B.A. (Hons), M.A (Econ). Ph.D., Hon. D.Sc Europe).

distinguished Indian Economist


  • Overview
  • Preface
  • Index
  • Review


What about the Future of Economic Science? The Contributors attempt to answer this question, in this book. The foundation for the future of economics lies in not only by the contributions of Nobel Laureates in economics but also influenced by leading past economists like Joseph Schumpeter, John Maynard Keynes and J. R. Hicks.

 The book proves that in the 21st Century, with more and more empirical works, it will no longer be a dismal science but will be a perfect science. The future of economics is very bright and in the next 100 years, a tremendous amount of research is going to be turned out.

This work will be of interest to all economists, professors and students in  conomics and provides a comprehensive picture of the present state of economics with views to the future on varied areas in economics.

Time present and Time Past
are both perhaps present in Time Future,
and Time Future contained in Time Past. T. S. Eliott

To all those who are interested in economics and have read economics and economic thought till the end of the Twentieth Century, one question would arise that „what about the future of our economic science?? Economics has many branches now, each one is a specialized area. To answer the question about the future, one has to analyze at least selected areas and each of those areas has to be analyzed keeping a gauge into the future. I have thought of three postulates to deal with those areas. These are the need for a long run view in economics; the need to view economics not only as a theoretical subject but also as the empirical one of those theories and the need to view economics as a real applied science and no longer a subject of mere theories, upto the publication of General theory of John Maynard Keynes in 1936. The application started there after by leading economists, thanks to Keynes particularly and Paul A. Samuelson has done a lot on this aspect and in putting mathematics into economics has been just a play for him. The last one is the need to view economics as not just a political economy but a perfect science.

The second half of the twentieth century was dominated by the contributions of Nobel laureates in economics who are now 62 in number after its first presentation to Jan Tinbergen and Ragnar Frisch in 1969. Each of these laureates has their own specialized areas and they have applied to past theories and translated economics from a mere decimal science to empirically applied science and thus made it a perfect science. These contributions of laureates will become the basis is the future for more and more empirically applied studies and researches in the 21st century. But, Keynes is ever lost and will be revisiting. To provide an overview of the contributions of Nobel Laureates, they are listed in the Annex at the end of the book.

When the „Economic Journal? of the Royal Economic Society, London published its centenary volume in January 1991 which has focused on future of economics, I was inspired by that work done under the leadership John D. Hey, the then Editor of the „Economic Journal?. I thought I should do substantial work for an expanded book on Future of Economic Science, much larger in scope and coverage in areas in economics. I contacted Hey who sent his blessings to me on my task.

The „Future of Economics? in this book is presented keeping in view the three postulates mentioned above. It is presented in 37 chapters authored by about 40 economists well known and reputed in the World who have kindly authored those papers. These authors are, Frank Hahn, Paul Streeten, Donghyun Park, Alan E. H. Speight, Steven Cook, Gamini Herath, Jon D. Erickson, Jesus M. Zaratiegui, Gilbert Abraham-Frois, Steven Pressman, Wei Huang, K.K. Lai, Y. Nakamori, Shouyang Wang, John Lodewijks, Vittorangelo Orati, Spiridon Paraskewopoulos, Víctor A. Beker, John Paleologos , Ken-ichi Tatsumi, Andrea Micocci, Cees Gorter, Ronald Schettkat, Paul M. Comolli , M.J.Waples, Javier Campos, Juan-Luis Jimenez, Michela Nardo, Maite Cabeza-Gutés, Craig P. Gower, Ismail Shariff, Sarah Lumley, Marc D. Hayford, Douglas Mair, Anthony J. Laramie, and Th. Blecker.

It is difficult to cover even the briefest summaries of these chapters in the preface. Therefore, I have taken more important chapters for the purpose. The first chapter by Frank Hahn, The Next Hundred Years serves the purpose of a brief introduction followed by Paul Streeten who in his chapter Shifting Fashions in Development Dialogue has provided three justifications for the early emphasis in economic growth and has discussed and seems to be justified. The chapter covers a survey of evolution development thinking from the early days when the growth was accepted as a performance test (not as the objective) of development, via an emphasis on employment creation, jobs and justice, redistribution with growth and sustainable development to basic human needs, human development and the capability approach. There follows a critical discussion of the Human Development Index.

