 Dear minister, colleagues and friends, it is a great pleasure and an honour to chair the opening session of the UNU wider conference today. As you have all seen, the title of the opening panel is Key Ideas and Outcomes of Global Development. Now, this opening panel is aimed at giving a framework or setting the scene for the coming discussions within the three days ahead of us. It will do that in two different ways. First and foremost, it will look at global as well as regional perspectives of development. Secondly, it will look at ideas, policies and outcomes and their interlinguages and even dynamics between the three. So this would be the aim of the opening panel and we have four leading international scholars that are going to speak in the panel, and let me introduce them briefly. First and foremost, we have Professor Ernest Arjitig. He is the Vice Chancellor of University of Ghana and he is currently also acting as the chair of the UNU wider board. Then Professor Justin Lin. He is the founding director of the China Centre for Economic Research at Beijing University. He has served as the former chief economist of the World Bank and during the years he has had the wealth of interaction and cooperation with the UNU wider. Then we have Professor Nora Lustig. She is Samuel C. Stone Professor of Latin American Economics at the Tulane University. She is also a non-resident fellow at the Centre for Global Development and the Inter-American Dialogue. Professor Nora Lustig has also served in the UNU wider board. And then fourthly, Professor Deepak Nayar. She is Emeritus Professor of Economics at the Java Hall Nehru University in New Delhi and he is the former chair of the UNU wider board. So these are our distinguished speakers in the opening panel and without further delay I would say let's go and get to the business. I would give Professor Ayiti the floor. Please Ernest, maybe you can go to the podium. Madam Chair, distinguished ladies and gentlemen, I am certainly very pleased to be here this morning to discuss the issue of links between ideas and development outcomes. I will be asking myself the question that Fin posed us. Do ideas drive outcomes? And I will be arguing that yes, ideas do drive outcomes to a very large extent and indeed the current situation around the world where we seem not to be getting much outcome is a direct consequence of the absence of big ideas. Indeed there is a certain perception around the world that development economics has run out of new ideas. This may not be entirely true but clearly it's obvious to me that people are comparing the ideas of today to the ideas of 50 years ago. So there may be some truth in that. Most of the ideas that drive how economies are money today are not properly guided by any big thoughts. That's the argument. In doing this I want to look briefly at the history of development thoughts. We all remember in the 1950s the works of people like Zinstein Rodin. We all remember the works of Herschman, we remember Gunamido and we remember Athaloys. These were the thought leaders that Paul Krugman had described as bringing about the high development theory. They brought these theories and so today we remember arguments about the big push. We remember discussions of cumulative causation. We do remember things like balance growth. We may not entirely agree with the arguments therein but yes they were ideas that were formed. Those ideas in the 60s influenced governments in many countries. So it take a place like Africa where government in the 1960s soon after independence were beginning to craft development plans in Ghana, Tanzania, Nigeria, many places. They looked for thoughts, they looked for ideas from many of these men that I've mentioned. So Athaloys coming to Ghana or Nikola Skala coming to Ghana to talk to their friends that any influence they got was no accident. That's how development economics was positioning itself to influence policy. So many were those who believed at the time that it's not going to be possible to have different policies in place without linking them to the thoughts and the ideas coming from the leaders at the time. So we saw that and we've seen how by the late 60s and 70s many of these ideas were beginning to falter. We saw how governments began to fall as they suffered from one crisis after the other and how the blame was shifted from the way policy was implemented to the kinds of ideas behind the policies that happened in the 70s. After the 70s we began to model through. It's very interesting that Paul Krugman in his discussion of the fall and the rise of these new ideas begins to think that the problem was the way in which the ideas were formulated and the methodologies that were associated with that. Clearly there may be some element of truth in that but that's only one part of the story. Since the 1970s we've been through a world in which we've largely tried to model through. A major concept of the earlier high development theories was largely that we're looking at external economies and we're looking at the economies of scale and these were things that were difficult to model in those times. By the 1970s we had moved well beyond that. Development outcomes had moved well beyond that. So we saw a world in which markets played a much more important role than had been the case in the earlier development ideas of the 50s and 60s. In these new thoughts, in these new thoughts of the latter part we no longer focused on the big ideas but we focused more on how to get policies running as a result of new global debates. But those new global debates were not based on any particular set of ideas. Those new global debates were actually an offspring of mainstream economics where the dominant force was the market. The assumption of free markets and competition dominated the thoughts of the 80s and so we saw in the 80s reform after reform in various countries driven by the Oshite consensus. Now, have we seen a change in the performance of countries as a result of this? Yes and no. We've seen very performance across countries whether in Africa or in Asia or Latin America. We've seen very performance. As early world drives growth and diversification in any of these economies we're not yet able to pinpoint it varies from place to place. We saw the transformation in large parts of Southeast Asia. The recent story of China poses for us a new question as early world drives growth. Is it ideas? What kind of ideas? Are they mainstream ideas? The performance of some countries like Latin America, especially Chile posed new questions for us in development and the varied performance of countries in Africa led to even more questions. So as early world role do these ideas play? And as early world is wrong with all the ideas of the 50s and 60s that form the foundation of development economics. The main importance in that we have not paid enough attention to my view has been the role of the state, the role of the state in the making of policy, the role of the state in the allocation of resources and the role of the state in facilitating a relationship between various economic agents. We haven't done that. So why are there no big ideas today? Why are there no big ideas today? In fact there are some big ideas. There are some big ideas. The biggest idea in the last two decades has been the millennium development goals. That has been the biggest idea of our time, the millennium development goals. These came as a foundation to new thoughts being brought together by the international community. The emphasis on the removal of poverty and inequality, the emphasis on improving social standards as a result of what we have seen in the earlier decade of improvements in the economic performance was very seem to be a very sensible thing to do. And indeed it was a sensible thing to do. So we saw for 15 years the domination of the millennium development goals. How countries pursue these varied from place to place, not according to any particular development concept. So we've seen as a result of this varied approach to the pursuit of the MDGs, varied outcomes. There are countries around the world that have reduced poverty significantly. And some in doing that have also seen inequality come down. But for many inequality went up. For many we saw growth accompanied by unemployment, very significant unemployment. Throughout the developing world, especially in Africa, we've seen the absence of diversification of economies. So while China has been able to diversify, and part of South Asia has been able to diversify, we haven't seen that in Africa. That the absence of a particular type of philosophy or idea behind development. I've argued that there were four reasons that there are no big ideas. The first is the rejection of the high development theories as a result of the argument about methodology. So there were ideas, and we liked the basic principles of those ideas. But as economists, we faltered them for the absence of rigor. And we faltered them for the absence of mathematical models and the line most of them. That was the first. So we threw at the baby the bath water. We failed to appreciate what balance growth meant, or what the big push was all about. We failed to appreciate that and see how best that could be achieved. And the line most of the ideas was an implicit role of the state. But this was never properly interrogated, because we didn't trust the state in many places. Because the state had failed in many places. We never really gave ourselves a chance to interrogate the role of the state. What role should the state be in terms of the allocation of resources? We didn't do that. But today, based on experience from many parts of the world, especially in Asia, we know that the state has a role to play, has a very significant role to play. But that role must be modified to suit every particular culture. That role must be designed to lead to particular outcomes. We haven't done that. The third point I make is that mainstream economics has never properly come to terms with the role of the state. Largely as a result of the fact that most of our interventions are intended to stimulate the market and its performance. We haven't really given enough attention to what role the state should play. So what should be the role of the state in brain about transformation? Should the state simply be an agent for stepping in when markets fumble? We've seen that happen. And indeed, that's what many people do recommend, that the state should step in when markets fumble. And I can say I can do more than that. There are places where the markets don't exist. And there are many places. That's why the new economic director. When the market is unable to perform, the state must be ready to do that. Should the state have a more direct role in the allocation of resources? The example of many parts of Asia tell us that it depends. There are clearly good examples where in China we've seen the state help the market to grow. That example I'm here, just we were talking about that. An example is one. But can you transfer the experience of China to Africa? Clearly we'll have to be done with some circumspection and some modification. Should the state in Africa, for example, be given a much more visible role in the allocation of resources? Today, one can argue that most African states have come a long way compared to where they were in the 60s and 70s. Today, institutions in Africa are a lot different from what they were 30 years ago. So the African state has a much better grasp of policy and ideas. The problem for the African state today is that it has been looking outside of Africa for those big ideas. It has been looking for close to three decades and not found those big ideas. It is used to having seen the big ideas of the 50s and 60s and is still looking for something similar. But that something similar has sort of invaded it. That's the problem that many African states face. So moving forward, what should be the role of the state? How should the African state, for example, position itself to play a much bigger role in development in bringing about transformation? First, the African state has to accept that its main purpose is to bring about transformation. That simply achieving higher growth rates cannot be enough. Simply reducing poverty cannot be enough. Bees have to be sustained over the long term. And that is going to come about only through transformation, trachea transformation. That's the first in the African state has to accept. When that is done, when that has been done, the state then needs to build the institutions that would allow it to pursue the idea of transformation. Unfortunately today, in many African economies, governments look outside for guidance in terms of what