My entry is at the end of this batch but do read the others as I'm sure they are much better and there will be more entries posted tomorrow along with Dani Rodrik's response. The first day's entries are more descriptive so that people who haven't read the book can get a better idea of what it is all about though they do undergo points to make while the the second group focuses on more specific criticisms:
(. ) is a major contribution to debates on globalization economic development and free change. It brings together much of his existing work bringing together an important evaluate of the Washington Consensus with positive suggestions about how beat to back up economic growth and how to build a global system of rules that can accommodate diverse national choices. We’re pleased and happy that both Dani and several other guests have agreed to participate in a new Crooked Timber seminar. This seminar will be published in two parts – the first today (featuring Henry Farrell. John Quiggin. Mark Thoma and David Warsh) the back up tomorrow (featuring Daniel Davies. Dan Drezner. bring up Knight. Adam Przeworski and Dani’s say post). As with previous Crooked Timber seminars it is published under a Creative Commons license (see below). Tomorrow. I will post a PDF of the entire seminar (plus a LaTeX register for anyone who wants to compete around with it). If you have specific comments about the contributions gratify post them in the relevant comments section for the specific affix. For general technical glitches etc affix comments here.
(1) Dan Drezner blogs at. He is an Associate Professor at the Fletcher School of Law and Diplomacy at Tufts University. He has written two academic books on international political economy (looking at sanctions and globalization) as well as a Council of Foreign Relations report and numerous articles. He possesses specific expertise on the intersection between celebrity culture and global politics.
(2) Jack Knight is Sidney W. Souers Professor of Government at Washington University in St. Louis. He is author of a widely cited book on institutional theory.
as come up as numerous articles. He has a new book co-authored with Jim Johnson on rational choice pragmatism and deliberative democracy which will be published next year.
(3) Adam Przeworski is Carroll and Milton Petrie Professor of European Studies and Professor of Politics at New York University. He is the compose of several monographs and numerous articles on topics including social democracy democratic transitions and economic development. This (previously discussed in CT post) gives a good overview of his life politics and academic bring home the bacon.
(4) Dani Rodrik blogs at. He is Professor of International Political Economy at the Kennedy School of Government of Harvard University where he teaches on international development issues. He has written two books copious numbers of academic articles and policy papers and was recently awarded the inaugural Albert O. Hirschman Prize of the Social Science investigate Council.
(5) Mark Thoma blogs at which has quickly become established as one of the key forums for consider of economics and politics on the Internet (with occasional interjections by Paul Krugman and others). He is professor of economics at University of Oregon where he has published numerous articles on aspects of macroeconomics theory.
: From his title on. Dani Rodrik is at pains to determine himself as a neoclassical economist bred in the bone. He writes. “If I often depart from the consensus that ‘mainstream economists’ undergo reached in matters of development policy this has less to do with different modes of analysis than with different readings of the bear witness and with different evaluations of the ‘political economy’ of developing nations.” Not to start an argument if the book were about professional cooking he might have called it
adjust economics is not very much like chemistry but the cerebrate for Rodrik’s emphasis on the primacy of theory. I think has less to do with the presence of economics’ many competitors in the development game – political scientists sociologists lawyers business executives savants of all sorts—than with what happened in mainstream economics itself in the twenty-five years since he began his career.
First this book is strictly grounded in neo-classical economic analysis. At the core of neoclassical economics lies the following methodological predisposition: social phenomena can beat be understood by considering them to be an aggregation of purposeful behavior by individuals – in their roles as consumer producer investor politician and so on – interacting with each other and acting under the constraints that their environment imposes. This I sight to be not just a powerful develop for organizing our thoughts on economic affairs but the only sensible way of thinking about them. If I often depart from the consensus that “mainstream” economists have reached in matters of development policy this has less to do with different modes of analysis than with different readings of the bear witness and with different evaluations of the “political economy” of developing nations. The economics that the graduate student picks up in the seminar dwell – consider as it is and riddled with a wide variety of market failures – admits an almost unlimited be of policy recommendations depending on the specific assumptions the analyst is prepared to alter … the tendency of many economists to furnish advice based on simple rules of ride regardless of context (denationalise this liberalize that) is a derogation rather than a proper application of neoclassical economic principals
: Dani Rodrik’s schedule opens with a discussion of the policy approach that dominated the development debate for much of the 1990s and to some extent still does. The term ‘Washington consensus’ was coined by John Williamson of the IIE to described the views of Washington-based institutions (IMF. World Bank and US Treasury in the 1980s but escaped from its creator and came to encompass a program of dogmatic adherence to a revived version of 19th century economic orthodoxy commonly referred to as neoliberalism.
takes on a problem of fundamental importance how to affect and sustain economic growth in underdeveloped countries and lift people out of poverty.
Past attempts to solve this problem can for the most part be identified with one of two polar extremes solutions that involve pervasive and persistent government intervention and solutions that rely upon extreme
market-oriented policies. Neither of these approaches has been very successful and the book argues for a different approach that combines these extremes and allows merchandise forces to operate in an environment shaped by government policy. Under this combination come the government in partnership with the private sector uses industrial policy and institutional change to strategically kick-start coordinate and bear on economic activity.
If the barriers to development are difficult to identify what should you do? One come is go a set formula such as the Washington Consensus. This provides a recipe to follow that is grounded in economic principles relies upon markets to direct development activity and is intended to be robust enough to work in a wide variety of circumstances. Unfortunately there is little evidence that such a formulaic market-based approach works across the broad sets of conditions and institutions that exist in undeveloped countries. And the opposite approach a heavy-handed top down highly interventionist dictatorial approach does not seem to be able to sight the keys to successful growth either.
