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Daphine Mugayo

Last week in class, we read Duflo's paper on the discussion of whether economic development is necessary for equality or whether equality is necessary for economic development. Duflo argued for the necessity of equity over efficiency costs.

In this paper, the author seems to present another approach of looking at these two variables that seems very applicable to Duflo's question. The author justifies an equality function that is dependent on economic development. He argues for the need for simple short term growth strategies that create bursts of growth that would soon require for institutional development to sustain this growth. This argument seems plausible as he explains that the development of such institutions like those necessary for equity development have higher fixed costs and lower marginal costs. He brings to light the unreality of the idea of development of institutions required to deliver utmost equality in poor countries.
It then becomes less surprising that the author does not list equality as one of the universal principles. From the reading, I presume that the author foresees equality coming into play once economies experience growth and begin creating institutions that are key to sustain this growth. This would justify the World Bank's idea that women empowerment is necessary for sustained growth and development.

Thus if the author were to have a one on one with Duflo, he would argue for the need for short term development in poor countries which would easily be achievable by simple policy. This burst would then cultivate an environment that requires for institutions including those for equality, that would sustain the growth. Using his approach, you would do away with having to undertake Duflo's projected efficiency costs just to earn equality.

HeeJu Jang

Rodrik's article has numerous points that were discussed in materials that I have been reading for Professor Dickovick's IPE class (which is conveniently right after Development Econ). One of the points that I thought would be interesting to elaborate is the protectionism.

In theory (and assertion among champions of trade liberalization), protectionism is considered to be restricting free trade from achieving its full benefits. Histories of Latin America show us that the strong emphasis on Import Substitution was a huge failure. Economists such as Coughlin, Chrystal, and Wood believe that protectionism is deleterious in that it deprives both domestic and foreign investors of opportunities to start new business. (If interested in reading their work, you can find the article via http://research.stlouisfed.org/publications/review/88/01/Protectionist_Jan_Feb1988.pdf)

On the other hand, Rodrik asserts that countries such as South Korea and Taiwan have reaped myriads of benefits by giving advantages to domestic producers through subsidies and selective trade protection. Although these countries adopted policies antithetical to Washington Consensus, they still managed to achieve sustainable economic development.

So when it comes to the issue of protectionism, is it always case-by-case?

Samantha Smith

It was refreshing that Rodrik is so open in this paper by essentially saying that anything is possible and neoclassical economics works, but only under the right set of conditions. In the past weeks our class discussions have concluded that, there is no one “development answer,” so while it is easy to conclude that based on any of the papers we have read, I enjoy reading Rodik’s deeper look into this. He uses trade liberalization as one of his examples and then goes to list seven conditions that need to be met in order for trade liberalization to be a correct growth strategy. One of Rodrik’s points is that “sound economics has often been delivered in unsound form.” This is a direct response to the “Washington Consensus,” which places a bias to western development ideas. Whether or not the west agrees with China’s economic practices, these economists cannot argue with China’s positive growth rate. Throughout the second half of the paper and in his conclusions, Rodrik emphasizes that a mix of conventional and unconventional policies will work based on the realities of the country. Even when Rodrik explains the two-pronged growth strategy of investment to stimulate growth and then institutional building to sustain it, he acknowledges that this varies for each country and situation.

So to answer HeeJu’s question based on the paper and how I interpreted it, I think that anything is case-by-case, including protectionism.

A quick comment- one of my favorite lines in this paper is “It goes without saying that not all unorthodox remedies work. And those that work sometimes do so only for a short while.” I liked this line with the example of Argentina attached because as I was reading this paper, I started to get caught up in abandoning the “Washington Consensus” all together, but this brought me back to rational thinking about individual cases and circumstances.

