Dani Rodrik is wondering whether we might be seeing a new paradigm in development economics:
Until very recently, if you spent anytime thinking about development policy, the chances are that you fell into one of three groups. One group believes the problem with developing countries is lack of resources. So the solution is a vast increase in foreign aid. A second group believes the real problem if lack of incentives. So the solution is more and better markets. The third group thinks the problem is lousy governments, so the answer lies with improved governance. I leave it to the reader to identify these positions with their most distinguished (or at least most vocal) representatives…
But there is something new afoot. Increasingly, some people are saying the right way to approach development policy is to start with the view that we actually don’t know where the problems lie, to acknowledge that the key problems may differ from setting to setting, and to adopt an explicitly experimental attitude to policy selection and formulation so that you can learn about the environment in which you operate.
In this approach, monitoring and evaluation are key, as you want to pull back from mistakes and improve policies over time. Indeed, you build the monitoring into the policy process itself so that learning becomes part and parcel of it–rather than something you leave to your researchers or economists. This way of thinking about development policy is radically different from the three schools I summarized above, as it admits much greater diversity and heterodoxy. It is humble about the extent of our knowledge but optimistic about our ability to learn.
