For those of you who don't know Dani Rodrik, last week in Psci 4193 we were assigned to read Rodrik's "Why do More Open Economies Have Bigger Governments?" Dani Rodrik is a Harvard scholar who has, on many occassions, challenged the status quo in the field of political economics and succeeded. "Why do More Open Economies Have Bigger Governments?" is just one example where Rodrik argues that more trade causes risk, which leads to the demand for insurance as safety nets (I.e. bigger governments). This argument was contrary to the popular "race to the bottom" approach at which argued that deindustrialization was the cause of bigger governments. Rodrik's logic and presentation are without a doubt the best and most influential arguments that I have read concerning political and development economics. His articles are easy to read and shed light on modern and practical approaches to the world economy.
I highly recommend skimming through the article I have attached by Dani Rodrik called "Goodbye Washington Consnsus Hello Washington Confusion." This article was assigned to me last semester in Econ Development and out of a hundred readings this one was the most helpful and well argued paper all semester. http://www.hks.harvard.edu/fs/drodrik/Research%20papers/Lessons%20of%20the%201990s%20review%20_JEL_.pdf
This article is long so read the intro and the conclusion. I would also suggest that you start reading the secon paragraph on page four for some background on the Washington Consunsus and his argument against efficiency gains at the bottom of page five. Much of Rodrik's analysis follows
The World Banks: Learning from a Decade of Reform. He argues that the neoliberal conditions that were pushed on developing countries by the IMF is a failing approach and he shares his vision of what ought to be done.
Rodrik comes highly recommended to any students studying economics who wish to broaden their
understanding of the bigger picture side of the world economy. I hope this is helpful to someone because it was especially helpful to me. Only takes 5 min read it!
Very interesting. I learned in International Organizations and International Trade that the "race to the bottom" has been disproved for the most part because most multinational corporations actually prefer a country with a relatively well established system of regulation and law as a characteristic of a stable and effective government. This has resulted in more of a "race to the middle" where nations that are deregulated enough to foster healthy business while fighting corruption and other undermining effects and retaining a framework of law that allows that business to grow safely seem to be preferred.
ReplyDeleteOn the subject of the IMF, in theory attaching conditions to the money sound pretty good but I agree that its important to consider the fact that imposing conditions can be considered quite arrogant and even downright dangerous if those conditions actually turn out to be harmful to a country. Unfortunately I don't really have a solution to offer because I feel that conditions should be imposed, yet at the same time no one can predict with complete accuracy the effects of those conditions on a developing nation. Each nation is its own case so applying economic beliefs about how policy will change its plight can be a bit of a gamble.
Very interesting, I enjoyed his non-combative argument. What I mean by this is that there is often such a head on argument between those who believe in neoliberal policies and those who do not. There never seems to be an appeal to the other sides argument, a middle ground.
ReplyDeleteI did not read the entire article, perhaps it is included in there but I am curious as to whether or not Rodrik has a specific prescription for what countries who were failed by neoliberal economic theory should do now. Specifically that is. I am guessing that establishing regulation that is not overbearing but present and creating an environment to foster trade would be a first step in his prescription but I fear that corrupt and unstable governments will have trouble achieving this. is this not part of the reason neoliberal policy's were applied in the first place?
-To take a certain level of power an autonomy out of the underdeveloped/unstable state and distribute it to world powers who could control and ideally develop the country remotely? Perhaps this is far fetched but I have always seen this as one of the more interesting aspects of neoliberal policies.
Were you possibly thinking of charter cities? See http://bit.ly/YrAseI and http://econ.st/YrAxPw.
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