Juan Cruz Mayol

As an Argentine, I want to draw the connection between the reading with what has been happening the las couple decades in my country. In the mid 1970s, in the context of the cold war, the US approved the 'Condor operation', "in order to facilitate the coordinated employment of internal security forces within and among Latin American countries" (US General Robert W. Porter); in real terms this meant supporting military dictatorships across Latin America, tied to neoliberal economic policies that opened the countries to the international markets. In Argentina, this meant the reduction of the local industries that could not compete with the lower international prices. In order to support this system, and promote capitalism, Argentina increased by large amounts its external debt, that, as we read in Chapter 3, did not have the effect the Marshall Plan had in Europe due to corruption.
Some of this external debt coming from institutions like the IMF were tied to their recipes or prescriptions, that "followed the Washington Consensus requirements: trade (tariff reduction) and financial (free capital inflows and outflows) liberalization; deregulation of the economy (liberalization of prices of goods); and the ‘retirement’ of the State from economic activities (privatisation of the state enterprises, e.g., oil and gas, banks, telecommunications) as well as some of its functions (coverage of social security, for example)"(1). The situation got worse when the state had to keep borrowing money to keep the exchange rate of the peso tied to the dollar in the 1990s; what was implemented as a solution, ended causing more problems, as Rodrik states in his article, each of the unorthodox methods could have different results in different countries. In Argentina, the lack of foreign investment during this period led to the failure of the neoliberal model prescript and enforced by the IMF. This model ended after history's largest default in the early 2000s. "During his August 31st, 2004 ten-hour, self-invited visit to Argentina, IMF Managing Director Rodrigo Rato told President Néstor Kirchner: "At the IMF we have a problem called Argentina ". Kirchner promptly replied: "I have a problem called 15 million poor people"" (2) Argentina decided to pay its debt to the IMF as a way to get rid of their prescription economic models. Ten years later, we are back where we started, another default (as from yesterday, according to the decision of the American court in NYC). This debt started as a way to promote the initial spark of growth that the Todaro book explains, but now the president Cristina Fernandez de Kirchner argues that it is hindering economic growth, as the bondholders demand a 1608% profit on their initial investment, what can make the RUFO (rights upon future offers) clause apply, and make the rest of the bondholders that accepted to receive about a 300% instead (93% of the bondholders accepted this offer), demand for a larger percentage interest.
Argentina seems to be trapped in a cycle, in which debt does not allow much saving for economic growth, and without economic growth paying the debt becomes harder every year. The currency devaluates daily, inflation reached 50% last year (the real one, not the government data), and with a black market for dollars (yes, bills with Franklin's face) that promotes speculation as it was the only investment that had profit last year (better than any stock, bond or startup business), economic growth seems to be an impossible goal for the next couple years in Argentina.
With the combination of the prescription models, corruption that leads to the misuse of foreign debt, and the idea of unorthodox methods having different results depending on each country (Chile went through a similar historical process but the model worked out there), Argentina makes a good example to see some of Rodrik's ideas.

(1) http://www.twnside.org.sg/title/twr137a.htm
(2) http://www.redpepper.org.uk/Argentina-and-the-IFIs-better-off/

Jean Turlington

Rodrik emphasizes that there is no one specific policy or theory about development that describes how a country and its economy grows. Many of the things that he discusses remind me of the clinical concept of how to stimulate development that we mentioned in class. You must find out what works for that specific country or area and apply it to that area, not all policy will be effective worldwide. It is almost even like raising kids, although I have not done it, my mom always talks about how each of her three children needed different things to grow and develop. She did not treat us all the same when it came to growing up because we each faced different problems. If we had been treated the same when we faced different problems we may not have been as successful.

Another interesting component of studying how countries develop is how Rodrik noted that many times larger periods of grown and development were associated with small or relatively mild policy changes or other types of changes. Table 9 describes over a page worth of instances where small “growth transitions” resulted in some sort of growth. Some amounts of growth were larger than others, but they were all period of growth as a result of a change. Maybe if we can identify what these changes might be in a country that encourages this growth we could spur something new. This goes back to the first idea though that development can be subject to the situation inside of a specific country. In other words different countries will probably have changes that spur growth but finding those could be key. I think lastly although there are many ways to increase growth and development the models and theories do a good job of describing the overarching ideas where more specific things can be applied to the individual countries, which I think also goes back to Sam’s point about working to improve development on a case by case basis.

