The fallacy of Washington consensus and the role of the Government: interpreting some Chinese contributions to development policy from aspects of Chang’e 4

Students of economics may have heard of that economics, especially the kind of mainstream neoclassical economics taught in most universities on earth today, is an imitation of physical science in some fundamental fashion. However, few economists would imagine that economics can be as effective as physical science, not even in the remote future. China’s Chang’e 4 mission to the far side of the Moon provides a golden opportunity for economists to explore this fascinating possibility from the aspect of astrodynamics.

This article, inspired by thoughts of Justin Yifu Lin and Angang Hu among others regarding China’s economic reform, demonstrates that physics explaining the Three-Body Problem of classical mechanics may as well be understood as guiding principles when dealing with issues in development economics. Several aspects of ‘Washington consensus’ are examined in relation to the concerns raised by Chinese scholars. The study concludes that neoliberal interpretations of modern economics are basically inconsistent with the neoclassical framework outlined in standard economics textbooks.     

Competitive strategies and performance in technology-based industries

A model is proposed for relating a technology-based firm's investments in R&D and marketing to its level of performance. The model is based on a homothetic performance function form that is maintained to best represent unique differences among the competitive strategies of firms or groups of firms within an industry. It also permits explicit estimation of returns to scale with respect to investments in R&D and marketing for the industry as a whole. The empirical analysis strongly supports the existence of a heterogenous competitive structure in a technology-based industry with the returns-to-scale estimates varying among the industries studied. The model implies that desirable increases in competition occur through the interaction of individual firms and possibly strategic groups. It also implies the possibility of less than perfect substitution of resources across competitive strategies within an industry. Thus future models of competition should not be based entirely on size-related measures.     

新自由主义思潮的全球化历程及其影响

新自由主义思潮在向全球扩张蔓延的过程中,对拉美、东欧和前苏联国家产生了巨大而深刻的影响。对新自由主义的危害,正处于改革发展关键阶段的中国应有清醒而足够的认识。     

Oil price shocks in a portfolio-balance model

In the 1970s oil price increases were often associated with downward pressure on the foreign exchange value of the dollar. In order to identify the factors generating this association, we examine an oil price shock in a portfolio-balance framework where a wealth transfer is generated by altered current account positions. We show that the exchange-rate impact of higher oil prices depends importantly on the asset prefernces of both oil importers and oil exporters, as well as exchange rate expectations, which are influenced by countries' abilities to adjust to higher oil prices.     

An analysis of the behavior of mature black-owned commercial banks

Accounting and statistical techniques are used to compare the behavior of a sample of mature black-owned banks with that of a matched set of nonminority-owned banks. The black banks are generally less profitable. The major reasons for this lower profitability include more liquid asset portfolios at the black banks, higher operating costs on liabilities, and higher rates of loan loss. Higher loan loss rates appear to be the single most important factor, with losses on real estate and possibly commercial and industrial loans probably being the most serious continuing sources of loan losses.     

积极应对后WTO时代绿色壁垒对我国农产品出口的影响

加入世贸组织以来,绿色壁垒逐步取代了关税和配额,成为我国农产品出口面临的最大障碍。面对复杂苛刻的技术法规、标准和质量认证制度,要迅速熟悉和掌握WTO的“绿色”规则、应承担的义务和赋予成员的有关权利,加快制定有关法律法规和技术标准,确定与国际接轨的我国产品标准体系。政府和企业要采取多种措施积极应对并最终跨过后WTO时代的新贸易壁垒。     

Contribution of interest rate control to China’s economic development

China’s economy has grown at an unprecedented pace since 1978, which has resulted in a sustained improvement in the average living standard in China. A theoretical model is developed in the present study to analyze the role of interest rate control in China’s economic growth, where investment is primarily determined by interest rates available to firms and entrepreneurs. When the central bank regulates the interest rates and makes them below the equilibrium rate, high-level investment activities boost economic growth and introduce new technologies into the economy, which in turn promotes growth in labour productivity. As the current marginal product of capital is much higher than the interest rate, the output growth is much faster than consumption growth and exports become an important part of the economy. To maintain competitiveness of exports over a longer period, it is necessary to keep exchange rates low, which results in large foreign exchange reserves. When the export sector is losing its competitiveness edge due to increased labour costs and exports cannot digest the difference between output growth and consumption plus investment growth, interest rate control may lose its positive impact on economic growth.     

The Washington Consensus: A post-mortem

After guiding development policies for nearly 20 years, the “Washington Consensus” lies in shambles. Although selected components remain relevant for development policies around the world, some specifics of the broader policy “package” and, more generally, the concept of a standardized package of policies applicable to all developing countries has clearly been discredited.Criticism has been directed at the assumed link from economic liberalization of international trade and financial flows to more rapid economic growth. Apart from a handful of developing countries, admittedly including some large and important ones, most of the world saw little of the promised economic benefit from widespread and on-going trade and financial liberalization, initially. Many countries actually regressed, when evaluated against broader socio-economic development goals, including income inequality. We conclude that differences in initial conditions (history, culture, geography and levels of industrial and institutional development) preclude any single development policy package from being universally effective.