The paper ends with a discussion whether a freedom index should be integrated into the human development index.

The Future of Development Economics will clearly remain a highly relevant discipline in the 21stcentury. The extent to which development economists succeed in making substantive progress will largely determine whether they can make a significant and positive impact on the everyday lives of ordinary people in developing countries, which, in turn, is ultimately the yardstick of their discipline?s effectiveness and relevance for the 21st Century.

Another noted author Alan E. H. Speight with his co-author Steven Cook has presented Future Directions in Applied Econometric Methodology briefly and very well. The approach adopted here is largely discursive, rather than technical, in the hope that the arguments and conjectures presented might be accessible to as wide an audience as possible. He has demonstrated that econometrics is certainly a child of the past 100 years looking for its future in the 21th century. There is a chapter on future of economics from the angle of environment in the 21st century. This is authored by Jon D. Erickson. Gilbert Abraham-Frois has wondered Can One Contemplate a New Classical Synthesis? and well analyzed. The chapter by Jesus M. Zaratiegui what progress economics has made and what can we contemplate in rebuilding the new economics is an analytical chapter. There is a feeling that the research and training in economics is slowly going down in its quantum. John Lodewijks ponders over the subject Training the economists of the future and suggests methods to improve the quality and quantity of research.

These are a few illustrative examples and every chapter in the book has provided economic analysis of the subject matter of the chapter concerned and has provided future directions. All most all subjects in economics including the recent globalization concept and its controversy on to full employment and distribution of income and future of internet technologies have been covered. Thus, this book, it is hoped, will provide a comprehensive picture of the present state of economics with views about the future on varied areas in economics.

In a work of this nature, it would be difficult to acknowledge everyone who have co-operated with me in bringing out this book.

I wish to acknowledge with gratitude all the authors who have contributed and whose names are mentioned above. Professor. Paul A. Samuelson, the first American Nobel Laureate in economics has been a major source of inspiration to me who has encouraged through his papers to other works and „forewords? to some books. Similarly, Robert M. Solow, Nobel Laureate in economics has acknowledged my work and he has stated in letter that “over the years, I and many other economists around the World have profited from your work. On half of our discipline, such selfless endeavor often goes under rewarded and underappreciated. I can certify my own appreciation. I know I speak for many other economists”. I am grateful for his appreciation and help to me in doing my further works and bring out this book. Special mention may be made who have actively co-operated with me on a continuous basis. These Professors are Warren P. Hogan and John Lodewijks from Australia, Abraham- Frois from France and Vittorangelo Orati from Italy. I also acknowledge with thanks the co-operation of many economists who have refereed the papers and special mention may be made of Rathiram, Distinguished Professor, Illinois State University, USA and John Lodewijks, Professor and Head, University of Sydney.

The future of economics is very bright and in the next 100 years, a tremendous amount of research are going to be turned out based on major works of Joseph A. Schumpeter, John Maynard Keynes, Sir John Hicks and their contemporaries. The works of laureates in economics will also stand out as foundation for future research in the 21st century. The major works of Professors Paul A. Samuelson, Jan Tinbergen, Kenneth J. Arrow, Sir John Hicks, Wassily Leontief, James Tobin, Robert M. Solow and Franco Modigliani, among others, are bound to influence the future of economics in the decades to come.