Austin Hay

The examples that were discussed in this article elucidate some interesting findings. I think the clear thesis in this article was strong, yet vague. He basically came up with some guiding principles or elements to starting growth, continued on to say there’s no way to know how to do these in any form outside of deciding case by case, and then further went on to say even if one comes up with the right implementation of “property rights,” “sound money,” “fiscal solvency,” and “market oriented incentives” that often times the benefits fade after maybe a decade (or less). He often used the phrase “higher order principles of sound economic management do not map into unique institutional arrangements.”
As others have commented above, I find it odd that not one of these cornerstone economic traits that he emphasizes deals with any qualitative measure of life in a country. Sure, this is an economics paper, and measures of the quality of life are spotty at best, but at some point (as we’ve discussed in our class time) any amount of economic incentives or plans cannot succeed if a majority or large portion of the population is in danger of starving, has no access to health care, or any other number of unfortunate circumstances. I feel like most of the examples he brings up would fall apart in many developing areas where so many are living on less than $2 or $1 a day. He says any plan for economic growth needs to depend heavily on local knowledge, but doesn’t mention much about how poverty and extreme poverty would factor in. That would be an interesting addendum to this and to some extent Duflo’s piece last week complements this article in this way. She supported fixing these quality pieces first in order to reach the point of doing the vague ideas brought up in this article.

Bennett Henson

I thought Rodrik's paper was intriguing because it examined economic growth in developing countries through a very wide lens, as oppose to some of the other papers we have read. Essentially Rodrik is echoing Duflo's opinion that there is no "magic bullet" when it comes to economic development, but instead of examining intra-household bargaining, he is saying that each economy is very different and therefore needs specialized implementation of first-order economic principles.
These principles, property rights, market based competition, sound money, etc. have proven to be essential for development, but the ways in which these principles have been implemented vary wildly. It is important to implement these principles in a way that is tailored for a specific economy. Countries have achieved these goals through very unorthodox implementations, such as China's two-track strategy and Mauritius' EPZ. But when, other countries try these strategies they often fail because they try to adopt a system that has been perfectly tailored for a different economy. Similar to the False Paradigm Model, these institutional reforms are implemented in good favor, but can result in damaging the economy, just like the doctors from Banerjee and Duflo's "The Economic Lives of the Poor" would often harm their patients solely due to misdiagnosis.
Like Jeffrey Sachs' Clinical Approach, we must analyze each country like a different patient and prescribe them the exact medication they need.

Jacob Strauss

This paper coupled with Heeju's and Juan's posts reminded me of several of the discussions I have had in international politics courses at W&L concerning poorer countries and IMF development strategies. States such as Jamaica have been forced to rely on loans from the IMF in the past to avoid default, but the strings attached to the money often force them to develop along a Washington consensus model. However, it has been shown in many areas (as Juan points out) that this paradigm doesn't work in many developing countries for a wide range of reasons, such as the lack of a strong domestic market and inability to compete with companies in developed companies. These measures can lead to a cycle in which countries are forced to request further loans and in return more austerity measures are applied. Rodrik makes the point that the strategies that work in one area (china, taiwan) usually won't work in another which explains the struggles of the IMF to create growth, and this relates to last week's discussion on how we need to avoid looking for patterns where none exists. When I was in China we often discussed the Reform and Opening of 1978, and my teachers all made the point that China had started "walking on the road of capitalism, but it will always be with Chinese characteristics." The emphasis on the unique strategy of the Chinese can be said for any successful growth story, as each paradigm must adapt to the culture and foundations of the country it is being applied to, not the other way around.

Raymond Monasterski

Developmental Econ Blog Post

One of the key arguments of Rodrik’s paper is that “igniting economic growth and sustaining it are somewhat different enterprises.”

While he focuses particularly on the Washington Consensus and how countries have used alternatives to the model and still succeeded in growth, his argument, in its most basic sense, is also related to neoclassical models of diminishing returns. In our analysis of the Solow growth model during Tuesday’s lecture, the theory of diminishing returns was evident, as when capital increased, income was increasing by a decreasing amount, eventually leveling off. So, when a country with a low capital and low income starts trying to grow the economy, perhaps by investing in capital, if possible, than the beginning growth will be remarkable. However, as Rodrik articulates, sustaining growth is a different project.

