Non-Resident Senior Research Fellow & former Chief Economist UNU-WIDER Helsinki 🇺🇳🇫🇮Also universities of Copenhagen 🇩🇰 Manchester & Warwick 🇬🇧

Helsinki
Joined August 2014
Can a democracy with open markets and an open society recreate Korea's 🇰🇷 chaebol-heavy growth model? Today, the chaebols' weight is enormous: sales of the top 4 groups equal about 40% of Korea's GDP, large firms do 2/3 of business R&D, and just 10 companies ship about 40% of exports (55% in Q2 2026, on the chip boom). How did they come about? First, in the 1950s, their founders built their initial capital through import licences, rationed foreign exchange, US aid, and cheap sales of former Japanese-owned property. That system was not exactly transparent or corruption-free, to put it diplomatically. Then, for nearly three decades under the military regimes of Park Chung-hee (1961–79) and Chun Doo-hwan (1980–88), the chaebols benefited from a long list of advantages: •heavy import protection •directed, subsidised credit •an undervalued won •a repressed financial sector •repressed labour rights and wages •some of the longest working hours in the world, over 50 a week on average. By the 1980s, Korean consumers were paying more for cars at home so that Hyundai could sell them cheaply abroad (my picture below of an original Hyundai Pony, built for export to New Zealand, at the National Museum of Korean Contemporary History in Seoul 👇). Only after the 1997–98 Asian Financial Crisis, which hit Korea very hard, did the chaebols start competing on a more level playing field. So, after half a century of colossal and socially costly support, the chaebols are now indeed globally competitive. But SMEs, despite ever-growing state support, still can't find their mojo. The rest of the non-chaebol economy continues to struggle. And fertility, arguably part of the bill, is the world's lowest. Can developing countries replicate the Korean chaebol model in today's global economy? Should they?
Poland 🇵🇱 and South Korea 🇰🇷: two global growth champions with two different growth models and social outcomes. Over three decades both grew fast (4.2% vs 3.7% a year per capita) and reached the same productivity (~$52/hour), but with very different R&D spending: 1.4% vs 5.1% of GDP. On social outcomes, Poland ranks #24 in world happiness vs Korea's #67, with half the suicide rate and a third of the old-age poverty (13% vs 40%) 👇 The shared challenge: among the lowest fertility rates in the world, 1.07 and 0.80. @Noahpinion @KoreaEconInst
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What happens when tax policy changes? Microsimulation models like RWAMOD help governments see the bigger picture. In Rwanda, RWAMOD was used not only to estimate the revenue effects of income tax reform, but also to assess its impact on low-income households. #SOUTHMOD
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Tony Addison retweeted
Pretty hard to find a better example of a tariff that is causing more harm to US industry (and consumers) for less strategic or economic gain than the steep tariff on Canadian aluminum 1/2
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China’s surplus is not the greatest contributor to imbalances—the US deficit is. As a share of global GDP, the US’ current account imbalance was 2-3x that of China in 2023 to 2024, Nicholas Lardy writes in response to @MikeFroman in @ForeignAffairs. foreignaffairs.com/guest-pas…
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The underappreciated reason Fed will eventually likely have to hike: interest rates look *low*. The long-run (i.e. neutral) rate is 4.3% according to the ACM term premium model, higher than the current rate (3.88%) and the FOMC's own long-run 3.2%. Read more in my newsletter (free to subscribe): wsj.com/economy/central-bank…
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Our “Poverty, Prosperity and Planet Report 2026” is out! Jobs at the center of Poverty Eradication. worldbank.org/en/publication…
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Loss of consumer confidence in OECD 2019-25: the US craters. 🥹
People in rich countries are unhappy. In the US they're truly miserable. Sentiment fell more in the US since 2019 than any other country. US sentiment at the 0th percentile of pre-COVID history, others generally around 25th percentile. And our economy doing better than most!
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Are cities engines of upward mobility? Women are more likely to increase their relative educational rank in cities (see below, @paulnovosad) But.. urban female labor force participation remains extraordinarily low - 14% in Delhi India is thus losing out on talent & earnings.
