Economic Development
I was reading Dani Rodrik’s “Goodbye Washington Consensus…” in the Dece. 2006 JEL. He argues that the pro-market policies everybody has been pushing for economic development in the past 20 years are misguided and they don’t seem to have worked. I’m skeptical, though. The last part is where he makes his own recommendations, which it turns out are no more based on proven empirical success than the ones basic price theory suggests. I also wonder about his claim that the standard recommendations have worked badly. He cites Argentina, for example, as a failure, but the problem there was exactly the huge government deficits that are one of the Washington Consensus’s main targets. I bet if he looked at the results of particular policies, rather than overall growth, he’d see things differently. On the other hand, it’s also true that economies are robust to a lot of bad policies. The Communist countries did develop; Europe is not regressing in wealth; with world technical progress, it’s hard not to advance; the investment rate matters more than tariff policy.
March 1st, 2007 at 3:03 pm
Why should Washington dictate developing countries’ economic policy in the first place? The “Washington Consensus” is an oxymoron. It can’t be a consensus if only the Washington establishment decides upon it. To be truly consensual, a policy package would have to garner consent globally, not just from Washington policy circles.