Join Jomo Kwame Sundaram, a Malaysian economist and former UN official, as he delves into the complexities of global development. He critiques conventional economic metrics like GDP, arguing that true prosperity hinges on human capabilities. Discover why South Korea's unique success story remains hard to replicate, the pitfalls of relying on foreign direct investment, and how mismanagement keeps resource-rich countries poor. Jomo sheds light on the need for better governance and the myths surrounding economic policies that affect growth and global poverty.
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GDP vs Human Capabilities
True development is measured by human capabilities, not just GDP or income levels. - Mineral wealth can inflate income without improving societal capabilities.
question_answer ANECDOTE
Tanzania's Gold Tax Dilemma
Tanzania discovered gold but was advised not to tax mining firms fearing corruption. - This led to massive wealth extraction without helping Tanzanian citizens.
insights INSIGHT
FDI Limits Foster Development
South Korea succeeded by limiting foreign direct investment and building local industry. - Over-reliance on foreign investments often results in wealth extraction, not development.
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The Entrepreneurial State challenges the conventional wisdom that innovation is best left to the private sector. Mariana Mazzucato argues that the public sector has been the primary risk-taker in many significant technological innovations, from the Internet and GPS to touch-screen displays and voice recognition. She provides case studies to show how government investments have driven economic growth and suggests policies to ensure that both the public and private sectors share the risks and rewards of innovation. The book emphasizes the state's role in shaping and creating markets, rather than just fixing market failures.
The economic consequences of the Peace
John Maynard Keynes
In this book, Keynes critiques the Treaty of Versailles, particularly its economic provisions, which he believed were overly punitive and would lead to widespread economic suffering and instability in Europe. He argues that the treaty breached the principles of the Armistice agreement and the Fourteen Points, and that the reparations demanded from Germany were unrealistic and would have devastating economic consequences. Keynes also provides a personal account of the key players at the Paris Peace Conference and predicts that the treaty's terms could sow the seeds for future conflicts[1][4][5].
Principles of the Natural Economy
Principles of the Natural Economy
Friedrich List
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.
Follow our host on Linkedln to know more or subscribe to our emailing list to get new episodes directly into your inbox.
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
The Innovation Civilization Podcast 