New paper: Cities in South Asia are hotbeds of upward mobility for everyone, but especially for women. This is the urban-minus-rural difference in the adult education rank of a child growing up in a bottom-half household. 🧵 1/
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The Fed’s inflation task is like that of a doctor prescribing antibiotics, says Maurice Obstfeld. Even as the symptoms pass, the patient will be urged to complete the course. “You may feel better, but finish them,” Obstfeld says. The same course of action applies to the Fed. “When they start to hike, they continue administering the antibiotics for a while until the patient is cured.” bloomberg.com/news/articles/…
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⏰ Last few days to apply! We're looking for a Country Economist to join IGC Jordan in Amman and help turn evidence into policy to help shape Jordan’s growth. Fluency in Arabic and postgraduate degree in economics required. Apply by 30 Oct 👉 bit.ly/3UhiSQe
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Tony Addison retweeted
I fully agree with Marcin. We discussed this before. The problem is obvious already in Acemoglu & Robinson, "Economic Origins of Dictatorship and Democracy". (Afterwards, it gets worse, because more simplistic.) Their scheme deals only with capitalist countries. It is super narrow. It simply has no place for non-democratic polities with low income inequality. In their view--which is very much driven by today's ideology of commodification that they take as obvious-- if the elite is "extractive" it must strive to get as much income as possible and inequality must be high. But communism was non-democratic and non-extractive and had low inequality. They cannot fit such a polity in their system at all. They show themselves to be extraordinarily limited in taking capitalism as the "natural order", thus totally ignoring the systems that rules 1/3 of the humankind for more than half-a-century. They have nothing to say about communist institutions. This is btw also the reason why they were consistently wrong on China.
Was communism inclusive or extractive? I recently had an interesting disagreement with Prof. James Robinson, 2024 Nobel laureate (with @DAcemogluMIT and @baselinescene) and co-author of “Why Nations Fail.” Prof. Robinson argued that the "former Soviet bloc countries had extractive institutions that could not create prosperity after 1991" (see pic below). I argued almost the opposite: communism made Central and Eastern European societies inclusive by bulldozing the old feudal, oligarchic structures that had kept the region underdeveloped for centuries, through land reform, the destruction of old elites, mass education and social mobility. I wrote a whole book about it, which e.g. @DAcemogluMIT kindly commented on and then endorsed (global.oup.com/academic/prod……) @OUPAcademic. @BrankoMilan has made a similar argument for China, Vietnam and others. Communist planned economies were economically inefficient, to put it diplomatically, and their governing institutions were indeed extractive. But the inclusive society they created laid the foundation first for removing communism, starting with Solidarity in Poland, and then for the region’s first-ever economic success after 1990. Prof. Robinson dismissed my argument as “curious” :-) What does everyone think? FYI, @HarrisPolicy @gamblingondev @S_Stantcheva @adam_tooze
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New Working Paper! J. Fink and I compare innovation projects that obtained public funding with those that were rejected. Approved projects were TWICE likely to result in significant innovations. portal.research.lu.se/en/pub…
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“Economic history will have a very exciting boom”. Very likely to be true. Digitization will be easier. But since bottlenecks remain in economic history like gaining historical context and dealing with messy real world data issues.
With math essentially being delegated to OpenAI, here's what I predict for economics and the social sciences more generally: ✅The top tier of research will just become better and it will be normal human-led research where AI is used for scale (e.g. conducting qualitative interviews with relevant populations, running behavioral interventions in the field, analyzing massive text data, etc.) ✅ Field experiments will rise in value and generally making "connections" with firms and being able to run stuff (potentially testing AI pipelines) will be in high demand ✅ Research with administrative data will become even more valuable, but the benefits might be concentrated among some prolific authors who are allowed by the government agencies to use local models to analyze the data at scale. PhD students can probably forget about it ✅Economic history will have a very exciting boom and there will be an enormous race and big rewards for digitizing archives as a source to both identify new research strategies and document new descriptive facts. ✅Review and verification systems will become massively improved with AI assistance and it will become standard practice to do a 360 review of the paper + code + data at the *submission* stage. ⚠️Research that in principle can already be almost completely outsourced to the AI (download and analyze public data, run simple survey experiments, write theory models) is in for a big shock. This would be very bad from the perspective of researchers who depend on this "bread and butter" research, but I think this type of work will just be outsourced to public agencies who can answer their own questions without the need for "peer-reviewed" research.
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This is an automatic listen! Alex is one of the most knowledgeable people out there on the US economy 1930-1945. Looking forward to my next run. so I can listen to this.
