« Material for Wednesday Discussion | Main | ECON 280 for Friday »



Emma Richardson

This piece made the reality of economic development and its related policies much more individualized and realistic. The use of case studies, especially those of China and Latin American countries, displayed that the commonly discussed policies for sparking economic development, namely those comprising the Washington Consensus, are not always most effective. This paper succeeded in giving context to the quest for economic development.

China has had remarkable growth and development while adopting ideas that are the antithesis of the Washington Consensus. Instead of providing “free markets and sound money,” China controlled economic output and worker locations while preventing private property ownership. What worked for China may not work for everyone, but the policies enacted fit their circumstances beautifully.

Latin American nations, on the other hand, deregulated, liberalized, and privatized their economies yet have “reaped so little growth benefit out of it.” This paradoxical result is difficult to explain, but some chalk it up to the dramatic pendulum swing being too chaotic given that they were so invested in ISI shortly before. Once it again, we see that the Washington Consensus policies may not be best for everyone.

I feel that this paper explains the dilemma of the Washington Consensus in a similar way to how we discussed the Marshall Plan. The Marshall Plan couldn’t be applied to other countries outside Europe because they did not have the infrastructure and human capital prerequisites. The Washington Consensus assumes that the things that make another country tick are the same things that make the US tick, which is almost never the case.

Katrina Lewis

Rodrik’s piece includes many case studies to show that there is no one-size-fits-all approach to either igniting or sustaining economic growth. He asserts that the “higher-order economic principles” of property rights, sound money, fiscal solvency and market-oriented incentives are necessary, at least minimally, to experience growth, but otherwise growth is an individualized process. His piece is frustratingly honest about how little can be generalized about growth and the likelihood that lessons from one country can be applied with success elsewhere. In many ways, his paper’s conclusions about growth seem very similar to a common class phrase—“it depends.”

I think that reading Krugman’s piece last week about the limitations of economic models was a great set up for the Rodrik reading. Krugman discusses how model users need to be aware of the assumptions tied to models and then expect to draw conclusions from models only when the assumptions can hold. You cannot use models, with all their assumptions, in any situation and expect to be able to draw meaningful conclusions. In the same way, you cannot apply growth strategies that were developed with consideration for one country’s “capabilities, constraints and opportunities” in another country and expect to see comparable growth rates. As Rodrik says, “institutional innovations do not travel well.” The other similarity I noticed between the works we read by Krugman and Rodrik was that they both support imperfect concepts. Krugman identifies many shortcomings of models, but in the end, he still thinks they are invaluable to the field of economics for what they can show us. Rodrik cannot boil the historical case studies down to a single, generalized growth strategy, but he still thinks there is a lot to learn from how countries have worked toward achieving the higher principles. He also shows that theories that have been proven to not stand in broad application, like the Washington Consensus, can still be beneficial to consider.

Tanner Smith

This paper expands well on the Krugman paper we read earlier. While the Krugman paper focused on modeling and how policy makers often take the results of models and implement policies based on them without holding the assumption, this paper focuses on specific policy implementations and how copycat strategies usually fail. It is very natural for people to want to copy success; this happens across every industry and one success often is followed with a wave of copycats who are not quite as good. The key point within economic development is that most countries do not operate within the same paradigms; just because a policy worked in one country with one set of conditions does not mean it will work in another. That takes us to questioning how we learn from the past. If copying past success does not work, as this paper shows, then it will take much more rigerous economic research to figure out what will work in each country. The part about Western economists assuming they have all of the answers struck me, as we in the U.S. talk about the U.S. as the ultimate success story and assume that our principals should be adapted across the world. When Latin American countries did this, however,it did not lead to sustainable growth in many cases, as simply opening markets to trade does not work if other institutions are not in place. Within the context of this class this paper and the Krugman paper are reminders not to make broad generalizations about the best methods of promoting economic growth, as we really need to consider each country's unique situation before developing a plan to promote economic growth.

Lee Bernstein

The line from Rodrik’s paper that immediately jumped out to me is “The economist’s reasoning is utterly plausible, which underscores the point that the Washington Consensus is far from silly: it is the result of systematic thinking about the multiple, often complementary reforms needed to establish property rights, put market incentives to work, and maintain macroeconomic stability.” (9). This caught my eye because it shows how the suggestions and recommendations for a developing country are reasonable on paper, but in reality they don’t work out as predicted or even in a consistent manner. Just like Tanner, while reading this paper I thought of Krugman’s piece from last week. These models and policies help us attempt to make progress in developing countries but they never work as well as planned. As Rodrik pointed out, Latin America implemented a lot of these policies and they still struggled to see economic growth (7). But, what has succeeded in other countries, don’t necessarily mean that they are the correct solution.“East Asian institutional anomalies have often produced perverse results when employed in other settings” (12). This means that we shouldn’t being making these policies the new Washington Consensus, but at the same time should we be promoting the current policies, if they aren’t working either? Maybe the solution is making policy recommendations more region specific. Even that may not work due to differences between countries and the context of when the policy is originally written.

Andrew Zandomenego

Rodrick’s “Growth Strategies” does an excellent job of putting everything we have discussed and read in class into context. Beginning the semester, I believed I would be learning the all-being, universal growth strategy to help any under-developed nation rise and prosper. But as Rodrick’s best point indicates, growth strategies are not universal and must be taken in the context of the particular nation and time. In other words, there is no correct combination of economics’ outlined principles—incentives, markets, budget constraints, and property rights—that applies to all nations.
Rodrick argues this point through several powerful methods. First, he uses the viewpoint of a Martian—someone who knows nothing about our world—to depict how growth strategy approaches and their effects on different nations appear in their simplest forms. Rodrick also uses China as his most effective tool to prove that development can occur through unconventional institutional strategies, such as the House Responsibility System and Special Economic Zones. Contrasting this to the regressed Latin American nations that followed more traditionally accepted methods exemplifies the point that growth strategies must be implemented in the context of the nation.
Rodrick uses his main point to support his two-pronged growth strategy, which calls for investments to kick-start growth (which can be triggered by market or government failures) and institution building strategies to sustain growth. Rodrick highlights the importance of the second principle by discussing the difficulty nations face with sustaining growth, since igniting growth is relatively easier to accomplish. Therefore, a focus on the mid- to long-run is crucial.
Rodrick ends his discussion by noting that economists are so focused in development and growth strategies because “it’s the subject that nobody knows anything about that we can all talk about,” as mentioned by Richard Feynman. There is no correct formula for a proper growth strategy and this must be the first assumption made before tackling growth in any under-developed nation.

The comments to this entry are closed.