Easterly vs the Growth Commission

The Growth Commission report has been described by David Warsh as an orphan of the World Bank's former regime (under Wolfowitz). Now Bill Easterly claims its reductionist expertism—abandoning all grand theories of development—is also an empty promise. There is at least one general principle that can be discerned in every case of successful development:

"Confirming Hayek, systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty. The evidence for this comes from both history (for example old, despotic, poor Europe compared with modern, free, rich Europe) and cross-country comparisons (for example South Korea compared with North Korea, former West Germany compared with East, New Zealand compared with Zimbabwe). This alternative paradigm has a much smaller role for experts, because experts cannot direct or impose freedom from the top down (or else it would not be freedom)."  extract from: Bill Easterly in the Financial Times

Martin Wolf note some useful "don'ts" for growth policies identified by the Commission:

"Particularly welcome is the short list of policies to be avoided. Among them are: subsidising energy (particularly relevant today); using the civil service as employer of last resort; reducing fiscal deficits by cutting spending on infrastructure; providing open-ended protection to specific sectors; using price controls as a way to curb inflation; banning exports, to keep domestic prices low; underinvesting in urban infrastructure; underpaying public servants, such as teachers; and allowing the exchange rate to appreciate too far, too quickly"  extract from: Martin Wolf—Financial Times

Tags for this entry: trade microeconomics growth economics development