scholarly journals Varieties of Common Sense

2020 ◽  
pp. 46-72
Author(s):  
Christopher Cramer ◽  
John Sender ◽  
Arkebe Oqubay
Keyword(s):  
Structural Change ◽  
Comparative Advantage ◽  
Common Sense ◽  
Development Economics ◽  
Terms Of Trade ◽  
Conventional Wisdom ◽  
Inclusive Development ◽  
Neoclassical Economics ◽  
Competitive Markets ◽  
Trade Theory

Policy officials are often influenced by two broad varieties of conventional wisdom: the set of ideas broadly associated with neoclassical economics; and those ideas flowing from third worldist, anti-imperialist, and structuralist development economics. We show how these apparently opposing perspectives often have a surprising amount in common. Reflexes of ‘impossibilism’ and ‘naive optimism’ are often shared across an ideological divide. Thus, pessimism in orthodox trade theory suggests no African economy can hope to accelerate structural change by defying the signals of comparative advantage; and pessimism in structuralist trade arguments claims limited gains from exporting, especially from exporting primary commodities while the terms of trade are declining. Both forms of pessimism can easily switch to naive optimism when they imagine the ease of rapid and ‘inclusive’ development. But the switch requires that unrealistic conditions are put in place: perfectly competitive markets or idealized South–South cooperation.

Ten Pages that Changed the World: Deconstructing Ricardo∗

2009 ◽  
Vol 2 (1) ◽  
pp. 1-33 ◽  
Author(s):  
Richard Peet
Keyword(s):  
Free Trade ◽  
Economic Geography ◽  
Comparative Advantage ◽  
Development Policy ◽  
Open Market ◽  
Trade Theory ◽  
The World ◽  
Neoliberal Development ◽  
Trading Scheme ◽  
Political Economic

Powerful ideas that shape the world become taken-for-granted verities, in two senses of the term: as the only world that is known; and as the only world that can be imagined. When hegemony controls the imagination, fundamental criticism becomes difficult, and perhaps, impossible. Yet what if there were flaws in the original idea, from which new worlds were constructed, that have materialized in a political-economic geography beset with seemingly unsolvable problems? For example, what if there have always been fundamental flaws in the free trade, open market, competitive, global system that dominates both the world as we know it and the conventional political-economic-geographical thought we know it through? This article speculates that a psycho-discursive act of deconstruction might unravel the entire, subsequent discourse. It aims deconstruction at a founding statement in the free trade, global ideal, by looking critically at David Ricardo's theory of comparative advantage. Ricardo's argument that specialization and free trade are universally beneficial, became a founding premise of conventional economic theory and a basic prescription of liberal and neoliberal development policy. The article looks critically: at the logical consistency and representational accuracy of Ricardo's theory, especially the claim that all participants benefit from participation in a free trading scheme, so that trade brings about a far better world. The article reaches two main, critical conclusions: free trade theory based in comparative advantage has, from the beginning, been an ideology for creating economic spaces open to domination by powerful, leading countries; economics and economic geography have, since their classical beginnings, been biased in that their founding statements reverse the reality they pretend accurately to represent.

Trade and Spatial Growth

2017 ◽  
Vol 18 (1) ◽  
pp. 94-111
Author(s):  
Sirimal Abeyratne ◽  
N. S. Cooray
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Global Economy ◽  
Spatial Concentration ◽  
Trade Theory ◽  
Missing Link ◽  
Spatial Growth

Comparative advantage is based on ‘locational factors’ so that trade leads to growth and its spatial concentration. Until recently, the nexus between trade and spatial growth received little space within trade analyses though it did not appear to be a missing link in initial contributions to trade theory. The reshaping of the global economy with greater integration has called for analyses of trade and spatial growth. This article examines theoretical premises of the link between international trade and spatial growth, and the implications of reshaping of the global economy for the study of spatial growth within trade theory.

scholarly journals Assessing Structural Change in the Demand for Food Commodities

1983 ◽  
Vol 15 (1) ◽  
pp. 31-37 ◽  
Author(s):  
Richard C. Haidacher
Keyword(s):  
Structural Change ◽  
Conventional Wisdom ◽  
Rules Of Thumb ◽  
Food Commodities

Perhaps out of a concern for efficiency, or for other reasons, we develop or adopt rules—the simpler are called “rules of thumb”—to direct and govern much of our behavior. The bases for these rules are many and varied, assumption, conventional wisdom, experience, theory, to mention a few.

Introduction: The Art of Engineering Prosperity in Unlikely Places

2019 ◽  
pp. 1-19
Author(s):  
Justin Yifu Lin ◽  
Célestin Monga
Keyword(s):  
Eighteenth Century ◽  
Structural Change ◽  
Comparative Advantage ◽  
Low Income ◽  
Economic History ◽  
Poverty Reduction ◽  
Technological Development ◽  
Methodological Approach ◽  
Policy Practice ◽  
Globalized World

This chapter provides a methodological approach that draws lessons and insights from economic history and theory and uses empirics from economic analysis and policy practice. It starts with an observation of the increasingly globalized world economy in which technological development allows the use of factors of production in locations that maximize returns and utility, and countries gain mutually by trading with each other if their strategies focus on revealed and latent comparative advantage. By following carefully selected lead countries, latecomers can emulate the leader–follower, flying-geese pattern that has well served economies since the eighteenth century. The prospects for sustained and inclusive growth are even greater for low-income economies that enjoy the benefits of backwardness. The chapter advocates implementing viable strategies to capture new opportunities for industrialization, which can enable low-income economies to set forth on a dynamic path of structural change and lead to poverty reduction and prosperity.

