Book: The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics
Author: William Easterly
The Elusive Quest for Growth by William Easterly reviews various theories of growth and the consequent efforts by World Bank and IMF. As the title indicates he looks at how these approaches ‘failed’ and traces some reasons for their failure. The book is interspersed with live accounts of little cases (“intermezzo”) from the field to animate the discussion.
Useful review of evolving thinking in IMF and World Bank over 50 years
He starts by discussing why growth matters and offers a straightforward reason – “to help the poor”. The first chapter briefly traces some reviews of growth and its impact on poverty. This is followed by sections on “panaceas that failed” and the theme section “people respond to incentives” (see table of contents below for more details). Considering that the book is written by an insider (Easterly worked for the World Bank) the book offers interesting insights into the debates within the Bank and an episodic view of development thinking within the institution. It perhaps reflects the currently growing priority for getting institutions right to get the incentives right – a radical movement from ‘getting the prices right’ discourse. In the process the book offers a good insight into shifting thinking in these institutions for almost half a century.
Easterly criticizes the interventions of WB and IMF and claims that they have failed broadly. This is where the critical nature of the book stops. Underlying the book are narrow notions of “Good Policy” and a growth fundamentalism that gives no room for any measure that would deviate from the infamous Washington Consensus.
Growth and nothing else: how useful insights go awry
Needless to say, the book is focussed on ‘growth’ and the world view is presented by comparisons between ‘rich countries’ and ‘poor countries’. He uses this comparison to make an important point that growth often contributes to reduction in poverty and improvements in other standards of living (education, nutrition, health, etc.). What he misses to do though is to look at the wide array of patterns among poor and rich countries that are contributed by other measures. As Amartya Sen and Jean Drèze have argued on many occasions, policies focussed on human development need not always be inconsistent with concerns for growth. And growth very often happens without human development, specially when they are accompanied without any policies focussed on these issues. His world view based on rich/poor dichotomy is a significant weakness of the book.
Unquestionable “Good Policies”
There is an undercurrent of ‘good policy’ Vs. ‘bad policy’ through the book and much of the ‘good policy’ is what could be called the Washington consensus. He is rarely critical of the policy prescriptions and attributes their widespread failure to half-hearted implementation. I am not making an argument that Easterly sticks to Washington consensus (WC) in this book – that is far from true. But he does tend to give WC the hallowed ground and a part of the discussion is about getting the incentives right so that these get implemented.
Covers education, health, corruption and many other topics but with a narrow perspective
The book covers a wide ground by looking many pressing issues (population, human capital, health, etc.). Each of these chapters present interesting insights. May be given the limitations of discussing so many themes the discussion merely touches the surface of most topics. This would not be a shortcoming of the book but for the fact that what is discussed stays well within the framework of mainstream economics that is inadequate to understand phenomena. I have elaborated this in a separate post with reference to his cash for condoms chapter. The unfortunate tendency to ignore the rich context in which we live and make decisions persists through the book. My verdict about the book: useful insights, poor prescriptions.
Table of Contents
PROLOGUE: THE QUEST
Why Growth Matters
To Help the Poor
Intermezzo: In Search of a River
THE PANACEAS THAT FAILED
Aid for Investment
Solow’s Surprise: Investment Is Not the Key to Growth
Intermezzo: Dry Cornstalks
Educated for What?
Intermezzo: Without a Refuge
Cash for Condoms?
Intermezzo: Tomb Paintings
The Loans That Were, the Growth That Wasn’t
Intermezzo: Roumeen’s Story
Forgive Us Our Debts
Intermezzo: Cardboard House
PEOPLE RESPOND TO INCENTIVES
Tales of Increasing Returns: Leaks, Matches, and Traps
Intermezzo: War and Memory
Creative Destruction: The Power of Technology
Intermezzo: Accident in Jamaica
Under an Evil Star
Intermezzo: Favela Life
Governments Can Kill Growth
Intermezzo: Florence and Veronica
Corruption and Growth
Intermezzo: Discrimination in Palanpur
Intermezzo: Violent for Centuries
Conclusion: The View from Lahore