C3 - Centrum für Internationale Entwicklung, Alois Wagner-Saal
The middle-income trap, climate change, and the role of the state
ÖFSE Development Lecture No. 9
with Robert H. Wade (Department of International Development, London School of Economics), Melanie Pichler (Department of Political Science, University Vienna) and Ludovico Alcorta (UNIDO).
The „Mother of Global Problems“ today is stopping climate disruption, or more exactly, decarbonizing the energy system while sustaining economic growth. If the issue is framed as a horse race between economic growth and avoiding climate disruption, economic growth will always win, for political reasons. But what if the still-prevailing Washington Consensus on appropriate politics and institutions for economic growth in developing countries is not effective for economic diversification and upgrading, to the point that many middle-income countries are caught in periodic cycles of sharp growth accelerations followed by sharper decelerations and longer periods of very low growth, also known as the middle-income trap? Countries in this condition are likely to drag their heels on decarbonizing their economies, saying „We are too poor, and you (developed countries) caused the problem“. This talk discusses the reality or otherwise of the middle-income trap, a contentious subject – unsurprisingly because its reality would go against the conventional wisdom of neoclassical development economics. Then, having established that it is „real enough“ for policy makers to take very seriously, what is the appropriate role of the state in escaping it? This brings us to the still-toxic topic of industrial policies and how to do them well rather than badly.
Key-Note Speaker Robert H. Wade is Professor of Political Economy and Development at the London School of Economics. His research asks how to improve the development prospects of developing countries in today's globalized world; and especially in the international system of rules, regimes, and organizations which bear upon their development prospects. His book Governing the Market won Best Book in Political Economy from the American Political Science Association. He won the Leontief Prize in Economics in 2008.
Conveners: ÖFSE in cooperation with the Department of Political Science/University of Vienna