Volume 4, Issue 2 -

This paper explores the ideas of development and the role of the state in economic development and institutional change from the New Structural Economics perspective. We argue that economic structures – including the structure of technology and industry, and hard and soft infrastructure – are endogenous to the endowment structure, which is given at any specific time and changeable over time. We advocate a state to facilitate structural change by using industrial policy to overcome market failures in order to help industries with latent comparative advantages to become competitive in the market and the state should pragmatically prioritize the use of its limited resources and implementation capability to create enclaves with favourable infrastructure and institution to jump start a dynamic growth in a country beset with poor infrastructure and institution.

The present paper aims to use the case of China Development Bank (CDB) to tackle the fundamental question of why development banks in an effort to shed light on the broader debate about the role of state in economic development. By delving deeper into the role of CDB in incubating the market for long-term urban infrastructure investments, it argues that development banks can play an indispensable role in incubating markets especially in developing and transition economies where capital markets are underdeveloped and market institutions are flawed. This perspective goes beyond the conventional approach to justifying why development banks, i. e., fixing market failures. It further argues that realizing the role of market incubation requires at least two conditions: building “firewalls” within development banks to resist undue political influence; and designing incentives for development banks to exit when markets are mature in order to avoid suppressing financial development and crowding out private capital. It concludes that well-managed development banks can help to create synergies between state and market by incubating markets.

This paper examines China’s ongoing revolution in higher education. On the bright side, Chinese higher education has enjoyed four decades of remarkable expansion, as measured by college enrollment, post-graduate training, research capacities and various global rankings. In 2007, China’s higher education has become the largest in the world in terms of student enrollment. Yet, after decades of economic liberalization and marketization, Chinese higher education is one of the few areas that remain monopolized by the state. Despite extraordinary progresses Chinese universities have recently made, they have been repeatedly criticized by many insiders (university presidents, college deans, professors, as well as students and their parents) for the lack of academic freedom. It remains to be seen whether China’s universities can transform themselves from an institution of higher education to a home of liberal learning and innovation.

Is there a way of performing labor and doing work – a central activity that has so far occupied humans – that aligns with or even amplifies the core dynamics of a democratic society? This article answers in the affirmative by introducing a model of labor named homo faber based on a group of highly influential texts from ancient Greece, the birth place of the world’s first democracy. This ancient Greek ideal of homo faber conceives human nature as desirous of imparting meaning through modifying the natural surroundings. A combination of conditions is imperative for materializing this paradigm: full control and mastery over one’s work, absence of compulsion and scarcity, group solidarity and individual pride, and direct and free interaction with the public, among others. The homo faber is essential to the Greek democratic vision because it mirrors aspects of the ideal citizenry that takes matter into its own hands: both roles flourish through egalitarian, horizontal, and mutually satisfying exchange that is free of covetousness and coercion. However, the historical reality of Classical Greece at the height of its civilization in the fifth and fourth centuries is a bitter lesson: the homo faber model began to wither amidst the rise of slavery, rentierism, and imperialism. While these betrayals severely marred the legacy of ancient Greece, the aspirations of homo faber nevertheless help us deliberate what kind of configuration of work and what sort of considerations for workers best serve democratic goals.

This short essay, delivered at a panel meeting entitled “The Legacy of Ronald Coase,” documents the influence of Coase’s work on the recently published book, Stateless Commerce .

The writings of Ronald Coase, along with those of Armen Alchian and Harold Demsetz, on the theory of property rights, transaction cost economics, and the economics of institutions have yielded powerful insights and transformed many areas of economics. The seminal paper of Ronald Coase (Coase 1960, “The Problem of Social Cost,” Journal of Law and Economics , 3(1),1–44) not only clarified the notion of externality but also laid the foundations for a powerful theory of property rights and transaction cost economics. The insights of that paper have helped to shape the field of Law and Economics and also proved important in such fields as Environmental Economics, among others. It is worth mentioning that Coase’s work also led to our late colleague John Dales’ important book (Dales 1968, Pollution, Property, and Prices: An Essay in Policy-Making , University of Toronto Press) that formulated the idea of markets in pollution rights (cap-and-trade). In this note we will briefly review our work spanning many years linking the Coase Theorem to Cooperative Game Theory and Core Theory, emphasizing inter alia the importance of our approach for rationalizing property rights and contractual arrangements.

Janet Landa interprets informal economic network of traders or middlemen as an institution for lowering transaction costs in communities that have not developed reliable legal infrastructure for enforcing contracts. In economics, Landa has pioneered the study of trust in trade networks and her new book reveals the intellectual development of an original scholar over a period of thirty years. Of the 14 essays in the book, 5 have not been published before. The story begins on the ground in Singapore and West Malaysia in 1969 when a young doctoral student wonders why Chinese middlemen, belonging the Hokkien dialect group, dominate the marketing of rubber made by small-scale Malay producers. The student herself is part of the Chinese diaspora but studies at a Canadian university.