In the book Capitalism and Inclusion under Weak Institutions, reviewed in a previous post, author Raul Fabella points to a lack of social coherence in the Philippines as undermining economic progress and contrasts this with the Chinese case where "a strong sense of identity and mission" has propelled phenomenal economic growth. Judging by differences in receptivity to the statement "most people can be trusted", Fabella may be onto something. Survey results presented in Figure 1 show 62.7% of Chinese agreeing with this statement versus just 2.8% of Filipinos. Personally, I am mystified by these results having spent many years in both countries and not finding Filipinos any less trustworthy than Chinese. Yet the results do lend credence to Fabella's thesis.
Moderator: Calla Wiemer (email@example.com)
published by the University of the Philippines, Center for Integrative and Development Studies, 2018. pdf download
The lackluster development performance of the Philippines over the span of many decades is routinely blamed on "weak institutions" by Filipinos. In this thought-provoking book, University of the Philippines economics professor and Philippine National Scientist Raul Fabella advises on how to overcome the curse of weak institutions to achieve robust growth with poverty reduction.
When the last global crisis hit in 2008-09, the major economies of East Asia, but for one, had ample fiscal space to respond, and took advantage of that. This time around, the positioning is more mixed and the threat potentially much greater.
In Asia, the shock of the Great Financial Crisis (GFC) was inflicted mainly through export loss and capital flight. Domestic financial systems remained sound and productive capacity intact. A quick shot of fiscal stimulus was just the remedy to tide an economy over until global trade rebounded and financial capital returned. Use of such a strategy shows up in Figure 1 as a sharp increase in the debt-to-GDP ratio in 2009 for Malaysia, China, Vietnam, Thailand, Korea, and Taiwan, with the ratio then declining or stable in 2010. Two countries – the Philippines and Indonesia – saw no increase in their debt ratios in 2009, riding out the crisis without recourse to fiscal stimulus.
The dominant publisher of economics journals suffers from a dearth of women among its top tier editors. The underlying problem is that academics are not making the selections; rather, the choices are made by Elsevier staff who do not read the journals they manage or appreciate how those journals distinguish themselves. They thus rely on superficial criteria and succumb to subjective biases on gender in picking editors.
This post follows up on my review of Tom Orlik's wonderful book "China: The Bubble that Never Pops". The book explains why constant predictions of China's economic collapse due to mounting debt and financial risk have not been borne out, and the explanation is altogether compelling. My one quibble with the book regards Orlik's view of the underlying driver of the saving/consumption imbalances that motivated debt driven stimulus. Orlik emphasizes China's one-child policy as the source of the imbalances, going so far as to call it China's original sin in an interview. The argument is that with China's weak social welfare system, having only one child makes for insecurity about old age that induces parents to save more during their working years. I'm not convinced that this holds up as a reason for China's imbalances. Let me hasten to add that, regardless, the book's original contribution in explaining why no crash has occurred holds up very well. The source of the imbalances is a separate issue, but one worth pursuing in its own right.
There is a sense in which I agree that the one-child policy has been a factor in China's high saving. The exceptionally sharp decline in the birth rate in China's case accentuated the demographic transition that is common among countries during economic development. A couple of decades on, the drop in the birth rate brings a bulging labor force relative to a shrinking share of old and young age dependents in the population. Per the life cycle hypothesis of Modigliani (1970), saving is done by those in their working years who generate income whereas the young and old consume without producing any income from which to save. The decline in China's dependent share was particularly steep in the 2000-aughts and relatedly, so was the rise in the saving rate, as shown by Bonham and Wiemer (2013). So while the one-child policy mattered, it did not matter until two decades after it was introduced and not because it prompted precautionary saving to provide security in old age but because of the long-run demographic forces it intensified.
Oxford University Press, May 2020.
As much as China's crash has been predicted, someone needed to explain why it hasn't happened. And no one could be more credible in doing so than Tom Orlik who has reported insightfully on China since 2011, first with the Wall Street Journal, then with Bloomberg where he is now Chief Economist.
Starting a new journal has never been easy, but in recent years it has gotten very much harder. This is the sad reality the American Committee on Asian Economic Studies (ACAES) came up against in its own quest following loss of the Journal of Asian Economics to a takeover by Elsevier (see previous post). Start-up is inherently difficult simply because reputation is so crucial to attracting submissions, and reputation takes a long time to establish. But start-up has of late become even more difficult because the journal publishing industry is caught in a state of limbo between an old model that relies on selling subscriptions to libraries and a new model that features open access with the business angle of that yet to be worked out. The dominant player in journal publishing and its major customers have squared off and failed to come to terms.
The dominant player by far in journal publishing is Elsevier. As the first post in this series documents, Elsevier's share of articles published in the top 200 economics journals was an overbearing 58.6% for the last decade. Elsevier has exploited its market power to the point that such major customers as the University of California and the Massachusetts Institute of Technology have finally halted negotiations and canceled their subscriptions. UC broke off negotiations in January 2019 (its struggles chronicled here). More recently, on June 11, MIT announced it was following suit. Many European universities have also taken a stand, organizing their resistance by country. In particular, a consortium of German universities canceled subscriptions in January 2017. At times, boycotts have also been staged in Taiwan and Korea.
Loss of the Journal of Asian Economics to a takeover by Elsevier and less than encouraging responses from other publishers to inquiries about starting a new journal prompt these remarks. Why did the model of an academic society choosing editors, setting a vision, and developing content stop working for Elsevier? And is there a future for such a model?
The Journal of Asian Economics was founded in 1990 by the American Committee on Asian Economic Studies. During its 30 year run under ACAES auspices, the Journal was helmed by three Editors-in-Chief: founder Manoranjan Dutta (1990-2007); Michael Plummer (2007-2015); and myself (2015 to the June 2020 issue). The Editor-in-Chief served concurrently as President of ACAES with endorsement by the organization's voting members.