World Development And Economic Systems: Theory And Applications

by Solomon I Cohen

Overview

Mainstream economics generally assumes a universalistic market-oriented economic behavior that drives countries to adopt one economic system, with marginal variations. This book extends the scope of theory and applications by asserting that other distinct behaviors evolve and dominate in other economic systems. Systemic differences arise from distinct social, political and economic behavioral-motivational types that associate with intensive agent activity in household, state and firm settings. External conditions, historical events, and agent interactions ultimately result in domination of one motivational type over others; thus determining distinct profiles of structure, conduct, and performance in different economic systems, that are generally observed in the adopting countries.The book validates the theory empirically, traces the historical evolution of the respective economic systems in the world regions and evaluates their responses to various systemic failures such as monopoly, uncertainties, externalities and collective needs. The evaluation is extended to structural changes and system performance regarding growth and distribution.This book draws on microeconomics, welfare economics, development economics and the international economy. The book projects the influence potential of leading countries/systems, and treats effects of displacement of incumbent leaders (US, Japan) by newcomer leaders (China, India) on system competition and on world governance.

Product Details

ISBN-13:	9789814632324
Publisher:	World Scientific Publishing Company, Incorporated
Publication date:	05/18/2015
Pages:	408
Product dimensions:	6.60(w) x 9.80(h) x 1.00(d)

Table of Contents

Preface vii

Chapter 1 Introduction 1

1.1 Objective 1

1.2 Past and Current Studies of Economic Systems 2

1.3 Building Blocks of an Integrative Theory of Economic Systems 7

1.4 Outline 9

Endnotes 11

Chapter 2 An Integrative Theory of Economic Systems 13

2.1 Introduction 13

2.2 Components of the Economic System 14

2.3 Settings: Household, h, Firm, f and State Settings, s 17

2.4 The Subsystems of Households (H), Firms (F) and the State (S) 26

2.5 Influences and Dominance of One Subsystem Over Other Subsystems 33

2.5.1 Interactive influence 33

2.5.2 Regulative influence 38

2.6 Dominant Subsystems and Related Prototype Systems: HIS, FIS, SIS 39

2.7 Exploring Paths of Dominance from a Common Starting Situation 43

2.7.1 The historical institutional timeline approach 43

2.7.2 Analytical modelling of evolutionary changes 47

2.8 Exploring Absence of Dominance: The Multi-Poles System (MPS) 50

2.9 More Dynamics: Interactions Between World Development and Economic Systems 53

2.10 The Evaluation Framework for Economic Systems 56

2.11 Concluding Remarks 59

Appendix 60

Endnotes 63

Chapter 3 Empirical Validations 67

3.1 Introduction 67

3.2 Positioning of Country Groups Along Prototype Systems 71

3.3 Deductive Indicators on Agent Attitudes in Different Economic Systems and Relating Country Groups 74

3.4 Deductive Indicators on Institutional Conduct 77

3.5 Outcome Performance 79

3.6 Concluding Remarks 86

Appendices 88

Endnotes 90

Chapter 4 Evolution and Evaluation of the Firm Intensive System in FIS-Centred Countries 93

4.1 Introduction 93

4.2 Historical Developments 95

4.2.1 Focus 95

4.2.2 The period of 1000 to 1400 98

i The Papal revolution and crusade wars

ii The feudal-lordship-manorial subsystem

iii Urban communes

iv Trade guilds

4.2.3 The period of 1400 to 1700 103

i The Renaissance

ii The Reformist Revolutions

iii The world discoveries

vi The colonial conquest

v The rise of nation states

vi The rise of business metropolis

4.2.4 The period of 1700 to 1900 113

i Enlightenment and the constitutional revolutions

ii Economic thought and the IR

4.2.5 The period of the 20th century and recent years 119

i World War I

ii World War II

iii Great Depression

iv Financial crises

v Integration of the FIS

vi Globalization.

