Economic Growth: The New Perspectives for Theory and Policy

342 Pages·2014·5.727 MB·English

by  Tai-Yoo Kim, Almas Heshmati (auth.)

Tai-Yoo Kim · Almas Heshmati
Economic Growth
The New Perspectives for
Theory and Policy
Economic Growth

Tai-Yoo Kim (cid:129) Almas Heshmati
Economic Growth
The New Perspectives for Theory and Policy
Tai-YooKim AlmasHeshmati
DepartmentofIndustrialEngineering/ DepartmentofEconomics
TechnologyManagementEconomics SogangUniversity
andPolicyProgram(TEMEP) Seoul,Korea,Republicof(SouthKorea)
CollegeofEngineering
SeoulNationalUniversity
Seoul,Korea,Republicof(SouthKorea)
Additionalmaterialtothisbookcanbedownloadedfromhttp://extras.springer.com
ISBN978-3-642-40825-0 ISBN978-3-642-40826-7(eBook)
DOI10.1007/978-3-642-40826-7
SpringerHeidelbergNewYorkDordrechtLondon
LibraryofCongressControlNumber:2013954791
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Preface
Thisbookhasbeenwrittenforreaderswhodesiretowitnessasignificanteconomic
growth, one that will bring about an enhancement of the national economy and
welfare. Important target readers that we have kept in mind include college and
graduate students, economic policymakers, politicians, the experts and leaders of
economicpolicy.Anyonewithabasicknowledgeofeconomictheorywhowishes
to learn more about economic growth, however, will benefit from perusing the
contents of this book. The new perspectives of economic growth theory that we
introduceherewillproveespeciallyusefultothosewhoquestion,andtothosewho
havebeendisappointedwiththelimitedefficacywithwhichtraditionaleconomics
andeconomicgrowththeorieshaveappliedtotherealworld.
Constructingatheoreticallycorrectperceptionofthenatureofeconomicgrowth,
and crafting practical government policies to stimulate actual economic growth,
requireafirmgriponthreefundamentalcharacteristicsofeconomicgrowth.
Firstofall,thenatureofeconomicgrowthisnotdefinedbythespeedatwhich
the economy grows, but by whether or not it accelerates in its growth. In other
words,thecurrentspeedofeconomicgrowthisfarlessimportantthantherateofits
acceleration(ordeceleration).Thisisbecausetherateofaccelerationisthefactor
that indicates the technological nature, or industrial organization, of an economy.
Technologicalnatureandindustrialorganizationareultimatelywhatdeterminethe
rate of a country’s future economic growth. In any given historical period,
therateofaccelerationwasinfactnotonlylinkedtotheeconomiccharacteristics
of a country, but also to the social, political, and cultural factors stemming from
economics.
Thesecondpointtorememberisthateconomicgrowthisafruitoftheexpansive
reproductionsystem.Theeconomicgrowthofacountryorsocietyaccelerateswhen
the virtuous cycle of an expansive reproduction system is created and maintained.
When the country or society falls out of this virtuous cycle, its economic growth
stalls; if a malicious cycle is formed, its economy begins to regress. A virtuous
cycle is formed when accumulated capital is invested in technological innovation,
generating new demand for the new products created by newly developed technol-
ogy.Thisspursaqualitativedevelopmentoftheeconomyandthesophisticationof
v
vi Preface
industrialorganization,whichbecomethebackbonesoftheexpansivereproduction
system. Qualitative development of the economy allows for mass production and
mass supply, gratifying the newly generated demand and keeping up an expansive
equilibrium. Ina society where the expansive reproduction system is the engine of
economicgrowth,then,technologicalinnovationisitspowerfulfuel.
Finally,theroleofvaluecreationineconomicgrowthiscrucial.Anexpanding
economy is indicative of generation of new values, which had not previously
existed. Traditional industrial classifications, such as primary, secondary, and
tertiary, or manufacturing versus service, however, are woefully inadequate for a
properunderstandingoftheroleofvaluecreationineconomicgrowth.Economic
policies basedonthe traditionalclassificationsandtheorieshavethusoftencaved
intoskewedandunproductivecontroversies.Insteadoftryingtoascertaindifferent
categories of economy, it is more important to understand that an economy
develops through the cycle of the processes of creation, expansion, and transmis-
sion of value. The rise and fall of every state in history, then, were inextricably
linked to the processes of value creation in various societies in different time
