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World hegemonies and global inequalities

The Rest Beyond the West

Sahan Savas Karatasli, Sefika Kumral, Daniel Pasciuti and Beverly J. Silver

The chapter seeks to understand the significance of contemporary radical changes in world income distribution (most notably the recent rapid rise of China, India and a handful of other peripheral countries) by comparing the present with other periods of world-hegemonic transition. The empirical core of the chapter examines the interrelationship between the rise and decline of world hegemonies and changes in the global stratification of wealth (between-country inequality) from the sixteenth century to the present. The authors find that (like the contemporary period) past periods of world-hegemonic crisis and transition have been characterized by radical transformations in the global hierarchy of wealth, although there are fundamental differences in the nature/direction of change in each transition. Drawing on world-systems theories of global inequality and hegemonic cycles, the authors conduct a comparative-historical analysis of the dynamics underlying the long-term empirical patterning in the global distribution of wealth and power. They analyse the implications of their findings for the ongoing debate about whether we are in the midst of an impending ‘great convergence’ or on the verge of a major reversal of fortunes favoring the global North/West.

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Luiz Carlos Bresser-Pereira

The ‘Rest’ will only be able to catch up and grow more than the West if it goes against a ‘received truth’: capital-rich countries should transfer their capitals to capital-poor countries. This is intuitively the truth, and the mantra that the West uses to occupy the markets of developing countries with their finance and their multinationals. Yet, new developmentalism tells us that developing countries will invest (and save) more if their current account is balanced, if not showing a surplus.  Starting from a balanced current account, the decision to incur in deficits or grow cum ‘foreign savings’ – actually, foreign finance – will appreciate the exchange rate in the long term and discourage investment. In consequence, we will have a high rate of substitution of foreign for domestic savings, and foreign finance will finance consumption, not investment. Yet, developing countries have difficulty realizing this, first, because the West and their economists are adamant in recommending current account deficits; second, because such policies are consistent with a high preference for immediate consumption; and third, because economists in developing countries are unable to criticize the ‘growth cum foreign savings policy’.

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Why growth rates differ

The Rest Beyond the West

Vladimir Popov

Many agree that the crucial factor of economic growth is institutions in the long term, but there is less agreement on what determines institutional strength. The chapter uses objective measures of the institutional capacity (shadow economy and murder rate) to trace the trajectories of institutional developments in the Global South and discusses hypotheses to explain these trajectories.

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Richard Sakwa

There are two models that have been in contestation since the end of the Cold War – wider Europe and greater Europe. The tension between the two is a central facet of the cold peace that has predominated for the last quarter-century, and has coloured Russia’s relations with the European Union (EU). Wider Europe is based on the tried and tested model of the EU, whose arc of good governance, economic liberalism and societal welfare was projected ever further to the East. The other draws on the greater European idea inspired by geopolitical interpretations of territorial space while trying to find ways to overcome the logic of conflict that inevitably arises from geopolitics. The greater European project sought finally to end the division of the continent, respecting the various cultural and civilizational traditions yet united on the principles of free trade, visa-free travel and the assertion of a multipolar but united continent in world affairs as a moderating force. This ‘Gaullist’ vision of continental Europeanism envisaged building on the already existing ‘variable geometry’ of European integration (notably the Council of Europe and the Organization for Security and Co-operation in Europe (OSCE)) to create a genuinely multipolar and pluralist vision of continental unity. Instead, the wider European project was increasingly subsumed into a rampant Atlanticism and forced the countries in between the EU and Russia to choose between the two. The result was the Ukraine conflict and the new division of Europe. Only a renewed continental vision can repair relations between Russia and the EU and overcome the broader crisis in European development.

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Mapping a New World Order

The Rest Beyond the West

Edited by Vladimir Popov and Piotr Dutkiewicz

This book identifies possible factors responsible for the recent rise of many developing countries. It examines how robust these trends actually are and speculatively predicts the implications and consequences that may result from a continuation of these trends. It also suggests possible scenarios of future development. Ultimately, it argues that the rise of ‘the Rest’ would not only imply geopolitical shifts, but could lead to proliferation of new growth models in the Global South and to profound changes in international economic relations.
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Justin Yifu Lin

In post-World War II, East Asia was considered the least hopeful regions for development in the world due to its poor natural endowments and high population density. Against the odds, East Asia has become the most dynamically growing region in the world, substantially closing the gap between the Western industrialized high-income countries. In the chapter, the author shows that economic development is a process of continuous technological innovation and industrial upgrading. The success of the East Asian economies was due to the fact that they have proactive governments enabling their economies to develop according to comparative advantages in a market system and tap into the potential of advantages of backwardness in the process of technological innovation and industrial upgrading. As such, these economies are competitive in domestic and international markets and grow faster than the industrialized high-income countries, enabling them to close the income gap or even catch up with the Western advanced countries.

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José Antonio Ocampo

The economic history of Latin America is marked by three essential features. The first is that it was the part of the developing world (together with the Caribbean) the most deeply transformed by colonization, as well as the first to become politically independent in the early nineteenth century (with the exception of Cuba). The second, which it shares with other parts of the developing world, has been its position within the world’s economic system as a commodity producer, a feature, a few countries aside, it has been unable to overcome despite the industrialization drive that took place in particular from the 1930s to the 1970s. This has made the region vulnerable to trends and fluctuations in commodity prices. This vulnerability has been enhanced in different periods by highly unstable and pro-cyclical access to external financing, giving rise to severe crises when these two factors coincided. The third is that it is, together with parts of sub-Saharan Africa, the most unequal region of the world.

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Introduction

The Rest Beyond the West

Vladimir Popov

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Jayati Ghosh

The chapter considers the following questions: Is global economic stability necessary for countries wishing to industrialize and complete their development project? Or does some degree of instability actually benefit economies wishing to change their relative position in the international division of labour? If so, what kinds of stability/instability matter? What insights does recent history provide for assessing current possibilities in this regard?

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Vladimir Popov and Jomo Kwame Sundaram

The chapter reviews catch-up or converging growth in parts of the Global South. By 1950, US per capita national income, adjusted for purchasing power, was nearly five times the world average. Since then, Western Europe and Japan have closed their per capita income gaps with the USA. East Asia, South Asia and some other developing countries have also started to close gaps with the West in recent decades. Thus, after two centuries of growing economic divergence, the world has witnessed an era of uneven convergence between parts of the South and the North. Alternative scenarios and some future implications are considered.