Friday, June 06, 2008

Recent comments of Easterley on development

do not seem to be popular with some of the experts: some links here, but Jonathan Dingel thinks Easterly also has a serious point to make. Here is Easterley's response Paul Seabright's criticism:
"Paul misunderstood my point, which is probably due to my inadequate exposition. There is a big difference between saying “a small group of experts cannot cause growth in a whole economy” and saying “all experts are useless.” I was saying the first, and not the second. Paul seemed to think I was saying the second. I nowhere talked about relying exclusively on “common sense.” I am implicitly defining the “development expert” as someone who has the presumption that they CAN cause growth in a whole economy, and saying the time of such “development experts” is definitely over. I think it is much more plausible that development happens in a decentralized spontaneous way through the efforts of many free individuals to seek better lives for themselves, through the market and through democracy. Of course, some of those ways involve many complex endeavors that need the advice and technical training of many specialized experts: doctors, biologists, physicists, engineers, and yes, definitely, economists. Economists give great guidance on everything from trading systems to macroeconomic stabilization to auction design to financial regulation. Keynes in a famous quote said it would be splendid if economists were thought to be as competent as dentists. I think we are getting close to Keynes’ ambition, and all of the things I just cited where we can be good dentists will contribute to economic development. Let’s just not make the enormous leap to the absurd and counterproductive presumption that we dentist-economists can come up with an expert plan that will achieve rapid growth for a whole society out of poverty into prosperity."
Dingel also discusses Abhijit Banerjee's misgivings. Excerpt:
"It is not clear to us that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control. Maybe all that happens is that something goes right for once (privatized agriculture raises incomes in rural China) and then that sparks growth somewhere else in economy, and so on. Perhaps, we will never learn where it will start or what will make it continue. The best we can do in that world is to hold the fort till that initial spark arrives: make sure that there is not too much human misery, maintain the social equilibrium, try to make sure that there is enough human capital around to take advantage of the spark when it arrives. Social policy may be the best thing that we can do for growth to happen and micro-evidence on how to do it well, may turn out to be the key to growth success."
On a different note Guljar Natarajan discusses the role of NGOs in development here.

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