Economist Promotes New Economic Development Model

November 13, 2007

COLUMBUS, Ohio -- Any nation can drive away poverty, hunger and disease and reap the benefits of a successful economy. All it takes is six key principles, according to an Ohio State University agricultural economist.

 

For decades, economists have offered solutions to the fiscal, social, and cultural dilemmas of underdeveloped countries -- with some success and much failure, from various points of view. In a newly published book, Luther Tweeten promotes a new model -- a culmination, he says, of all that economists have learned about economic development and the only one a country needs for economic success.

"Countries recognize the need to deal with poverty, and the only effective way is through economic development," said Luther Tweeten, professor emeritus of agricultural trade and policy in the Department of Agricultural, Environmental, and Development Economics. Tweeten's "Prescription for a Successful Economy" offers a workable means to economic progress and the end of disease, hunger and poverty by describing what he calls the standard economic model.

"The gist is that it's possible for any country, no matter its government or its economic state, to be an economic success by implementing the policies set forth by the standard economic model," said Tweeten. "I think that this book is very important. It outlines a workable design and the best practices for economic progress."

No country's economy has succeeded without utilizing markets, he noted, but added that markets work on "automatic pilot" most effectively in a supportive institutional environment. "Hence, the formula for economic success is mostly about getting institutions right," said Tweeten.

The standard economic model is based on the principles of six elements:

• Governance, which includes security, order and stability; honesty and competence of public administration; investment and improvements in property rights; and the promotion of competition among businesses.

• Macroeconomic policies, which include fiscal responsibility, monetary restraint, and appropriate taxation.

• Globalization, whose elements include properly valued foreign exchange, an open economy, and free trade.

• Infrastructure investments, examples of which include all-weather roads for food security and commercial activity, bridges, seaports, airports, and electricity.

• Public services, which include agricultural research, human resource investments and health clinics.

• Attention to the environment for sustainable development.

Tweeten said no country currently implements all six elements of the standard economic model, but several follow enough of the components to be an economic success.

Based on several case studies, outlined in the book, Tweeten found that China is the best example of a country following the standard economic model.

"In the last 20 years, China has moved 400 million people out of poverty (those making less than $1 a day) and the country has done it using the markets," said Tweeten. "Its economic policies have literally transformed the country and it's growing 10 percent a year. No other country is doing that."

Other countries that are seeing success by implementing elements of the standard economic model include India, Vietnam, Chile and the Eastern European nation of Estonia. And then there's the United States.

"In many ways the U.S. is a bad model. One of the elements of the standard economic model is financial responsibility and we don't use this one very well at all. We are imposing huge burdens on future generations by living way beyond our means," said Tweeten. "But in other ways we are a success. We have respect for property and do not have violent conflicts regarding race and religion. For such reasons, many countries continually look to us as a model of economic success."

He added that countries under conflict, such as Iraq, may never achieve economic stability because they don't utilize such elements as governance and infrastructure investments.

"Even the worst policies benefit somebody," said Tweeten. "But it doesn't have to be that way. It's OK to step in and teach respect for other people, for other religions. It's OK to confront those cultures and institutions that shape the economics of a country. As economists, we aren't very good in dealing with such issues."

Tweeten said the thrust of the book focuses on economic education and utilizing the comprehensive array of economic policies that have been brought forth for the past 40 years.

"Many countries share a common pattern of economic ruin," said Tweeten. "This book is intended to use the evidence and experience of decades worth of policies to provide readers with a useful new beginning."

The book is available to purchase at such places as http://www.Amazon.com, Barnes & Noble, http://www.alibris.com, and http://www.allbookstores.com.

 

Author(s): 
Candace Pollock
Source(s): 
Luther Tweeten