Uniting Solow et al with Duflo et al

A new paper by Dani Rodrik is a must raed paper for those interested in Development Economics.

He calls it new development economics but it is actually trying to reunite the two distinctly emerging fields of development economics. His blogpost explains:

  • Macro-development: focus on economic growth and tend to analyze economy-wide policies such as trade, fiscal, and currency policies.  Think Anne Krueger, Jeff Sachs, Bill Easterly, Paul Collier. 
  • Micro-development: focus on individual-level outcomes and analyze microfinance, education, health and other social policies. Think Angus Deaton, Mark Rosenzweig, Michael Kremer, or Esther Duflo. (developed by MIT-PAL)
  • The first group relies on cross-country econometrics or analytical country studies.  The second relies increasingly on randomized field experiments. 
  • Both groups share the same objective: achieving sustainable improvement in standards of living of the poor. 
  • But the way they go about it seems so different as to make them look like members of entirely different disciplines. 

What Rodrik says is the methods may be different but in reality both are thinking on similar lines- development policies shouldn’t follow the straightjacket mode and as each country is different , so should be the development policies.

Both approaches have their +ves and -ves and Rodrik says:

So my bottom line is that the practice of development economics is at the cusp of a significant opportunity. We have the prospect not only of a re-unification of the field, long divided between macro- and micro-development economists, but also of a progression from presumptive approaches with ready-made universal recipes to diagnostic, contextual approaches based on experimentation and policy innovation. If carried to fruition, this transformation would represent an important advance in how development policy is carried out.

Highly recommended

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