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The Logic of Growth

Dec 28-2023   



On the occasion of the launch of the Chinese version of The Logic of Growth, the author, Nobel Laureate Prof. Edmund Phelps, had a dialogue with Prof. Justin Yifu Lin on issues related to growth and innovation-driven development. The two scholars also each delivered a speech. Prof. Lin is Honorary Dean of National School of Development and Dean of PKU Institute of New Structural Economics.

 

Prof. Lin said that the book offers inspirations for China to achieve its goal of realizing national rejuvenation and developing into a developed country by 2049. That entails China should have per capita GDP equal to 50% of the US one by that time. Over the last half century, the US per capita GDP grew by about 1.8% annually. To realize its goal, China needs to develop at a rate of 4.5% between 2019 and 2049. The Logic of Growth highlights the critical role of innovation in enhancing productivity, increasing people’s income, and driving national growth, said Prof. Lin. China seems to command certain advantages in innovation, one of which is the so-called late-mover advantage. China also has three advantages in the Fourth Industrial Revolution, namely its large pool of talents, immense domestic market, and the world’s most complete hardware supply chain. Prof. Lin believed that China has the potential to grow by 8% annually up to 2035; even after factoring in its efforts to deal with such issues as global warming, it shall still be able to achieve 5-6% growth per year. To make the best use of its advantages, Prof. Lin stressed the importance of having an efficient market and an effective government.

 

Prof. Phelps summarized the flourishing of innovation in western countries and the most important driving force for it: the formation and popularization of modern values from around 1490 to 1940. However, many of these countries lost half or even more of their vitality in the 20th century. In the US, many companies derived their success from intensive lobbying, rather than intensive innovation, he said. Institutions and policies that hindered innovation include: short-termism, monopoly by large corporations, and financial prerogatives and regulatory risks. Equally important is the possible loss of modern values, which diminished people’s desire for innovation.

 

China used to produce products innovated by other countries, but the emergence of corporate giants like Alibaba, Tencent, and ByteDance has put an end to it. China has achieved admirable innovation-driven development in finance, artificial intelligence, and bio-tech, he said. Nowadays, Chinese entrepreneurs and companies are confronted with challenges similar to those of their Western counterparts. Prof. Phelps said such challenges include: obstacles to receive financing from banks, rigid corporate hierarchy, uncertainty of obtaining approval to enter some business areas, and population aging.

 

The Logic of Growth

Dec 28-2023   



On the occasion of the launch of the Chinese version of The Logic of Growth, the author, Nobel Laureate Prof. Edmund Phelps, had a dialogue with Prof. Justin Yifu Lin on issues related to growth and innovation-driven development. The two scholars also each delivered a speech. Prof. Lin is Honorary Dean of National School of Development and Dean of PKU Institute of New Structural Economics.

 

Prof. Lin said that the book offers inspirations for China to achieve its goal of realizing national rejuvenation and developing into a developed country by 2049. That entails China should have per capita GDP equal to 50% of the US one by that time. Over the last half century, the US per capita GDP grew by about 1.8% annually. To realize its goal, China needs to develop at a rate of 4.5% between 2019 and 2049. The Logic of Growth highlights the critical role of innovation in enhancing productivity, increasing people’s income, and driving national growth, said Prof. Lin. China seems to command certain advantages in innovation, one of which is the so-called late-mover advantage. China also has three advantages in the Fourth Industrial Revolution, namely its large pool of talents, immense domestic market, and the world’s most complete hardware supply chain. Prof. Lin believed that China has the potential to grow by 8% annually up to 2035; even after factoring in its efforts to deal with such issues as global warming, it shall still be able to achieve 5-6% growth per year. To make the best use of its advantages, Prof. Lin stressed the importance of having an efficient market and an effective government.

 

Prof. Phelps summarized the flourishing of innovation in western countries and the most important driving force for it: the formation and popularization of modern values from around 1490 to 1940. However, many of these countries lost half or even more of their vitality in the 20th century. In the US, many companies derived their success from intensive lobbying, rather than intensive innovation, he said. Institutions and policies that hindered innovation include: short-termism, monopoly by large corporations, and financial prerogatives and regulatory risks. Equally important is the possible loss of modern values, which diminished people’s desire for innovation.

 

China used to produce products innovated by other countries, but the emergence of corporate giants like Alibaba, Tencent, and ByteDance has put an end to it. China has achieved admirable innovation-driven development in finance, artificial intelligence, and bio-tech, he said. Nowadays, Chinese entrepreneurs and companies are confronted with challenges similar to those of their Western counterparts. Prof. Phelps said such challenges include: obstacles to receive financing from banks, rigid corporate hierarchy, uncertainty of obtaining approval to enter some business areas, and population aging.