The vision for which Kim stands is bottom-up. It focuses directly on the poor, and on delivering services – for example, education, health care, and microcredit – to their communities. This tradition’s motto could be, “Development is accomplished one project at a time.”
CommentsThe
other approach, represented by Okonjo-Iweala and Ocampo, takes an
economy-wide approach. It emphasizes broad reforms that affect the
overall economic environment, and thus focuses on areas such as
international trade, finance, macroeconomics, and governance.
CommentsPractitioners
in the first group idolize NGO leaders like Mohammad Yunus, whose
Grameen Bank pioneered microfinance, and Ela Bhatt, a founder of India’s
Self-Employment Women’s Association (SEWA). The heroes of the second
group are reformist finance or economy ministers such as India’s
Manmohan Singh or Brazil’s Fernando Henrique Cardoso.
CommentsAt
first sight, this might seem like another dispute between economists
and non-economists, but the rift runs within, rather than between,
disciplinary boundaries. For example, recent work with field experiments
and randomized controlled trials (RCTs), which has caught on like
wildfire among development economists, lies strictly in the tradition of
bottom-up development.
CommentsThe
relative effectiveness of the two visions is not easy to determine.
Proponents of the macro approach point out that the greatest development
successes have typically been the product of economy-wide reforms. The
dramatic reductions in poverty achieved by China over the span of a few
decades, as well as by other East Asian countries like South Korea and
Taiwan, resulted largely from improved economic management (as much as
earlier investments in education and health may have played a role).
Reforms in incentives and property-rights arrangements, not anti-poverty
programs, enabled these economies to take off.
CommentsThe
trouble is that these experiences have not proved as informative for
other countries as one might have wished. Asian-style reforms do not
travel well, and, in any case, there is significant controversy about
the role of specific policies. In particular, was the key to the Asian
miracle economic liberalization or the limits that were placed on it?
CommentsMoreover,
the macro tradition vacillates between specific recommendations (“set
low and uniform tariffs,” “remove interest-rate ceilings on banks,”
“improve your ‘doing business’ ranking”) that find limited support in
cross-country evidence, and broad recommendations that lack operational
content (“integrate into world economy,” “achieve macroeconomic
stability,” “improve contract enforcement”).
CommentsDevelopment
specialists in the bottom-up tradition, for their part, can deservedly
claim success in demonstrating the effectiveness of education, public
health, or microcredit projects in specific contexts. But, too often,
such projects treat poverty’s symptoms rather than its causes.
CommentsPoverty
is often best addressed not by helping the poor to be better at what
they are already doing, but by getting them to do something altogether
different. This calls for diversification of production, urbanization,
and industrialization, which in turn require policy interventions that
may lie at considerable distance from the poor (such as fixing
regulations or targeting the value of the currency).
CommentsMoreover,
as with macro-level economic reforms, there are limits to what can be
learned from individual projects. An RCT conducted under specific
conditions does not generate usable hard evidence for policymakers in
other settings. Learning requires some degree of extrapolation,
converting randomized evaluations from hard evidence into soft evidence.
The
good news is that there has been real progress in development policy,
and, beneath the doctrinal differences, is a certain convergence – not
on what works, but on how we should think about and do development
policy. The best of the recent work in the two traditions shares common
predilections. Both Conventional
development policy has been prone to fads, moving from one big fix to
another. Development is held back by too little government, too much
government, too little credit, the absence of property rights, and so
on. The remedy is planning, the Washington Consensus, microcredit, or
distributing land titles to the poor.
By
contrast, the new approaches are agnostic. They acknowledge that we do
not know what works, and that the binding constraints to development
tend to be context-specific. Policy experimentation is a central part of
discovery, coupled with monitoring and evaluation to close the learning
loop. Experiments do not need to be of the RCT type; China certainly
learned from its policy experiments without a proper control group.
Reformers
in this mold are suspicious of “best practices” and universal
blueprints. They look instead for policy innovations, small and large,
that are tailored to local economic circumstances and political
complications.
The
field of development policy can and should be reunified around these
shared diagnostic, contextual approaches. Macro-development economists
need to recognize the advantages of the experimental approach and adopt
the policy mindset of enthusiasts of randomized evaluation.
Micro-development economists need to recognize that one can learn from
diverse types of evidence, and that, while randomized evaluations are
tremendously useful, the utility of their results is often restricted by
the narrow scope of their application.
In
the end, both camps should show greater humility: macro-development
practitioners about what they already know, and micro-development
practitioners about what they can learn.
Reprinting material from this Web site without written consent from Project Syndicate is a violation of international copyright law. To secure permission, please contact us.
No comments:
Post a Comment