Feb. 6, 1997
Vol. 16, No. 10

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    Profile: Nancy Stokey

    Nancy Stokey, the Frederick Henry Price Professor in Economics and the College, is an expert on economic growth and development, and she manifests that experience through her research as well as through her editing of several professional journals.

    The current vice president of the American Economic Association, she is also co-editor of Econometrica, associate editor of the Journal of Economic Growth and has served as associate editor of Games and Economic Behavior and of the Journal of Economic Theory.

    She is the author of numerous papers on economic growth as well as co-author of Recursive Methods in Economic Dynamics (1989), a book about the research methods economists use in their work.

    She joined the University in 1990 after serving on the faculty at Northwestern, where she was the Harold Stuart Professor of Managerial Sciences. How did you get interested in economic development? There are huge differences in life in rich and poor countries. Some poor countries have been very successful in developing and others haven't. It's an issue that any human being has to think about -- that the quality of life can be quite different depending upon where you were born. I want to find out if there is any way more people can enjoy a better quality of life.

    You have written a paper titled "Are There Limits to Growth?" -- are there? The paper is about the effects of pollution and the ways societies respond to pollution. As countries develop, they start polluting more. We know about the problems of development in China, Mexico and Brazil and about the higher levels of pollution those countries are generating. Richer countries clean up their pollution, and controls start developing when countries reach a moderate level of income -- $4,000 or $5,000 per capita. While development is the source of the problem, further development brings its own cure. The pollution controls hold down growth a little bit, but they do not stop growth.

    Many people say pollution is worse in Europe than in the United States. Is that expected? Two of the cities I've traveled to are Athens and Rome, and I can say the quality of the air there is not as good as it is in Chicago. Much of that is from automobile traffic. Those countries required catalytic converters much later than did the United States. Greece is not as rich as the U.S. so it makes sense that Greece would be 10 to 15 years behind the U.S. in adopting the same pollution controls.

    Your research focuses on developing economies. Do you check labels to see where things are made? It's interesting to see where things are made. I'm old enough to remember when "made in Japan" was a pejorative expression, whereas now the highest quality cars and electronics come from Japan. Now goods are coming from mainland China, where we didn't have any trade for a long time. One of the big benefits is that silk has become much more affordable. I like silk.

    Going back to "made in Japan," is Japan now a model for developing nations elsewhere? Countries go through similar stages of development, and the same industries are the first to develop. Food processing comes in pretty early, followed by certain kinds of manufacturing. Then the products become more and more sophisticated. Television sets, for instance, were manufactured in Japan for a while. But if you look at the data you see that production of televisions there peaks and then declines. So you wonder who is making the television sets, because people are still buying them. But then you look at Taiwan and see the industry starting to grow there while it's declining in Japan. Five or 10 years after that, television production moves to South Korea. Whole industries migrate from one country to another.

    Are workers becoming unemployed as a result? No, because they're making something else. They go from making televisions to microwave ovens, for instance.

    So people in expanding economies have to develop new skills to survive. The same could be said for any changing economy. What does this mean for today's students? Technologies are changing faster than they used to, so what is important now is the ability to adapt. That's something important for educators to be aware of. We aren't just trying to impart knowledge, we're also trying to teach people how to acquire new skills. The way you do that is to teach students general skills, how to acquire new skills and how to analyze new problems. You're not trying to teach students right answers, but teach them about how to come upon an answer.

    -- William Harms