China’s New Development Strategy: Environment and Energy Security

This paper analyzes China's development strategy by focusing on both global and regional approaches to solving problems of energy security and ecological imbalance by addressing specifically the problems of China’s energy security. PRC’s growing energy dependence has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China. Fortunately, such a model of POLIS which is distributionally and ecologically sensitive can be built for China and applied strategically to lead towards a sustainable development trajectory. However, time is of the essence. Given the path dependence of development unless strategic disengagement from the existing path followed by a strategic engagement with the alternative strategy is begun within the next five years, it may well be too late. The stakes are indeed very high. A more detailed strategy paper based on the key ideas from the alternative strategy outlined here with concrete quantitative scenarios and feasibility studies along the lines of models sketched in the appendix ( and other, more detailed models) will go some distance towards giving the appropriate analytical foundations for the policy makers. The preliminary results confirm the predictions regarding fossil fuel-based energy shortage and lead towards a serious consideration of alternative energy sources. Achieving the twin goals of energy security and ecological balance are challenging but not impossible for China. Serious policy research can be used effectively if there is the political will to do so. The goal of regional cooperation is also achievable if patient negotiations in good faith can start in earnest. In particular, cooperation with other Asian economies, particularly Japan, Indonesia, Viet Nam and India will be crucial.This paper has sketched out the complexities of cooperation and conflict between China and Japan. Future work will address the problems of Regional cooperation for China in the East, South and South Asian context as well as in the context of Africa and Latin America.China, Development Strategy, Energy, Environment, POLIS, Innovation System, Regional Cooperation

Dialectical Logic and Self-consciousness: Some Preliminary Remarks on Hegel’s Phenomenology of Spirit and Science of Logic

The purpose of this note is to explore briefly the role that a dialectical development of logical understanding and consciousness plays in Hegel’s Phenomenology of Spirit with some references to his Science of Logic. The role played by the logic of ontological development is emphasized. Furthermore, the role of human laboring activity in particular in Hegel is singled out as an area where thinking can redirect itself to return from the heights of speculative thought to a this-worldly development of freedom through a series of internal and dialectical contradictions. In line with this approach, Hegel's non-atomistic characterization of the individual in society can also be seen in a new light.Logic, Dialectics, Labor, Self-consciousness, Sociality

Analyzing Poverty Impact of Trade Liberalization Policies in CGE Models: Theory and Some Policy Experiments in Agricultural and Non-agricultural Sectors in South Asia

The paper uses a dualistic, compact and “generic” (macroeconomic) computable general equilibrium (CGE) model specially constructed for the purpose of investigating the implications of trade liberalization for poverty reduction in South Asia. The model is a stylized representation of economies with large populations including large numbers of both urban and rural poor as in India, Pakistan or Bangladesh. The current “generic” model uses CES production functions and Harris-Todaro type migration model together with representative data to generate economy wide results. It is found that a dualistic production structure with sufficient details on the labor markets and household side can capture some of the effects of trade liberalization on poverty reduction. The model’s general equilibrium results suggest that trade liberalization can complement other specific policy interventions for poverty reduction.Poverty, Trade Liberalization, Dualism, CGE model, Agriculture Informal, Urban Informal sector

Building an Innovative Economy through Managed Creative Destruction: A Theory with Applications to South Korea

This paper presents a somewhat novel theory of innovation in the economy wide setting. The starting point for this theory is the creative destruction process at the firm and industry level. However, an extension to an economy wide setting requires the explicit theorization of the role of the state as well as an interacting nonlinear market process. The direction in which the theory leads is a complex interaction between state policies and market processes that influence the decisions taken by specific firms in particular areas of innovative activities. The key concept that is developed in this context can be called a Managed Creative Destruction(MCD) process. In a national (or regional) MCD, the creative destruction process characterizing innovation is structured more consciously by the state (or the states in a particular region). It can be argued that China is now going through this process. In this paper the particular case studied is South Korea's recent historical experience. Following Schumpeter we assume that innovation in specific firms can have economy-wide effects. Models based on this idea can be shown to have multiple equilibria. The idea of a positive feedback loop innovation system or POLIS is formalized by picking an appropriate sequence of equilibria over time. It is shown that POLIS has empirical relevance by applying the formal model to an actual economy. Recent financial crisis in many Asian countries, most notably South Korea, seems to have reversed the conventional wisdom regarding the East Asian “miracle”. This paper applies the concept of a POLIS to show that neither the current view that the miracle was a mirage nor the earlier contrarian view that the growth was a result of factor accumulation only is correct. Ultimately technological transformation — in particular the creation of a positive feedback loop innovation system is what makes the difference between sustained growth and gradual or sudden decline. Although various problems remain in both the real and the financial sectors, it will be premature to dismiss the impressive achievements and the future possibilities of the South Korean economytechnological transformation, multiple equilibria, POLIS (positive feedback loop innovation system), Korea,South Korean POLIS, Managed Creative Destruction(MCD)

Friedman’s Methodology: A Puzzle and A Proposal for Generating Useful Debates through Causal Comparisons

