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GTED strongly implies that economic policies should recover their fundamental nature of ED support principle in order to genuinely spur economic development, while social policies should also be reformed to be based on the ED principle if they are to be self-sustainable by creating new value-added.
(8) Implications of GTED on Global Economic Dilemma
According to GTED, this scenario seems the most plausible reason for the current global economic problem with a chain of reactions as follows; egalitarian economic and social institutions and polices [right arrow] killing the incentive to grow and encouraging moral hazard [right arrow] low growth of overall corporate sector and the aggregate economy [right arrow] no or less job creation with more social welfare demand [right arrow] increasing pressure for government expenditures for welfare without corresponding tax revenues mounting government debts [right arrow] global financial crisis with low growth and income polarisation.
GTED implies that it is imperative for developed as well as under-developed economies to get out of this "egalitarian trap" if they want to get over the low growth and polarisation dilemma.
According to GTED, capitalist economy has been led by the corporate growth and as such, should rather be called a corporate economy than a market economy.
It is hoped that the GTED new model can supplement the existing production function approach, by filling up the missing link between the diverse factors at the micro level and the aggregate output, by introducing the role of the modern corporation as a supreme aggregator which transform such diverse tangible as well as intangible resources into "corporate assets" and as a coordinator of production, theoretically as well as empirically.
According to GTED as well as the new institutional economics, the corporate firm, represented by its behaviour and performance, is the eventual outcome of survival, by adapting to the *surrounding environment given by the society's rules of the game, consisting of formal as well as informal constraints or institutions.
GTED implies the corporate-led and corporate-concentration-led growth for the capitalist economy.
Now it is time to consider the implications of GTED in terms of why Pakistan has been lagging behind Korea in terms of growth since the 1970s, even though Korea learned its development knowhow from Pakistan in the early stages of development.
From the GTED perspective, the key factor behind the divergence between the two countries since the 1970s seems to lie in their different policies toward corporations.
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