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A General Theory of Economic Development

Towards a Capitalist Manifesto

Sung-Hee Jwa

This book makes the bold attempt at proposing a new general theory of economic development. The main premise is that economic institutions and policies must embody ‘economic discrimination’ if there is to be any chance of real economic development. By economic discrimination, the author means ‘treating differences differently’ by selecting and supporting economic entities and behaviour that contribute positively to the economy. The book identifies markets, government and corporations as the ‘holy trinity of economic development’, that is, the three most important institutions that must work together via economic discrimination to steer the economy towards real transformative progress. The book also warns against the current trend of economic egalitarianism or ‘not treating differences differently’ because it destroys economic incentives and results in an array of economic problems including growth stagnation.
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Appendix: Analytic framework for macroeconomic growth and productivity analysis for the corporate economy

Towards a Capitalist Manifesto

Sung-Hee Jwa


The General Theory of Economic Development claims that the capitalist economy can be called the ‘corporate economy’ rather than the ‘market economy’, because at the centre of its development is the corporate firm. In this Appendix, I provide a general framework for analysing the corporate economy that is implied by the General Theory of Economic Development and will be useful for the analysis of macroeconomic growth and productivity. Although preliminary, the empirical estimation results shown below clearly support the proposition that corporate-led growth is inclusive and shared growth.

I begin with the corporate production function, which constitutes the basic model capturing: (1) corporate-led growth; (2) corporate concentration-led growth; and (3) corporate-led inclusive and shared growth. The corporate-led macroeconomic growth model presented here is comparable to the neoclassical production function model as well as the growth accounting model.

First, taking the basic linear model, we have:


the constant α captures pure value of the agrarian market economy; gdp is per capita gross domestic product; CA is per capita corporate asset.

Which gives:

as the marginal product of CA to gdp. And taking logs gives the elasticity of gdp with respect to CA.

The above specification (A.1) is meant to capture the essence of the corporate economy, showing that national economic performance may be directly explained by corporate growth. Some interpretation of the variables and parameters are in order: Because corporate asset, which is...

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