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Opening the CAGE

New Centre for Competitive Advantage in the Global Economy (CAGE) begins research on how markets, institutions, and public policies interact to create and sustain competitive advantage in a changing global economy.

Warwick’s Department of Economics announces the creation of the Centre for Competitive Advantage in the Global Economy (CAGE), a £4.4 million programme designed to use innovative research techniques to address the urgent economic issues that define our times: the struggle of nations to adjust to rapid and relentless global economic change.

The centre intends to extend the existing research frontier through new empirical work, new analytical frameworks, and new policy solutions. Established in January 2010 by the Economic and Social Research Council (ESRC), the centre has a bold mandate that places it at the forefront of both academic and policy research. Though the issues that CAGE will investigate are extraordinarily complex, its focal point is simple. CAGE’s research agenda is, in its essence, managing change.

CAGE’s cutting-edge research will address the struggle of nations to adapt to rapid and relentless global economic change

CAGE will examine the ways in which markets, institutions and public policies interact to create and sustain competitive advantage in a changing global economy, how such advantage evolves over time and how deprivation and wellbeing are influenced in both the short and long run.

The centre will investigate the salient factors that lie behind economic success generally, as well as with an eye towards what works in a particular country’s setting. Researchers will examine the dynamics behind global economic “churn,” looking closely at ways to confront difficult but necessary change and focusing on the potential to sustain growth and support wellbeing. A key goal is to explore the options for realising the benefits of continued economic success while mitigating the costs.

Under this mandate, CAGE poses three big questions:

  1. What explains catching up, forging ahead or falling behind in economic growth over the long run?
  2. How do countries adjust successfully to new opportunities and challenges presented by global economic development?
  3. When does succeeding in the global economy translate into reduced deprivation and enhanced general wellbeing?

The ESRC has invested £3.6 million in the centre’s five-year research endeavour, and Warwick University has contributed another £800,000. The ESRC selected Warwick University’s Department of Economics as the site for the centre because of its existing research strengths in economic history, economic theory, empirical economics and the political economy of development.

  • Nicholas Crafts, professor of economics and economic history, leads the innovative centre. Other Department of Economics professors will head research endeavours on the three central questions under investigation by CAGE:
  • Professor Sayantan Ghosal is the research director and chairs the research strategy group. He will lead research that looks at the threshold for reduced deprivation and enhanced general wellbeing.
  • Professor Stephen Broadberry will lead research on the explanations for catching up, forging ahead and falling behind in economic growth.

Professor Sharun Mukand will lead research exploring the dynamics that lead some countries to adjust successfully to opportunities and challenges presented by global economic change.

Though CAGE is not a multi-disciplinary research centre, it aims to forge new ground in economics-based methods. “Our approach will be more eclectic than would be implied by slavishly following the mainstream,” Professor Crafts says. “This will probably entail taking some risks. It will certainly make our work exciting and innovative.”

For example, Crafts says, CAGE work can be expected to transcend the usual purview of traditional economists as it delves into the aspects of institutions design that are conducive to economic development. CAGE research intends to emphasise to a degree that is unusual among economists the importance of political constraints on growth and what economists call “path dependence.” The term is sometimes explained by the phrase “history matters” because it refers to the tendency of certain customs and practices to live on, though their practical usefulness may have long since died.

CAGE also intends to depart from orthodoxy in looking at “poverty traps” by emphasising the interaction between physical and psychological aspects of poverty, examining, for example, both the circumstances that plague impoverished communities as well as the crippled aspirations and motivations that can plague impoverished individuals.

CAGE also has a vital mission in helping to shape the next generation of economic research. It will serve as a centre for what the ESRC terms “capacity-building” – training individuals, particularly younger researchers, in its methodologies and techniques. In this capacity, the centre expects to begin work with three postdoctoral fellows and three PhD students in the autumn.

In addition, the centre will run summer schools to offer training in methods to graduate students from around the world. The first of these summer sessions is scheduled for July 2010. Professor Christopher Woodruff and Dr Anandi Mani will lead this first summer school seminar on “Field Experiments in Development Economics.”

While a key priority for CAGE is to produce high-quality research that will be published in top academic outlets, its reach will extend far beyond traditional academic circles. A major objective of the centre is to insure that this academic research also has practical impact in helping policy-makers as they confront profound economic turbulence and its attendant human needs.

CAGE intends to use innovative research techniques to examine the key factors that lead to competitive advantage in times of change

CAGE will aim to produce findings that are of interest and value to public policy-makers as they grapple with political, economic, and social realities. To this end, CAGE will undertake unprecedented steps to facilitate outreach to key players in policy-making circles to ensure that they are aware of key research findings and that they can receive assistance in seeking ways to implement the most promising practices.

CAGE researchers intend to publish both articles in the top-tier refereed academic journals and in a series of policy briefing reports accessible to the lay reader. The centre will organise academic conferences as well as host meetings and workshops for audiences drawn largely from the policy-making community and the media.

To this end, CAGE has entered into a formal partnership with Chatham House in London, the home of the Royal Institute of International Affairs. CAGE’s efforts to reach a broader audience will benefit considerably from the extensive network and expertise provided by Chatham House, whose membership includes people with an interest in international affairs in many walks of life – politics, government, business, non-profit organisations, and the media among them.

On 2 June 2010, CAGE will officially mark its inception by introducing its research agenda and its key researchers to a gathering of guests from a broad spectrum of academics and policy-makers.

Debraj Ray, the Julius Silver Professor of Economics and Director of Graduate Studies in Economics at New York University, will deliver the event’s keynote speech on “The Future of Development Economics.” Ray’s research interests include income and wealth distribution, as well as collective action and group formation. His work in development economics has been praised for its elegant combination of theoretical reasoning and empirical circumstances, such as institutional limitations and possibilities.

CAGE will disseminate Ray’s keynote speech through a podcast, available through the CAGE website: http://go.warwick.ac.uk/cage/.