TFP and Krugman Bias

When financial crisis hit Asia in 1997, the wise Krugman quickly pointed out that there's a fundamental problem in the Asian economy and he used the Total Factor Productivity as a theoretical concept to explain the phenomenon. The lack of innovation in the Asian economies, argued Krugman, ultimately contributed to the collapse of monetary system throughout the region. Though others rush to criticize the so called crony capitalism and the whole pattern of political economy in Asia, I always thought that Krugman's argument was the most fitful one.

Now it's the American turn to suffer the financial meltdown, but so far, the prophet Krugman hasn't even mention the word TFP. For liberal economists, the idea that American market economy is not at the center of technological innovation and productivity growth is unthinkable and even blasphemous. The bias agaisnt Asian development is obvious now. Particularly when Krugman traveled to China and told the Chinese that their way of polluting the world is unsustainable at best. When it comes to the TFP, Krugman never wants to confess that two factors slip his mind: the scientific and technological innovation in the developing world is far more effective than he thought; if not, that's because the developed world always monopoliz the knowledge in order to prevent competition from outside the club. So stop empty talking Prof. Krugman. If you really want to save the world, try to pursuade big companies to transfer more energy saving techs to the developing world first!