institutions are best. It's good in my view that issues like good governance, corruption, etc. are a very major part of the agenda for discussion in your average African economy. It's good that African governments recognize the need to deal with these. It's good that they recognize the need for education in order to ensure a much better workforce. It's good that they recognize the role of infrastructure in bringing about change. What they need to work out in this scheme is how the allocation of resources is done. In a manner transparent, in a manner that leads to the outcomes that are associated with transformation. That has not yet been done. But the African state cannot be uniform across Africa. There are large states in Africa, like Nigeria, like South Africa, and there are small states like Togo, Benin, Gambia, etc. They have to approach the role of the state differently. They have to understand that the role cannot be uniform across the region. Depending on ethnic composition, depending on a certain dominance, depending on the state of the workforce, depending on relations with the outside world, the state's role can be crafted. So it is my view that in moving forward, wider institutions will have to look a lot more closely into how African states and in these states all around the world can play a more decisive role. It is important for the state to understand that ideas for transformation all have to come from within. It is important for the African state to understand whether arguments are going to be made for the big push or balance growth and how these may be achieved, those discussions will have to take place from within. It is only from within that they would understand the agencies surrounding many of these. One example I often give when discussing health matters in developing countries is everybody understands the need for a vaccine for malaria, largely because malaria is the major thing that is killing both the young and old in many countries. And yet, the search for a malaria vaccine is done outside of Africa. You will find in various places large numbers of researchers paying attention to the search for a malaria vaccine. Very few African researchers are part of that discussion and I have said to many of them there is a personal interest in ensuring that there is a malaria vaccine as soon as possible. For many of the non-Africans, the attention to a malaria vaccine will disappear with time and indications have been found. So it is for the Africans to look inside for that malaria vaccine. It is the same thing with development. There is an agency that might be attached to it. An agency that African academics must attach to the search for new ideas. We have seen that new ideas can lead to effective outcomes. We have seen how ideas led to the transformation of China and we have seen how these ideas are today transforming India and other places. So clearly, new ideas, big bold ideas have a role to play and these must be harnessed from within. Thank you very much. Thank you very much, Ernest. That was an excellent opening for the panel looking at the history and the role of big ideas. And I think what you were pointing out is very timely. I think that within less than two weeks the world leaders are deciding on another global big idea called the Sustainable Development Goals and I think that you set the scene beautifully in that respect. Next we have Professor Justin Lin and he is going to speak about the experience of China and East Asian economies in the pursuit of economic development after the Second World War. Justin, the floor is yours. Well ladies and gentlemen, I would like to take this occasion to congratulate UNU Widers for its achievement as a platform for debating development ideas. And also as an incubation center for generating new development ideas in the past 30 years. And in my short intervention, I'd like to have a review of development ideas and development performance from my own new structural economics perspective to become a dynamically growing high income country. It's a dream shared by all the developing countries. However, among nearly 200 developing economies since the Second World War, so far only two have moved from low income to middle income to high income. One is Korea, the other one was placed where I was born, Taiwan-China. And mainland China is likely to be the third one by the time of 2020 to move from low income to high income. And only 13 economies move from middle income to high income. Among those 13 economies, eight were European countries surrounding Western Europe. Their gap was small to start with or all your producing country. And the other five are Japan and four small East Asian dragons like Korea, Taiwan, Hong Kong, Singapore. So this result should be considered as very disappointing for us as development economists. And the nature of modern economic growth actually is quite simple. It's a process of continuous technological innovation and industrial upgrading, which increase labor productivity and income and also improvement of soft and hard infrastructures, which reduce transaction cost. And the developing countries should have the advantage of backwaters in the process of technological innovation, industrial upgrading and institutional improvement because they can learn from the high income country. And so theoretically, they should be able to achieve the convergence. However, most developing countries have been trapped in low income status or middle income status in the past six, 70 years. And so this phenomenon should be considered as puzzling. Capital is important because in the process of industrial upgrading and technological innovation and infrastructure improvement, certainly we need to have capital to do that. And according to the report of the GORUS Commission, the 13 economists who achieved 7% or more growth rate per year continuously for 25 or more years, there were five status facts, openness, maker stability and a high rate of saving and investment, and a market mechanism as well as capable, committed government. And so from the status facts, we know one of that is high rate of capital accumulation. But there's a Lucas paradox because theoretically the capital was scarce in the developing country. And the return to capital should be higher in the developing country. So we should observe the flow of capital from high income country to the developing country. But the reality was reversed. We observed the capital flow from the developing country to the high income country. And this paradox is a simpleton of the development value in the developing world. And like Ken said, I think the poor development performance was due to inappropriate development ideas. And so I'd like to have a review of the development ideas we have since development economics as a subject spring of modern economics. In the post-war periods, the development idea was structuralism. And the idea at that time was to focus on the market value for the developing countries in ability to develop modern, large-scale capital intensive industries. And at that time, the policy framework was used active government intervention to adopt a policy framework of import substitution. And we know these kind of ideas help the developing country to achieve a few years of investment that grows. But quickly the economy turned into stagnation and frequently hit by crisis. And then the gap with the high income country continued to widening. So by the time of the 1980s and 1990s, the idea changed to the neoliberalism. The focus was government values. And the policy framework was to have Washington consensus structure up in order to adopt all the modern market institutions like the high income country. But the result was the developing country followed these ideas. The average annual growth rate of growth was lower than the 1960s and 70s. And the frequency of the crisis was even higher than the 1960s and 70s. And so some economists referred the 1980s and 1990s as lost decades for the developing world. And during this period of time, a few economists were successful. In the 1950s, 1960s, Japan and the East Asian dragons, they adopted expert promotion instead of import substitution. And they started to develop traditional small-scale labor-intensive industries and instead of to develop large-scale modern industries. And in the 1980s and 1990s, during these transition reform periods, China and Vietnam performed quite well, but they did not adopt the Washington consensus structure up here. They adopted some kind of gradual piecemeal dual-track approach. And that approach was considered as the wrong approach from the development idea at that time. And all the successful countries had something in common. There was either market economy or transition to market, but their government also played a proactive role. And so for this, we know that the development idea did not deliver, and although successful economy, their policy could not be analyzed by the development ideas that we had in the past. So we need to have a rethinking. And for that, I'd like to propose my own ideas of development. The new structural economics. The new structural economics, you know, the hypothesis was that the industrial structure was economic structure in a country is indigenous to its endowment structure. And endowment, we know that is capital, devil, and natural resources. They were given at a given time, but they are changeable over time. And the importance of endowments are that the total endowments of an economy actually is a total budget. Of the economy at that time. And in a certain country, some are rich in capital, some are rich in natural resources level. And this kind of relative endowment will determine the relative factor price for the country at that time. And for economists, we know the total budget and the relative price are two most important parameters in our analysis. And these kind of different endowments will determine the different competitive advantage of the economy at any specific time. And to follow the competitive advantage of the economy to develop the economy will make the economy most competitive. And so the industrial structure or economic structure that are consistent with the country's endowment should be considered as the optimal structure. Certainly, our goal is to raise income. But if you want to raise income, you need to move to more capital intensive industries. Because economic structure is indaginal to the endowment structure. But if you want to move to more capital intensive industries, you should increase the capital availability of the economy. And if you can increase the capital availability of the economy, then economic structure will undoubtedly change to more capital intensive. But certainly in the process, you also need to improve the sub-institution and hard infrastructure. And from what I see, countries are trapped in low-income status or middle-income status was because those countries cannot have these kind of dynamic changes in its economic structure. But how to change the endowment structure? Because everything is indaginal to the endowment structure. My argument is that to follow the competitive advantage of the economy to develop its economy will be the best way. Because if you follow your competitive advantages, you will be most competitive. And you can generate the surplus in the economy so you have more to save. And also if your economy is consistent with your competitive advantages, the return to capital will be highest. Then you will have the highest incentive to accumulate. And this way, you can change your endowment structure at the farthest way. And once you change your endowment structure, you upgrade your industries and the technology, you have the advantage of backwaters. And so you can move faster than the high-income country and you achieve the convergence. And in this process, to follow the competitive advantages to develop economy is a term only understandable to economists. And how to translate this idea to the spontaneous choice of the entrepreneurs? Then we need to have an institution. That is the market institution. Because only competitive market can generate the relative prices that reflect the relative abundance of factor endowments. And if you have those kind of relative prices, entrepreneurs who are sick of its profitability, they will adopt the technology which are consistent with your endowment structure and also go to the industry which are consistent with your endowment structure. So you need to have a competitive market as an institutional basis. But the state is also important because economic development is a process of continuous upgrading in its technology and industry. And also includes infrastructure like transportation