Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/277422 
Authors: 
Year of Publication: 
2018
Citation: 
[Journal:] European Journal of Economics and Economic Policies: Intervention (EJEEP) [ISSN:] 2052-7772 [Volume:] 15 [Issue:] 2 [Year:] 2018 [Pages:] 219-237
Publisher: 
Edward Elgar Publishing, Cheltenham
Abstract: 
After World War II, only a few developing countries were able to catch up to the real GDP per capita levels prevailing in developed countries. These successful countries in almost all cases were in Asia and did not follow the free-market doctrine in the tradition of the Washington Consensus. There must be theoretical explanations as to why underdevelopment is reproduced and most countries in the world do not catch up. This essay reviews different economic approaches that attempt to explain the lack of convergence. The aim is to explain why neither trade based on comparative advantages, nor on economies of scale, nor in global value chains, can cure the lack of sufficient productivity development. The essay will also cover special features like negative terms-of-trade effects, abundance of scarce resources, and premature de-industrialisation. Also distorted financial systems, high inequality, and restrictions on macroeconomic demand management are briefly discussed. As most developing countries suffer from several of these factors, this approach can explain why development is only possible with the support of comprehensive regulatory government policies and a change in global governance.
Subjects: 
underdevelopment
financial system
free trade
inequality
Keynesian paradigm
Washington Consensus
JEL: 
B50
F40
O11
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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