Catch-up and Convergence: Leaders and Followers

This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.

Introduction

The convergence hypothesis at its most fundamental level posits that countries with lower productivity will tend to grow at faster rates than their more productive neighbors. This theory follows directly from the law of diminishing returns, which explains that the marginal output of a production factor progressively decreases as the factor is increased. Following this logic, a less productive country can exploit the same techniques utilized in more productive countries to achieve a greater output for any given level of input. While theoretically sound, the convergence hypothesis relies upon one key assumption that is not brought to bear in the real world – either no other determinants of productivity growth exist, or countries with varying productivities are equal in all other aspects. Empirical evidence runs contrary to both possibilities. For example, in the period from 1870 to 1913, America continued to increase its already well-established lead in productivity, while the average productivity level of laggard countries in Europe fell. Following the Second World War, however, Europe’s rapid growth and convergence with the United States seems to validate the hypothesis. These discrepancies imply the existence of other important determinants of growth. This paper seeks to examine the mechanisms by which convergence occurs to uncover the characteristics that explain why some laggard countries experience accelerated growth rates, why others with high productivity remain leaders, and why still others fail to ever catch up.

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A Comparative Study of the Great Depression and the Great Recession

This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.

Introduction

The recent economic downturn of the late-2000s, labeled the “Great Recession” by some, shares several interesting characteristics with the Great Depression of the 1930s. This is especially surprising given the vast body of economic study dedicated to the ascertainment of the Great Depression’s causes and ways to ensure that such an economic crisis never occurs again. The existence of such parallels, then, underlines the power of economic forces to produce these business cycles despite mankind’s best attempts to stabilize the worldwide economy. This paper aims to investigate commonalities and differences between the Great Depression and the Great Recession and furthermore to motivate the study’s relevance to policy reform attempts at combating the most recent contraction. To do so, it examines two aspects of each crisis – its probable causes and the manner of its subsequent worldwide propagation.

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“Institutions” and Economic Development

This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.

Introduction

Defined by Douglass North as the “humanly devised constraints that shape human interaction,” institutions understandably affect many aspects of society, and as such they are often placed at the center of studies regarding the causes of economic development. Indeed, institutions play a strong, if not causal role in economic growth. Though their influence alone cannot explain all economic development, institutions in its various forms are, at the very least, one of the necessary pre-conditions of economic growth and key accomplices of economic stagnation.

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Liberia: America’s “Settler State”

This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.

Introduction

Despite its abolishment of the international slave trade in 1808, America in the period following the American Revolutionary War was home to an ever-increasing population of both free and enslaved African Americans. This growing demographic posed a threat to the white community, which was concerned about the implications of black assimilation into American society. Many northerners were afraid of free blacks taking their jobs, while slave owners in the South were concerned that the presence of freedmen living in slave states would encourage slave revolts and runaways. In response, some proposed an expatriation of African Americans to colonies in Africa, which would grant blacks their freedom and whites their peace of mind. This idea took hold, and in 1816, the American Colonization Society (ACS) was formed with the mission to facilitate the establishment of such settlements. In addition to the central goal of mitigating white-black tensions in America, the operation also aimed to “civilize” and evangelize African natives. The ACS also stressed the economic benefits of establishing trade agreements with the African populations via colonies, which would secure for American merchants trade currently monopolized by Europeans. In 1819, when the ACS received funding from Congress, the enterprise began in earnest, and the first of many ships set sail for West Africa, with three white ACS agents and 88 emigrants on board. Over the next few decades, the ACS would work closely with the Liberian colonies in a struggle to establish permanent, self-sufficient settlements.

Prior to the 1830s, the US government only maintained an official interest in Liberia insofar as it served as an outpost from which to execute America’s anti-slave trade campaign. The Monroe Doctrine, which stymied international involvement between the Eastern and Western hemispheres, prevented the government from taking a more direct interest in Liberia’s internal affairs. Instead, the American Colonization Society maintained control over the territory’s administration until 1838, when Liberia proclaimed itself a self-governing commonwealth. This declaration of sovereignty was prompted by criticism that accused the ACS of attempting to acquire an empire as well as the ACS’s own financial problems. At this point, ACS still maintained some control over Liberia’s internal affairs, but its political and commercial influence waned substantially. In 1847, Liberia declared itself a Republic and legislative powers found themselves in the hands of the settlers. This paper examines the ways in which government policy affected the economic growth of the Liberian settler society from the early periods of its settlement in the 1820s to the worldwide depression in the latter part of the 19th century.

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A Survey of Causes for Income Inequality in the US

This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.

Introduction

The United States during the later part of the 20th century experienced a reversal in the pattern of decreasing income inequality that had slowly been establishing itself since the end of the Great Depression. Indeed, by 1982, inequality in the distribution of American family incomes had eclipsed the same figure measured in 1950, the year that had seen the highest level of inequality since record keeping began in 1947.

