Links. It’s the political economy, stupid.
1) Alex Tabarrok discovers the limits of profit seeking behaviour and the marketization of the government. Join the club.
2) His findings are related to this Voxeu post by Victor Kümmritz about Global Value Chains (i.e. the international division of labour and production processes). It’s not just about ‘equal trade’ between companies, but about a brutal power struggle between countries, too. In the gentler wording of Kümmritz:
These new findings lead to two conclusions for policymakers.
- Firstly, integrating into GVCs is a sound strategy. Interacting with global production networks can improve productivity and lead to spillovers for the domestic economy, as successfully shown by a large set of middle-income countries (e.g. Czech Republic, South Korea).
- Secondly, the materialisation of these gains is not guaranteed [e.g. the Baltic states, Greece M.K.]. New entrants need to ensure that they have a good institutional environment that incentivises foreign firms to source inputs locally and to outsource a growing share of their production.
3) Megan McArdle discovers the ‘historical school’ and is right to state that (my interpretation) marvelous techniques like vaccination benefited the rich as well as the poor and poverty and prosperity is not just about money. Look for somewhat related ideas also here. Developments in the Eurozone however remind us that absolute measures of poverty have been increasing – the number of poor increased (again: not a relative monetary measure of poverty!). This happened even in the UK, which its job rich recovery. Update: it’s in fact more ‘evolutionary economics’ than ‘historical school economics’ as there is something in her piece which admits that people themselve change, in tandem with their circumstances, and are part of these circumstances. Vaccination is of course an excellent example of this. If you’re vaccinated against measles you’ve changed, becoming a kind of super human. Really. But it changes my circumstances, too, as you can’t be contagious anymore. She will however have to deal with the increase of the official estimates of ‘absolute’ poverty (‘material deprivation’).
4) Alejandro Justiniano, Giorgio Primiceri and Andrea Tambalotti state that the housing and credit booms were credit supply driven.
5) The ECB has a neat graphing tool (but I did not yet manage to copy paste the graphs)