Edited by Marta Marson and Luca Bortolotti, University of Turin and OEET

The XXII Italian Association for the Study of Comparative Economic Systems (AISSEC) Scientific Conference held in Pescara in June 2022 collected several contributions on the topic “(Re)discovering the drivers of economic development”. This newsletter contains three articles based on a selection of presentations focusing on the drivers of economic development, exploring the key characteristics, dynamics and the policies that can actively support developing and emerging countries in the process of economic development.

The newsletter adopts thus a macroeconomic perspective, with special attention reserved to the economic decisions that governments can implement in the pursue of economic development. Indeed, the three articles focus respectively on comparative advantages, structural policies and tax revenues.

Newsletter n. 23 | November 2022 - Download PDF

by Andrea Boltho[*]

  

The text that follows briefly looks at changes in the revealed comparative advantage indices of four East Asian countries (Japan, South Korea, Taiwan and China) over half a century or more for the capital intensive and increasingly high-tech sector of machinery and transport equipment. This covers industries which were considered as totally unsuited to what were relatively poor and labour-abundant economies, whose comparative advantage was seen to lie in simple labour-intensive consumer goods and semi-manufactures. Yet, despite this conventional wisdom, governments in all the four countries actively encouraged in a variety of ways the growth of advanced manufacturing companies. The undoubted successes that were achieved suggest that such unorthodox policies must have played an important role.

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by Mohamed Ali Marouaoni[*], Jala Youssef[†] and Chahir Zaki[‡]

  

Not all developing countries were able to achieve structural change and successful transformation experiences remain confined to some countries (mainly Asian ones). As this article explains, there is still no consensus on underlying supportive policies for structural change in developing countries. Our findings show that structural policies improve structural change over the long run, yet their effect is mostly insignificant over the short run. Our results also point to deindustrialization trends since structural policies exert a positive and significant effect on services share in value added whereas their effect on manufacturing share is either insignificant or negative. As per macroeconomic policies, our results highlight the importance of countercyclical fiscal policies and undervalued currencies in enhancing structural change.

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by Antonio Savoia[*]

  

Tax revenues and political institutions placing constraints on the executive power may reinforce each other over time and this may also bring a shift in the composition of revenues. To test these hypotheses, we use historical cross-country data covering 31 countries for 1800– 2012. Results confirm that executive constraints and tax revenues tend to co-evolve in the long run, particularly when direct taxes and broad-based taxation are considered. Moreover long-run causality runs mostly from executive constraints to taxation. Findings link SDGs 17 (Target 1 strengthen domestic resource mobilization) with SDG 16 (promoting inclusive and accountable institutions), showing that they may work in synergy.

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