Did WWII actually make the U.S. economy more productive? New EPH Podcast episode with Alexander J. Field: manufacturing productivity fell roughly 18% between 1941 and 1945, and the "production miracle" story deserves a second look. ▶️ youtu.be/DGDXhBlq8PA
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Tony Addison retweeted
JD Vance recently said of the current affordability crisis: “You don’t turn the Titanic around overnight. It takes time to fix what was broken”. This is funny, but it is also very dangerous. (1/4)
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The paper studies how small states, those not frontline in geopolitical conflict, respond to Great Powers when the latter trigger shocks, such as tariffs, that can do the small state harm. DannyQuah.com/Storage/179252… – at Singapore
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Reducing the magnitude of global imbalances is a desirable goal, but it is best achieved through international cooperation & not unilateral action, Nicholas Lardy writes in response to @MikeFroman in @ForeignAffairs. foreignaffairs.com/guest-pas…
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Have we been mismeasuring China Shock 2.0 ? 👉Most comparisons focus on Chinese imports into G7 markets. 👉But in a world of relatively open trade, G7 manufacturers compete with Chinese factories at home, in China, and in third markets. 👉So the global scale of the shock depends on China's production, not just its exports. 🌟That why it matters that China's manufacturing growth is slower today, yet the increments are much larger relative to the G7's manufacturing base. lnkd.in/p/eiEsA4th cc: @kaushikcbasu @k_sonin @Lagarde @LHSummers @lindayueh @lugaricano @MarkJCarney @MaxCRoser @michaelxpettis @NateSilver538 @NIESRorg @NOELreports @NOIweala @Nouriel @ojblanchard1 @paulkrugman @PIIE @politico @profsfardoust @RayDalio @RBReich @RobinBrooksIIF @scottlincicome @SimonEvenett @simonjhix @sjwrenlewis @standardandedny @StephanieKelton
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Politico is reporting, unsurprisingly, that the Europeans need to mobilize more funds for Ukraine -- I think there is a pretty easy way to do it that respects Belgium's redlines, but it take a bit of financial creativity 1/ many
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Retirees own 60% of the wealth in Feance. Given high life expectancy, when they pass it on, wealth is not inherited by the young, but by the about to be old (those in their 50s). Read the entire thing, an excellent analysis of the pickle our societies find themselves in.
The ugly truth about France and some of the other European countries currently in turmoil - and which none of the politicians want to admit because it'd be political suicide - is that you can't solve the problem by going after immigrants (as the right asserts) or the rich (as the left asserts), but you could solve it by going after the old. One extraordinary statistic for you: people over 60 in France, a quarter of the population, own 60% of France's wealth, non-financial and financial (ofce.fr/pdf/revue/2025/3-192…). And here is another crazy statistic: that same quarter of the population, those above 60, receive nearly two-thirds of all social spending by the French government (previssima.fr/actualite/prot…) - which is famously among the highest in the world (France's government spending is an insane 57.3% of GDP). Last statistic: they make up about 40% of voters because they're a third of registered voters (insee.fr/fr/statistiques/266…), and they turn out far more than anyone else (franceinfo.fr/elections/sond…). Put our 3 statistics together and there's almost a bit of an apartheid situation here: the old own most of the country's wealth, collect most of the social spending and have the political power to keep it that way. Which makes them a de-facto rentier class, living off assets and transfers paid for by younger generations. And, of course, at the risk of stating a truism, the future is built by the young. Yet France keeps effectively taking money away from them to give it to those whose working lives are already behind them - and need the money far less since they already own the country's wealth. What about inheritance, I hear you ask? That's the funniest/saddest aspect: given that life expectancy has kept rising, the French now inherit a home at 54 on average. The most common case is someone in their 80s leaving it to heirs in their 50s, in effect the very old transferring wealth to the about-to-be old (insee.fr/fr/statistiques/fic…). You can add this to our earlier apartheid statement: on top of all the rest, even when the old finally let go of their wealth, it stays within their own "camp". That's my personal situation, incidentally: I'm 42, my father is 71 and he is starting to look at ways to pass things on to me and my siblings, when our professional lives are already well settled, so it'll arrive when it changes things the least, which is pretty much the French system in a nutshell. Now, I get that there'd be some unfairness in going after them: they paid into the system their entire working lives, playing by the rules of a social contract that told them if they paid up they'd collect at the end. Changing the rules now means breaking that promise, which is admittedly unfair. But there's no magic wealth tree in any society: you can only take it where it is. That's the way most major societal transformations end up happening. They're often triggered by a catastrophic event (the so-called "four horsemen": mass-mobilisation war, revolution, state collapse, plague) BUT what really drives change is a transfer: wealth gets pried from the privileged class who've been sitting on it and handed to those who'll build what comes next. So, in theory and in an ideal world, you can do without the catastrophic event and directly proceed with the transfer... The fact that in France, and elsewhere in Europe, it's the youth protesting is probably no coincidence - even though they don't frame it as a generational fight. And even though, cruel irony, the left politicians many of them march behind promise to bring the retirement age back to 60 (lcp.fr/actualites/legislativ…), which would make the situation even worse. Let's say they understand intuitively that the system is stacked against them, even if they haven't yet figured out how. And politicians are obviously doing what politicians do, meaning pandering to the people who actually vote, while pointing the young towards easier - and politically convenient - scapegoats. To be clear I'm not saying it's the only problem in France, VERY far from it. I'm also not saying that all old people in France live a lavish lifestyle at the expense of younger generations: there are also plenty of very poor retirees who, if anything, would deserve more. What I am saying is that it's probably the biggest elephant in the room: everyone can see it, nobody dares mention it - no politician, from any side, wants to run on cutting grandma's pension - and it makes every other problem harder to fix.
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