The Political Economy of Neo-modernisation

A newly emerged normative development idea of sustainability has been evolving, which was institutionalised by the UN in 2015, and which strongly reinforced, as an exogenous factor, all the responsible and accountable governments and other society actors within a country. In this context, understanding the importance of how this is institutionalised (endogenised) into society well deserves careful analysis. However, literature investigating such endogenising process within a country has received relatively less attention particularly in the context of normative force of sustainability. Therefore, this chapter is designed to explore why countries respond to external force (e.g., sustainability and technological innovation) differently and how the endogenous process affects such response. These two conceptual curiosities are addressed by in-depth theoretical analysis of competitive political economy and institutionalism in the process of development.

The causal relationships between country-level economic development and inequality remain a matter of considerable debate and policy interest. This chapter contributes to the literature on this topic by presenting the results of short-run and long-run Granger causality tests in both directions. Countries are classified according to the combination of positive and negative one-way and two-way causal relations found to be statistically significant. This challenges universal theories by distinguishing between 11 clusters of countries according to the Inequality-Growth causal nexus they display over time. The empirical findings on the existence of distinctive features of each of the regional groups can be consistent with the main arguments of the varieties of (welfare) capitalism in a way that each regional group may have largely been institutionalised by stronger (or weaker) (re)distribution systems and/or by inequality enabling (or restraining) growth potential. The findings are also consistent with the theory of an ‘N’-shaped relation between national income per person and inequality: in other words, it confirms that for many high-income countries growth is associated with rising inequality.

This chapter examines whether rising income inequality is the stylised fact for the process of structural transformation by revisiting classical accounts on various theories of normative inequality dynamics, modernisation, and endogenous growth. In addition, a complex interaction between transformational process and income inequality is analysed by exploring the multidimensions of inequality dynamics, including social, economic, political, and moral. This critical review allows us to conclude that rising income inequality is far from inevitable by introducing a proposal for what it calls Augmented Inequality Dynamics which attempts to systematise the endogenous process within a society, underpinned by these multidimensional aspects. Once the inequality dynamics are formed as historically driven systems of social, economic, and political relations that frame the regulation and coordination mechanism that governs a society, the dynamics can be so evolutionary in a way that they structurally transform themselves by interacting with various dimensions and institutions to shape their own pathway. This explains how income inequality is used to incentivise or restrain the process of various societal interactions by itself going Up and Down repeatedly in the context of structural transformation.

The adoption of the 2030 Agenda for Sustainable Development by the UN General Assembly in 2015 has refocused global attention on the centrality of sustainability to the development discourse. Meanwhile, African countries are prioritising structural transformation in their national and continental development programmes to promote employment through commodity-based industrialisation. How will efforts to promote economic, social, and environmental sustainability influence Africa’s agenda for structural transformation? Using panel data for a group of 29 African countries for the period 1995–2011, this article empirically analyses the impact of economic, social, and environmental sustainability on structural transformation in Africa. Our findings indicate that structural transformation is optimised when policy interventions adopt an integrated approach to sustainable development that takes into account all of its dimensions.

The evolution of civilisation appears to have primarily resulted from continuous improvement made possible by technological advances. A group of social evolutionists and economists have identified, among others, energy, transport, as well as information and communication to be the three most influential technologies. On the other hand, a number of eminent scholars have cited several forces, natural, physiological, technological, as well as environmental, which can place a limit on on-going improvement. The purpose of this chapter is to empirically explore the continuous improvement process as well as the limit placed on these three technologies. Using the framework of both connected and disconnected multiple technology S-curves and X-factor, historical improvement data on these three elements have been analysed. The results of our analysis indicate that improvement in general has continued without limit mainly due to a series of emerging new technologies. These emerging technologies can be either connected or disconnected from the existing mature technologies. Our preliminary analysis shows that much of the past improvement comes from new technologies that on first serious application appear to be substantially superior from earlier technologies. In addition, enormous continuous improvement, which has accompanied both connected and disconnected new technologies, appear to have played the critical role in sustaining the evolution of civilisation. The chapter discusses a number of policy implications and suggests topics for future research.

Although there have been significant warnings against the forthcoming Industrial Revolution, no one is able to confidently predict the future of convergence technologies and innovations. Nevertheless, states must be prepared for this uncertain future and be ready to mark new paths of innovation and development. As long as the role of a state is embraced, the Tetris principle is introduced to systemise how a state designs and implements its policy framework to maximise socio-economic benefits while dealing with those future uncertainties. In particular, the policy directions on how to transform such uncertainties into opportunities are proposed on the basis of the Tetris principle, which considers a convergence between innovation, policymaking capacity, fairness and justice, human capital for convergence, and an ageing society.