Pardee Center

How the Giant Strides

Three decades ago, mass exports of Chinese cars, washing machines, and computers seemed an unlikely scenario. Known at the time as “a pretty messy agricultural society,” says political economist Kevin Gallagher, China was regarded as a backwater of technological innovation. But the country Napoleon once called a sleeping giant was already beginning to wake up.

Using empirical analysis to study economic data, Gallagher, a Pardee Research Fellow, found that between the late 1970s and 2005, China’s ranking based on its percentage of global exports in high technology rose from 99th to first in the world. He is now asking what China’s emergence in the global economy might mean for other countries. Particularly, he is interested in the relationship between China’s rapid expansion and Latin America’s shrinking competitiveness in global high-tech markets.

“I’m examining how countries 35 or 50 years ago put in place policies that got them to where they are today, and then I ask, ‘Well, to what extent are these models that can be used in other countries?’” he explains. “To what extent are successful long-run developers hurting those like Latin Americans who haven’t been so farsighted?”

Called the Global Economic Governance Initiative, Gallagher’s investigation at the Pardee Center also tracks how existing international trade and integration frameworks impact developing nations. Inaugurating the center’s “Issues in Brief” series, Gallagher published a policy-oriented booklet summarizing the challenges facing the World Trade Organization (WTO), which was well received at the United Nations in April, when he addressed representatives of developing countries.

The lack of a level playing field combined with the WTO’s failure to help poor nations implement sound policies for long-range development has created deadlock in recent talks, Gallagher argues in the brief. From subsidies for cotton and sugar to what he calls draconian intellectual-property and investment rules, developed countries undermine growth in poorer nations. WTO’s future, Gallagher concludes, is hopeful only as long as it provides developing countries today with enough flexibility in policymaking to create and deploy effective strategies for the future.

“If you look at some of the successful countries that have put together development strategies, their long-term view of development helped them grow. In East Asia, and now China, average incomes have doubled every 10 to 15 years,” says Gallagher. “Growth and development is a long-term process, but unfortunately, development policy is often overcome by short-term interests. So at the Pardee Center we will be examining the political economy of longer-run growth policy.”