The Elusive Quest for Growth

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics, by William Easterly. MIT Press, 2001.

Though this is not a new book, I have found it moderately useful as I write an essay for the Incommunicado workshop in June. I am not an economist, and he uses accessible language as he interprets economic models and assumptions used since World War II to foster growth which he says is a necessity to reduce poverty. Interspersed between chapters laden with statistics are short tales and testimonies of people in dire straits in developing countries. He wants us to keep these in mind as we consider the theories and the evidence he presents.

In the mid-60's Walt Rostow predicted the country receiving aid would naturally increase its savings as development took off (to use an airplane metaphor), so that after "ten or fifteen years" the donors could anticipate that aid would be discontinued. Now, after $1 trillion (1950-1995) we are still waiting. The ratio of the wealthiest nation to the poorest has gone from 3:1 in 1820 (earliest stats. available) to 30:1 at present (U.S. and Bangladesh, at the time of publication).

He looks at a variety of "elixirs" (HP and Cisco would call them "solutions") to increase growth and discusses how most have failed for the most part: aid, investment, education, controlling population, loans, and debt relief. I found the criticism of the fruitless investment in education to be the most surprising, and he admits it is very controversial. He then discusses the role of technology going back to weaving and iron making and just a bit on ICT--my own interest. However, he does point out the role of knowledge leakage (diffusion) and what makes it effective in some places and not others. There's an interesting chapter on luck, both good (high prices for a resource whose pricing is out of the hands of the country) and bad (tsunamis, wars, weather). Another is about polarized peoples (race, religion, wealth, language). Corruption which plays a huge role in some countries is the final chapter before his conclusions. His basic premise is that people respond to incentives, and it's usually financial. Of course we can consider other social and spiritual incentives: friendship, being part of a team, patriotism, and even salvation.

The question he implies and one that I have had about the kinds of technology projects I have seen developed, funded, implemented, and then disappear is why do people keep repeating the same methods when available evidence indicates that procedures need to change drastically and that the money might be spent in more useful ways.

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