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Jan 31 "How the rest got rich" Lecture

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Political Science
Joseph Wong

How the Rest Got Rich Political Economy Jan 312011 LectureCapitalism and bureaucracy have found each other and belong intimately togetherMax Weber 1911Getting rich has less to do with people rather it has more to do with systems3 Pillars of Hong Kongs Economy 1 Tourism 2 Business Services finance banking stockmarket etc 3 Logistics Hong Kong has a significant comparative shipping advantageth17 Century Dutch Hegemony th Decline of Spanish dominance end of 16 CenturyMulticulturalo ie AmsterdamCatholics Protestants Jews Muslims etc al lived together in the name of commerceo Brought global knowledgeIndustrial Innovation o Wind Turbine PowerSaw Millenergy was used for industrialization Modern Finance o First stock exchange was createdo First central bank which was willing to investo Raised capital from public sourcesTrade o Economy was based on International Trade o Multinational Trading EconomyThe FluteShipUsed by Dutch merchantsShips were critical part of tradeWind Turbine Power Saw Mills allowed for cheap ship building o Less labor was required o Lower costsThe flute had a shallow hull o Allowed ships to dock at any port o Increased cargo capacity50 greater than any other shipShip allowed Dutch to out compete the BritishMarket PrincipleIncrease supplyDecrease priceIncrease consumptionIncrease trade and market shareFast forward to Chinese manufacturingo Nothing to do with Protestantism o Reason Lowered costscheap labor allows China to be the largest supplierThe Price FunctionDemand curve and supply curve EquilibriumOptimum price
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