Thus, he uses the Washington Consensus as a point of emphasis in his argument. As we see in East Asia, economic institutions are quite different from Western ideals of the Consensus. China, for example, when engaging in market liberalization, for example only allows farmers to sell at a market price after they have fulfilled state quota. With property rights, the government has maintained its equity in the land, because its prosperity has direct affects on the government’s revenue. These unorthodox institutions in comparison to the Washington Consensus have resulted in orthodox results, as it has provided incentives for growth based on market principles, only after producers and landowners have fulfilled state duties.

China’s case simply shows that economic growth doesn’t have to be restricted to a particular set of ideals or institutions, according to Rodrik. Moreover, institutions must apply to their particular settings. It’d be difficult to take China’s fairly state-based development and put it in a free-market capitalist economy that relies primarily on free trade and privatization of business. Imagine the uproar there would be in America, for example, if the state controlled part of each business or transaction. (In a way they have, through taxes and tariffs or recession stimulus measures, but not necessarily to the extent of China.) With economic decision-making being highly politicized, it is also difficult and time-consuming to make significant economic progress.

Meanwhile, China has been consistently growing, but its GDP growth has recently slowed, maybe due to diminishing returns or maybe not. In the end, Rodrik might take a more holistic overview on growth, at least in comparing growth and development on a global level but still emphasizes that there is no “magic bullet” that can work in every situation.

Alexandra Butler

As many others have mentioned, I found this paper to be honest and refreshing. I liked the challenges to traditional economic theory that Rodrik proposes in this paper. For those who do not know the ins and outs of economic theory, it may seem obvious that the world cannot be generalized and that policies cannot be “packaged.” It may seem clear that different countries and cultures require unique policies that fit their existing governments. However, I think as students of Economics, it can be hard to back away from the theories and models. Even in my other Economics classes, like labor econ, we draw straight lines and graphs of labor supply and demand that are “efficient.” It is easy to draw a subsidy or a minimum wage on a chalkboard-but does that mean it is necessarily the best option universally to fix unemployment? I really liked when Rodrik referred to policy implementation in developing countries as “recipes,” and when he reiterated later on that, “function does not equal form.” This metaphor, along with the Martian, was helpful in showing the reader how ridiculous it seems to make generalizations and assume patterns on a global scale based on models and theories. Sometimes I think economists forget that models and theories are just those, and not necessarily perfect prescriptions for development.

Reading this article also reminded me of my Economics of Institutions class I took two years ago with Professor Grajzl. In this class, we discussed how many developing countries suffer from weak institutions as a result of colonization. Many former colonies still suffer from an elite-controlled society that emerged after independence. However, this class focused on the importance of developing strong institutions to foster growth. What I found particularly interesting in Rodrik’s paper, though, was that sometimes weak institutions force countries to implement unconventional reforms. This is because the recipe-following, packaged reforms based on conventional economic policies require strong institutions. China, India, and Mauritius all implemented unconventional reform policies that would seem inefficient when compared to standard remedies. It is interesting that their institutional weaknesses spurred this creative strategy and actually helped these countries grow. Latin American countries with weak institutions that followed a more mainstream reform approach that resembled the Washington Consensus, however, did not experience the same growth.

I enjoyed this paper and found it especially interesting to get two unique perspectives on institutions in developing countries. While my previous class focused on the need for strong institutions, this paper provides examples where weak institutions, in certain examples, can actually inspire better development strategy.

Mary Beth Benjamin

It was interesting to hear Rodrik admit that it is difficult to pinpoint the solution to sustaining economic development and growth. In using a myriad of examples he concludes that each case is different and that there is no one factor that can be manipulated to stimulate growth across many different economies. Instead he believes, “the key is to realize that these principles do not translate directly into specific policy recommendations”. He says, “local conditions matter not because economic principles change from place to place, but because those principles come institution free and filling them out requires local knowledge”. This reminds me of the idea that was brought up in class during out discussion of The Economic Lives of the Poor. In this article, Duflo and Bangerjee talked about the decisions that poor people are faced with. In thinking about this, we were reminded that the best way to use economics to help these people was to listen to them and figure out why they act in ways that seem contrary to our model of rational behavior. Rodrik concludes by echoing this same idea: each community has its own set of needs that may not fit our one size fits neoclassical model but it is important to keep the big idea economics in mind to create custom tailored and admittedly less conventional policies to promote economic development.

