05 Nov 2014 (St. Kitts) — When the FT asked me a couple years ago for a piece that featured an influential thinker whose work shaped my professional life, I didn’t hesitate and wrote this article on Sir Arthur Lewis, the pioneering economist and Nobel Laureate from St. Lucia in the Caribbean. That article focused on business education and the good things that come from coupling serious scholarship and public engagement, research and practice. (For those who know me, this angle is no surprise: I try to bring “and” thinking with me wherever I go.)

In addition to exemplifying a life of active thought leadership, Lewis’s intellectual fingerprints are all over the emerging market boom. He saw parallels between the industrial revolution in the United Kingdom and the eventual movement of labor from fields to factories across the developing world (see China’s economic turnaround), and he brilliantly articulated the virtuous cycle of excess labor, profitability, and capital accumulation and reinvestment that drives employment and growth.

Today in lovely St. Kitts, I have the honor of delivering the 19th Sir Arthur Lewis Memorial Lecture, at the Eastern Caribbean Central Bank (ECCB). It’s a poignant moment for me personally, not only because of my deep admiration for Arthur Lewis but also because the ECCB gave me my first job as a professional economist: in 1994, following my first year of graduate school, I spent the summer in the ECCB research department, where I wrote a paper on the role of capital markets in economic development.

The focus for my remarks tonight is “Capital and Labor in the 21st Century: a Cautionary Tale.” Why cautionary? Because two seemingly unrelated trends gathering force today, when examined together and through the lens of the Lewis model, spell potential trouble for global prosperity within the next few decades: the approaching boom in the working-age population of developing countries and a rising tide of anti-capitalist sentiment within developed nations.

I will not give more away in advance of tonight’s lecture, but I will say this: dreams of prosperity should not breed a zero-sum mentality. Income inequality is a serious concern, but those who propose to fix it with policies that are inimical to business and capital are, at best, misguided. We have only to look at the history of economic policy choices across the developing world—including those in the Caribbean, where I am lucky enough today to enjoy sun and sea breezes—to know that this is so.

With deep gratitude and a full heart, I thank the ECCB and its governor, the Honorable Sir K. Dwight Venner, for inviting me to give the Lewis Memorial Lecture. I hope to do his memory proud.

>> read the lecture

26 Oct 2014 — How do you say “Turnaround” in Chinese? (Answer: Huízhuǎn) After months of biting my tongue, I’m pleased to finally announce that the Mandarin edition of Turnaround: Third World Lessons for First World Growth, has been published by China Machine Press. You can see Turnaround’s product page on dangdang.com.

The transformation of China’s economy during the past few decades, with millions of workers moving from fields to factories, is now the stuff of economic legend. The World Bank estimates that between 1980 and 2007, the Chinese economy lifted more than half a billion people out of poverty, and there is no doubt that the country’s rapid growth has reshaped the global economy as well.

Turnaround is about emerging nations more broadly (and what they can teach or re-teach advanced countries about economic discipline and prosperity), but Chapter Four devotes a bit of extra space to China. An excerpt from the section called “Catch Me if You Can” (beginning on p. 63 in the English language edition), explains the catch-up dynamic that helped create the modern manufacturing powerhouse China represents today:

In the framework of catch-up economics, China attained record rates of economic expansion because it managed to increase the growth rate of all three factors of production. It brought enormous quantities of people out of inactivity and underemployment in rural areas into gainful and more productive employment in the cities. China also promoted rapid rates of capital accumulation by permitting entrepreneurs to start their own businesses and keep the profits. Yet as important as capital and labor are for catch-up growth, ideas are the most vital input. Ideas range from new technologies–tractors instead of hoes, drip irrigation instead of buckets–to policies that provide incentives to employ both capital and labor more productively. By improving the productivity of existing resources, better ideas cause a country’s output of goods and services to expand even if its stock of capital and labor do not. The Chinese government increased the growth rate of ideas by “importing” policies that substituted many elements of a market economy for the elements of state planning. As investment became more profitable, foreign firms entered China, bringing with them still more new ideas–not about policy, but about things like supply chains, marketing, distribution, and sales.

With a seemingly unlimited supply of labor driving up productivity, plus new policies that encouraged capital accumulation and investment, a virtuous cycle of profitability took hold in China that allowed employment and income levels to go up and the country’s GDP to expand.

Yet it is unclear how long the current rate of growth in China can or will continue. Recent news headlines, including today’s Chinese Century article in The Upshot, convey more hesitation if not outright pessimism regarding China’s longer-term growth-rates. Certainly there is room for debate: future rates of growth could fall for reasons ranging from the simple arc of economic history (see The Upshot link above) to the reaching of a tipping point in China’s labor supply. In keeping with the themes of Turnaround, one might also imagine the effect on growth of any future shift in the country’s economic policies, particularly if brought about by rhetoric that is hostile to capital (think Picketty in the West) or that stems from resentment over matters of global economic coordination or trade.

This week, however, as I arrive in China for New York University’s Leadership Conference and, simultaneously, the incredible opportunity to launch in person the Chinese edition of my book, I am feeling optimistic and intend to focus on the positive lessons that China and Turnaround have to offer for all nations hoping to increase prosperity for future generations.

Book Events in China

On Monday afternoon, October 27, I am honored to give the first in a series of talks that are part of NYU Shanghai‘s Pudong Forum on Economics, Business, and Finance. Q & A session and book signing to follow the talk.

On Thursday evening, October 30, China Machine Press will hold its book launch in Beijing, where I will give a talk titled: “East Meets West: Economic Reform and Win-Win Outcomes for Global Growth” at BiMBA, National School of Development at Peking University.

Those who know me, know that I like a good cup of tea. Those who've read or heard me talk about Turnaround know that I care somewhat less for austerity.

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