to recoup the costs of
establishing the business.
Under this theory of growth, the road to increased national wealth was to grant
monopolies, which would give an incentive for an individual to exploit a market
or resource, confident that he would make all of the profits when all other
extra-national competitors were driven out of business. The "Dutch East India
company" and the "British East India company" were examples of such
state-granted trade monopolies.
In this period the view was that growth was gained through "advantageous" trade
in which specie would flow in to the country, but to trade with other nations on
equal terms was disadvantageous. It should be stressed that Mercantilism was not
simply a matter of restricting trade. Within a country, it often meant breaking
down trade barriers, building new roads, and abolishing local toll booths, all
of which expanded markets. This corresponded to the centralization of power in
the hands of the Crown (or "Absolutism"). This process helped produce the modern
nation-state in Western Europe.
Internationally, Mercantilism led to a contradiction: growth was gained through
trade, but to trade with other nations on equal terms was disadvantageous. This
– along with the rise of nation-states – encouraged several major wars.
descriptions of economic growth in his famous Muqaddimah (known as Prolegomena
in the Western world):
"When civilization [population] increases, the available labor again
increases. In turn, luxury again increases in correspondence with the
increasing profit, and the customs and needs of luxury increase. Crafts are
created to obtain luxury products. The value realized from them increases,
and, as a result, profits are again multiplied in the town. Production there
is thriving even more than before. And so it goes with the second and third
increase. All the additional labor serves luxury and wealth, in contrast to
the original labor that served the necessity of life."
In the early modern period, some people in Western European nations developed
the idea that economies could "grow", that is, produce a greater economic
surplus which could be expended on something other than mere subsistence. This
surplus could then be used for consumption, warfare, or civic and religious
projects. The previous view was that only increasing either population or tax
rates could generate more surplus money for the Crown or country.
Now it is generally recognized that economic growth also corresponds to a
process of continual rapid replacement and reorganization of human activities
facilitated by investment motivated to maximize returns. This exponential
evolution of our self-organized life-support and cultural systems is remarkably
creative and flexible, but highly unpredictable in many ways. Since science
still has no good way of modeling complex self-organizing systems, various
efforts to model the long term evolution of economies have produced few useful
results.
During much of the "Mercantilist" period, growth was seen as involving an
increase in the total amount of specie, that is circulating medium such as
silver and gold, under the control of the state. This "Bullionist" theory led to
policies to force trade through a particular state, the acquisition of colonies
to supply cheaper raw materials which could then be manufactured and sold.
Later, such trade policies were justified instead simply in terms of promoting
domestic trade and industry. The post-Bullionist insight that it was the
increasing capability of manufacturing which led to policies in the 1700s to
encourage manufacturing in itself, and the formula of importing raw materials
and exporting finished goods. Under this system high tariffs were erected to
allow manufacturers to establish "factories". Local markets would then pay the
fixed costs of capital growth, and then allow them to export abroad,
undercutting the prices of manufactured goods elsewhere. Once competition from
abroad was removed, prices could then be increased to recoup the costs of
establishing the business.
Under this theory of growth, the road to increased national wealth was to grant
monopolies, which would give an incentive for an individual to exploit a market
or resource, confident that he would make all of the profits when all other
extra-national competitors were driven out of business. The "Dutch East India
company" and the "British East India company" were examples of such
state-granted trade monopolies.
In this period the view was that growth was gained through "advantageous" trade
in which specie would flow in to the country, but to trade with other nations on
equal terms was disadvantageous. It should be stressed that Mercantilism was not
simply a matter of restricting trade. Within a country, it often meant breaking
down trade barriers, building new roads, and abolishing local toll booths, all
of which expanded markets. This corresponded to the centralization of power in
the hands of the Crown (or "Absolutism"). This process helped produce the modern
nation-state in Western Europe.
Internationally, Mercantilism led to a contradiction: growth was gained through
trade, but to trade with other nations on equal terms was disadvantageous. This
– along with the rise of nation-states – encouraged several major wars.
Endogenous growth theory
Growth theory advanced again with the theories of economist Paul Romer in the
late 1980s and early 1990s. Other important new growth theorists include Robert
E. Lucas and Robert J. Barro.
Unsatisfied with Solow's explanation, economists worked to "endogenize"
technology in the 1980s. They developed the endogenous growth theory that
includes a mathematical explanation of technological advancement. This
model also incorporated a new concept of human capital, the skills and knowledge
that make workers productive. Unlike physical capital, human capital has
increasing rates of return. Therefore, overall there are constant returns to
capital, and economies never reach a steady state. Growth does not slow as
capital accumulates, but the rate of growth depends on the types of capital a
country invests in. Research done in this area has focused on what increases
human capital (e.g. education) or technological change (e.g. innovation).