system, power facilities, and soft infrastructure like institution, legal system, financial system. And in this process, you need to have a state to address the incentive issue of the first mover. Because first mover creates all kind of externalities to the followers. And you also need to coordinate a lot of the effort. Some of the changes that may be able to made by the private sector, for example, improvement of the infrastructure power facility transportation system. But you need to have a state to coordinate that otherwise the infrastructure development may not be as quick as the industrial development. But some of them cannot be changed by the private sector like legal system, like financial regulation. So you need to have a state to play the coordination role. So the key is to have a competitive market and also offer a state. And I like to say actually the ideas of develop your economy according to your competitive advantages can provide a recipe. And the recipe can synthesize the status facts of the growth commission report. The first one is that the recommendation is following competitive advantages in the process of economic development. But what are the preconditions? You need to have a competitive market, you need to have a facilitation state. And those are the status facts of four and number five of the growth commission report status facts. And the other three of the growth commission report actually is the result of following the competitive advantages in the process of economic development. Because if you follow your competitive advantages, certainly you will be an open economy and you will have the ability to enjoy the advantage of big ones. And that is the status facts one of the growth commission report. And if you follow your competitive advantages, certainly you will be more competitive and you will have less internal driven crises. And if you encounter some kind of external shock, the government will have the best position to adopt counter secret measures because the physical position will be the strongest possible. And so that is condition number two. And then if you follow your competitive advantages, you are going to generate the largest possible economic surprise. And it will have the highest incentive to make investment. And that is the status facts number three of the growth commission report. And this idea seems to be able to explain the success. And actually this framework can also explain why the development ideas in the past failed. The structural reason, its idea was to develop a large scale model industry, but the country was poor. And those kind of industries went against the country's compared advantages from those kind of private sectors that are not viable. And to make those kind of not viable firms to survive, you need to give all kind of protection and subsidies. And those kind of protection subsidies could be raised. So you're causing misallocation of resources and corruption and social problems. And as a result, they return to the capital access role. And so capital will have a fright instead of capital, you know, will have an inflow. And this can also explain how come Washington Consensus failed. For two reasons, because the starting point of the transition was you have a lot of firms which are in wrong sectors. They are not viable. And they rely on all kind of protection and subsidies to survive. And if you remove all the protection and subsidies, they are all go bankrupt. And sometimes the government for failure, for concern about the employment issue, well, those kind of sectors are considered important for the national security. Even after the privatization, the government continue to provide all kind of subsidies and protection. And those kind of, you know, implicit subsidies and protection actually was less efficient than the old subsidies and protection. And that's the reason why the Washington Consensus did not work well. And the return capital continue to be low. So we observe the capital off-right. And a successful country in the transition process, they adopt some kind of gradual dual track. And it's reasonable because this kind of dual track on the one hand continue to provide some kind of transitory protection to all sectors to maintain stability. But liberalize and facilitation the entry to the new level intensive sector so you can enjoy the competitiveness and dynamic economic growth. And this kind of growth also create a condition for the reform in all sectors. And China, Vietnam and Laos followed that, I'd like to say, actually this approach. The first country to adopt this approach was Malaysia in the 1970s. It started with the import substitution in 1970s, started to set up a special economic zone. In a special economic zone everything was liberalized, but the domestic economy continue to be protected by all kind of interventions. And Malaysia now is the most successful country in Africa. Its per capita income is exceeding 10,000 US dollars. Then that's the new structural economic idea of work in the modern world that we can help the low income country to transform to have a structural transformation. And I say yes, and I'm a person belonging, if the knowledge is right, we should put that into action and to see the result. You know, from historically we know a few successful countries. They follow some kind of flying geese pattern. The government played the subsidiary role to help the private sector capture the window opportunity from the relocation of the very intensive industry due to the current incubation country that was roads. And that was the case in the post-war period of Japan. In the 1960s, the small dragons in the 1980s, China. They all, the government played this kind of facilitation role to capture the window opportunity for the global relocation of the labor intensive industry to jumpstart their industrialization process. And in my wider lecture, 2011, and I argue actually there's an opportunity for the war today because China had absorbed other surplus levels. And the wage rate in China started to rise and China is going to release 85 million jobs in the labor intensive industries and that will be large enough for almost all the developing countries in the world. And informed by this finding, the prime minister met us of Ethiopia after he read my report, my lectures, and he went to China in August 2011, actively invite the labor intensive sectors operators in the shoe sector to make investment in Ethiopia. And it's a one firm called Huajian. After the invitation from the prime minister, organized a delegation to waste Ethiopia in October 2011 and decided to make investment in October 2011. And in January 2012, two production lines with 600 workers started to operate. In March, this firm started to export. By the end of the year, it employed 2,000 workers. The second year, it employed 4,000 workers. It was a quick success. And the importance of this quick success was not this firm only because it demonstrates Ethiopia can be manufacturing for the world if the government provides those kind of active facilitation role. And so the government set up Industrial Park in 2013. And the first stage was to build up 22 factories within three months, all those 23 factories. This out to labor intensive in our firms in shoes in government for exporting and that was unimaginable in the past. And also encouraged by the success of the Industrial Park, the World Bank the first time gave 250 million U.S. dollars to support the construction of Industrial Park in the second phase and the third phase. And again, encouraged by the quick success of this Wahjian shoe factory in Ethiopia, President Kagame started to have active investment promotion to attract the firm direct investment in live manufacturing. In a C&H government, decided to invest in Kigali's special economy zone in 2012. And training of 300 Rwandan workers to produce protective clothes and t-shirts for export started in March this year. And employment by July reached 500. And in August, this firm started to export these clothes to China and Europe. And the C&H government plan to increase employment to 1,000 by March next year. And I'm sure this success story will demonstrate. A landlocked country like Rwanda can also be a humanitarian flow for the world and it can create a job and facilitate the structural transformation in Rwanda, in Ethiopia. And a landlocked country like Rwanda and Ethiopia can have this kind of structural transformation. I think other African countries and developing countries, if they follow the right idea to have a competitive market, with the facilitated government, they can capture this opportunity and to have a successful transformation. So my concluding remark, for development and transition performance in many department world was in the past, the policy was guided by inappropriate ideas. And if we have appropriate ideas, every developing country should have the opportunity to have a dynamic economic growth and transform themselves within one or two generations. But to have these ideas, I think we need to change our development thinking. Because in the past, our developing country thinking always used high income country as a reference. To shift what high income country had, what high income country could do well, and otherwise developing country to own what the high income country had or did as what high income country did. I think the right development ideas should look at what the developing country have now, and based on what they have, they can do well, and the government should scale up what they can do well. Then they can competitive, they can have a dynamic structural transformation. Thank you very much. That was a good overview of the historical experience from China and East Asia, as well as some of the practical lessons to be taken even globally. Now let's move to Latin America, and we have Professor Nora Lastic. Nora, the floor is yours. Good morning. First of all, thank you very much to FinTARP, wider in general, for inviting me to be here in the inaugural panel. It is a delight and a pleasure and an honor. And also I want to start by congratulating WIDER for its 30th anniversary. I think that today, not only me but many of my colleagues that are sitting around are examples of WIDER's commitment to helping young scholars come to fruition from developing countries as many years ago, many of us sitting here today participated in projects that WIDER sponsored and coordinated. So thank you for that as well. I'm going to talk about something that you asked us when you invited us to come and make our presentations, which are the ideas, policies and outcomes in developing economics, by looking at the influence of Latin America's structuralist economic thought. I should start by a word of caution that because of the brevity of our intervention, I'm not going to be able to do justice to all the thinkers, to the analytical frameworks or to the nuances that have characterized the evolution of thought and outcomes in Latin America. But I hope that with my remarks I will be able to give some highlights of how ideas, policies, outcomes and ideology actually shape what happens on the ground. So no PowerPoint. Today I'm going to actually read which I usually don't do and I hope that I am not going to bore you to death. So after the Second World War and up to the 1980s, the main goal of economic policies in Latin America was to develop an indigenous industrial sector seen as essential to become a mature economy. Given that Latin America was a latecomer, industrialization called for the protection against foreign competition of the indigenous sector and state support. This gave rise to the well-known import substitution industrialization strategy. During this period, economic policy was characterized by a heavy dose of protectionism, vis-a-vis manufacturing imports and foreign direct investment, and other components of state-led development. The import substitution industrialization strategy was at the core what is known, the Latin America's structuralist economic thought. It can be said that this thought officially began towards the end of the 1940s and the beginning of the 1950s with a publication by the UN Economic Commission for Latin America and the Caribbean of two documents. The economic developments of Latin America and some of its main problems and the economic study of Latin America in 1949. In spite of the fact that these were two official documents of the United Nations organizations, their main ideas can be attributed to the work of the very influential Argentine economist Raul Previch, then the head of ECLAC. Previch developed the intellectual framework of the center periphery approach and together with the Brazilian economist Hans