Trade Liberalization, Structural Change, and Economic Growth

2021 ◽  
pp. 407-441
Author(s):  
Michael Landesmann ◽  
Neil Foster-McGregor
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Trade Liberalization ◽  
Productivity Growth ◽  
Global Economy ◽  
Adam Smith ◽  
Trade Theory ◽  
New Trade Theory ◽  
The Impact ◽  
The Relationship

Trade and the integration of countries into the global economy is one of the main forces shaping the structural composition of economies, an effect which in turn is expected to impact upon productivity and growth. Structural change can be restrained or reinforced by international trade. This chapter reviews the theory on the relationship between trade and trade liberalization and both structural change and growth, from the contributions of Adam Smith to the more recent new new trade theory beginning with the work of Melitz. The chapter further discusses the existing empirical evidence on the relationship between trade and structural change, before concluding by presenting evidence on the impact of trade liberalization on productivity growth for a broad sample of countries, further decomposing the effect into an effect due to structural change and an effect due to within sector productivity developments.

Explaining Presidential Popularity: How Ad Hoc Theorizing, Misplaced Emphasis, and Insufficient Care in Measuring One's Variables Refuted Common Sense and Led Conventional Wisdom Down the Path of Anomalies

1978 ◽  
Vol 72 (2) ◽  
pp. 506-522 ◽  
Author(s):  
Samuel Kernell
Keyword(s):  
Vietnam War ◽  
Common Sense ◽  
Ad Hoc ◽  
Explanatory Variable ◽  
Explanatory Power ◽  
Conventional Wisdom ◽  
Independent Effect ◽  
Consumer Prices ◽  
Presidential Popularity ◽  
The Vietnam War

Within the last ten years a new conventional wisdom has surfaced in political science which tells us that presidents inexorably become less popular over time. Not much else matters. Neither the economy, nor the Vietnam War, not even Watergate seems to have had much independent effect on presidential popularity once time is taken into account. Before embracing these conclusions we need to reconsider the method that produced them. I argue that previous research too willingly accepted time as an explanatory variable, enshrouding it with theoretical meaning. To preserve its explanatory power alternative, substantive variables were shortchanged in their operational definitions and measurement. In this article I reverse the emphasis. Here, time is rejected as an explanatory variable and is employed only as a diagnostic indicator of the adequacy of the equations. A variety of alternative representations of real-world forces such as the economy and war are tested and some considerably improve the time-series correlation between the environment and presidential popularity. With these substantive variables I propose a simpler, if less glamorous, theory of presidential popularity consisting of two hypotheses: first, popularity is related to real events and conditions, and second, that it responds slowly to environmental change. Popularity is then both experiential and incremental. The findings for Presidents Truman through Nixon support this common-sense view. The Korean War (measured by U.S. casualties), the Vietnam War (measured by the number of bombing missions over North Vietnam and the U.S. war dead), the economy (especially six-month changes in consumer prices), Watergate, international “rally” events, and early term surges of approval all contribute independently to short-term fluctuations in presidential popularity. Moreover, as predicted, popularity appears to be autoregressive even when represented by an instrumental variables surrogate measure to minimize serial correlation. When the equations are specified in this way, time proves to be unnecessary in order to explain trends in presidential popularity.

scholarly journals Structural change in OECD comparative advantage

2013 ◽  
Vol 22 (6) ◽  
pp. 817-838 ◽  
Author(s):  
Steven Brakman ◽  
Robert Inklaar ◽  
Charles Van Marrewijk
Keyword(s):  
Structural Change ◽  
Comparative Advantage

Economic Reform and Structural Change

2019 ◽  
pp. 530-548
Author(s):  
Barry Naughton
Keyword(s):  
Structural Change ◽  
Economic Reform ◽  
Comparative Advantage ◽  
Market Transition ◽  
Service Economy ◽  
Policy Makers ◽  
New Era ◽  
The Relationship ◽  
Second Period

This chapter examines China’s experience with structural change during three distinct periods of economic reform and growth: 1978–1995, 1995 through to about 2010, and 2010 to present. In each case, the chapter finds that the pattern of structural change is related to the choices made by policy makers with respect to reform and market transition. The first period saw a shift towards a more labour-intensive output basket, a structure that was more in line with China’s underlying comparative advantage, while the second period witnessed a move ‘upstream’ toward more capital and skill-intensive industries. Since 2010, China has begun to move toward a service economy and embarked on a new era of structural change. Each of these periods offers specific ‘lessons’ about the relationship between policy and structural change. The chapter concludes with a discussion of these lessons and a number of generalizations that apply to China’s experience as a whole.

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