Economic Liberalism and the Developmental State: Hong Kong and Singapore’s Post-war Development

This book provides a fresh perspective on the debate over the role of the state in East Asia’s development history. Comparing the post-war development policies of Singapore and Hong Kong, it argues that their strong economic performances preceded and persisted despite, not because of, developmental state policies. While both nations are not pure free markets, the Hong Kong economy comes closer to that ideal and exhibited clear advantages over state-driven Singapore, in terms of greater levels of indigenous entrepreneurship, productivity and innovation. The book highlights the complex ways in which states penetrate markets, which are often neglected in liberal accounts of Hong Kong and Singapore as ‘free-market success stories’. At the same time, it also stands as a cautionary tale on the use of non-comprehensive development planning in the twenty-first century, where an unprecedented degree of complexity complicates economic policy and industrial upgrading. The book renews the case for economic liberalism in development policy through a unique Asian cultural lens.

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Economic Liberalism and the Developmental State: Hong Kong and Singapore’s Post-war Development

This book provides a fresh perspective on the debate over the role of the state in East Asia’s development history. Comparing the post-war development policies of Singapore and Hong Kong, it argues that their strong economic performances preceded and persisted despite, not because of, developmental state policies. While both nations are not pure free markets, the Hong Kong economy comes closer to that ideal and exhibited clear advantages over state-driven Singapore, in terms of greater levels of indigenous entrepreneurship, productivity and innovation. The book highlights the complex ways in which states penetrate markets, which are often neglected in liberal accounts of Hong Kong and Singapore as ‘free-market success stories’. At the same time, it also stands as a cautionary tale on the use of non-comprehensive development planning in the twenty-first century, where an unprecedented degree of complexity complicates economic policy and industrial upgrading. The book renews the case for economic liberalism in development policy through a unique Asian cultural lens.
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The Economic Consequences of IT: The IT Revolution’s Meager Benefits and Major Schisms

The IT revolution, underway since around 1980, has featured mediocre growth and rising geographic, educational, and generational inequality. This stands in stark contrast to the broad prosperity and convergence experienced in the 1950s and 1960s. We attribute this change to a swivel in the leading edge of productivity growth away from manufacturing largely present in towns to information technology mainly housed in “superstar” cities. Using a spatial model, we show how this can explain: rising prosperity and rapid housing inflation in “superstar” cities; falling relative wages in towns and the countryside; mediocre aggregate productivity due to increasing misallocation of labor; the loss of manufacturing jobs, especially in cities; and falling migration.
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A Mengerian Theory of Knowledge and Economic Development

This paper reconstructs Carl Menger’s theory of economic development centered around the growth of knowledge. Menger made knowledge central to the economic process, long before this was done more widely in economics. His work draws attention to two different types of knowledge, shared cognitive and institutional frameworks which help create coherent and integrated markets on the one hand, and, on the other hand, private—increasingly specialized and differentiated—knowledge used in the production of heterogenous (capital) goods. We situate Menger’s work on economic development in the evolutionary endogenous growth tradition going back to Bernard Mandeville and Adam Smith, and later developed by Alfred Marshall, Allyn Young, Ludwig Lachmann, and others. We use these insights to suggest that one of the crucial questions of economic organization is (1) the complementarity between the two types of knowledge we identify here, and (2) the extent to which knowledge is a part of shared social infrastructures rather than being organized privately within firms and other organizations.
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Economic Liberalism and the Developmental State: Hong Kong and Singapore’s Post-war Development

This book provides a fresh perspective on the debate over the role of the state in East Asia’s development history. Comparing the post-war development policies of Singapore and Hong Kong, it argues that their strong economic performances preceded and persisted despite, not because of, developmental state policies. While both nations are not pure free markets, the Hong Kong economy comes closer to that ideal and exhibited clear advantages over state-driven Singapore, in terms of greater levels of indigenous entrepreneurship, productivity and innovation. The book highlights the complex ways in which states penetrate markets, which are often neglected in liberal accounts of Hong Kong and Singapore as ‘free-market success stories’. At the same time, it also stands as a cautionary tale on the use of non-comprehensive development planning in the twenty-first century, where an unprecedented degree of complexity complicates economic policy and industrial upgrading. The book renews the case for economic liberalism in development policy through a unique Asian cultural lens.
Download Paper

The Economic Consequences of IT: The IT Revolution’s Meager Benefits and Major Schisms

The IT revolution, underway since around 1980, has featured mediocre growth and rising geographic, educational, and generational inequality. This stands in stark contrast to the broad prosperity and convergence experienced in the 1950s and 1960s. We attribute this change to a swivel in the leading edge of productivity growth away from manufacturing largely present in towns to information technology mainly housed in “superstar” cities. Using a spatial model, we show how this can explain: rising prosperity and rapid housing inflation in “superstar” cities; falling relative wages in towns and the countryside; mediocre aggregate productivity due to increasing misallocation of labor; the loss of manufacturing jobs, especially in cities; and falling migration.
Download Paper

