Market Economy and Econmic Growth Special Lecture on Contemporary Oct 27, 2004 Ajou University

1
Market Economy and Econmic GrowthSpecial
Lecture on Contemporary Oct 27, 2004 Ajou
University

• Yonghun JUNG
• Vice President
• Asia Pacific Energy Research Centre, Tokyo

2
Main Points

• Globalization of the world
• Transportation and Telecommunication
• Coercion, Control, Competition
• Economic growth
• Our situation in terms of Resource, Technology
  and Market
• China in Perspective
• Energy in Korea
• For you.

3
Globalization

• Coercion control competition
• Democratization
• Technology
• Finance
• Role of international financial organizations
• Information
• Self-sufficiency is the road to poverty
• Non-action can be protected only until others do
  see the opportunity somewhere else

4
Net Long-Term Resource Flow to Developing
Economies
Declining trend of financial flow to the
developing countries.
(Source) World Bank (2001)
5
Economic Growth

• Resources Capital, land, labor
• Technology Development Solow Residual
• steam engine, automobile, computer
• International trade
• Market provide incentives for efficient
  allocation of the resources
• Demand
• UK and USA
• American railroad

6
International Trade

• How have economic structures changed in the last
  two centuries?
• Multinatioal
• scale of economic actors is much greater
• the capacity for the organization of human
  activity over time and space has increased
• the quality, quantity, and velocity of
  information
• available to economic actors has increased
• the nature of the products and the nature of
• production has changed - new product and techy

7
What is the cause of change?

• Changes in scale, information, organization, and
  product
• and production alters the nature of the
  global economy.
• Technological change is the main cause of change.
• Why is technological change so important?
• It reduces costs, sometimes in exponential terms
• Increase productivity
• Change the production process in a more efficient
  way
• Creates new products
• Changes the relationship of factors of
  production- e.g.,
• less energy intensive

8
Our situation

• Resources
• Capital resources Japan and USA
• Natural resources
• Human resources chinese student
• Technology
• Basic Manufacturing Steel, Ship building
• ICT
• Market
• Regulation, Public Monopoly, Entry Barrier
• Reform only on equity not on efficiency

9
China in Perspective

• Almost two decades of two digit economic growth
• High economic growth for the next two decades
  expected 3 regions
• Resources
• Human resources Ph.D in the US
• Western region abundant resources
• Technology
• Space technology
• ICT technology
• Electric appliance technology Haier
• Market
• Liberalization and privatization
• Strong demand base

10

Black cat, white cat. It doesnt matter. All
that matters is that it catches mice. - Deng
Xiaoping
11
Energy in Korea

• Rising Energy Demand
• Public Monopoly
• Near 100 import dependence
• Asian premium
• Many big projects
• Sakhalin, Irkutsk, Yakutsk
• Power interconnection
• Domestic energy
• Nuclear, New and renewable

12
Economics of National Oil Security
(Source) Tietenberg (1996)
13
Oil Import DependenceB98, by region
Regionally different, generally rising
(Source) APERC (1998)
14
OECD electricity generation costs 1990
(Euro cts/kWh)
85.3
Upper limit
51.2
Lower limit
7.2
5.9
4.0
4.5
3.6
3.5
PFBC
Lignite
GTCC
Biomass waste
Solar (PV)
Wind
Nuclear
Source Green Paper towards a European Strategy
for the Security of Energy Supply.
2000.
15
Natural Gas Pipeline Projects in the NE Asia
16
For an economist

• Avoid extremes balance
• Max. Speed of the perfectly safe car
• Population scaremongers
• Environmental exhibitionist
• Avoid too simplified causality
• Beaver, Oil crisis
• Look out for the terra incognita
• US patent office
• Think yourself
• Extensive and daily reading
• Return to basics
• Question, question, and question (nothing for
  granted)
• No value in judgement
• Not bad or goo, but appropriate or in
  appropriate

17
An emotional load of valuation conflicts
presses for rationalization, creating blindness
at some spots, stimulating an urge for knowledge
at others, and, in general, causing conceptions
of reality to deviate from truth in determined
directions.

• Gunnar Myrdal

18
A lesson
I do not know what I may appear to the world but
to myself I seem to have been only like a boy
playing on the seashore, and diverting myself in
now and then finding a smoother pebble or a
prettier shell than ordinary, whilst the great
ocean of truth lay all undiscovered before me.
Sir Isaac Newton (1642-1727) From Brewster,
Memoirs of Newton (1855)