[from THE FUTURIST, January-February 2002]
[from THE FUTURIST, January-February 2002]
The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William Easterly. MIT Press, Web site mitpress.mit.edu. 2001. 342 pages. $29.95.
Getting Growth in Developing Nations
Rapid economic growth has pushed living standards to astounding heights in the industrialized world since World War II, but the less developed regions have been left far behind. How best to help poor countries replicate richer countries' success has been debated for decades, and attempted remedies, such as aid loans, have made many countries worse off than before.
The problem is that most attempts to relieve poverty violate the basic economic principle that people respond best to incentives, argues William Easterly, a senior adviser for the World Bank's Development Research Group.
Even a seemingly obvious solution such as increasing education has not had the desired impacts. "The growth response to the dramatic educational expansion of the last four decades has been distinctly disappointing," writes Easterly, who blames policy makers for not asking the obvious question, "Education for what?" He notes, "Creating people with high skill in countries where the only profitable activity is lobbying the government for favors is not a formula for success. Creating skills where there exists no technology to use them is not going to foster economic growth."
Easterly brings to this book his rich, first hand experience in development projects and the sometimes dramatically negative reactions of the recipient countries: "During my various visits to Colombia, I have had a bomb go off next to my hotel, have witnessed an attempted assassination, and once absentmindedly walked into the middle of an armed standoff between two rival government military units."
From this experience, Easterly argues persuasively that governments, like people, need incentives to pursue better policies, such as central bank independence and laws limiting credit to the government.
The Elusive Quest for Growth is accessibly, even engagingly, written, deftly handling the complex and perplexing problems of economic growth and international development.