Development Economics:
“New Challenges Facing the Global Economy”
Summary:
Development Economics emphasizes advocates for a long- term perspective in addressing a
country’s economic challenges, rejecting quick fixes that may lead to unforeseen problems.
The failures in this field are often linked to the imposition of western modernization, which
clashes with diverse cultures, values, and traditions. The negative consequences of blindly
adopting such approaches are evident in Chile, where post-coup Western solutions proved
detrimental in long term wellbeing. During the 1980s, several countries encountered
economic challenges and crises as they navigated through various models. The Latin American
debt crisis significantly impacted countries like Mexico, Brazil, Chile, and Argentina,
highlighting the vulnerabilities of relying on external borrowing. Asian economies also
experienced turbulence in the 1980s. India faced a balance of payments crisis, leading to
economic reforms, while countries like South Korea navigated challenges in their
developmental trajectories. These examples open the discussions of effectiveness of neoclassical development model and suggest the modifications of Washington consensus. Key
points include the importance of socially inclusive societies, local initiative and responsibility,
and the need for sensitivity in removing barriers to market creation. The role of civil society,
local institutions and investments in human capital, sustainable development through
informed participants and state interventions as a friend of market. While the initial part of
the book addresses crucial aspects for re-establishing or modifying the Washington
consensus, the judicial institution were not mentioned separately. In my view, emphasizing
the independence of the judiciary is first, as when these institutions are influenced from
behind the scenes, it paves the way for corruption and nepotism, significantly diminishing
individual’s quality of life and eroding trust in state institutions. I believe a steadfast
commitment to judicial interdependence ensure economics development by safeguarding
property rights, even though the resulting economics prosperity may not necessarily align with
the interests of certain institutions, particularly judicial independence. In developed countries
like the United States, the establishment of trustworthy financial systems attracts global
assets. One key factor, as highlighted in the book, is the formidable military strength of the
United States. The widely acknowledged expertise of the U.S. Armed forces instils confidence
in individuals and nations, making the U.S a secure choice for safeguarding savings, especially
when compared to nations like Syria and others countries facing military inadequacies.
Another important aspect is the United States dominant position in the global economy,
representing 22 % of the GDP. This economic influence positions the U.S, as a stable and
productive destination for savings. Additionally, the Unites States plays a crucial role in
providing liquidity to global trade, further enhancing its appeal as safe haven for financial
assets. The adherence to the rule of law in the United States emerges as a crucial factor. This
legal framework ensures stability and security, contrasting clearly with undeveloped nations
lacking a strong law, weak military capabilities, and limited global trade contributions. In
essence, the United States becomes the preferred choice for safeguarding billions in savings
due to its military strength, economics dominance, pivotal role in global trade, and
commitment to the rule of law. This flood of savings contributes significantly to overall
development of the country. The book explores the rapid development of China and India
specifically as both country developed dramatically ın a short period of time. The question is,
how they accomplished that much in that period of time? First of all, for China, the Chinese
Communist Party (CCP) has effectively suppressed wage increases for almost 30 years,
especially in Special Economic Zones (SEZs). Especially this policy, with the effect of the
absence of independent labour unions in the country even though it was communist before,
significantly reduced wages and led to significant capital accumulation. Workers in the Special
Economic Zones lived in cheap dormitories, with no residential rights, and saved a significant
parts of their salaries, contributed to high capital availability. Furthermore, after joining the
World Trade Organization (WTO) in 2001, China became the world's supplier of low-cost,
labour-intensive products, of course, due to the country's high population. This by time made
China a one of the best in textile and electronics specifically. The combination of low wages,
declining transportation costs, and globalization has contributed to economic development of
China. China maintained its demographic advantage even though it adopted "one-child
policy". Large productivity gains in agriculture, together with domestic immigration policies,
provided a large workforce for the manufacturing and industrial sectors on the East Coast of
the country. Labour surplus played an important role in sustaining economic growth for sure.
The Chinese government's ability to make decisions quickly, without the long way of
consensus-building process seen in democracies, has made it easier to execute large-scale
infrastructure projects. The construction of projects like the Three Gorges Dam on the Yangtze
River demonstrated the authority of the government and its ability to make fast decisions for
economic development. This actually is very important for development of economics and a
critics of the democracy that may prove that the democratically way of administration is not
the only way for the development of the economics.
In the book, China's trade model is described as mercantilist, economy mostly dependent on
foreign consumption and discussed if economic development of China is sustainable.
