Globalization, Economic Development and Inequality

Globalization, Economic Development and Inequality

An Alternative Perspective

New Horizons in Institutional and Evolutionary Economics series

Edited by Erik S. Reinert

The expert contributors gathered here approach underdevelopment and inequality from different evolutionary perspectives. It is argued that the Schumpeterian processes of ‘creative destruction’ may take the form of wealth creation in one part of the globe and wealth destruction in another. Case studies explore and analyse the successful 19th century policies that allowed Germany and the United States to catch up with the UK and these are contrasted with two other case studies exploring the deindustrialization and falling real wages in Peru and Mongolia during the 1990s. The case studies and thematic papers together explore, identify and explain the mechanisms which cause economic inequality. Some papers point to why the present form of globalization increases poverty in many Third World nations.

Chapter 7: Technological Revolutions, Paradigm Shifts and Socio-institutional Change

Carlota Perez

Subjects: economics and finance, evolutionary economics, welfare economics


Carlota Perez The last decades of the twentieth century were a time of uncertainty and extremely uneven development. People in many countries and in most walks of life felt uncertain about the future for themselves and their workplaces, about the prospects for their own countries and for the world as a whole. Inside each country and between countries there were strong centrifugal trends generating unprecedented growth and wealth at one end of the socio-economic spectrum and increasing poverty, deterioration and degradation at the other. Among those old enough to remember, there was widespread recognition that the erratic, uneven and unstable climate of the 1980s and 1990s was profoundly different from the ‘golden age’ of growth of the 1950s and 1960s. This recognition is probably at the root of the revival of interest in long waves. This chapter puts forth an interpretation of the long-wave phenomenon which offers to provide criteria for guiding social creativity in times such as the present. In it, I define this period as one of transition between two distinct technological styles – or techno-economic paradigms – and of construction of a new mode of growth. Such construction would imply a process of deep, though gradual, change in ideas, behaviours, organizations and institutions, strongly related to the nature of the wave of technical change involved. Indeed, contrary to what is usually assumed, I suggest that long waves are not merely an economic phenomenon, though they certainly have economic manifestations. Long waves affect the whole system,...

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