A Mengerian Theory of Knowledge and Economic Development

This paper reconstructs Carl Menger’s theory of economic development centered around the growth of knowledge. Menger made knowledge central to the economic process, long before this was done more widely in economics. His work draws attention to two different types of knowledge, shared cognitive and institutional frameworks which help create coherent and integrated markets on the one hand, and, on the other hand, private—increasingly specialized and differentiated—knowledge used in the production of heterogenous (capital) goods. We situate Menger’s work on economic development in the evolutionary endogenous growth tradition going back to Bernard Mandeville and Adam Smith, and later developed by Alfred Marshall, Allyn Young, Ludwig Lachmann, and others. We use these insights to suggest that one of the crucial questions of economic organization is (1) the complementarity between the two types of knowledge we identify here, and (2) the extent to which knowledge is a part of shared social infrastructures rather than being organized privately within firms and other organizations.
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What Can Industrial Policy Do? Evidence from Singapore

This article explores the limits of central industrial planning through a case study of the developmental state of Singapore. While previous scholars argued that successful industrial planning is impossible, this paper takes a different and modest position. Singapore’s industrial policy is acknowledged to have - to an extent - contributed to genuine economic development but its state-heavy approach, by crowding out local enterprises, led to unintended consequences in the form of poor productivity, innovation and entrepreneurship performance. This paper is relevant to contemporary discussions about mission-oriented industrial policy and the entrepreneurial state.
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Toward a Demsetzian Knowledge Theory

The paper attempts to outline a general theory of knowledge in economics based on the work of Harold Demsetz. We identify that “knowledge encapsulation” is a key Demsetzian idea that could unite the otherwise fragmented or narrow research on knowledge in economics. The knowledge encapsulation concept holds that mobilizing cognitive resources and acting under full knowledge is costly. This creates an incentive to compress knowledge into an algorithmic form, which can then be transferred in a cost-efficient manner between a multitude of agents. From this idea of Demsetz, we create a simple theoretical model.
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Efficiency, Legitimacy, and the Administrative State

This essay examines certain epistemic problems facing administrative states’ efforts to draft efficient regulations for their societies. Sam DeCanio argues that the absence of observable policy counterfactuals frustrates efforts to assess the efficiency of administrative states’ decisions, as it is impossible to determine whether different policies would have generated greater benefits at lower cost than the policy the state implemented.
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Foucault and Hayek on public health and the road to serfdom

This paper by Mark Pennington draws on the work of Michel Foucault and Friedrich Hayek to understand threats to personal and enterprise freedom, arising from public health governance.
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Elinor’s Ostrom’s ‘realist orientation’: An investigation of the ontological commitments of her analysis of the possibility of self-governance

This article is the first to draw together systematically Ostrom’s reflections about ontological issues and to identify what Ostrom saw as their implications for the appropriate methods for analysing and explaining the possibility of self-governance. In doing so, the paper also contributes to the growing literature on ontology and the history of economic thought.
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Constitutions and Blockchains: Competitive Governance of Fundamental Rule Sets

Read Here Constitutions and Blockchains: Competitive Governance of Fundamental Rule Sets Author: Eric Alston Published in Journal of Law, Technology …
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Mark Pennington: Hayek on Complexity, Uncertainty and Pandemic Response

This paper draws on Hayek’s distinction between simple and complex phenomena to understand the nature of the challenge facing policymakers in responding to the new coronavirus pandemic. It shows that while government action is justifiable there may be few systemic mechanisms that enable policymakers to distinguish better from worse policy responses, or to make such distinctions in sufficient time.
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Francesco Chiodelli and Emiliano Esposito: The regulatory environment of illegal access to public housing in Naples

This paper focuses on the informal occupation of public housing in Naples (Italy), analysing the fraudulent takeover of housing units. An in-depth look at this case study contributes to the international debate on the nexus between urban informality and the state, showing the fundamental, multifaceted role of public institutions in shaping the illegal city.
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John Meadowcroft: Buchanan at the American Founding: The Constitutional Political Economy of a Republic of Equals and Unequals

James M. Buchanan cited the American Founding as an important inspiration for his constitutional vision. His insistence on unanimous constitutional agreement highlights the fact that the Constitutional Convention did not obtain the consent of the black Americans. Accordingly, Buchanan’s work leads to an appreciation of the Founders as an archetype of the constitutional mentality that he advocated throughout his work, but also to an understanding that the Founding fell short of his ideal of genuinely consensual politics.
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