Theories of economic growth, the mechanisms that let it take place and its main
determinants abound. One popular theory in the 70's for example was that of the
"Big Push" which suggested that countries needed to jump from one stage of
development to another through a virtuous cycle in which large investments in
infrastructure and education coupled to private investment would move the
economy to a more productive stage, breaking free from economic paradigms
appropriate to a lower productivity stage.
Analysis of recent economies' success shows a close correlation between growth
and climate. It is possible that there is absolutely no actual mechanism between
the two, and the relation may be spurious. In early human history, economic as
well as cultural development was concentrated in warmer parts of the world, like
Egypt.
According to Acemoglu, Johnson and Robinson, the positive correlation between
high income and cold climate is a by-product of history. Former colonies have
inherited corrupt governments and geo-political boundaries (set by the
colonizers) that are not properly placed regarding the geographical locations of
different ethnic groups; this creates internal disputes and conflicts. Also,
these authors contend that the egalitarian societies that emerged in colonies
without solid native populations, and which could be exploited by individual
farmers led to better property rights and incentives for long-term investment
than those where native population was large, and together with the tropical
climate, colonizers were led to plunder and ruin, and to create exploitative
institutions, a situation which did not foster growth or private property
rights. Colonies in temperate climate zones as Australia and USA did not inherit
exploitative governments since Europeans were able to inhabit these territories
and set up governments that mirrored those in Europe. It is important to note
that Sachs, among others, do not believe this to be the case.
late 1980s and early 1990s. Other important new growth theorists include Robert
E. Lucas and Robert J. Barro.
Unsatisfied with Solow's explanation, economists worked to "endogenize"
technology in the 1980s. They developed the endogenous growth theory that
includes a mathematical explanation of technological advancement. This
model also incorporated a new concept of human capital, the skills and knowledge
that make workers productive. Unlike physical capital, human capital has
increasing rates of return. Therefore, overall there are constant returns to
capital, and economies never reach a steady state. Growth does not slow as
capital accumulates, but the rate of growth depends on the types of capital a
country invests in. Research done in this area has focused on what increases
human capital (e.g. education) or technological change (e.g. innovation).
Theories of economic growth, the mechanisms that let it take place and its main
determinants abound. One popular theory in the 70's for example was that of the
"Big Push" which suggested that countries needed to jump from one stage of
development to another through a virtuous cycle in which large investments in
infrastructure and education coupled to private investment would move the
economy to a more productive stage, breaking free from economic paradigms
appropriate to a lower productivity stage.
Analysis of recent economies' success shows a close correlation between growth
and climate. It is possible that there is absolutely no actual mechanism between
the two, and the relation may be spurious. In early human history, economic as
well as cultural development was concentrated in warmer parts of the world, like
Egypt.
According to Acemoglu, Johnson and Robinson, the positive correlation between
high income and cold climate is a by-product of history. Former colonies have
inherited corrupt governments and geo-political boundaries (set by the
colonizers) that are not properly placed regarding the geographical locations of
different ethnic groups; this creates internal disputes and conflicts. Also,
these authors contend that the egalitarian societies that emerged in colonies
without solid native populations, and which could be exploited by individual
farmers led to better property rights and incentives for long-term investment
than those where native population was large, and together with the tropical
climate, colonizers were led to plunder and ruin, and to create exploitative
institutions, a situation which did not foster growth or private property
rights. Colonies in temperate climate zones as Australia and USA did not inherit
exploitative governments since Europeans were able to inhabit these territories
and set up governments that mirrored those in Europe. It is important to note
that Sachs, among others, do not believe this to be the case.