Singer, the theory of secular deterioration of terms of trade for commodity producers and exporters. Both were the intellectual backbone, both theories intellectual backbone of developing the import substitution industrialization strategy in Latin America. The view at the time was very optimistic. It was that without protecting imports from foreign competition, Latin America would never industrialize and without a robust industrial sector, the economies of the region would never fully develop them. Thinkers at the time assumed that industrialization through import substitution would lead the peripheral economies to a more independent, democratic and egalitarian growth path than growth based on primary goods exports. Sounds familiar. We all mentioned this, my predecessors mentioned this and I'm sure Deepa will too. But as Justin mentioned and Ernest before me, reality turned out to be very different. The severe limitations of industrialization via import substitution became evident all too soon. As industrialization proceeded, the problem of externally balances became more acute and unmanageable. Balance of payments crisis became frequent. Because import substitution industrialization strategy relied on implicitly and explicitly taxing the primary goods sector, agriculture became less dynamic and a stagnating agricultural sector resulted in bottlenecks in the production of foodstuffs and hence in inflationary pressures. Second, because industrial sector used imported capital intensive technologies employment in urban areas did not grow fast enough to absorb migrant labor from depressed rural areas giving rise to expanding urban poverty. Third, as the import substitution process advanced, the resources that could be transferred from the primary sector to industry decline and the process depended more and more on state subsidies to make it viable. While public expenditures complementary to the industrialization process increased government revenues could not keep up because of a stagnating primary sector and a subsidized industrial sector. An imbalance in the public finances with us unleashed resulting in demand pressures that contributed to higher inflation and eventually fiscal crisis. This appointment with the results of the import substitution process gave way to new currents of thought within structuralism. And I think there were two main views at the time. One was the radical view. I don't know, we haven't talked so much about that but at some point people thought that development for the periphery within capitalism was not possible and therefore revolution was the alternative and moved to a socialist regime and that was done through revolution in Cuba and attempts to do it through democratic reform happened in Chile. Then there was another group. The more reformist economists argued that development within capitalism was feasible but required reinforcement of the inward looking strategy through changes in the composition of domestic consumer demand. Growth within capitalism existed but only if the distribution of income became decidedly more equal. Furtado, who was a very influential Brazilian structuralist economist was among the main proponents of this view and developed a model in which he considered that the main constraints for growth and development in emerging countries was supply driven that was the result of a productive structure that moved increasingly to more capital intensive sectors with also higher import requirements. This resource allocation in turn was the result of an unequal distribution of income that generated a demand profile bias towards these sectors and the growth pattern exacerbated both inequality, poverty, and foreign dependency. Within this framework, then a more equal distribution of income would be accompanied by higher output and employment growth rates as well as a higher degree of national control of domestic capital and output. These ideas were tested by many people. Some of you are here actually. I also wrote some trying to test some of those and the studies that tried to link the relationship between inequality and growth through the impact of the former on savings, distribution of demand, and the capital import intensive output in general found some evidence of a potentially positive yet smallish, very smallish relationship between greater equality and growth. However, perhaps more importantly, all the attempts at redistribution in Latin America really failed in the period of the 1960s and early 1970s. We can look at the socialist reform is experienced in Chile under Allende in the early 70s or the Sandinistas in Nicaragua in the late 70s. The state-sponsored land reforms in Bolivia and Peru and the attempts to increase real wages through minimum wages and our labor-friendly legislation in Argentina, Brazil, Mexico, Peru, and Uruguay during the 70s and 80s did not succeed. They tended to generate output shortages and fuel inflation. Moreover, reform is a revolutionary distributed processes entail conflicts that cause financial and physical decapitalization, both of which negatively affected output. Income redistribution turned out to be much more difficult than anticipated. It led to economic chaos and social conflicts. Reformist redistribution was attempted at the same time that in most Latin American countries there were leftist guerrilla movements whose objectives were to overthrow capitalism. Those were the days of the Cold War and ideology really influenced the policies that people wanted to adopt. The economic, political, and military elites could rely on support from particularly the United States in fighting the left and leftist economic thinking or progressive economic thinking. Many countries in Latin America faced military coups and long years of bloody and repressive authoritarian regimes. Attempts at trying to remove the bottlenecks associated with import substitution and racialization strategies through redistribution, as I said, backfires. So far from resulting in self-sustained growth, redistributed policies, exacerbated imbalances, and undermined democracy. However, the import substitution and racialization strategy was given some respite. When rising external and fiscal deficits to the second half of the 1970s were funded by rich country commercial banks eager to recycle a flood of the so-called petrodollars of the time. As a result, Latin American sovereign and private foreign debt rose in country after country. When interest rates started to rise in the U.S. in the early 80s, debt servicing became increasingly more difficult. With commodity prices signaling a downward trend and rising interest rates in the United States, commercial banks became increasingly reluctant to lend to a region whose economic prospects seemed shaky. Sounds rather familiar. The debt crisis ensued. In order to avoid default and stabilize domestic prices and their macroeconomy, governments had to borrow from multilateral financial institutions such as the IMF, the World Bank, and the Inter-American Development Bank in the context of Latin America. This lending, however, came with strict conditionality. Conditionality involved draconian fiscal austerity and trade changes in economic policy. In order to have access to the much-needed foreign exchange, Latin American governments had to give up its inward-looking state-led development strategy and slash fiscal deficits, devalue other currencies, liberalize its trade and foreign investment regimes as well as its financial sector, private-state state companies, and dismantle its industrial policies. These set of policies, as was already mentioned, associated with mainly Chicago, but not only trained economies, became eventually known as the Washington Consensus, a term coined by Washington-based economists, John Williamson. The dominant mainstream thinking at the time considered that the policies pursued under import substitution or solidization were at the root of Latin America's poor economic performance and structuralist thinking was demonized and banished from mainstream circles. I should say that at that time, Wider was an exception because in the mid-1980s, I forget when we had the first meeting, Lance Taylor in 1985. So we were here from the very beginning. In 1985, Wider invited Lalia Giaordina, the director of Wider, then invited Lance Taylor to organize a project that would look at adjustment and stabilization policies from a heterodox perspective. And many of us were there. Raise your hands if you were there. Okay. So the project covered Africa, Latin America, Middle East, Asia, and many of the people who were in that project actually later became ministers, vice-minister, directors of central banks, examples here. One of the Tanzanian head of the central bank, Ben Undulu, was there too. And interestingly, I always remember this. At the same time, Wider was holding a conference of the more orthodox economists, a project led by Michael Bruno and Stan Fischer. And the only time we overlapped was in a boat trip. That's the only interaction we had then, but at least we were able to take a boat trip together. Anyway, the recurrent failure of IMF led programs to curb inflation in Latin America during the debt crisis, however led to the eventual development and legitimization of more heterodox approaches. I went, forgive me, but I lost the patient-patient. I'll be there in a minute. Okay, so the structuralist theory of inflation gave great importance to something that was ignored by the orthodox stabilization approaches, which were the transmission mechanisms, such as wage indexation and oligopolistic pricing by which inflationary pressures are translated in an increase in the general level of prices in the entire economy. There's so-called infert inertial inflation. So this led to several scores in the region, particularly some Brazilian economists were leading the economic thinking at the time, and some of our colleagues here, derived sophisticated models of inertial inflations, and the ideas were incorporated into policy in several countries, such as the Plan Austral in Argentina, Plan Oriale in Brazil, with different degrees of success. At the beginning, structuralist ideas about stabilization were treated with utmost suspicion by the international financial institutions and many of the more conservative policymakers. However, over time, some of its tenants were increasingly embraced by mainstream economics, both in academia and policy circles. And I think one prominent example of success, of ideas making it eventually into policy because they showed that they could do better than otherwise was the implementation of the Mexican Pacto in 1988. Mexico had followed very orthodox, was a poster child of orthodox policymaking in the 1980s, but when things didn't work out, eventually the government agreed to implement a combination of more orthodox tenants with heterodox tenants and introduce a coordination of price setting and wage setting that actually brought inflation down for the first time in Mexico in six years, decidedly down and paved the way for Mexico's recovery. So, you know, the development of anti-inflation programs that combined some ingredients from orthodox economies and heterodox Latin Americans structurally, I think is an example in which outcomes fed into ideas that in turn broke policy and led to a public policy that could claim success. There was, I need to go a little fast here and I think that I want to illustrate, I mean, one of the, I think, messages that I want to leave here today is that maybe thanks to the fact that we have ideology with a much smaller presence in determining the way we think. And the fact that fundamentalist policies or principles in economics have actually been eroded, there's been a trend towards mixing much more ideas from different walks of life in economic thinking that are much more promising in terms of generating policy-making that will help produce outcomes that would result hopefully eventually in more inclusive growth. And I wanted to mention two salient examples of the mainstreaming of structuralist thinking that include one, the importers attributed to creating new comparative advantage through state intervention, which the other authors also alluded to, a modern form of industrial policy and the rising concern with the negative impact of inequality on growth. The realization that market failures may be at the root of Latin Americans like last performance gave rise to a new form of industrial policy whose objectives are to internalize externalities, improve efficiency, provide public goods and address coordination failures and capital market imperfections. These are currently known as productive development policies in some circles and have been