#34 - Prof. Jomo Kwame Sundaram : Why Most Countries Stay Poor – Growth, Power & Global Myths
The Innovation Civilization Podcast
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Global Economic Stagnation and the Quest for Growth
This chapter examines the complexities surrounding global economic growth, emphasizing predictions of stagnation from key economic figures like the IMF's managing director. It contrasts China's growth with the stagnation in regions such as Africa and Latin America, highlighting the impact of U.S. policies on worldwide economic dynamics.
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In this episode, we're joined by Professor Jomo Kwame Sundaram, a Malaysian economist and thought leader who served as the Assistant Secretary-General for Economic Development at the United Nations (UN) and Assistant Director-General at the FAO. We explore how countries in the Global South can chart their own paths to prosperity.
What makes a country truly developed? Is it just GDP per capita or something deeper?
Professor Jomo challenges conventional economic dogma—unpacking flawed narratives around FDI, inflation, aid, and industrial policy. With sharp historical insight and grounded realism, he examines why only a few countries have truly made the leap from developing to developed, and what it takes for the rest to follow.
We dive deep into:
• Why South Korea’s path to development is so unique—and rarely replicated
• The dangers of relying too heavily on foreign direct investment (FDI)
• How resource-rich countries like Tanzania and Equatorial Guinea remain poor
• The role of good governance—myth vs. reality
• Industrial policy and protectionism in the modern age
• The myth of the 2% inflation target and the origins of TFP calculations
• Why we need whistleblowers in economics to fight mythology
Key Takeaways from the Episode:
1. GDP Isn’t Everything:
Professor Jomo argues that true development is about human capabilities—not just high income. Many mineral-rich countries show that high GDP doesn’t guarantee a capable, prosperous society.
2. FDI Is Not a Magic Bullet:
Countries like South Korea succeeded by limiting FDI and building domestic capacity. In contrast, over-reliance on foreign capital can lead to wealth extraction without long-term benefits.
3. Governance Indicators Are Circular:
Metrics of good governance often reinforce existing biases, labeling developing countries as inherently poor-governed based on narrow criteria.
4. Aid Isn’t Always Altruistic:
While aid can help, it often serves political purposes and fails to address structural problems. Misguided advice—like telling Tanzania not to tax gold mining—has impoverished nations further.
5. The Power of Industrial Policy:
From the U.S. post-Civil War to modern-day China, industrial policy has always driven real growth. The current revival of protectionism may reshape global trade dynamics.
6. The Myth of the 2% Inflation Target:
Professor Jomo dismantles the origin story of the widely accepted 2% inflation target, tracing it back to a political slogan in New Zealand rather than any real economic justification.
7. Emerging Markets Must Think Contextually:
There’s no one-size-fits-all model for development. Local conditions, capabilities, and smart policymaking matter more than mimicking the West.
8. Technology’s Role Is Complex:
AI and machine learning have vast potential, but without equitable distribution, they may worsen inequality. True progress lies in how benefits are shared.
Join us for this unfiltered, eye-opening episode with Professor Jomo, where we challenge dominant development narratives and explore the real ingredients of economic transformation.
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This conversation is part of the Emerging Market Innovation Series, brought to you in collaboration with Strategic Counsel, where we're also joined by Hafidzi Razali, Founder and CEO of Strategic Counsel.
Timestamps:
(00:00) – Introduction to Professor Jomo and his global economic leadership
(02:00) – What defines a developed country? Why GDP isn’t enough
(05:50) – The FDI trap: Why foreign capital can hinder national development
(12:10) – Lessons from Korea, China, and Singapore
(17:45) – Mariana Mazzucato, moonshots, and the entrepreneurial state debate
(24:00) – Financialization and the decline of real innovation
(30:50) – Industrial policy from Hamilton to Biden: A history of protectionism
(36:10) – Extractive vs. inclusive institutions: Debating colonial legacy
(43:00) – The French CFA zone and the myth of aid
(49:30) – Inflation targeting and monetary policy misconceptions
(55:00) – Can AI drive growth—or deepen inequality?
(60:00) – Final thoughts on building resilient, people-first economies
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