Tuesday, December 2, 2008
Public Goods
Public goods have two distinct aspects: nonexcludability and nonrivalrous consumption. “Nonexcludability” means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive. If an entrepreneur stages a fireworks show, for example, people can watch the show from their windows or backyards. Because the entrepreneur cannot charge a fee for consumption, the fireworks show may go unproduced, even if demand for the show is strong. The fireworks example illustrates the related free-rider problem. Even if the fireworks show is worth ten dollars to each person, arguably few people will pay ten dollars to the entrepreneur. Each person will seek to “free ride” by allowing others to pay for the show, and then watch for free from his or her backyard. If the free-rider problem cannot be solved, valuable goods and services—ones people otherwise would be willing to pay for—will remain unproduced. The second aspect of public goods is what economists call “nonrivalrous consumption.” Assume the entrepreneur manages to exclude noncontributors from watching the show (perhaps one can see the show only from a private field). A price will be charged for entrance to the field, and people who are unwilling to pay this price will be excluded. If the field is large enough, however, exclusion is inefficient. Even nonpayers could watch the show without increasing the show’s cost or diminishing anyone else’s enjoyment. In other words, the relevant consumption is nonrivalrous. Nonetheless, nonexcludability is usually considered the more important of the two aspects of public goods. If the good is excludable, private entrepreneurs will try to serve as many fee-paying customers as possible, charging lower prices to some customers if need be. One of the best examples of a public good is national defense. To the extent one person in a geographic area is defended from foreign attack or invasion, other people in that same area are likely defended also. This makes it hard to charge people for defense, which means that defense faces the classic free-rider problem. Indeed, almost all economists are convinced that the only way to provide a sufficient level of defense is to have government do it and fund defense with taxes. Many other problems, though, that are often perceived as public-goods problems are not really, and markets handle them reasonably well. For instance, although many people think a television signal is a public good, cable television services scramble their transmissions so that nonsubscribers cannot receive broadcasts easily. In other words, the producers have figured out how to exclude nonpayers. Both throughout history and today, private roads have been financed by tolls charged to road users. Other goods often seen as public goods, such as private protection and fire services, are frequently sold through the private sector on a fee basis. Excluding nonpayers is possible. In other cases, potentially public goods are funded by advertisements, as happens with television and radio. Partially public goods also can be tied to purchases of private goods, thereby making the entire package more like a private good. Shopping malls, for instance, provide shoppers with a variety of services that are traditionally considered public goods: lighting, protection services, benches, and restrooms are examples. Charging directly for each of these services would be impractical. Therefore, the shopping mall finances the services through receipts from the sale of private goods in the mall. The public and private goods are “tied” together. Private condominiums and retirement communities also are market institutions that tie public goods to private services. They use monthly membership dues to provide a variety of public services. Some public goods are provided through fame incentives or through personal motives to do a good job. The World Wide Web offers many millions of home pages and informational sites, and most of their constructors have not received any payment. The writers either want recognition or seek to reach other people for their own pleasure or to influence their thinking. The “reciprocity motive” is another possible solution, especially in small groups. I may contribute to a collective endeavor as part of a broader strategy to signal that I am a public-minded, cooperative individual. You may then contribute in return, hoping that we develop an ongoing agreement—often implicit—to both contribute over time. The agreement can be self-sustaining if I know that my withdrawal will cause the withdrawal of others as well. A large body of anecdotal and experimental evidence suggests that such arrangements, while imperfect, are often effective. Roommates, for instance, often have implicit or explicit agreements about who will take out the trash or do the dishes. These arrangements are enforced not by contract but rather by the hope of continuing cooperation. Other problems can be solved by defining individual property rights in the appropriate economic resource. Cleaning up a polluted lake, for instance, involves a free-rider problem if no one owns the lake. If there is an owner, however, that person can charge higher prices to fishermen, boaters, recreational users, and others who benefit from the lake. Privately owned bodies of water are common in the British Isles, where, not surprisingly, lake owners maintain quality. Well-defined property rights can solve apparent public-goods problems in other environmental areas, such as land use and species preservation. The buffalo neared extinction and the cow did not because cows could be privately owned and husbanded for profit. It is harder to imagine easily enforceable private property rights in schools of fish. For this reason we see a mix of government regulation and privately determined quotas in that area. The depletion of fish stocks nonetheless looms as a problem, as does the more general loss of biodiversity. For environmental problems involving the air, it is difficult to imagine how property rights could be defined and enforced effectively. Market mechanisms alone probably cannot prevent depletion of the Earth’s ozone layer. In such cases economists recognize the likely necessity of a governmental regulatory solution. Contractual arrangements can sometimes be used to overcome what otherwise would be public goods and externalities problems. If the research and development activities of one firm benefit other firms in the same industry, these firms may pool their resources and agree to a joint project (antitrust regulations permitting). Each firm will pay part of the cost, and the contributing firms will share the benefits. Contractual arrangements sometimes fail. The costs of bargaining and striking an agreement may be very high. Some parties to the agreement may seek to hold out for a better deal, and the agreement may collapse. In other cases it is simply too costly to contact and deal with all the potential beneficiaries of an agreement. A factory, for instance, might find it impossible to negotiate directly with each affected citizen to decrease pollution. The imperfections of market solutions to public-goods problems must be weighed against the imperfections of government solutions. Governments rely on bureaucracy, respond to poorly informed voters, and have weak incentives to serve consumers. Therefore they produce inefficiently. Furthermore, politicians may supply public “goods” in a manner to serve their own interests rather than the interests of the public; examples of wasteful government spending and pork barrel projects are legion. Government often creates a problem of “forced riders” by compelling persons to support projects they do not desire. Private means of avoiding or transforming public-goods problems, when available, are usually more efficient than governmental solutions.
Written by : Tyler Cowen (an economics professor at George Mason University and director of the Mercatus Center and the James M. Buchanan Center)
Written by : Tyler Cowen (an economics professor at George Mason University and director of the Mercatus Center and the James M. Buchanan Center)
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