applied with different degrees of success in different countries in the world. The link between inequality and growth has also been the subject of renewed theoretical empirical research. I think that from the structuralist thinking of the past the most complete framework used to link inequality and growth in terms of how inequality shaped the composition of consumer demand which in turn fostered a composition of supply which stifled growth. Well this relationship now has been mainstream and it's for example discussed in one of the common graduate development textbooks by Debra Ray. Another example of new economic thinking on the relation between inequality and growth which was also present in structuralist thinking emphasizes the role of imperfect capital markets and indivisibilities in available technologies and how in their presence the poor may be unable to invest in profitable ventures because they usually find themselves out of lending markets. In this case a one-time redistribution could actually help reduce poverty and also result in higher income per capita. Thus both mechanisms shaping a country's comparative advantage through state intervention and addressing the link between inequality composition of consumption and slow growth which were present in structuralist thinking from the very early on have been gentrified by present-day development economists through the use of rigorous theoretical models. We have come so far that today one of the key voices in warning the world about the perilous consequence of inequality for growth is no other than the IMF itself. Things have changed. It is encouraging to observe how economic theories applied economists international financial organizations and governments have given up fundamentalist positions and chosen a path that integrates views from different schools of thought. Hopefully this open mind in the realm of ideas will result in policy making that produces inclusive and sustainable growth as well. Thank you very much. Thank you very much Nora for the insights on the transformations in Latin America and particularly the importance between growth and inequality. And I think that we all also appreciated your insights on the history of wider and during the very beginning of the institute. Now I have professor Deepak Nayar he is sort of going to wrap up the panel he is going to look at the relation between development ideas and outcomes across the development of the economy. And I think that we all appreciate your insights on the history of wider and growing world. So Deepak the floor is yours. Thank you chair distinguished participants at the outset I'd like to congratulate wider on its 30th anniversary and on our behalf wish it the very very best in its life and times to come birthdays are time for celebration and time for reflection I hope that this event is going to provide us just the right mix of the two as over the next three days we learn from each other meet many old friends and make some new friends the world economy since 1980 has witnessed profound changes associated with structural transformations which have exercised an enormous influence on the process of development in reflecting on this past and thinking about the future of development I have decided to focus on the growing relative importance of developing countries in the world economy not only because this is among the most significant changes over the past 30 years but also because it has the potential of transforming the lives of large numbers of people in the context of my presentation is to focus on these outcomes in development analyze the underlying factors and consider the future implications in doing so I will also touch upon the relationship between ideas and outcomes in development now let me begin with an overview first I will sketch the contours of change in the significance of developing countries in the world economy over the past 30 years second I will highlight the disparate outcomes across regions and between countries within regions in the developing world on these two points to save time I will be brief third I will consider the lessons that emerge from the development experience of countries that have led this process for countries that might for and possibilities of development futures in countries that are followers or latecomers now even if aggregates sometime conceal more than they reveal I believe the big picture I am going to sketch is important the three plus decades since 1980 have witnessed some catching up by developing countries by which I mean Asia excluding Japan Africa and Latin America including the Caribbean between 1980 and 2013 their share of world GDP in current prices at market exchange rates increased from 21% to 37% by 16 percentage points mostly at the expense of industrialised countries attributable to much faster growth consider 1981 in 2013 their GDP growth threat at about 5% per annum was roughly double that in industrialised countries moreover as population growth slowed down growth in their GDP capital at more than 3% per annum was two and a half times that in industrialised countries yet GDP per capita in developing countries as a proportion of that in industrialised economies although it did mark the end of divergence however there was a significant convergence towards per capita income levels in transition economies and in the world as a whole but there was a massive new divergence away from the least developed countries now the catch up in industrialisation was even more significant there was a dramatic transformation in just three decades in 1980 and 2013 the share of developing countries in world manufacturing value added rose from 18% to 45% similarly their share of world exports of manufactured goods jumped from 12% to 43% the engagement of developing countries with the world economy through trade, investment and migration also gathered momentum over these decades their share in world merchandise trade increased from 25% to 45% now the structural transformation in the world economy over the past 30 years associated with the dramatic increase in their relative importance was concentrated mostly in Asia Latin America stayed roughly where it was while Africa experienced a decline development was uneven not only among regions but also between countries within regions there was a high degree of concentration among a few China, India, Indonesia Malaysia, South Korea Thailand, Taiwan and Turkey Asia, Argentina, Brazil Chile and Mexico and Latin America Egypt and South Africa in Africa which I describe in my book catch up as the next 14 thus Bricks, Brazil, India, China with our Russia in this case are a subset of the next 14 at the other end of the spectrum there were the least developed countries as many as 48 that fell behind rapidly during this period indeed disparate outcomes in development across geographical space are striking whether we consider regions or country groups among regions Asia led the process throughout the three decades Latin America failed badly in the 1980s it's lost decade to recover thereafter but stayed roughly where it was while Africa did poorly in the 1980s and 90s it's lost decades and with some retrogression despite recovery in the 2000s this is clearly reflected in their shares of respective shares of GDP industrial production and merchandise trade in the world economy the differences in their comparative GDP and GDP per capita are also striking although both Africa and Latin America did much better after 2000 than they had before in country groups the next 14 were the analog of Asia and led the process throughout these three decades although there were differences among them the bricks were an important and leading subset of the next 14 the LDCs even more than Africa in the regional grouping it was significant retrogression and fell behind rapidly in every sphere as country groups the next 14 and bricks witnessed some convergence in income levels with the world particularly after 2000 while the least developed countries witnessed a massive divergence it needs to be said that China was the most important among the bricks just as the next 14 there is much more to bricks than China and much more than the next 14 to the developing world there is another related dimension of uneven development that deserves mention here even if it is not my focus this morning the catch up process is characterized by emerging divergences in the world economy there has been an increase in economic inequality between countries there is not only an exclusion of countries but also of regions within countries and of people in countries almost everywhere from this process let me now turn to the two main parts lessons in learning and development futures the industrialization and development experience of the next 14 suggests that there were differences in economic size settings, drivers, emphasis and transitions there were differences in economic size some countries were small others were medium size while a few were very large there were different settings some countries were resource rich and land abundant other countries were resource poor and land scarce there were different drivers some countries relied on primary commodities or natural resources or on cheap labor there were different emphasis for some countries external markets and external resources were critical in industrialization whereas for other countries domestic resources and domestic markets were the drivers but for a few among the next 14 it was external markets and domestic resources there were different transitions reflected in different patterns of structural change the Latin American model relied on foreign capital foreign technology and foreign markets in which Brazil was the exception but South Africa came close the East Asian model in the next 14 had two variations there were countries such as Malaysia, Thailand and Indonesia where the size ranged from small to large which relied on foreign capital foreign technology and foreign markets there were countries such as South Korea and Taiwan where foreign markets but mobilized domestic resources and developed domestic technological capabilities instead of relying on foreign capital and foreign technology the mega economy model followed by China and India relied mostly on domestic markets domestic resources and domestic technologies in the earlier stages of industrialization but at later stages both these countries joined the quest for external markets and foreign technology and foreign capital Brazil, Turkey and Egypt in three different continents adopted a model that sought to find the blend of domestic and foreign in markets, capital and technology which evolved over time in their pursuit of industrialization these industrialization models must also be situated in the wider context of their development models each with its mix of the state and the market differed across countries and changed over time and there are possible clusters in terms of development models which range from a strong reliance on markets and openness Argentina, Chile, Mexico, South Africa Malaysia, Thailand and Indonesia through state support with moderated openness Brazil, Egypt and Turkey or strategic intervention with calibrated openness South Korea and Taiwan to state intervention China and India the differences are more than nuances moderated openness was largely open economies with few restrictions in some spheres calibrated openness was asymmetries and openness by design manifest in strategic trade policy that was open for the export sector but restrictive for other sectors with limits on openness to foreign capital and tight curbs on foreign brand names controlled openness and also with respect to foreign investment and foreign technology now if you think of similarities and common factors the analytical clusters I have created helped to focus on what was common among these countries despite their apparent diversity even if reduced to smaller subsets but they had even more in common across subsets in factors that put them on the path to sustained industrialization now it is possible to identify three such factors stylized facts initial conditions enabling institutions and supportive governments there were two aspects of initial conditions the first was the existence of a physical infrastructure the second was the spread of education in society in both a critical minimum was essential to kickstart industrialization and countries created these initial conditions or built upon what existed for the next 14 some institutions may have been inherited from the past but only in small part the framework of enabling institutions to support a foster industrialization in these countries was put in place by proactive governments in