Curtis Jay Correll

Like Raymond, I was interested in Rodrick’s argument that there is a difference between jump-starting growth and sustaining it. In jump-starting growth, Rodrick used pretty clear empirical evidence to show that Washington Consensus strategies are not always the most effective. Liberalization of the economy in trade and others sectors does not necessarily help the country in question, since the market forces and institutions in place often cannot immediately hold up under new market pressures. Since so many market assumptions are violated in many of these countries, Rodrick showed that in some cases it is better to fix the market failures or even to simulate the effects of liberalization through policy first.

Maintaining and sustaining growth is where the Washington Consensus and economic liberalization appear to have a closer resemblance to successful policy. Through liberalization and the improvement of institutions domestically, growth seems to be sustained most effectively, but Rodrick makes the point that current methods have been effective in function but do not necessarily need to be replicated in form. The same goals can be best achieved in different ways in different countries, so it is important in both this step and the jump-starting of growth to look very specifically at countries individually instead of painting them all with the same brush.

Andrew Riehl

The reading explains how unpredictable economic development can be. Some policies work in certain time period, but not others. Some policies work in certain countries, but not others. It all depends on the historical, economical, and political contexts. One section that stood out focused on China’s economic development starting in the 1980’s. If an economist in 1978 were to suggest policy moves for China, they would choose none of the things that China actually did to develop their country. For example, they did not privatize lands but instead gave the power to local communities. They also liberalized agriculture only at the margin when they would have been fully recommended to do so at the time from the popular “Washington Consensus.” It ended up working for China anyway. Another complication comes forth when the author makes a general statement like “trade liberalization is good for economic performance.” He then says this is only true given the seven bullet points that follow the statement in the article. This section articulates the point that all policies are contingent on the context. This begs the question: is there even an overall answer to economic development or does it only work on a case-by-case basis? There might be a very general answer to economic development, but it is very non-specific and it is always open to change.
I also found it really interesting how successful and unsuccessful economic growth happens regionally. Generally Sub-Saharan Africa moves together as well as Latin America and East Asia. Is this because their history and governments are similar or are there other reasons as well?

Ferrell Carter

I, along with what seems like most other students, appreciate Rodik’s broad approach to development economics and what strategies work for different countries. Though he didn’t flesh out the ideas of the social sphere as a key proponent to economic development, Rodik did mention that market successes must be linked to social protection, social insurance, and democracy. The ideas of social protection and democratic ideals get back Duflo’s point that social (namely gender) equality and growth have this symbiotic relationship. Though Rodik did not directly address social reforms as policy suggestions, he hints that such policies and institutions would facilitate economic growth. Along these same lines is Rodik’s consideration of local conditions when applying development strategies. He says that since such conditions come “institution-free,” economists must have an understanding of the conditions of a country in order to enact effective policies, since development works on such a case-by-case system. I agree with what Jean wrote about this idea being similar to the idea of “clinical economics” that we discussed in class. In order to prescribe development strategies, economists must first understand the background and conditions of a country of interest.

I can compare this to my experiences in the Dominican Republic. For three years in high school, I went for a week at a time to rural villages outside of Puerta Plata with a missionary that my dad had become friends with. We usually visited 5-6 villages per trip and they were so vastly different. Even at this micro-scale, there would be no way that one development strategy would work for each one. In village one, they needed clean water since the river was so badly polluted, while in village two they had found clean water and now needed medication to treat worms that they had contracted from previously polluted water. Bringing “aid” to any of the villages would be almost useless without first spending time there and understanding what they needed the most to sustain themselves. I think this relates well to what Rodik discusses in his essay and how each development story will ultimately be different from the last.