It is hoped that this work which is a major one will be read with interest by all economists, professors and students in economics and other professional colleagues in the World.
 17th August 2009                                                                    K. Puttaswamaiah

Preface Contributors

1. The Next Hundred Years                                            Frank Hahn


2. Shifting Fashions in Development Dialogue                   Paul Streeten


3. The Future of Development Economics                          Donghyun Park


4. Future Directions in Applied Econometric  Methodology                                                     Alan E. H. Speight and Steven Cook


5. New Institutional Economics:                                   It?s Nature, Potential and the Future                        Gamini Herath


6. The Future of Economics in the Century of the Environment Jon D. Erickson


7. Re-building the Building: What Progress in Economics Jesus M. Zaratiegui


8. Can One Contemplate a New Classical Synthesis ? Gilbert Abraham-Frois


9. Are the Different Versions of the Tableau  Économique Consistent?                                 Steven Pressman


10. Applications of Artificial Neural Networks to Forecasting  in Finance and Economics                 Wei Huang, K.K. Lai, Y. Nakamori and Shouyang Wang


11. Training the Economists of the Future                       John Lodewijks


12. Schumpeter?s Open Model of Economic Development and the  Ensuing Tasks for the Future Economics and the Future of “Economics”          Vittorangelo Orati


13. The Social Economic System of Europe at the End of 20th Century and Its Perspectives                   Spiridon Paraskewopoulos


14. Some Issues on the Cognitive Status of Economic Theory  Víctor A. Beker


15. Stylized Facts on the Kaldorian Approach to Economic Growth in Greece John Paleologos


16. Nonlinear Computational Finance and Forecasting Ken-ichi Tatsumi


17. The Philosophy of Economics Andrea Micocci


18. On Musical Chairs and Matching Models: Do Employed Job Seekers Crowd-out the Unemployed? Cees Gorter and Ronald Schettkat


19. Optimal Public Investment in Natural Capital under Sustainability  Criteria for a Growing Economy Paul M. Comolli


20. Against Lawson?s Rescue of Mainstream Economics  Andrea Micocci


21. International Trade, Technological Progress and Changing  Patterns of Comparative Advantage M.J.Waples


22. International Trade and Imperfect Competition  M.J.Waples


23. Old and New Ideas in Competition Policy  Javier Campos and Juan-Luis Jimenez


24. Rational Expectations and the Quantification of Survey Data: The Role of Measurement Error Michela Nardo and Maite Cabeza-Gutés


25. Private Participation and Regulation in Infrastructures: Lessons 479 from recent experiences in Latin America Javier Campos


26. Recent Developments in the Modelling of Financial Market Volatility Alan E. H. Speight and Craig P. Gower


27. The Imperatives of Economic Theory and Its Relevance to the Real World: Some Observations Ismail Shariff


28. The Pros and Cons of Globalization John M. Paleologos


29. The Specter of Globalization in the Context of World Economic Welfare Ismail Shariff


30. Marshallian Industrial Districts Revisited Jesus M. Zaratiegui


31. Non-Linear Time Series Models in Economics: A Selective Survey Alan E H Speight


32. The Environmental and Social Justice Implications of Australia?s Economic Policy: Meeting the New Millennium Head-on Sarah Lumley


33. Towards a Sustainable Development: An Economic Policy Perspective Ismail Shariff


34. The Effect of Balance of Payments Constraints in a Model of Exhaustible Resources Paul M. Comolli


35. The Fed and the Goal of Low Inflation Marc D. Hayford


36. Full Employment and the Distribution of Income Douglas Mair and Anthony J. Laramie


37. Internet Technologies as Basis of Modern Manufacturing Concepts Th. Blecker


Annex I





This volume assembles a distinguished panel of international experts to review current trends in the discipline of economics and to speculate on future  developments. The canvas is very broad. The topics include the environment and sustainability, new institutional, Schumpeterian and behavioural economics, the economics of networks and advances in econometrics, non-linear dynamics and financial volatility, and the globalization debates. Every reader will find  something of interest and be challenged by the conjectures of this splendid  volume.

                     -John Lodewijks, Professor & Head, University of Western Sydney.

The very title of this enormous volume is enough to indicate the outrageous daring project that K.Puttaswamaiah has devised and succeeded to manage. More than forty specialists give their opinion and produce their analysis on nearly 900 pages treating in an original way a great variety of topics: globalisation, non linearity, finance, development, institutional economics, neural networks…. A superb realization which will remain of interest in the remote future…

                            -Gilbert Abraham-Frois, Professor, University Paris-X-Nanterre.