Category Archives: Development Economics

Seems Obvious, Doesn’t It?

Bill Easterly on Afghanistan:

Transitionland had a thoughtful response to my cri de coeur on Afghanistan yesterday. Among her recommendations for improving things:(1) Stop the air strikes that are killing civilians,
(2) Crack down on corrupt contractors to USAID,
(3) Stop supporting Afghan warlords who are homicidal and/or corrupt.

So, after years of experimentation, we can now start applying these subtle, complex lessons:

(1) Don’t kill,
(2) Don’t steal,
(3) Don’t give aid to those who do.

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Government, Technology, and Growth

I’m reading Bill Easterly’s The Elusive Quest for Growth for a class right now. It asks and answers the question of how to make poor countries rich. It’s a good read. I find I disagree with many details, but the core message is simple and true: people respond to incentives.

As I said, there are parts that I don’t buy into. Here’s an example:

Brazil moved more slowly into the computer revolution than necessary because of a government ban on PC imports, a misguided attempt to promote the domestic PC industry, a classic attempt by vested interests to hijack technological progress. (p. 186)

What does he conclude from this experience? “The government should subsidize technological imitation.” (ibid)

He ignores his own advice that incentives matter. As Brazil showed us, government’s incentives often hurt growth. Ask any public choice theorist.

Quibbles aside, it’s a good book. I recommend it.

And if any of my classmates read this, I’m interested in your thoughts.