John Mathews emailed me suggesting I might be interested in posting a link to this op ed on development policy.
He was right. The article makes points that I’ve quoted Dani Rodrik making against the Washington consensus in earlier posts. I have little doubt that the article is pretty on the money, though, like the Washington consensus it may be a bit more of a recipe than Dani Rodrik would go for. Rodrik stresses the idea of diagnostic development economics, where one seeks to discover the specific market failures that really matter and then work on them – or in the words of the title of his new book, ‘One economics, many recipes’. Still I doubt the authors of the op ed would disagree with that.
There is then the question of the degree to which this kind of thinking and this kind of political economy can be of use to more developed countries. My suspicion is that well done it can be at least in specific areas. But it’s risky. And Australia has such strong bureaucratic anti-bodies against active industry policy, that it’s unlikely we’d do it well. Add to that the fact that innovation itself is changing, and the race at the forefront appears to be increasingly going to places like the US with a very strong tradition of entrepreneurialism among the citizenry – an entrepreneurialism which isn’t easily fostered by lots of meetings with officials.