Conclusion:Eight Principles for Policy-Makers
The introduction to this book posed three big questions:
- When did the massive inequalities in the contemporary world originate?
- How have a relatively small number of countries managed to achieve such
high levels of income and welfare? - Why have so many countries remained at low levels of income and
welfare?
If the reader is in future wary of or questions carefully any clear answers given
by journalists or scholars to these questions, then the book will have served its
purpose. A simplistic proclamation such as ‘Education is the key to economic
growth and poverty reduction’ is not a serious answer; it is a way of avoiding
clear thinking. The widely accepted finding that investment has a robust rela-
tionship with economic growth still leaves open the questions of the deep
causes of investment: is it geography, institutions, colonialism, openness or
culture? Growth is a complicated phenomenon and to understand it requires a
deep knowledge of a particular country rather than the application of one set of
economic theories (whether free-market or any other variety) to all countries.
Despite these complications and emphasis on the importance of case stud-
ies we candraw a number of general principles to help policy-makers desiring
to both promote economic growth and make that growth more development-
friendly.
Prioritize reform
Even though we may feel overwhelmed by the number of processes that influ-
ence economic growth, we should not draw the conclusion that a long list of
policy changes is required in the immediate future. We do need to prioritize
reform. This requirement is very often ignored by consultancy organizations
and academic scholars whose long lists of economic problems are accompa-
nied by equally long lists of solutions. Given that the author conducts much of
his research on Pakistan, here are two such examples from that context.
A report from the Competitiveness Support Fund (2010), financed gener-
ously by USAID,notes that in evaluations of its economic competitiveness
Pakistan scores poorly on security (terrorism, organized crime, business costs
of crime and violence, and the reliability of the police services), infrastructure
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