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09/26/2014

Comments

Callie Northrop

We've discussed many times and in many different applications how there is not a sure fire way to achieve growth and economic development. However, I thought Rodrik's work did a great job of pointing out how many different puzzle pieces are at play in stimulating and sustaining growth. Not only are there many variables, but there are varying combinations of those pieces that seem to have different effects in different countries. Before reading this paper, I felt that we hadn't yet figured out the "magic solution" to economic growth. However, after reading this, I have a more realistic view that each country has such different cultures and circumstances, which will ultimately call for individualized approaches to stimulating growth. The two-pronged approach in China stands out particularly in my head as an example of a strategy that would not work well in many countries, yet has proved successful in China. It makes me think a lot about what Professor Casey said at the beginning of class; the best way to help another country is by listening to the people and understanding their problems. In this way, it seems important that each country find a combination of policies and strategies which best fit their specific problems.

Callie Northrop

We've discussed many times and in many different applications how there is not a sure fire way to achieve growth and economic development. However, I thought Rodrik's work did a great job of pointing out how many different puzzle pieces are at play in stimulating and sustaining growth. Not only are there many variables, but there are varying combinations of those pieces that seem to have different effects in different countries. Before reading this paper, I felt that we hadn't yet figured out the "magic solution" to economic growth. However, after reading this, I have a much more realistic view; that each country has such different cultures and circumstances, which will ultimately call for individualized approaches to stimulating growth. The two-pronged approach in China stands out particularly in my head as an example of a strategy which worked well in one place but would not be as successful in many others. It reminds me in a way of something Professor Casey said in the beginning of the semester: in order to best help developing countries (or any county for that matter), the best thing to do is listen to the people and understand their lifestyles, problems and concerns. In this way, it is important for economic policies and strategies to be very specific for each country. It is why a policy like the Washington Consensus might not work in every country and why an American economist (like the article's example) cannot make perfect suggestions for every country based on his or her economic insights.

Callie Northrop

We’ve discussed many times and in many different applications how there is not a surefire, perfect solution or way to achieve growth and economic development. However, I thought Rodrik’s work did a great job or pointing out how many different puzzle pieces are in play in stimulating and sustaining growth. Not only are there many variables, but there are also varying combinations of those pieces that seem to have different effects in different countries. Before reading this paper, I felt that we hadn’t yet figured out the “magic solution” to economic growth. However, after reading this paper, I have a much more realistic view; that each country has such different cultures and circumstances, which ultimately call for individualized approaches to stimulating growth. The two-pronged approach in China stands out particularly in my head as an example of a strategy, which worked well in one place but would not be as successful in many others. It reminds me in a way of something Professor Casey said in the beginning of the semester: in order to best help developing countries (or any country for that matter), the best thing to do is listen to the people and understand their lifestyles, problems, and concerns. In this way, it is important for economic policies and strategies to be very specific for each country. It is why a policy like the Washington Consensus might not work in every country and why an American economist (like the article’s example) cannot make perfect suggestions for every country based on his or her economic knowledge or insights.

Taylor Theodossiou

The challenging of traditional economic theory aspect of Rodrik’s paper was, like many others who have posted on the forum, what I found to be most interesting. It has always made sense to me that different countries should be approached in different ways, after all there are always vast cultural differences between countries, and so it seemed only logical when Rodrik pointed out that we should take an individualized approach when trying to develop a country’s economy. I also liked Alexandra’s point on how economists should use and develop their theories but should always remember they are only theories and realistically cannot be applied to the entire world. Even the non-traditional approaches shouldn’t be used in the exact same way. According to Rodrik “different packages have different costs and benefits depending on prevailing political constraints, levels of administrative competence, and market failures,” which leads us to the clinical approach. It makes sense that we should take an approach similar to that of a doctor. Identify the problem so that the right “medication” can be given. However, because Rodrik’s approach is so broad I find it hard to tell what is the right answer in development economics, if there even is a right answer. According to Rodrik we shouldn’t rely only on traditional approaches because it is clear that non-traditional approaches like China’s and other Asian economies have worked. However, unorthodox methods don’t always work, such as Argentina’s experiment with a currency board. The idea of experimentation, like the work of Duflo, is an interesting one to me. And I agree with others when they compare Rodrik’s idea of experimentation to Duflo’s. Duflo, however, works on a much more localized scale and so I wonder how experimentation would work on a larger scale when dealing with an entire country’s economy.

