A Perspective on Frugality in Growing Economies: Triggering a Virtuous Cycle between Consumption Propensity and Growth

The relationship between Growing economies have recovered from the global financial crisis faster than many developed economies and increased the consumption significantly over the past years. In light of the role of their consumption growth in global sustainability, this paper analyzes the decisive factors leading to a virtuous cycle between consumption propensity and investment in growing economies. An empirical analysis was conducted to identify the contributing factors to such a cycle in 40 countries. They could be divided into three economic groups by the marginal propensity to consume. The results suggest that growing economies suffer from an autarky cycle between consumption and GDP due to insufficient investment elasticity against consumption elasticity while advancing and advanced economies allow GDP growth to induce investment efficiently. A possible trigger for inducement of investment by growth in growing economies can be 'frugality'

A Transition from Consumption-Dependent Development to Investment-Driven Development: A Comparison of 40 Countries

Following up the contrasting behaviors that growing economies suffer from an autarky cycle between consumption and economic growth. Advancing and advanced economies allow GDP growth for inducing investments efficiently. An empirical analysis was conducted in 40 countries, inspired by Samuelson’s multiplier-accelerator model, to examine a mechanism for switching from an autarky cycle to an investment-inducing virtuous cycle. The results suggest that a correlation between consumption growth and investment intensity is crucial to enable a shift from an autarky cycle to a virtuous cycle. The transition dynamism of economic cycles in these countries in the last three decades is also analyzed

Catalyst Role of Government R&D Inducing Hybrid Management in Japan: Lessons for Emerging Economies

Japan has achieved conspicuous technology advancement and subsequent productivity increase by overcoming threats and constraints of sustainable development of economy and society. The achievement can be attributed to a sophisticated combination of industrial efforts and government stimulation. This paper analyzes the government role in inducing industrial strength in Japan. Empirical analyses were conducted focusing on technology driven development trajectory between Japan and the US over the last two decades. The results reveal that Japan incorporates sophisticated mechanism enabling the hybrid management of technology fusing indigenous strength and learning ability. While the combination of government and industry stagnated in the 1990s, a swell of reactivation emerged in the early 2000s. This can largely be attributed to revitalization of the mutual interaction between government and industry. Such a catalyst role of government R&D inducing the hybrid management demonstrated by Japan would provide a new insight in emerging economies

Fusing East and West Leads a Way to Global Competitiveness in Emerging Economy: Lessons from China’s Leap in Wind Energy Development

China has demonstrated world leading wind energy development in the last five years which can be attributed to the fusion between its design and manufacturing strength in indigenous wind turbine industry and newly emerging wind energy industry in absorption of global best practices. An empirical analysis of China’s wind energy development trajectory over the last decade focusing on the technology sourcing from foreign firms in support of domestic players for accelerating functionality development through enhanced knowledge identification, absorption, assimilation and acclimatization was attempted. Important lessons learned include (i) importance of supply chain in the technology diffusion, (ii) effective technology acquisition and assimilation through early domestic firm engagement, (iii) effect of relevant domestic firms involvement in technology transfer partnership to induce inter-industry spillovers, and (iv) a framework for an emerging nation to develop new functionalities. Similarity and disparity with similar success of fusion in solar industry (JTMGE 3, 2) were also identified