Development Thinking at the Millennium

TL;DR: For instance, this article pointed out that what matters is not only what policies might foster faster growth, but also how the political process might produce those policy changes, and that there is no single road to development.

Abstract: W e are entering a new millennium and closing out a century filled with ferment. As we look over the way we thought about development over just the past half century, we can see marked changes. It has become clear that development is possible but far from inevitable. There is no single road to development. In recent years some East Asian economies have achieved sustained growth with relatively low inequality. They have not followed blindly the prescriptions of the Washington consensus: they did maintain a high level of macroeconomic stability, but at the same time their governments played a far more important role than the popular nostrums advised. While the debate about the most effective strategies for development-and the appropriate role of the state-continues, research has helped us understand better what features of developing countries make them differ from developed countries (and they differ in many ways). We also now understand better what features of developing countries act as a hindrance to development. Today the debate is moving on to the far deeper question of how to foster change. We recognize, for instance, that what matters is not only what policies might foster faster growth, but also how the political process might produce those policy changes. Equilibrium and change are thus the twin focuses of development economics. How do we describe the short-run equilibrium-the status quo, the state of beingof developing countries? And what are the forces that eventually lead to a disturbance of this equilibrium, to change? Developing a thorough understanding of these questions is not straightforward. In my keynote addresses at the Annual World Bank Conference on Development Economics over the past three years, I have touched on several aspects of these topics, not without controversy. Economists differ markedly in their beliefs, especially on issues that touch on policy-which virtually all the questions surrounding development do. Accordingly, I have been concerned with the central question of how do we know what we know or come to believe what we come to believe.