Bobby DeStefano

Rodrik’s conclusion that there is no one strategy to create economic development is not too surprising. Early economic development theories believed that less-developed countries should mirror policies of developed-countries. However, Rodrik gives many examples of how countries, particularly in Southeast Asia, have been able to create economic development without following the Washington Consensus. The path to economic development is different from country to country, as each country has its own history, culture, and policies. As Rodrik states, “that even the simplest of policy recommendations- ‘liberalize your trade’- is contingent on a large number of judgment calls about the economic and political context in which it is to be implemented.” Simple policies changes may be all that is needed to “push” a countries economy forward. This suggest that the wide-sweeping policies changes that the “Washington Consensus” calls for may hurt a developing country’s economy. Rodrik uses the example of East Asia and Latin America to illustrate this point. Countries, such as China and South Korea, were able to create huge economic growth during the second half of the 20th century without using policies suggested by the “Washington Consensus.” Instead that created policies that fit what their respective economies need in order to grow. Compare this to Latin America, where countries attempted to remake themselves by following the Washington Consensus, have seen slower economic growth.

Madison Smith

One thing is certain, Rodrik’s article basically discredits anyone who thinks that people/countries are poor because of only one or two reasons. What I really like about this article is its ability to show how an interaction of policy prescriptions is able to promote development, but the article doesn’t try to conclude one magic interaction. I have always wondered how do you truly “liberalize trade” or “secure property rights”. These terms seemed vague and difficult to put in to practice. After reading this, I at least know one more piece to the puzzle. I realize now that there are multiple ways to reach the same goal. I think that this is a good reminder for what the Banerjee and Duflo article was talking about with rationality being in the eyes of the beholder, but on a macro scale. While one country may liberalize trade using one method, another country may need to do something completely different to see the same result. I have taken a lot of different poverty classes, and read so many small-scale studies on different programs and the effects on poverty, but it is important to remember that these studies are on a small scale and can not necessarily be replicated in a different part of the world.

Zach Colby

I thought this paper was a great supplement to our class discussion on Tuesday. Tracing the history of growth and development theory throughout the last 75 years really helped give us an idea as to how ideas evolve and how no theory or model can ever perfectly represent the real world. Rodrik basically states this in a much longer, more thought out and intelligent way. There is no perfect prescription no one action we can take or institution we can implement that will solve all the problems in the developing world. I think we can also link this back to our discussion of Duflo, as many people above me have. There is no x causes y or y causes x, rather the variables of the world are all interfunctional and incredibly complex. This also reminds me of a paper I just read in Professor Goldsmith's Econ 235 class. It was a paper by Janet Currie regarding the advantages of preschooling and academic intervention for disadvantaged kids. There were tons of different experiments and Currie's review of the literature came to the basic conclusion that there is no "magic bullet" for successful intervention. What everything I'm saying boils down to is that we can model every real world problem we want but most of the time it is going to take a variety of efforts to truly solve the issue.

Kate LeMasters

3. Having taken International Political Economy (IPE), as HeeJu is in right now, it is the first time I have seen an economic and political economy perspective come together. As she says, Rodrik’s paper further emphasizes how developing context is necessary. However, I do not think he places as much emphasis on the types of context needed. In Paul Collier’s book The Bottom Billion, he hones in on the conflict trap, natural resource trap, being landlocked with bad neighbors, bad governance in a small country, and how these four components intermix with each other. While Rodrik is correct to address the need for context, he does not dig into how different components of context often play into other components as well. Obviously, this is a short paper that gives an overview of the problem, but he should note that underdevelopment in one sector and corruption in another often create magnified barriers.
For instance, the current Ebola outbreak is wreaking havoc on many countries, but those in conflict zones and war areas are facing increased harm. Not only do these countries not have the healthcare institutions in place, but they lack just governments. Clearly, these areas do not have sustained development. As Rodrik states, sustained growth must be able to withstand exogenous shocks, which, I claim, should not be restricted to economic ones. However, we see the international community responding to the situation in these countries with blanket-statements. They are the ‘Ebola-affected countries’ but no one seems to recognize that their situations vary greatly. Take, for example, this article, which focuses on the international funds necessary to stabilize the economies of these countries: http://www.naturalnews.com/046952_Ebola_World_Bank_International_Monetary_Fund.html

An interesting point that Daphine made was the lack of mention of equality, which others then substantiated by saying that this paper should account for poverty and absolute poverty. While Rodrik mentions social institutions, he doesn’t specifically address human capital and its importance. I too think it would be very enlightening for him to incorporate equality into his argument to see where this would fit. I would assume that human capital accumulation is what allows the sustained growth he speaks of. If we only say ‘institutions’ without specifying how and if they should work to increase human capital, then we do not get at the whole picture.

