This seems to have addressed the few reservations I had about this export factor or element - is it necessary for progress, or merely sufficient? So you need a "break out" component that in turn grows other components, building on each other.
But I do wonder if the critical part is so much a given physical resource as human capital innovation and the entrepreneurship you mention. I am thinking somewhat of Japan, S Korea, and Singapore - or do I not understand their respective growth situations that well?
I perceive that Keynesians look to money capital to create the demand for an economy to grow or to recover from a downturn, making it the "fuel" of the economy. But I consider that money is really only the lubrication of the economy (you need enough to meet the demands for money as an economy grows) but the real fuel is that innovation and entrepreneurship element.
With that in mind I have wondered if an immigration program that gives workers a 6 year visa to come to the US to learn a trade or skill or obtain an education, but then requires them to return home to add those skills to their domestic economy, would be at least part of a beneficial "boot strapping" assist. They might end up competing with us more directly later on, but that is still all to the good in the bigger picture. In the context of this essay's progress factor, the element exported is brain power, which is then reimported at a higher value level. Not the total answer for a country to enter the progress chain, but maybe an assist to it?
Yes, human capital matters, but the exact skills needed varies greatly by nation, time period, technology, and industry. So the term "human capital" is much too vague. A willingness by key entrepreneurs or government leader to copy what works in richer nations enables this to happen.
And capital matters, but it only flows to areas that already have the foundations of economic growth in that industry. So nations are competing for international capital flows, and societies that are in the best position get the capital first.
Your immigration idea might work but with current enforcement, there is no guarantees that the worker will go back to their home nation. And there are only a few industries where a nation can potentially grow rapidly, and those vary greatly by nation. I don't see the federal government being agile enough to make much of a difference.
I have more ideas in my book on what developing nations should do.
Could causality be reversed? Could it be that a high-value export industry is not the cause of additional wealth, so much as a consequence of openness? Perhaps strong local production and exports is an indicator of domestic openness, a willingness to trade, and willingness to import ideas.
Sorting out causality in complicated historical processes is a bit tricky. It is somewhat like the “chicken vs the egg” problem.
I guess it depends on your definition of “openness.” If you mean low tariffs, then no. Many nations have started exporting while maintaining tariffs against imports, the United States being an important example. Lowering tariffs typically comes later.
If by openness, you mean a willingness to copy technologies, skills and organizations from other societies, then partially yes. Copying from more successful societies is essential. That is why I included it in “How Progress Works” on another post.
I say partially because it does not take a change of mentality from the entire society. One domestic entrepreneur that is willing to copy can get the ball rolling. Many dominant export industries started with just one man, who copied from other nations and surrounded themselves with workers who were willing to learn.
It is only when there is one or more examples of successful export industries that entire societies begin to change their outlook.
But that entrepreneur also needs a government that will not shut the company down. Unfortunately, this has been common as well. Many governments see wealth creation as a threat to their power, because it potentially creates a rival power base. Decentralization of government helps avoid that, which I mention on another post.
This seems to have addressed the few reservations I had about this export factor or element - is it necessary for progress, or merely sufficient? So you need a "break out" component that in turn grows other components, building on each other.
But I do wonder if the critical part is so much a given physical resource as human capital innovation and the entrepreneurship you mention. I am thinking somewhat of Japan, S Korea, and Singapore - or do I not understand their respective growth situations that well?
I perceive that Keynesians look to money capital to create the demand for an economy to grow or to recover from a downturn, making it the "fuel" of the economy. But I consider that money is really only the lubrication of the economy (you need enough to meet the demands for money as an economy grows) but the real fuel is that innovation and entrepreneurship element.
With that in mind I have wondered if an immigration program that gives workers a 6 year visa to come to the US to learn a trade or skill or obtain an education, but then requires them to return home to add those skills to their domestic economy, would be at least part of a beneficial "boot strapping" assist. They might end up competing with us more directly later on, but that is still all to the good in the bigger picture. In the context of this essay's progress factor, the element exported is brain power, which is then reimported at a higher value level. Not the total answer for a country to enter the progress chain, but maybe an assist to it?
Thanks for the comment:
I explain the causality of progress better here:
https://frompovertytoprogress.substack.com/p/the-five-keys-to-progress
And this results in the following changes:
https://frompovertytoprogress.substack.com/p/understanding-how-humans-create-progress
Yes, human capital matters, but the exact skills needed varies greatly by nation, time period, technology, and industry. So the term "human capital" is much too vague. A willingness by key entrepreneurs or government leader to copy what works in richer nations enables this to happen.
And capital matters, but it only flows to areas that already have the foundations of economic growth in that industry. So nations are competing for international capital flows, and societies that are in the best position get the capital first.
Your immigration idea might work but with current enforcement, there is no guarantees that the worker will go back to their home nation. And there are only a few industries where a nation can potentially grow rapidly, and those vary greatly by nation. I don't see the federal government being agile enough to make much of a difference.
I have more ideas in my book on what developing nations should do.
Could causality be reversed? Could it be that a high-value export industry is not the cause of additional wealth, so much as a consequence of openness? Perhaps strong local production and exports is an indicator of domestic openness, a willingness to trade, and willingness to import ideas.
Sorting out causality in complicated historical processes is a bit tricky. It is somewhat like the “chicken vs the egg” problem.
I guess it depends on your definition of “openness.” If you mean low tariffs, then no. Many nations have started exporting while maintaining tariffs against imports, the United States being an important example. Lowering tariffs typically comes later.
If by openness, you mean a willingness to copy technologies, skills and organizations from other societies, then partially yes. Copying from more successful societies is essential. That is why I included it in “How Progress Works” on another post.
I say partially because it does not take a change of mentality from the entire society. One domestic entrepreneur that is willing to copy can get the ball rolling. Many dominant export industries started with just one man, who copied from other nations and surrounded themselves with workers who were willing to learn.
It is only when there is one or more examples of successful export industries that entire societies begin to change their outlook.
But that entrepreneur also needs a government that will not shut the company down. Unfortunately, this has been common as well. Many governments see wealth creation as a threat to their power, because it potentially creates a rival power base. Decentralization of government helps avoid that, which I mention on another post.
Great summary and explanation.