Griffin Cook

While I was reading this paper, I kept thinking back to Professor Casey’s comment in class on Tuesday that he once had a conversation with a World Bank official in which he said that they preferred to assign economic advisors to countries which they had little to no prior knowledge about. After reading Rodrik’s assessment, this policy seems even more ridiculous. This seems especially true when considering the implications of what Rodrik is saying, such as the fact that unconventional policies are often necessary for rapid economic expansion. It would be difficult to tailor a unique policy to a fit a country’s economic needs without an intimate knowledge of its people, inner workings, customs, etc. Rodrik himself directly states that, “an immediate implication is that growth strategies require considerable local knowledge (pg.18).” Essentially, I am pleased that Rodrik addresses one of my primary concerns with many of the articles about economic theory and studies that I read: I feel that too often models or certain policy approaches are assumed to be almost universal and consistent in their effect and are applied too broadly, when in reality every situation should be evaluated on a case-by-case basis.

One of the other interesting aspects of this paper is the relationship between learning by example and economic policy innovation. For example, observing the successful actions taken by countries in growing their economy is beneficial for understanding which of the aspects of the Washington Consensus should hold true and what basic principles should be adhered to when designing policy. However, as Rodrik notes, emulating another country’s successful policy will often fail. The prevailing message is that creating successful economic growth policy requires a pioneering attitude. There is a need for trial-and-error, gradual introduction of interventions to observe what works and what doesn’t. Furthermore, many of the examples of successful growth display a degree of innovation and creative decision-making. I think that the paper’s concluding remarks effectively capture the most important sentiment of the paper: abandoning economic principles in assessing these situations is foolish, but strictly adhering to them while trying to find the one “big solution” for economic development is an exercise in futility. The key is to use them as a foundation, but also knowing which rules to break when constructing a successful plan of action.

Mac McKee

Between the two economic goals studied in this paper (igniting growth and sustaining growth), Rodrik offers little in terms of certainty. While the latter goal can be achieved well with reliance on neo-classical economic principles, data show that these same principles are not similarly effective for achieving the former. It seemed intuitive to me that long-term economic growth would rely on second-order principles (institutions and standards which ostensibly hold in developed countries); it is on these principles after all, that first-world economies rely in part for the success of their economies.

Not so intuitive however, was Rodrik's demonstration of how Washington Consensus strategies do not seem correlated with the kick-starting of economic growth. Indeed, in the case of Southeast Asia, growth was tremendous despite the lack of several key elements of Washington Consensus strategy. Rodrik does not suggest, however, that the strategies which effected this growth would work for other developing countries. Rather, he contends, over and over again, that each case requires its own study and application of guiding principles, such as those found in the Washington Consensus. This was a refreshing departure from other readings I've had in economics (admittedly, it's not a long list of readings) in which the authors insist on rigid rules and principles. Not being especially inclined towards broad, hyper-macro level data and theories, I was pleased to read Rodrik's argument which is, while inconvenient for theorists, more realistic about the nature of development and growth.

Brian Lawler

Unlike most everyone else, I found this article disturbing. Rodrik's solutions to starting and sustaining growth were at first very soothing to me. However, I became more and more unsettled as I continued reading the paper and Rodrik did not offer some grand scheme to ignite growth.
Rather he did multiple shallow case studies and assumed certain innovative policy changes had causal links to growth without backing them up with empirical data and a sound theoretical argument. Maybe this only bothers me because his paper felt like a theoretical paper that was lacking in advanced theory. His reliance on incentives was his big theory and perhaps he needed to limit it to that in order to save space or to save the conciseness of his argument. Otherwise it would have been a compilation of case studies that looked at policy changes that may have caused growth, but may not work elsewhere.
The whole article to me just felt too simple and familiar though perhaps it is on purpose as Rodrik is encouraging us to look for simple yet elegant solutions to ignite growth.

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