This is a series from our writers Holly Narey and Michelle Gonzalez Amador who are taking Jeffrey Sachs’ online course The Age of Sustainable Development. They will be sending out an update on the course every week. Click here for more on all our writers. Check this tag to see all posts on this topic.
The third lecture started by Sachs pronouncing the concise phrase in the title and then followed with a construction of the current state of the global economy.
Both the first and the second session were characterized by an interactive model, in which the video-lesson would engage you in the learning process by allowing you to identify the challenges ahead and, in the case of people from a developing country (such as myself), identify your context with the one being presented by Sachs. This third lesson, however, was slightly different.
Professor Sachs managed to relate each subject to one key idea from which all sorts of issues stem. While “Economic development is new” is a strong phrase filled with possibilities, what followed added a layer of historical interest: “It began after the Industrial revolution. Before, the world was equal. Equally poor.”
However gloomy the prospect of a future in a world with a widening income gap and pollution that appears irreversible might seem, Sachs reminded us how, sometimes, it is necessary to look at the past and remember the real context of such challenges. In terms of the course, introducing at this point a brief history of the evolution of the modern economic world after two sessions of challenge facing and context reviewing, is, I think, fantastic.
My take: there might still be challenges ahead, but we have come very far in the development process!
Economic growth, says Sachs, has one key ingredient: technology. But, for the process to begin, various pre-conditions were needed. It is a process of interaction that starts with know how, followed by the connection of the different geographical economic areas and processes: raw produce from rural areas must reach the city where it will be manufactured, adding value, and then sold back to the rural areas.
The UK was the lucky region that met all of the conditions early and escaped from the extreme poverty threshold (approximately $2000/person), and, as a form of ripple effect, its neighbouring countries soon caught up, leaving the peripheries out of the process. Sachs went on,
“Modern economics combines the natural resource base, the technological know how, and the spreading market economy”.
The question arises, then, how can we make sure every country – not just the lucky ones – has the opportunity to be part of the economic growth process?
We were presented with two broad but spot on ideas. The first way to do so is for a country to invest in continuing innovation and thus generate endogenous growth (hint: think of a returns to scale process). The second way for process inclusion is by obtaining the existing technology from other nations. Sadly, the latter leaves the country in a constant catch-up dynamic.
Sachs, of course, is a promoter of endogenous growth. He pointed towards the idea that the future of the world depends on the increasing production of technology. Since we are not allowed, legally, to give out all of the information of the course, I will close up this entry with a key argument for you to further analyze: economic (and sustainable) development now depends on proper diffusion of the know how!
(Hint: if your answer to this question doesn’t involve ‘globalization’ in it, you’re doing it wrong)