4.2.6 A summary illustration of the changed relative powers of main subsystems in FIS countries 123

4.3 Evaluation of Challenges and Responses in FIS-Centred Countries 124

4.3.1 The free market economy model, market failures and policy responses 124

4.3.2 Production indivisibilities 128

i Natural monopoly

ii Imperfect competition

iii The trade-off between perfect competition and technological advance

4.3.3 Imperfect governance 138

i Incomplete information

ii Asymmetric information

4.3.4 Externality effects 144

4.3.5 Collective needs 149

4.3.6 Endowments distribution: Income and wealth 150

4.4 The Polity System in FIS Countries 157

4.5 Private and Public Shares in FIS Countries 162

4.6 Concluding Remarks 174

Endnotes 176

Chapter 5 Evolution and Evaluation of the State Intensive System in SIS-Oriented Countries 181

5.1 Introduction 181

5.2 Development of the State Intensive System: From Establishment of Communism to Its Breakdown 184

5.2.1 Timeline 184

5.2.2 Development of the communist regime: Contradictions between the control and real worlds 189

i The state's ideology

ii The state's party

iii State ownership of property

iv The central planning system (Gosplan level, ministry level, Enterprise managers, Individual consumers, Informal dealers, Bureaucratic bias)

5.2.3 Pursued policies and reform strategies 198

i Pursued policies

ii Reform, strategies

5.2.4 Economic performance of the communist regime 202

5.2.5 Breakdown of the communist regime and the SU 1989-1991: Different interpretations 204

5.3 Recession and Recovery 207

5.4 The Short Transition and the Long Transition 212

5.5 Strengthening Competitiveness in Markets and State 215

5.6 Raising Confidence in Markets and State 219

5.7 Internalization of Externality Backlogs 223

5.8 The Balanced Provision of Public Goods 224

5.9 The Income Distribution Problem 225

5.10 Concluding Remarks 228

Endnotes 229

Chapter 6 Economic Systems in the Development Regions 231

6.1 Introduction 231

6.2 Timeline of Development Epochs 233

6.2.1 Political and economic epochs 233

6.2.2 Colonial rule 234

6.2.3 Nation building 236

6.2.4 Democratic reforms 240

6.2.5 Household-led demographic transition 241

6.2.6 State-led economic development 243

6.2.7 Firm-led economic development 248

6.2.8 Globalization-led and firm-led integration with the world economy 249

6.3 Reassessment of Structural Change and Development Performance in Terms of System Economics 253

6.3.1 Indicators and data 253

6.3.2 Structural change 254

6.3.3 Economic performance 261

6.4 Country Variations within Regions 267

6.4.1 Introduction 267

6.4.2 East Asia Pacific (EAP) 268

6.4.3 South Asia (SA) 271

6.4.4 Central Asia and Caspian (CAC) 273

6.4.5 Middle East and North Africa (MENA) 275

6.4.6 Sub-Saharan Africa (SSA) 276

6.4.7 Latin America and Caribbean (LAC) 280

6.4.8 Sum up on variation results 282

6.5 Patterns of Convergence and Divergence 283

6.6 Concluding Remarks 286

Appendices 287

Endnotes 301

Chapter 7 Focus on China and India as Upcoming Global Leaders 305

7.1 Displacement Calculus 305

7.2 China and India: Background and Development 309

7.2.1 China 309

i Historical background

ii Economic development

iii Agricultural mobilization

vi Industrial structuring

v Outward orientation

vi Restrained tasks for the public sector

7.2.2 India 319

i Historical background

ii Economic development

iii Agricultural mobilization

iv Industrial structuring

v Outward orientation

vi Fiscal budget

7.3 China and India: Economic Growth and Economic Orientation 328

7.4 China and India: Economic Growth and Income Inequality 332

7.5 Concluding Remarks: China and India as Examples of Multi-Poles Economic Systems 335

Endnotes 338

Chapter 8 System Competition and World Governance in the Near Future 343

8.1 Introduction 343

8.2 Leading Regions at the World Level 344

8.3 Leading Countries at the Regional Level 345

8.3.1 Developed regions 345

8.3.2 Development regions 347

8.4 Leading Countries at the World Level 353

8.5 Leading Countries in the Near Future 357

8.6 Economic Systems, World Development and World Governance in the Near Future 358

8.7 Exploring Designs for World Governance 362

8.8 Concluding Remarks 367

Appendices 369

Endnotes 373

References 375

Author Index 385

Subject Index 389