Milton Friedman’s “The Methodology of Positive Economies” is still one of the most widely read pieces on economic methodology. One reason for this might be Friedman’s attractive proposal that economists use theories and hypotheses as pragmatic devices to summarize data and make predictions over the relevant range of observations. Logically, this should lead to a fair minded comparison among many contending theories. However, Friedman's actual examples and discussion of these examples raise a puzzle. The field of comparison seems unduly narrow from the beginning. In my attempt to resolve this, I consider some logical and ontological problems for Friedman's position. I end up by suggesting a scientific realist approach to testing theories by causal comparisons over a wide field of contending theories.economic methodology,Milton Friedman's methodology,logic and and ontology,causal comparisons,scientific realism

Causal Depth contra Humean Empiricism: Aspects of a Scientific Realist Approach to Explanation

The purpose of this note is to clarify how the idea of "causal depth" can play a role in finding the more "approximately true" explanation through causal comparisons. It is not an exhaustive treatment but rather focuses on a few aspects that may be the most critical in evaluating the explanatory strengths of a theory in the social sciences. It presents a general argument which is anti-Humean on the critical side and scientific realist on the positive side. It also elucidates how explanations in political economy and other social sciences can be judged by the scientific realist criterion of causal depth by an extensive example from research in the political economy of development. In this case, an "intentional" and methodologically individualist neoclassical explanation is contrasted with a "structural" dual-dual approach as rival theories purporting to explain the same set of phenomena. The formal model representing the dual-dual approach can easily be contrasted with its neoclassical counterpart. The comparison shows that the dual-dual model is indeed deeper in terms of causal structure than the neoclassical modelEconomic Models, Social Explanation,Causal Depth, Scientific Realism, Political Economy, Neoclassical Economics, Structuralism, Social Science Theories

Causal Depth: Aspects of a Scientific Realist Approach to Causal Explanation contra Humean Empiricism

The purpose of this note is to clarify how the idea of "causal depth" can play a role in finding the more "approximately true" explanation through causal comparisons. It is not an exhaustive treatment but rather focuses on a few aspects that may be the most critical in evaluating the explanatory strengths of a theory in the social sciences. It presents a general argument which is anti-Humean on the critical side and scientific realist on the positive side. It also elucidates how explanations in political economy and other social sciences can be judged by the scientific realist criterion of causal depth by an extensive example from research in the political economy of development. In this case, an "intentional" and methodologically individualist neoclassical explanation is contrasted with a "structural" dual-dual approach as rival theories purporting to explain the same set of phenomena.Social Explanation, Causal Depth, Scientific Realism, Political Economy, Neoclassical Economics, Structuralism, Social Science Theories, Economic Models

Making Globalization Work: Towards Global Economic Justice

Globalization as a corporate-led process has come under much justifiable criticism. This paper attempts to give the term analytic content distinct from its more ideological formulations.. It then focuses on a normative analysis of globalization from the capabilities perspective. A freedom-centered perspective such as the capabilities approach emphasizes policies and institutions that can enhance freedom globally and locally. A global governance structure based on transparent principles of both economic efficiency and social justice is shown to be a desirable state of affairs; however, the present fractured process of globalization is more likely to end up in a fragmenting regionalism or even national protectionism and rivalry. Multilateral cooperation on the basis of the framework advanced here is an urgent necessity.To this end the creation of international regimes of cooperation in areas ranging from trade and finance to ecological and women's and minorities rights issues must be put on the international and national social and political agendasGlobalization, Global Justice, Capabilities, Financial Crisis, Global Financial Architecture, Global Society

"On Mortality and Poverty: An Axiomatic Approach With A Modified Index"

The purpose of this note is to analyze a somewhat novel aspect of poverty measurement, namely the impact of premature deaths of poor people on measured poverty. The perverse results one could easily obtain theoretically can be illustrated by using the widely used headcount ratio index. The proposal for a correction offered here involves the introduction of a new axiom of biological stress (ABS) to handle the case of premature mortality among the poor specifically, and to address the issue of increasing biological stress generally. A new headcount ratio index adjusted for the specific biological stress leading to premature deaths among the poor is constructed. It is simple, consistent with ABS, and easy to estimate. It is hoped that given the relevance of the critical demographic variables already acknowledged in the literature, the new index will be of use to the poverty reduction specialists.

"Trade Liberalization and Poverty Reduction in General Equilibrium: The Role of Labor Market Structure"

The paper uses a dualistic, compact and "generic" (macroeconomic) computable general equilibrium (CGE) model specially constructed for the purpose of investigating the implications of trade liberalization for poverty reduction in South Asia under different labor market specifications. The model is a stylized representation of economies with large populations including large numbers of both urban and rural poor as in India, Pakistan or Bangladesh. The current "generic" model uses CES production functions and Harris-Todaro type migration model together with Indian data to generate economy wide results. The model's general equilibrium results allow us to test a number of hypotheses regarding the role of labor markets in inducing poverty reduction when trade liberalization policies are adopted.