The communicate is that too much reliance on either the government or the private sector has not in general produced the desired outcome of sustained long-run growth. To overcome this the schedule recommends prescriptions that alter the information flow between the private and public sectors to reveal the important barriers to development. This calls for a collaborative effort between the government and the private sector devoted to identifying and removing the biggest impediments to entrepreneurial activity. A main point of the book is that although there are certain broad principles that guide the choice of industrial policies and institutional design there is no one recipe that works for all countries. The endpoint is sustained economic growth and the prescriptions are firmly grounded in traditional economic principles but the exact path a country takes to reach its long-run objectives depends upon its unique circumstances and generally involves a combination of orthodox and unorthodox institutional practices.
While the first stage seems relatively easy to bring about getting to the second stage i e sustaining growth is more difficult (the book lists over eighty instances of growth spurts but only a few of those have been sustained over a long measure period). As the book says. “Sustaining growth is more difficult than igniting it and requires more extensive institutional reform,” and much of the discussion in the book is devoted to explaining a systematic approach to institutional design that promotes the necessary dynamism to bear on growth over the longer term.
Unfortunately the general principles that explain the difference between the countries who make it to the second stage and those who do not are unclear. One of the book’s messages is that such systematic differences are difficult to identify due to unique conditions in each country but since making it to the back up stage is the goal of development policy. I still desire we had a better sense of the factors that explain why most countries are unable to make the transitions needed to bear on economic growth.
Perhaps the book’s discussion of a cover by Imbs and Wacziarg (2003) in the section on institutional create by mental act is related to this problem of determining which countries will survive the transition into the second re-create. The paper estimates a typical development pattern and finds that development follows two distinct stages an initial re-create where sectoral employment and production change state less concentrated and more diversified followed by a second stage where this reverses and there is increasing sectoral concentration as the economy grows. In addition the turning point is estimated to occur on add up at relatively high levels of per capita GDP. Thus graphing sectoral concentration against GDP per capita reveals a U-shaped pattern and as Imbs and Wacziarg stress the U-shaped pattern “is an extremely robust feature of the data.” Based upon this they conclude that “Countries diversify over most of their development path”.
This conclusion is based in move upon the prove that the minimum of the U-shaped development path is at a relatively high level of income but there is quite a bit of variation in the minimum across countries (partly explained by openness) and it is lower after 1980. In addition the minimum is the point when the forces that are increasing concentration mouth to dominate the forces that are decreasing it but that is not necessarily the point where these forces mouth to change.
What I am suggesting is that perhaps this affect of clearing out unproductive unprofitable firms is an essential part of getting to the second re-create and that this process must begin fairly early in the development process earlier than the minimum point of the U-shaped curve. Initially the clearing out doesn’t fully balance the growth spurt and there is increasing sectoral diversification overall but eventually the forces of consolidation come to act upon the forces of diversification as successful firms gain strength and this causes sectoral diversification to end as the economy passes by the minimum inform on the U-shaped development curve. Without this process in place to clear the path for stronger firms to emerge and without it beginniing fairly early in the devekopment process growth stagnates before the country ever reaches the minimum point on the U-shaped development curve.
Perhaps it is the failure of this cleaning out process to direct due to government ownership of some firms government protection of certain favored sectors regulation labor restrictions etc. that is a factor in preventing countries from getting to the back up re-create. The book recognizes barriers such as these can impede development and one of the key guiding principles the schedule gives for partnerships between the public and private sectors and in building institutions to support growth is the creation and preservation of ‘dynamism.’ In this regard among countries experiencing growth spurts it might be interesting to find out what the sectoral concentration profiles look desire for the countries that were able to make it to the second stage versus those that did not particularly a comparison of measures such as exit rates. More broadly however the challenge is whether there are deeper connections between the U-shaped concentration curve that appears to give a very robust characterization of the growth profile of developing countries and the first and back up stages of growth identified in the book.
And this brings me to my measure inform. Whether or not there’s anything to the anticipate above about stagnation due to the inability to clear out unproductive elements in the economy a bigger message is that we be to learn more about the connections between the first and second stages of growth i e about the transition itself. For example what if removing the one or two most important impediments to jump-starting economic growth in the short-run is not the best means of getting to the second stage or leads to a dead end where you cannot get to the back up stage at all? Maybe some other development strategy involving the back up and third most important barriers say won’t give quite as much boost initially but gives the country a much better chance of surviving the transition and sustaining growth over the longer call. The example is simplistic but the point is that this is a single interconnected problem not two separate problems and the first re-create must be devoted to bringing about a successful convert to the back up re-create. The book does a great job of listing the guiding principles for each stage and of describing how to design institutions to sustain growth but I would desire to see the connections between the two stages particularly how to set conditions in the first stage so as to make the back up re-create more likely explored in more depth. As noted above the kick-start phase seems relatively easy to carry about and there are scores of instances of this happening but getting to the back up stage is much more difficult and perhaps there is more that can be done to enable the transition to act displace. In any inspect since so many countries fail after growth is initiated the convert is something we need to learn more about and this book provides a solid foundation from which to investigate this air further.
One thing the government could and has at various times do very come up that would really help start and run a business is give copious amounts of good data on the multitude of things business need to experience for good decision making.
I think China really skews the mode; something akin to competing with slavery. So what's efficient for a US firm trying to compete?
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Related article:
http://economistsview.typepad.com/economistsview/2007/11/dani-rodrik-sem.html
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