Thursday, February 7, 2013

The development debate gone astray?

Why are some countries rich and some poor? Why do the poor countries continue to remain so? Why is there no convergence of incomes as theory and logic would predict? What, in general, is the secret to sustainable growth? These grandiose inquiries have agitated human minds for decades. In recent years, an array of distinguished researchers have pointed to specific explanatory factors - path dependency and institutions or Washington consensus or accumulation and distribution of productive knowledge - and particular approaches to policy formulation - human capital development coupled with enlightened industrial policy or release of binding constraints or randomized control trials - in an attempt to answer these questions.

I have two problems with both such inquiries and its underlying processes. One, I believe we are on the wrong track if we search for one comprehensive solution or strategy to explain growth and development. Even a very broad conceptual solution like any of the aforementioned explains only a small part of the problem. Further, assuming we accept any one of them as the predominant cause or determinant of growth, we are still no more closer to deciphering what needs to be done to address the deficiency. Leave alone being in a position to translate those prescriptions into action in the real world. The answers from this inquiry will invariably be skewed and not reveal the full dimensions of the the problem.

The search for magic pill solutions can have many other systemic distortions, apart from leading you nowhere in the search for solutions itself. For the researcher, it becomes a slippery slope, down which he slips ever so slowly and unknowingly. Once you become wedded to one particular narrative or agenda, you try to rationalize every other deviant, and there will be no dearth of deviants in any such complex systems which are not amenable to a particular line of analysis, by stretching the frames of reference and scope of the original hypothesis. Over time, you stretch it so much as to seriously compromise the internal consistency of that hypothesis. Correlations become causations  history becomes predictor of future, sophisticated models become attractive

Two, I am inclined to the belief that the search for answers to the big questions of development should have a cross-disciplinary range, instead of being confined to the narrow confines of economics. Political science and sociology would have as much valuable contribution to answering these questions as economics itself. The field of economics may have an edge, but not monopoly, in contributing to this process if only because it has been more receptive to adopting techniques and areas of investigations from other disciplines as well as being the leader in using empirical techniques to study development processes.  

1 comment:

Anonymous said...

Some modern economists have in fact crossed over into other disciplines. Take Freakonimics for example. Interesting book but could have done better.