Tuesday, January 25, 2005
The Holy Grail of development might not exist
Here is an interesting article on economic development by Charles Kenny, at the world bank. He notes that there are quite a few exceptions to the rule that “laissez-faire is the recipe for growth.”
Can you name the eight countries in the world that managed to more than quadruple their per capita GDP between 1929 and 1988? They are Japan, Taiwan, South Korea, Italy, Norway, Finland, Bulgaria — and the USSR.
There are also a number of counter-examples, which suggest government intervention is hardly a universal catalyst for growth. ‘One size fits all’ theories do not fit the facts of economic experience and — so far — economists have had little to offer beyond such theories.But, to be fair, contradictions across, and even within Development economists are quite common, thus reflecting the nature of the field...
The level of the confusion in which development economists find themselves on the topic of the causes of economic growth is suggested by two articles published in The Economist, both written by Columbia University economist Jeffrey Sachs.Who'd have guessed. Jeffrey Sachs is a flip-flopper.
In the first, published in June 1996, Sachs argued that had African policymakers merely followed an agenda of open markets, African countries would have grown even faster than the countries of East Asia.
But in the second article, published in June 1997, Sachs argued that even if they had the policies right, Africa would have grown 2.3% per year slower than East Asia — because of poor soil, geographic isolation and a bad climate.