According to the book, accession of China into the World Trade Organization was vital for the
development of Chinese economic success. The book also mentions challenges that are strictly
associated together with China's development, such as vital environmental pollution, a real
estate problem with a large number of empty apartments, and an increasing income gap. The
book warns that China has entered the Middle Income Trap and emphasizes the necessity of
transition from an export-oriented economy to a consumption-oriented economy.
The book explores India’s economic development, intricately entwined with its geopolitical
context. Described as an “island country” due to religious differences with neighbours, Hindumajority Pakistan and Bangladesh. Economic development of India is also affected by its
complex social structure, especially the caste system. Economic inequalities persist due to
historical difficulties in social life. Constitutional measures has been taken to eliminate the
discrimination within the country. However, it is hard job to do so in India because of its deep
roots in its history. Post-independence challenges included religious unity, influenced by
Mahatma- Gandhi’s family. In the 21st century, Prime Minister Narendra Modi implemented
economic reforms, introducing the Goods and Services Tax (GST) and undertaking
demonetization. Demonetization aimed to control the informal economy, however it caused
temporary economic problems. Government focused on the complexities in taxation,
improved infrastructure in the country and took necessary measures for business to be easier.
Comparing India and China is very difficult because both countries have very different cultures
and way of living. China has larger and more productive economy with lower inflation
compared to India. In 2018, India's population was 1.2 billion and its GDP was 2 trillion dollars,
while China's population was 1.34 billion and its GDP was 12 trillion dollars. Per capita GDP
disparity and growth rates show that economic superiority of the China continuous.
The establishment of the European Union (EU) stands as a pivotal development in Europe’s
history, especially in the aftermath of devastating World Wars. The EU not only symbolizes a
union of states and their institutions but also serves as a proactive platform for collaborative
problem- solving, addressing issues on common ground. The absence of such an institution
was a contributing factor to the outbreak of both World War 1 and World War 2. Moreover,
European Union brought together the notion that is “and, and” rather than “or ,or” to the
world. That means, after the emergence of the European Union, other states should not think
that we will either be on the side of Germany or France. Instead, they should think that “we
are all parts of one union”. European Union is a logic that all Europe is one nation in essence.
No more war broke out in Europe after the emergence of this union. However, people of the
member states can freely travel, live and work in the other member states which in turn could
increase the economic well-being of the countries in the EU. In essence, the European Union
is a paradigm of unity that has not only prevented further conflicts but has also laid the
foundation for a cooperative and integrated Europe, fostering economic growth, cultural
exchange, and a shared sense of identity among its diverse member states.
However, many contemporary problems brought challenges to the European Nations such as
immigration. Those, who was born in developed countries seem lucky compared to regions
facing conflicts like Sub-Saharan, North Korea, Syria, and Palestine. This has led people to seek
refuge in the European Union for better living conditions, but cultural, religious, and lifestyle
differences have created internal tensions. Rightist movements, gaining strength across
Europe, are exemplified by leaders like Meloni in Italy, who opposes the EU. The declining
population in European countries complicates decision regarding newcomers. The idea of
creating a United States of Europe (USE) with a common constitution, trade, services, labour,
and capital freedom, a federal government, shared budget, taxes, law, and a unified army and
police faces challenges. It seems to me impossible to create this when we consider that Britain
left the Union, and Italy considers its options.
On the other hand, Russia, which has been one of the most important rival to the west, both
for United States and for the countries of European Unions has experienced its own unique
way to the economic developments. This experience strictly sticked together with its historical
junctures such as collapse of the Soviet Union in 1991 and the emergence of modern Russia,
the Russian Federation under President Vladimir Putin. This new state suffered many
problems because of the significant territorial losses and decline of population. Furthermore,
efforts of privatization by Boris Yeltsin caused to consolidation of the capital among just a few
oligarchs. Putin, mainly focused on restoring the economic and political order. His presidency
was mainly characterized by control over the media, elimination of political opposition, and
strategic goals aimed at regaining influence over former Soviet states and weakening the EU.
He mostly accomplished those goals above especially increased influence of Russia over postSoviet countries. Armed Forces of Russia attacked not only from the Russia-controlled regions,
but also from the post-Soviet Belarus to directly capital Kiev. Also, both leader of Azerbaijan
and the leader of Armenia were in meeting with Putin after they both fought for Karabahk
region. Additionally, Putin used energy as a weapon against the West, using its power on gas
supply to silence NATO countries over invasion of Ukraine. Furthermore, main economic
activities of Russia relies on exports of resources, exports of weapons and mercenaries.