periods,betheylargeandpowerful,ortinyandinsignificant.
Wehopethatourneweconomicgrowththeorywillofferusefulandapplicable
suggestions for countries seeking to stimulate new economic growth, for both
developingcountries trapped inamaliciouscycleofchronicallylowgrowthrates
and poverty and advanced industrial states struggling with economic crises and
recession.Webelievethatourtheorywillnotonlyofferexcitingnewsolutionsfor
theeconomiesofindividualcountries,butforthecommongrowthandprosperityof
theglobaleconomyatlarge.
We are deeply grateful for the support ofthe National Research Foundationof
Korea (NRF), Grant No.2010-0026178, near the time of the publication of our
research. Without Editor Toby Chai, the staff, and the Springer publishing com-
pany, this book would never have seen the light of day. Although we cannot
reiterate all the names of our co-authors here, their dedicated and creative efforts
were what enabled the completion of our theory and book. Their names can be
foundintheindividualchapterstowhichtheycontributed.Ifanymistakesorerrors
are still to be found in the following pages, it is due solely to the negligence and
shortcomingsoftheauthor.
Seoul Tai-YooKim
August2013 AlmasHeshmati
Contents
1 IntroductiontoandSummaryofEconomicGrowth:
TheNewPerspectivesforTheoryandPolicy. . . . . . . . . . . . . . . . 1
Tai-YooKimandAlmasHeshmati
2 DeceleratingAgriculturalSociety:Theoretical
andHistoricalPerspectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Tai-YooKim,AlmasHeshmati,andJihyounPark
3 AcceleratingEconomicGrowthinIndustrialSocieties:
TheProcessofExpansiveReproduction. . . . . . . . . . . . . . . . . . . . 57
Tai-YooKim,SeunghyunKim,andJongsuLee
4 DeterminantsofEconomicDivergenceAmong
AcceleratingSocieties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Tai-YooKim,SeunghyunKim,andJongsuLee
5 TheFaster-AcceleratingDigitalEconomy. . . . . . . . . . . . . . . . . . 163
Tai-YooKim,EungdoKim,JihyounPark,andJunseokHwang
6 TheFasterAcceleratingGrowthoftheKnowledge-Based
Society. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Tai-YooKim,Mi-AeJung,EungdoKim,andEunnyengHeo
7 TheCatch-UpIllusion:WhyDevelopingNationsthat
ExperienceRapidEconomicGrowthCanNeverCatchUp
withAdvancedCountries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Tai-YooKimandSeunghyunKim
8 War,PeaceandEconomicGrowth:ThePhoenixFactor
Reexamined. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
Tai-YooKim,GicheolJeong,andJongsuLee
vii
viii Contents
9 TheRelationshipAmongStockMarkets,Banks,Economic
Growth,andIndustryDevelopment. . . . . . . . . . . . . . . . . . . . . . . 279
Tai-YooKim,JungwooShin,YeonbaeKim,andJeong-DongLee
10 TheNecessityofaNewIndustrialClassification
BasedonValue-CreationBehavior. . . . . . . . . . . . . . . . . . . . . . . . 293
Tai-YooKim,YoonmoKoo,DongOokChoi,andYeonbaeKim
BiographyoftheAuthors. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . 309
AuthorIndex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
SubjectIndex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Lists of Contributors
Dong Ook Choi ESSEC Business School and THEMA, Universite´ de Cergy-
Pontoise,Cergy-Pontoise,France
Eunnyeng Heo Department of Energy Resources Engineering, 38–314, Seoul
NationalUniversity,Seoul,SouthKorea
AlmasHeshmati DepartmentofEconomics,SogangUniversity,Seoul,SouthKorea
JunseokHwang DepartmentofIndustrialEngineering/TechnologyManagement
EconomicsandPolicyProgram(TEMEP),CollegeofEngineering,SeoulNational
University,Seoul,SouthKorea
Gicheol Jeong Science and Technology Policy Institute (STEPI), Dongjak-gu,
Seoul,SouthKorea
Mi-AeJung ScienceandTechnologyPolicyInstitute(STEPI),Seoul,SouthKorea
Eungdo Kim The Graduate School of Health Science Business Convergence,
ChungbukNationalUniversity,Cheongju,Chungbuk,SouthKorea
Seunghyun Kim Science and Technology Policy Institute (STEPI), Seoul,
SouthKorea
Tai-Yoo Kim Department of Industrial Engineering/Technology Management
Economics and Policy Program (TEMEP), College of Engineering, Seoul National
University,Seoul,SouthKorea
Yeonbae Kim Department of Industrial Engineering/Technology Management
EconomicsandPolicyProgram(TEMEP),CollegeofEngineering,SeoulNational
University,Seoul,SouthKorea
Yoonmo Koo Engineering Research Institute, Seoul National University, Seoul,
SouthKorea
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