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Figure 1 (above) depicts the top ten percent income share in the United States during the decades between World War I and present day. The data points are logically separated into three discrete periods – The Great Depression (characterized by high inequality), the Great Compression (a decrease in inequality), and the Great Divergence (a return to higher inequality). This last period came as a surprise to many who had previously studied income inequality in America. At the time, the prevailing school of thought regarding the mechanics of economic inequality was one first proposed by Simon Kuznets in his 1955 paper entitled “Economic Growth and Income Inequality”. Kuznets hypothesized that as economies matured in less developed regions, certain emergent factors like industrialization and urbanization would increase income inequality. Then, as those economies continued to develop, social and political forces would come into play to relieve the poorest in society while the upper income group would experience slower growth than under early industrialization. These two observations produced an inverted-U curve of inequality as a function of development, a model that had been supported by empirical evidence from the first half of the 20th century. Around the 1980s, however, income inequality began a steady climb that has carried through to present day. Furthermore, a closer look at family incomes during this time reveals that the income gap has increased the most between the top and the middle of the distribution, while it has remained fairly stable between the middle and bottom. The search for causes of this upward trend in income inequality has been the topic of much research, though a consensus has hardly been reached. Truly, pinpointing a cause would help address inequality in the real world and its associated negative effects, such as increased rates of mortality and obesity. This paper presents a survey of the most compelling theories for income inequality in America and seeks to identify the strengths and weaknesses of each.

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A Malthusian Study of 20th Century Korean Economic Development

This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.

Introduction

While there exists substantial literature regarding the application of Malthus’s economic model to European countries prior to and following the Industrial Revolution, little effort has been spent applying the model to Europe’s neighbors in the east. South Korea in particular seems to be a compelling subject, insofar as its meteoric rise to economic power in the 20th century remains largely unprecedented and a fairly complete data set exists for many of its economic indicators. Dubbed the “Miracle on the Han River” by some economists, South Korea’s recent history has seen the country’s per capita national income increase 80-fold from US $125 in 1966 to over US $10,000 in 1995. Like Europe prior to the Industrial Revolution, Korea prior to the Korean War followed the Malthusian economic hypothesis of rising populations preventing sustained increases in standards of living. Statistics from the post-Korean War era up to the present day, however, indicate that South Korea (hereinafter as “Korea”) has since broken free of the Malthusian trap, thanks in large part to a series of government-endorsed economic development plans and also to cultural shifts like the rise in family planning.

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The Ethics of Genetic Engineering

This term paper was prepared for Ethical Reasoning 24: Bioethics, a Core Curriculum course taught at Harvard College.

Abstract

This paper seeks to examine the ethical questions surrounding the intentional manipulation of genes to achieve phenotypic modifications in humans. It is not concerned with distributive justice or the ethics of research, but rather with the debate over whether the technology of genetic engineering itself, once it is to a reasonable level proven both safe and effective, is ethical to use. The study begins by motivating the discussion and introducing some key concepts related to the technology. After establishing the scope and structure of the analysis, the paper proceeds by reviewing the most commonly presented arguments against genetic engineering and demonstrating that all fail to establish a legitimate ethical basis upon which such a criticism could stand. Finally, the paper concludes with a short discussion outlining possible areas for further study and discourse.

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Predictors of Violent Crime Rate in the United States

This regression analysis was prepared as part of a final project for Statistics 104: Introduction to Quantitative Methods for Economics.

Abstract

The following report seeks to provide explanations of the variation in violent crime rates throughout the United States by analyzing the statistical signi cance of relationships between the violent crime rate and seven potential predictor variables. A multiple linear regression showed that two of the seven potential predictor variables, teen birth rates and the percentage of the population living in metropolitan areas, proved to be strongly signi cant (p < 0:001). As each of these variables increase, the violent crime rate rises. This fi nding suggests that states with greater teenage promiscuity and larger cities exhibit higher violent crime rates. Despite demonstrating a strong statistical correlation, these results cannot be used to support a causal relationship. Still, though, the results of this report provide important insights into violent crime rates and potential ways to address them.

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How Hindu Attitudes and Institutions Shaped India’s Economic Growth

This term paper was written for Economics 1776: Religion and the Rise of Capitalism, an undergraduate course taught at Harvard College by Benjamin Friedman.

Introduction

Hinduism has no single authoritative scripture from which its believers derive meaning. Unlike the Christian and Jewish traditions, its history does not begin at a singular point or event in history (á la “In the beginning God created the heavens and the earth.”). Neither does there exist in the religion a single mode of worship or even a single object of worship. Its disciples draw upon numerous canons, and as a result, within the umbrella term of Hinduism myriad contrasting schools of thought have existed. For this reason, if it hopes to reach meaningful conclusions, an analysis of Hinduism’s effect on India’s economic development must refrain from a holistic study and must focus on specific components of the greater religion. Vikas Mishra writes of this intricacy, “It is almost naïve to treat Hinduism as one entity. For instance, the economic implications of the ‘Dayabhag’ School of Hindu Law are vastly different from those of the ‘Mitakshara’ School.” Polarizing features can also be discovered in countless other comparisons of Hindu belief sets. For example, the Carvaka school championed materialism while the Ascetic tradition emphasized an aversion toward physical comforts. Interestingly, both beliefs find basis in Hindu scriptures. This disparity between schools of thought in Hinduism complicates the issue at hand.

This study attempts to establish an analysis of the correlations and possible causations regarding certain Hindu beliefs and India’s economic history. It seeks not to make sweeping generalizations about Hinduism, but rather to concentrate on specific aspects of the religion as they relate to the nation’s secular development. To that end, this paper will examine various attitudinal and institutional characteristics of Hinduism and will be generally structured by the enumeration and discussion of these concepts. In doing so, it may be enlightening to also examine within this context other closely related religions such as Buddhism and Jainism. This is by no means an all-encompassing study, but it does address many important connections between Hindu beliefs and structures and India’s economic development.

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