Economic Growth and Development 2

| 7 →

Preface

This book is intended to be complementary to H. Gürak’s book entitled ‘Economic Growth & Development’ published by PL International Academic Publisher in 2015. A thorough analysis of historical developments was missing in the previous book which is offset by the contribution of Francesco Macheda. In Chapter-1, Macheda attempts to review the historical process through an objective and unbiased eye.

Chapter-2 by H. Gürak, the author, is on a rather important global issue regarding long-run growth and the development of developing countries, the Brain-Drain or on the mobility of labor as the textbooks present them in the mainstream economic models. Qualified brains or synonymously qualified labor is a sine qua non for economic growth and development. But the developing countries seem to lose their most valuable inputs of production to the developed countries in return for nothing. In fact, they stand idly by and allow developed countries to relieve them of their most valuable assets.

Capital is one of the important factors of economic growth and development. Yet there is no consensus on the definition of capital. In fact, there are various types of capital which are simply ignored in the economics textbooks. Another related but ignored issue is the ignorance of ‘capitalist’ in determining investment, and as a consequence, any long-run growth decisions. One rarely sees the following question raised: Which is the determinant factor of investment decisions: the ‘capital’ or the ‘owner of the ‘capital’, e.g., the Capitalist? This important issue is studied by H. Gürak in Chapter-3.

The savings equal investment (S=I) approach is still used in contemporary text-books emphasizing its relationship to growth. Not only academics but also many politicians, technocrats and bureaucrats frequently emphasize that the insufficient amount of savings appear to be a major deterrent to long-run growth. In Chapter-4, Gürak evaluates how realistic this perception is and, to the surprise of some, claims that the amount of savings does not determine the rate of new investment, thus the growth rate in the long run. S=I assumption is more an ‘academic legend’ rather than a reality. ← 7 | 8 →

Chapter-5 discusses today’s popular argument that there might be an end to growth for some Middle- Income Countries that are caught in a trap. Gürak claims that there is no deliberately engineered ‘trap’. However, there are ‘inadequate’ or ‘inappropriate’ economic policies implemented by the decision-makers that prevent the realizing of the desired long-run economic growth targets.

Unfortunately two expected contributions are missing in this book partly due to time-constraints and partly due to ‘other’ circumstances. One of them was the question whether the Keynesian economic policies advocating increased public expenditure to eliminate unemployment and to increase economic growth were already implemented in Germany and the United States in 1930s. If so, then the related question is: Was Keynes inspired by the developments in those countries when he wrote his renowned ‘General Theory’?

The second expected contribution was on ‘Keynesian Developmentalism’, which associates economic growth and development policies developing countries to Keynes’ suggested policies which were in fact intended for the developed countries to eliminate unemployment. Actually, economic growth and development policies specifically designed for developing countries emerged as a ‘sub-discipline of economics’ after the Second World War. As F. Macheda states: “It appeared in the intellectual space opened by the struggle put up by the army of the oppressed and super-exploited semi-colonial and colonial people in Asia, Africa, Latin America, and the Caribbean and like islands.” (See Chapter-1 in this book). But what was the source of inspiration of such policies specifically designed for developing countries? Was it Keynes’ ideas intended for developed countries? Or some other source?

Specific development policies were first introduced in Turkey in the 1930s upon the instructions of Atatürk, the founder of the Turkish Republic. While the rest of the world was struggling with severe economic problems, Turkish economy flourished at a high rate, especially between 1933 and 1938, the first non-communist Plan period.

Was Atatürk inspired by Keynes’ ideas? The answer is a clear ‘no’. On the contrary, there are sound and rational reasons to believe that the policies called ‘Keynesian Developmentalism’ were in fact inspired by the successful policies of Atatürk implemented in 1930s. ← 8 | 9 →

I hope to take up these two important subjects in my next book or maybe in the Second Edition of this book.

*Special thanks go to Hakim John Lee for his patient and valuable ‘mental’ contribution.