the pursuit of industrialization the role of governments in evolving policies nurturing institutions and making strategic interventions whether as a catalyst or a leader was central to the process market and openness it was about minimizing market failure the emphasis was on getting prices right and buying the skills or technologies needed for industrialization for countries that stress state intervention it was about minimizing government failure the emphasis was on getting institutions right and building the skills or technologies needed for industrialization now what are the lessons for followers the clusters of size settings drivers, emphases, transitions and models among the next 14 suggest a wide range of attributes that most developing countries except for small island economies or landlocked countries would have something in common with one, two or a few of them so that there are lessons to be drawn from their experience clearly these experiences cannot be replicated and their lessons must be contextualized and the differences among the next 14 clearly show that there are alternative paths to development so that there is no unique solution indeed there are choices to be made that are bound to be influenced by history and conjuncture but should also be saved by characteristics and circumstances of countries in fact many of the present laggards in industrialization or development may not be very different from what these leaders in the development were 50 years ago so that the possibilities of and potential for development are similar last but not least I would like to address a question that is easy to ask but difficult to answer what can be learned from the experience of the past 30 years that have witnessed a substantial change in the economic significance of developing countries even if it has been concentrated in one region Asia the next 14 about the possibilities of development in other low income or middle income countries over the next 30 years in doing so I would like to stress three propositions first inclusive societies alone can sustain rapid growth and transform it into development that improves the well-being of their people second there are alternative parts to development rather than unique solutions so that there are choices to be made third learning to unlearn from development is just as important as learning from development now development is about creating production capabilities in economies and ensuring well-being of people in countries initial conditions enabling institutions and supportive governments are necessary to kickstart industrialization and technology what Justin talked about but these might not be sufficient to sustain economic growth in the long term and transform it into meaningful development if it does not improve the living conditions of people in the pursuit of development poverty eradication employment creation and inclusive growth then are an imperative for one these are constitutive as essential objectives for a means of bringing about development this is the only sustainable way forward for developing countries because it will enable them to mobilize their most abundant resource people for the purpose of development the same people who constitute resources on the supply side provide markets on the demand side to reinforce the process of growth through cumulative causation therefore developing countries must endeavor to combine economic growth with human development and social progress this is a lesson for leaders and followers alike the leaders the next 14 can sustain their growth in future only by ensuring that the benefits of catch up are distributed in a far more equal manner between people and regions within countries the followers can provide an impetus to their growth with a faster transformation now the possibilities of doing better or the prospects of catching up on the part of developing countries in the world economy depend not only on how the next 14 fair in times to come but also on whether this process spreads to other countries in the developing world now there is some good news in terms of the determinants of potential growth there is bad news in terms of endogenous if we reflect on it there are possibilities now the diversity among the next 14 makes it clear that there are no unique solutions or magic ones to development in fact the experience of the next 14 suggests that there are alternative parts hence as I said there are choices to be made to some extent these choices depend on size and endowments however the emphasis on resources and technology also depend on country specific conjunctures and circumstances moreover there are strategic choices to be made between different development models each with its mix of the state in the market or open nets and intervention these choices have and will make the difference between success and failure to conclude learning from experience is of critical importance it is about correcting for mistakes but it is just as important to unlearn from experience it is about questioning long-held beliefs and thinking anew most have not thought about it in retrospect it is clear that turning points in thinking about development which reshape policies or strategies were strongly influenced by history the past and conjuncture the present reinforced by the dominant political ideology of the times the development consensus was shaped by the experience of deindustrialization and under development in the colonial era and the nationalist aspirations of newly independent countries with the beginnings of decolonization the Washington consensus which evolved through the 80s was shaped part by the history of development outcomes over the preceding three decades the success of a few small East Asian countries and failures elsewhere highlighted even if this history had been impartial but it was strongly reinforced by the conjuncture which witnessed the political collapse of communism and the change in the dominant ideology of our times as outcome surface advocates of the development consensus did seek to introduce correctives for past mistakes to address poverty and stress human development but did not rethink strategies the critics sought fundamental changes in economic policies which was implemented everywhere by the late 1980s but development outcomes that followed belied expectations the promised economic performance simply did not materialize in a very large number of countries particularly in Africa and Latin America indeed countries that were non conformist using heterodox or unorthodox policies mostly in Asia fared far better than countries that were conformist or unorthodox policies mostly in Africa and Latin America this unfolding reality which revealed a mismatch between regime change and economic performance did not persuade orthodoxy to think about correctives and policies except doing more of the same or doing it faster let alone rethink strategies of course outcomes did lead to some debate and some rethinking but it was limited and selective and it differed across schools of thought for it was shaped only in part by outcomes it was also significantly influenced by priors in thinking and ideology in perspectives the relationship between ideas and outcomes in development was asymmetrical selective and partial since ideas were shaped far more by ideology than by outcomes the reason is clear enough dominant ideologies began to question their belief systems it meant seeding intellectual or political space hence the attempts to unlearn from development which changed priors of thinking were few and far between and it should come as no surprise that non-dominant doctrines were more willing to learn from development experience it meant capturing intellectual or political space yet once the tables were turned such that non-dominant doctrines were reluctant to learn and unwilling to learn from experience obviously it would be a formidable challenge to change this reality even so an ability to learn combined with a willingness to unlearn from development could transform the possibilities of change for good in the developing world over the next 30 years thank you this beautifully wraps up a panel that has been looking at a variety of experiences on economic structural transformation in three continents I think that we have had a clear historical perspective here we have looked at the impact of big ideas or their absence from the African perspective we have looked at some of the key elements of the success stories in Asia we have heard experiences on handling the debt crisis and its impact on growth and inequality in Latin America and I think that Deepak beautifully also laid some of the key ideas for the future by saying we do need to take context into consideration but the path to the future is poverty, eradication and economic growth we do have some time for comments questions from the floor and I would encourage everybody to think a specific comment a specific question that you would like to raise at this very point I would give first the floor we have Mike can you just identify yourself and also identify to whom you are addressing the question or comment why don't you come here Jose Antonio Campo from Colombia but teaching at Columbia University in New York totally Colombian but I wanted to make two points one to Justin partly to Nora but one to in a sense I don't I mean when you say the structuralism was a dismal failure Justin I don't know in Latin America the only period of fast growth was the period of industrialization from 1945 to 1980 Latin America grew 5.5% per year as a comparison since 1990 has grown 3.2% per year in that period you take out the effects of demographic demographic boom for example you estimate GDP per worker so productivity labor productivity or in fact total factor of productivity is the best period in Latin America history so I don't know is that a dismal failure in a sense Nora is a bit more nuanced in her comment but let me say that I was struck by the fact that nobody mentioned financial globalization and the effects of the developing world which if anything the end of that period was in Latin America due to the first series of crisis generated by financial globalization so in a sense it's more the macro of managing financial volatility the mic again are we getting any better with the mics would you mind coming up here and thank you I'm a professor at the University of North Florida and I'm also a senior research fellow at the African Center for Economic Transformation in Accra again I have a comment but it links like three presentations and all four presentations were excellent I started by professor IET who noted that the state has to accept that transformation is needed the state leaders know that transformation is going to vote them out of office or cut the rent seeking that they are taking advantage of so I wonder what you have to tell us in that area how can we make sure that they get it while they know that they're going to be losing in some countries the second thing is professor Linn's new structural economic perspective it's a great and useful to recognize what professor Nyer emphasized that there are alternatives to development that fits all and if you look at African countries for example what would work for some of the fast urbanizing countries in Africa would not work for Burundi or Ethiopia or Uganda which are still almost 80% sterural you talked about the importance of contextualization as well I had another point but the point about financial globalization I was thinking more about globalization effects which are not new but it might be now more intensified than in the past to participate in global value chains for example is it just the responsibility of the state in Africa and the private sector in Africa or does it involve the responsibility of the trading partners as well which are developed countries as well as China and in other countries thank you thank you very much we'll take one more question and then I give floor to the panelists Richard Jolie from the IDS panel it was a very rich wonderfully diverse and extraordinarily detailed presentation I want to make one point however that none of you spoke about the universality of development as many of us feel it's the way it needs to go the SDGs the sustainable development goals for example are recognized to be universal to my mind and living in Britain very important secondly as Jose Antonio has mentioned the financial crisis whether it's hitting the developed countries or the developing it's a one world financial capitalist problem and thirdly speaking as a Brit what to my mind is interesting is that many of the issues now of developing countries and some of these successes have many lessons for