Good vs. Bad Economic Development Policies

Can you draw a universal distinction between good and bad Economic Development policies?

For one, I would say – nothing of the universal kind exists. The relevant distinction between good and bad is based upon the social context of application, the forces at play, the realities undefined and the mentality at bay. The view point is well narrated through the concept of Second Best Institution (Dani Rodrik).

If anything, it is not a distinction between good and bad but in between ‘low risk’ and ‘high risk’ policies, given a specific environment. For Instance, Investment in Infrastructure and Foreign Direct Investment (FDI), although a politically viable and easier policy to implement, can be categorized as a high risk policy that is given the local labour and firm market are not susceptible or flexible to such inherent changes given their current standing and structural stance (most of the developing regions of the world). Therefore, a fore front priority of projects based on solely Infrastructure and FDI in such regions, will not only drive the local firms out of business and lead to massive brain drain, but will ultimately exacerbate the employment problems and realities(structural) of the region (Rodriguez Pose).

Therefore, as a policy specialist when advising a local government or enforcing the pursuit of a goal, my policy recommendation to the authority would be based on implementing a low risk policy, defined in terms of making the best of what exist, fine tuning and diversification within the existing base. However, while doing so I would propose gradual but necessary investment in enhancing the flexibility and mobility of the local labour and firm market, reducing their susceptibility to external shocks and changes in the environment (Balanced policy). However, an important assumption to note is my hindsight conclusion that policy intervention will help juice up the economy in question.

This is especially important and relevant for external specialist, who are alien or mere acquaintances to the surroundings and workings of the environment in which they are intervening and providing advice, if not action. The above narration falls in line with the new paradigm in development policy, based on the social context and learning by doing policy practice, as outlined by a few in the field.

The narration is supplemented by several case studies, under which similar policies applied to different regions under a similar framework have provided diverging if not opposite results. Therefore socio-economic and political characteristics and realities are very important considerations.

For year’s policy makers have been cornered for their short falls, for the mismatch between promise and result, for their adhocism in policy driven by inconsistency and on-off approach. In practice, the real question within the academic and policy world has been what works and what doesn’t. What role does policy have in the local let alone global economy? What is its impact and target market? Its nature, form and characteristics and above all what does it want to achieve. As many policy specialist, as either students or practicing experts are confronted with the conundrum to lay out a distinction between what works and what doesn’t, their minds are subverted towards drawing conclusions.

However, very few would say, we cannot precisely pinpoint what works and what doesn’t on a broader scale, we are unclear what is better and what is worse given a complex environment, which is the real world we live in, and we certainly cannot claim its absolute success, as it is a combination of several forces working outside the scope and domain of the policy table. If anything, we can give a drift but rarely a precise conclusion. However, such is the test of their expertise and role in the global race. For starters, maybe, acceptance is the way forward.

Tags: Columns, Development, Economy

Category: Columns, Economic Wheel