Episode 223: Stefan Dercon
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There Are No Magic Bullets in Economic Development
What does it take for a developing economy to grow and thrive? There are many obstacles that stand in the way, but they can be overcome with the knowledge of where to apply efforts for best results. To understand another country or advise their government on how to grow economies takes someone who has been to the places, spoken to the people, listened to their needs, and can communicate the challenges.
Stefan Dercon is a professor of Economic Policy at the Blavatnik School of Government and the Economics Department at Oxford University, a Fellow of Jesus College. And the Director of the Centre for the Study of African Economies. His newest book, Gambling on Development: Why Some Countries Win and Others Lose, deals with his research into what keeps some people and countries poor: the failures of markets, governments and politics, mainly in Africa, and how to best affect change in the different countries there.
Stefan and Greg talk all about development economics, the differences between developing economies in Africa and elsewhere, and what successes and mistakes have happened in that region so far. They discuss what pitfalls to watch out for when dealing with planning and action coming from abroad. Stefan talks about the difficulties of foreign organizations understanding the needs of these countries and the ways to use local help to make aid more effective, and help developing economies to flourish.
Episode Quotes:
Why you can’t wait until perfection in anything
16:10: You're not going to first spend all your time building good foundations because then you're totally wet, and you don't sleep ever any night. You probably build something that's not quite perfect, but actually make sure that it has a roof that doesn't fall off entirely. So now, after a bit, if you don't put in some things, you have a very weak floor. We put a few more things that you need to strengthen that floor as well. And I'm a strong believer that the more I worked on development, there is agency here and now to already do something. You can't wait until perfection in anything.
A framework that we can use for political markets
31:51: The best way to be taken seriously by the central state is by starting an armed uprising. And so, for political entrepreneurs, the only route was to create more chaos. So you want to create enough opportunities that new elites can come in as well. And that's political markets thinking about entry and exit, entry deterrence.
Learnings from the policy space over the last 20-30 years
11:38: It doesn't help to be very ideological. You need to be pragmatic about what you're doing in your own country. Do common sense, and there are certain things we know more in economics about the things we shouldn't be doing than actually the things we should do. So we know that in a particular moment in time, a massive tax cut is probably not a good idea. In other moments, well, maybe it's okay. We don't know. And so it's like that—sensible macro policies and so on.
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