the north and when I look at the policy and the narrowness of economic policy in Britain today I weep for the perspectives the lack of perspectives with many people in development would take for granted and as some of us put in a little document about Britain and Europe be outraged we say the north now needs to learn from the south thank you very much for the comment I think that the comments were more or less addressed to all the panelists so I would give a floor to the panelists maybe Ernest you would like to start thank you very much there was the very first point that we didn't address the issue of financial globalization I agree I believe the main reason for not directly alluding to the financial globalization was the fact that we were dealing with ideas coming from other groups or individuals that have more or less influenced the way we pursue development I would be very surprised if we could consider financial globalization as a result of any one group's ideas clearly it's a function in a manner that has affected every country in the world today definitely something, a phenomenon that has to be considered in every consideration of development another qualifier is to be one of what we call this set of ideas Mina was interested in the issue of long termism when it comes to structure transformation and the likelihood that governments will find it an unattractive option I do understand you as a result of the new democratic dispensation in many countries as a result of new elections and so on every government thinks about how to win the next election and so less interest in longer term issues of transformation I agree entirely we are going to find a way around it we are going to find a way around it and I believe that as electorates become more and more sophisticated and begin to see that their short term gains always lead to longer term losses they will be more acceptable they will find long term reforms more acceptable typically today in almost every country there are issues with power supply you can't deal with power supply challenges within a short term framework and the populations are beginning to understand whether it's in South Africa or Ghana or Kenya everybody is beginning to understand that you go to deal with infrastructure within a long term framework that's beginning to bite and people are beginning to stop asking the question what are you going to do for me now we've seen governments lose elections even though they spend lots and lots of money they're going to lose elections in terms of the universality of development indeed the SDGs before the MDGs clearly reminded us of that by the end of the day countries still have to make decisions for themselves likely so even if we placed the issue of a development approach within a wider context every country still has to account for its place of decisions and choices being made every country has a way or will have a way of dealing with the SDGs and so the fact that we are pursuing development in a universal manner does not preclude the choice of country approaches what can the North learn from the Southern reform that's one big question clearly many who looked at Greece and said why doesn't Greece do what African countries learned 15 years ago or 20 years ago if Greece had learned what African countries went through they would have probably avoided many of the challenges Italy can learn a lot from that Spain can clearly the basic principle surrounding macro reforms really matter whether it's in Africa or in Asia or Latin America or in Europe and I believe that that lesson is being learned in many different ways especially in kind of like Greece, Portugal and others thank you the first response to Ocea Antonio I agree with you not in America under the structuralism prefer better under the neoliberalism in my remark I said because you look into the average annual growth rate and the stability of the economy the performance of Latin America was better under the structuralism under the neoliberalism however I think structuralism was still a failure because structuralism did not help the Latin America country to get out of the middle income trap because if you look into the gap between the Latin America country and the US and developed country the gap did not narrow that's one thing and secondly it was a failure also compared to the good performing East Asian economies because they were able to move from low income to middle income and to high income and Latin America was unable to do that so from that comparison I think structuralism was still a failure and something new can be learned from the success of the East Asian economy and the failure of the rest of the developing country and second comments that certainly agree there's no one site fit all policies but if you look into the basic guiding principles of the transformation there's been something that should be similar because to have a successful transformation in a competitive and inclusive way the economy need to be competitive and how to make the economy competitive certainly in a country will be different from one to the others but overall I think the basic principle of competitive advantages the basic principle of advantage of back awareness and the best principle to be pragmatic in your policy design I think it should be applicable to almost all the countries and I use the example the quick wins in Ethiopia and also in Rwanda to demonstrate if you have a pragmatic approach and the government facilitates the entry to the sector which you have competitive advantages then you can have job generation quickly you can be competitive in international markets even in your land or country with poor institution and poor infrastructure and the most important thing is to be universal and then coming to the third comment Universalities I think that sometimes we mix ends with the means I think many goals in the MDG or SDGs some of them are ends the end result of the development some of them are the means to achieve the end result but often we do not we group them all together and sometimes we know which one should be SD levels for us to achieve the end and secondly I agree with you the North can also learn from the South one example is that in China and some East Asian countries they use infrastructure investment as a counter-secular measure during the downturn of the economy and when I was the chief economist of the World Bank at the beginning of 2009 most of the people in the North institutions they did not agree with that approach but I am very happy to see now to use infrastructure investment as a counter-secular measure which can create jobs reduce the need for the unemployment benefit during the downturn of the economy and that will provide the foundation to have higher productivity growth in the future and to be accepted even in the North. Thank you. Yes, this is working? Yes, okay. So let me first address Richard's point about universality of development I guess by that you mean the importance of including not just developing countries but also the rich countries and I couldn't agree more and I think that more we're dealing with transnational problems and our frameworks are not adequately adapted to deal with them either analytically or policy-wise and I think we better get our engines running on that because that's truly universal then you know beyond the national states. Now let me respond and lesson from Latin America to Europe it could have been zillions I don't know why they were not tapped more frequently during the recent great recession. Let me address Jose Antonio's point about two things you said. You said that we have evidence that during import substitution industrialization during the structural stage in Latin America growth was better than later, no doubt and that we didn't mention financial liberalization. I don't have a conclusive view and I'm willing to be proven wrong but I think although it's true that Latin America performed better during one of the periods in which structuralist policies were undertaken they were running out of course. You did have an average growth rates that was higher than the current fiscal and balance of payments crisis and runaway inflation during that period and I did mention you say no okay well I mean maybe I am Argentine he's Colombian so that explains everything. No it did but Mexico had this crisis in 1976 before things became globalized. I think that the financial globalization actually postponed the ability of transforming the policy that was working into making it work better. It was replaced by something that didn't give results which was the market based extremism but I mentioned that when that import substitution was running its course the influx of foreign debt actually helped countries continue with a strategy for quite a few years more until terms of trade reversed and interest rates rose but again I'm willing to prove wrong I think we're strongly influenced by different experiences you know it's going to be very hard to show what would have been the counterfactual but I do think that at some point a set of policies that was followed in Latin America had run its course and the structures thinkers used to think so too by the way Thank you chair first I think Jose Antonio Campo is quite right we as a panel are collectively guilty of not thinking about what the future uses but there is a plausible explanation that each of us spend 20 minutes choosing a domain focus but let me say that if we think about development in the past 30 years we should have and we must analyze the implications of the internationalization of finance because that is so shaped outcomes now what does it mean for the past if we look at the diversity amongst the future you would find that those who did better were those that hastened slowly with capital account liberalization and those that did worse and were more vulnerable were those that had integrated into international financial markets second if we think of the future this is certainly going to reduce degrees of freedom in the formulation of policies and strategies of the kind I thought about or reflected on even if there are alternatives we recognize it third if the financial crisis that surfaced in late 2008 which some of us described as the great recession soon after it surfaced is now turning out also to be a long recession longer than the Great Depression so the question we need to ask ourselves is that if finance capital takes precedence over industrial capital in the world economy what does this mean for growth in industrialized countries and what does this mean for the possibilities of growth in developing countries because in many ways I have a feeling the slowdown in industrialized countries has sustained the rising share of the developing world in GDP in manufacturing value added and in merchandise trade but that might not be forever second there was a question about generalizations now I think all of us who engage in development are inclined to to create our own analytical constructs are inclined to coax stylized facts from experience the danger is that this leads to generalizations because and it leads to generalization because the transition from diagnosis to analysis to prescription is simpler it has a much wider appeal but one sentiment in my argument was that we must resist this temptation for the simple reason that while it's important to theorize and to generalize we must also recognize the importance of diversity so that we can create stylized facts analytical clusters recognizing this diversity and this links to the point I made the reason this tends to happen and it's very difficult to stop it from happening is that ideology does shape ideas much more than outcomes do so people's priors in thinking people's ideological perspectives lead them to generalize in a particular way third, Richard's point about the universality of development I recognize in one dimension but there is another dimension you refer to multilateral compacts such as the millennium development goals which were asymmetrical it was about the industrialized countries sort of preaching to the developing countries or what they must do and how they could do better perhaps the new compact on sustainable development goals will be less asymmetrical but my sense is the agenda is still shaped by that kind of asymmetry now even so the development is important because you are quite right there are lessons that western Europe and southern Europe can both draw from the experience of the developing world in the past 30 years but we also need to recognize that in that universality there is a set of rules and institutions in the world economy which are asymmetrical they are unfair rules they are asymmetrical rules and then