Especially the WAGNER that even had dared to move against to Putin himself in Russia during
Russia’s offensive in Ukraine. Author, criticizes approach of Russia and claiming that they do
not try to be normal, modern industrial economy, instead rely on heavily mentioned areas to
get economic benefits.
On the other side, this book explores the overview about the economic situation about the
Middle East, Saudi Arabia, Turkey, Iran, Iraq, Syria, and Egypt. Saudi Arabia is rich and deeply
connected to Islam. It was founded in 1932 by Abdulaziz Ibn Saud. The discovery of oil in the
late 1930s transformed the country economically. The political system is influenced by
conservative interpretations of Sunni Islam. The country adheres to strict form of Islamic law,
and the Quran and Sunnah form the basis of legal system. Sharia law prescribes specific
punishments for certain offenses for instance, beheading, stoning, amputation, crucifixion,
flogging, and in extreme cases, capital punishment. In the recent years, Saudi Arabia has
undertaken legal reforms as part of the vision 2030 initiative. These reforms aim to modernize
the legal system, improve the business environment, and enhance the rule of a law. Efforts
have been made to streamline legal producers and increase transparency. Also in case of
turkey, it was the centre pf the Byzantine Empire until the Ottoman Turks, led by Osman 1,
established the Ottoman Empire in the late 13th century. After World War 1, the Ottoman
Empire collapsed, and modern Turkey emerged under Mustafa Kemal Atatürk in 1923. Turkey
operates under a democratic, secular, and parliamentary system. In recent years, there has
been significant political polarization. The ruling Justice and Development part (AKP), led by
President Erdoğan, has been in power since 2002. Turkey’s alignment with European values
has progressed, but economic instability persists, not solely due to president Erdoğan’s
decisions. Regional instability, stemming from neighbouring countries facing political turmoil
and economics crises, amplifies Turkey’s economic challenges. In Iraq, the aftermath of wars
and the presence of PKK exacerbate security concerns and hinder economic development.
Syria, divided into the US-protected YPG (PYD) in the north, anti-Regime opponents protected
by Turkish forces and Russian-backed Regime forces, further complicates the situation. YPG,
which is synonymous with PKK in all but name, forces Turkey to allocate significant amounts
of national income to defend its borders against itself. Additionally, ISIS, Hezbollah and other
terrorist organizations operating primarily in Syria which also threaten Turkish economic
benefits. In addition, as a result of the conflicts between Turkey's eastern neighbours
Azerbaijan and Armenia since 1993 have led to the closing of commercial and diplomatic ties
with Armenia. This move took place after Armenia invaded Azerbaijani territory in the First
Nagorno-Karabakh War, causing civilian casualties in the occupied areas. Despite economic
and political difficulties, Turkey's economic and military capacity continues to grow. Turkey,
which has to spent significant amount of its national income to maintain stability is yet has
stronger military and economic developments compared to some of European Union
countries such as Greece, South Cyprus Rum Administration that are in the EU with no military
conflicts with its neighbours.
This books also delves about Latin America, has a complex past shaped by indigenous
civilizations, colonialism, and struggles for independence. Economically, these countries vary
widely. Mexico has a diverse economy. Brazil is a major agricultural and industrial player,
Venezuela heavily relies on oil exports, and Argentina is known for agriculture and minerals.
This book delves into one of the most impactful global pandemic situations within worldwide.
The post-pandemic era witnessed a historic global vaccination drive, aiming to achieve
widespread immunity against COVID-19. Countries implemented varied strategies, and
vaccine distribution inequalities highlighted challenges in global health governance.
Additionally, the pandemic promoted advancements in healthcare technologies and
accelerated digital transformation, fostering more efficient and resilient systems. However,
the long- term impact on mental health and economic disparities remains a significant
continue to address. In the post- pandemic landscape, diverse approaches emerged among
countries. For instance, countries like Israel swiftly rolled out vaccinations, achieving high
immunization rates early on, contributing to a notable decline in cases. On the other hand,
some nations, facing logistical hurdles and vaccine supply issues, encountered delays in their
vaccination campaigns. Meanwhile, Scandinavian countries like Denmark and Norway focused
on a balanced approach, combining public health measured with economic support to
navigate the challenges.