Lucy Ortiz

Jumping off Curtis’ point, I found it interesting that Rodrick was able to illustrate the basic idea of the paper that developing countries need specific, not pre packaged, strategies with the institutions of developed countries. Rodrick mimics his argument for using the first order economic principles as only a very basic starting point when discussing the institutions in the developed world. He explains that Europe, Japan, and the US all have appropriate regulation, social insurance, and macroeconomic stability but all have different institutional forms, pointing out that capitalism and welfare states look very different in each. Each country took the basic theories and implemented them in their own way. Taking this a step further I found that Berkowitz et al. ‘s findings on the creation of legal institutions that “countries that developed their formal legal orders internally, adapted imported codes to local conditions, or had familiarity with foreign codes ended up with much better legal institutions than those that simply transplanted formal legal orders from abroad”(27) was a valid explanation of a starting point for Rodrick’s argument. Yes, the first order economic principles are important and should be taken into consideration, but just as imported legal codes need to adapted to local conditions, as far as development as a whole goes, “The hard work needs to be done at home” (18).


I agree with Zach--this paper helps to identify how the evolution of thought in the field of economic development works at the ground level. Generally, I think Rodrik's appeal to the importance of local policy strategies makes a lot of sense. As he illustrates through case studies like China and other East-Asian nations, simply following the "big rules" or Washington Consensus does not always yield the most successful economic outcomes. Furthermore, his acknowledgement that successful policies are often "two-pronged" hits home. Too often developing nations (or those helping developing nations) are too focused on the short-term economic effects, forgetting that the attainment of prolonged prosperity does not necessarily go hand-in-hand with short-term success.

As a politics major, I was very interested in Rodrik's discussion on the necessity of a non-corrupt government in addressing market failures. While this seems to be a no brainer, I do not believe that the issue gets enough attention. The unfortunate reality is that many developing countries that struggle economically also suffer from self-serving, corrupt leaders. It is possible that these countries must work on fixing governmental corruption before they are able to enact any long-lasting, powerful policies to address economic insecurity.

Chandler Moody

I agree with Bennet’s post that Rodrik’s belief that there’s no magic bullet to solve economic development all the time for every situation echoes some of what Duflo talked about in her paper that we read last week. Clinical trials have entered the world of economics for precisely this reason- so that we can say with some level of certainty whether a policy is effective or not as compared to a control group. So far nobody has mentioned the two quotes at the very beginning of the piece, so I wanted to talk about them. I found these two quotes to be a great starting point for Rodrik’s paper. The contradiction between the two quotes made me intrigued as to where the paper would go. The first quote from Harberger, an American economist, are the words of a man who believes that implementing policy is a surefire way to see economic development. He is basically saying that it’s no coincidence that more developed nations are succeeding economically and less developed nations are not. He believes that economic growth can be achieved strictly by following the policy suggestions from professionals. From this quote, he’s insinuating that the less developed countries have not succeeded because they have not enacted these policies. This quote is from 1985. As we talked about last class, theories on growth and development are constantly evolving. This first quote from Harberger expresses a Neoclassical view. His 1985 mindset can be contrasted, it seems, with his own later beliefs. Rodrick quotes him again right after saying that “When you get right down to business, there aren’t too many policies that we can say with certainty positively affect growth.” This is from 2003. This type of theory is in line with something Rodrik and Duflo would agree with today. Popular theories today seem to be echoing the idea that we ought to have a more practical approach to making growth happen. While something like the Solow model is an extremely powerful tool, there is no standard package for growth. As Rodrik points out, the key is that brilliant economic principles do not always translate to successful policy recommendations. While his paper makes a strong case for discarding “the rule of thumb,” it doesn’t provide an exact solution, but that’s something I really liked about it. As a side note, I also really liked how he laid out his ideas in this paper. It was very logical to follow his thinking from “what we know that (possibly) aint so” to “back to the real world.”