they tend to crowd out from the middle income and middle income countries so we need to address your idea of universality not simply in terms of ends but also in terms of means in the international context of course having said that given any international context there are degrees of freedom for national development strategies and one last point I can't resist the temptation because Jose Antonio and Campo and I have had this conversation earlier for 30 years but if we take a long term view say 1870 to 1950 you actually see the decline and fall of Asia which was incredible attributable to the decline and fall of China and India but you also see that Latin America is the only continent of what we now call the developing world that actually increased its share of world GDP and the world population in a theoretical manner for 80 years and in many ways 1950 to 1980 was a continuation of that process now we can have sort of linguistic debates but my concern is that sometimes periodization leads to views that may be partial and certainly we look at Latin America and Latin America was the success story until certainly until 1950 and even until 1980 and that's what has turned around I think I will stop with that chair thank you Thank you very much Deepak I can take two more questions there is a lady at the back with the green dress please can you identify yourself and if you can specify to whom you are posing the question Thank you I have three questions My name is Ita I'm sorry now you have to limit your question into one I'm sure that we all need to have also some fuel for our systems in the elements of coffee so I'm sorry one question prioritized the most important one you have in mind My name is Ita Manatoko I'm between affiliations right now I used to work with my last job was evaluation office with IMF but I spent some time with the bank as well maybe my most important question then is really about since we are looking forward we are thinking of the future perhaps the panel could comment on where the world is going and how this folds into what we are doing here basically the world is evolving rapidly the main drivers of the transformation that is undergoing now as science and technology the world that we live in for eight years from now will probably be very different from what we are living in now so part of the question is really as development economists how are we going to fold this into our vision of finding leaps or rapid development modalities on institutions the challenge in building institutions I'm from Botswana is how do you make institutions leadership proof because we know our leaders see a new regime as an opportunity to dismantle what they didn't like before and carry it forward in mineral rich economies which is where the country I'm from the challenge in terms of relative prices that Justin Lin talked about in looking at relative factor prices as your key to how to structure industrialization the challenge there is that those prices become distorted by the dominance of the mineral resource and this is a challenge that Botswana is facing now so you now have a labor force which is overpriced because it has been driven by government wages which are government revenue comes from the mineral resource that sort of thing so you have to have a challenge where you have high income society and high income levels but you have to establish the correct factor prices for an unmineral economy in the long term thank you thank you very much then we have a lady here in front yes or in the middle front can you identify yourself and as focused question as possible thank you I am Olga Shemeckina Georgia Institute of Technology and all of the speakers spoke about an institutional change that is required to adopt a role of a leader especially a pragmatic one in the development process and given the problems that developing countries have in particular with corruption and focus on short term gains and creating these policies how to overcome that mindset thank you thank you very much so very briefly all the panelists where are you seeing the world going as lead economic thinkers and how can we change the mindsets that are prevailing some of the challenges maybe Deepak you would like to start first very quickly in response to the two questions first if we contemplate futures I think we must dismiss with as much conviction as we can command the idea that countries some countries particularly in Africa are destined for under development there is nothing more unscientific and historical than that view who could possibly imagine in 1960 that the Republic of Korea is where it is in 2015 in some I believe there are possibilities and it depends very much on what countries do in their respective national context and I think we have considered that second just is simple well I am in danger of oversimplifying you know if we take a long term historical view I think that developing countries defined as Asia, Africa and Latin America together will by 2030 be exactly where they were in 1820 in terms of their relative importance in the world economy this will be a very unequally distributed outcome in development but their share in world GDP will be in current prices at market exchange rates 50% or more their share in world manufacturing value added will be close to what it was in terms of birox estimates in 1820 at about 55-60% and their share of world trade will be roughly similar so that I do believe that the world is going to continue the structural transformation uneven or disparate as it might be thank you Thank you Deepak Nor I won't venture a prediction of where the world is going but I think that one area that we as development economies need to think very much about what can be done is the fact that there is increasing evidence that technological change is continually going to be labor saving so in the future the generation of income through employment might be quite hard and therefore we need as long as the robots are owned by one group of society and another group of society just as labor to sell we got a problem and I think that we haven't thought about what is the paradigm that will deal with the new technological realities in terms of generating inclusive growth with social peace the second thing about the question about corruption I think it's very hard to change corruption but there is hope and I don't know how many of you recently witnessed a country that was characterized by tremendous impunity for decades but one commission that had been set up by the UN I think it was a very sort of determined head decided to pursue corruption to the end and the president had to resign and now he's going to stand trial in a country that had a 30 year civil war and that spends 10% of its collect 10% in taxes and that's all it spends and it has a tremendous duality in terms of the indigenous populations poverty and the rest of the non-indigenous population I think that's a sign of progress it means that you can generate institutions that may help fight corruption with results Thank you Nora then Justin regarding the role of science and technology I have to say it has been there since the industrial revolution because since the industrial revolution we started to have modern economic growth and the nature of modern economic growth is a process of continuous technological innovation and industrial upgrading and those innovation and upgrading science and technologies so I think this is not something new I think something new is that the rate of technological changes and industrial upgrading become accelerated over the time and we see that in the past century and we are going to see that in the coming century also and under this kind of situation are we going to have divergent or convergent or we will be able to converge to high income or not I think it very much depends on whether we have a policy framework which can make the country enter into the areas that can be competitive in the international market or not if they can do that they will be converging if they cannot do that they are going to do the same as I argue in my framework to identify areas which you have latent competitive advantages and to come up with the government facilitation to help the private sectors entering into the sector which you have competitive advantages and so you can be competitive and you can also generate more surplus accumulated capital and facilitate you to come to respond to the comments of the new structural reason actually I do not call new structuralism I call new structural economics I think that the difference between new structuralism and the new structural economics is that structuralism is a set of ideology a set of policy that you need to follow and the new structural economics is a framework analysis and in this framework I advise the developing country to look into what they have now that is their endowment now and to based on their endowment now what they can do well that is their competitive advantages and to have a policy framework to scale up what they can do well now in order to be competitive and to capture the new opportunity and so they can converge so I think it's different and the new structural economics thank you thank you thank you very much so to eat us question about where is the world going clearly as my colleagues on the panel have indicated the future it's very difficult for anyone to predict what it's going to be like but clearly how science and technology evolve will drive that future so very important for countries is how they engage with that change that is taking place I believe that your concern is about where will Africa be as these things evolve Africa's future has to be in the hands of the Africans Africans have to define for themselves as how they want to face and engage with the rest of the world over the next decade the next two decades etc one of the biggest worries I've had is always looking at African governments waiting for some sense of direction in terms of what to do that for me has been the biggest worry as an African I believe that Africa can take its future into its own hands by looking at what's available today thinking about what it wants and engaging with the new knowledge and the new technology available so where Africa ends will really be determined largely by the Africans I'm not at all naive about the fact that there are global activities that impinge on how effective any country can be but it's important that African governments begin to think in a much more proactive manner how they want to engage with the future how do we change mindsets I don't believe that it's possible to change mindsets I believe that people learn from their experiences so mindsets evolve in any society as a result of the experiences that people have from past experiences so if we're going to see corruption come down it would depend on what institutions and how they deal with corruption so if there are sanctions for corrupt behavior of course with time you see people move increasingly away from corrupt behavior so it's not simply a matter of governments or preachers preaching to people to be less corrupt it's more a matter of what experiences they go through as a result of being corrupt I come from a country where in the last week I have provided evidence of 22 judges taking bribes it's become a huge scandal for the whole nation it's become a major embarrassment for the judiciary and for the legal profession now everybody is watching to see how lawyers in general will come out of it everybody is watching to see how they respond and I believe the way they respond how lawyers are trained in the future we will define the profession for the future and we will define how the nation engages with the judiciary so these experiences are what will change people and their mindsets it's not how much preaching that you do thank you thank you very much Ernest we are coming to the end of the opening panel where we are setting a very wide scene for the coming discussions and days I think that like particularly the last questions we are pointing out while we are analysing the past our perspective has to be in the future I hope you all feel inspired and maybe also a little bit provoked because these elements will serve as an excellent fuel for the coming discussions now if you want to come back to what has been said in the opening panel you can always visit the UNU wider website the video of the opening panel will be available there if you want to see a little bit more on similar issues also addressed by the panellists you can visit the wider YouTube where you have several interesting interviews and discussions on global development challenges with these words I will close the opening panel and I will give floor to Fin