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Political Economy After the Crisis. Michael Woolcock Week 2 The Past and Future of Economic Growth February 6, 2014. Overview. Prelude: Where you sit shapes where you stand Economic growth in the past (the ‘long run’) Eight ‘stylized facts ’, some initial principles

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political economy after the crisis

Political Economy After the Crisis

Michael Woolcock

Week 2

The Past and Future of Economic Growth

February 6, 2014

overview
Overview
  • Prelude: Where you sit shapes where you stand
  • Economic growth in the past (the ‘long run’)
    • Eight ‘stylized facts’, some initial principles
    • What don’t we know that we need to know?
      • Not just for ‘policy’, but for implementation?
    • Where might we search for answers?
  • The future of economic growth
    • Integrating diverse evidence, coherent theory, capability for implementation, legitimacy
prelude
Prelude
  • Different types of problems…
    • require different types of solutions, which require
      • different types of strategies for assessing effectiveness
    • attract (‘select for’) different kinds of people, who in turn
      • are trained, socialized, hired, assessed by people like them
      • creating reasonable – and sometimes unreasonable – differences. E.g.,
        • Academics vs practitioners vs ‘policymakers’
        • Heart surgeons vs cardiologists
        • Debates over rise/fall of ‘global poverty’ (Kanbur 2001)
        • Sachs vs Easterly on effectiveness of ‘foreign aid’ (ongoing!)
prelude1
Prelude
  • Different types of problems…
    • require different types of solutions, which require
      • different types of strategies for assessing effectiveness
    • attract (‘select for’) different kinds of people, who in turn
      • are trained, socialized, hired, assessed by people like them
      • creating reasonable – and sometimes unreasonable – differences. E.g.,
        • Academics vs practitioners vs ‘policymakers’
        • Heart surgeons vs cardiologists
        • Debates over rise/fall of ‘global poverty’ (Kanbur 2001)
        • Sachs vs Easterly on effectiveness of ‘foreign aid’ (ongoing!)
  • So, in debates over ‘growth strategies’…
    • ‘Washington Consensus’ (‘neo-liberalism’) vs MDGs vs HR
    • Policy X vs Policy Y vs Policy X’ (i.e., ‘the what’)
    • Little attention to implementation (‘how?’, ‘by whom’?)
    • Little attention to identifying, interrogating the actual problem
      • Many experts ‘sell’ solutions; don’t wrestle with novel problems
1b or poverty is the historical norm need to explain national wealth

Mexico, $8165

China, $5332

India, $2990

Ethiopia, $688

~ Year 1250

1851

1898

1929

#1b: Or, ‘poverty’ is the historical norm; need to explain national wealth

Current

Cross

Section

Economic Trajectory

of Leading Country

From: Pritchett (2009)

3b though within country inequality rising at unprecedented rates in late 20 th c
#3b: Though within-country inequality rising at unprecedented rates in late 20th C
6a few countries have initiated and sustained rapid growth
#6a: Few countries have initiated and sustained rapid growth
  • China, (India)
  • “Getting to Portugal” (poorest OECD country)
    • Who’s made it in the last 60 years?
      • South Korea
      • (Taiwan…)
      • Chile
      • (Singapore)
      • Selected Eastern European States
        • Czech Republic, Poland, Estonia, Slovenia…
6b turbulent volatile growth characterizes most poor countries
#6b: Turbulent, volatile growth characterizes most poor countries

Source: Pritchett and Werker(2012)

7 heterodoxy many recipes required best fit not best practice
#7: Heterodoxy (‘many recipes’) required; ‘best fit’ not ‘best practice’
  • Rodrik (2007, 2012)
    • No single story can (yet?) accommodate this variety
      • Or, this diversity requires at least a coherent array of theories
      • Work inductively from evidence to principles to ‘policy’
    • Successful cases often followed non-orthodox path
      • China, Taiwan, South Korea…
      • Rich countries themselves took different paths, have different institutional configurations (e.g., Japan vs Canada vs Netherlands)
      • Lots of devils in lots of details
  • Whether to pursue a particular policy course must be fit for purpose, context-specific
    • Much of professional life, and our global institutional architecture, actively conspires against this
8 getting good institutions implementing effective policy is really hard
#8: Getting ‘good institutions’, implementing effective policy, is really hard
  • Sustained economic growth is a ‘relentless revolution’ (Appleby 2011)
    • Legitimacy of change process is key
    • More complex economic activity requires correspondingly robust, adaptable global and national institutions
  • Good aggregate description of ‘institutions’ does not map on a good theory or ‘instruments’ for getting them
  • Many countries struggle to deliver the mail (i.e., perform purely logistical tasks), let alone implement something as complex as ‘the rule of law’
  • ‘Institutions’ as human inventions
    • Cf. languages, religions (Fukuyama 2011)
    • Back to types of problems… (to be continued!)
big picture rival views
Big picture, rival views?
  • ‘Geography’
  • ‘Culture’
  • ‘Institutions’