C Wood

The idea that different countries within their own situational context may need a much different package of strategies was an idea that was repeated constantly throughout the article. The most memorable and creative way that this point was articulated though, was the use of an objective viewer, the martian. This, to me, was a very clever way to establish the point that just applying a general anecdote procedure for different general situations is not the best solution. The martian attempting to deduce what strategies each country used based on rates of developments of different sectors of the economy was a clever way to explain this point in a different way. The Martians guesses would not correlate to reality.

This relates with another key argument of the paper that professor Casey touched on in class. This is that someone attempting to prescribe strategies for development for a country needs to be knowledgeable about the specific dynamics of that country such as its history, current institutions, ect. Though sometimes imitation of successful development schemes can be placed on developing countries with similar backgrounds, it makes sense that, like a doctor, an economist should take into consideration the country and it's individual characteristics rather than just models.

Andrew Winter

Like Zach, this paper immediately reminded me of our discussion from last class. I remember in particular how we emphasized how often economists and other policy makers attempt to use the same treatment on underdeveloped economies worldwide. As if the solution to Country A's economic issues would automatically work in country B. Rodrick reminds us that this is not only an inadequate solution, but that the state of Country B may require a completely different approach. He states, "The point is that even the simplest of policy recommendations—“liberalize your trade”—is contingent on a large number of judgment calls about the economic and political context in which it is to be implemented." Basically, I agree with Rodrik and most of my peers above in feeling that we need to rethink our growth strategies; we need to stop trying to find a one size fits all cure and look at each country on more of a case by case study.

Richard Nelson

It seems like this is pretty much a consensus, but I thought this study did a very good job of showing how the same catalyst or policies can have vastly different effects on different people and countries. One of the best examples was Latin America, where Rodrik wrote, “The regional average for the index (“liberalization index”) rises steadily from 0.34 in 1985 to 0.58 in 1999. Yet the striking fact from Figure 1 is that Latin America’s growth rate has remained significantly below its pre-1980 level.” While policies are often very important in altering economic functions, they are only one piece of the big picture. It’s like comparing apples to oranges – we can’t take policies that have worked in developed countries or even very similar countries and expect them to function the same. The Washington Consensus brings us to logical and successful policy reforms, but it is not the only option (as seen in China). The other section I found particularly interesting was about Argentina’s currency board. The controlled Peso exchange had its benefits, but was it ever a long-term fix? This goes back to Rodrik’s argument that spurring an economy is one thing, but sustaining it is an entirely different beast. The problem is that we (as societies) are often so short-sighted that as long as today is good, we think that tomorrow will be as well. This is very similar to what happened with the US in the ’08 crisis, where we ignored the very blatant evidence in front of us that things couldn’t keep on going as they were. We like to measure the success of a plan by its immediate effectiveness, often at the expense of a few years down the road. So, taken in the context of developing economies, what is the answer to both spurring and sustaining an economy? This study clearly shows that there is no answer, other than constant re-evaluation of each completely custom plan for every different country. While history teaches a lot, in some ways it narrows our views. I can, in some ways, maybe see that this is why the world bank had employees go into countries completely blind, so that they had a clean slate with no biases (maybe?). Regardless, this paper left me thinking even more about the endless variables that can leave a great policy and regime in ruins due to sometimes uncontrollable variables and timing.

Wilson Hallett

Rodrik’s piece is interesting in the form of academic literature. Most literature I have experienced that is related to economics usually caters to a uniform economic theory without regard for specific economies. Most recently was piece regarding a “how-to guide” on how to get out of a deflationary or liquidity trap economic environment. The conclusion was a three-pronged approach to be applied to any situation in a country experiencing the negative symptoms of said issues. Rodrik, however, understands and articulates in her essay that many times, unorthodox measures are necessary and that a cookie-cutter economic reform agenda isn’t required for economic growth. The analogy of a western economist visiting China and recommending reforms based on western beliefs may not have worked as well to promote growth as the slight institutions that the Chinese government did end up enacting.
Even though Rodrik does recommend a two-pronged approach to growth, the plan is very basic and open to methods of choice to different economies. The approach revolves around short-term plans to ignite growth followed by long-term plans to sustain growth.

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