Toward a new development economics

Also in the Boston Review, Abhijit Banerjee on a new development economics:

[T]he only theories that we hold onto with some confidence are disaster warnings—banning all trade is bad, as is banning all private enterprise and printing money to pay everyone. With anything more nuanced, or less negative, there are too many doubts and differences.

It is perhaps natural that the reaction to this kind of uncertainty is to be pessimistic about the possibility of taking any constructive action. William Easterly, the most articulate of the pessimists, in his 2006 book The White Man’s Burden, comes very close to suggesting that there are no recipes for growth that can be brought in from the outside, other than the recipe of giving people within the country incentives to find a recipe on their own.

But this is not what the evidence is telling us. All it is saying is that the cross-country data we are using is not up to answering the kinds of questions that are being asked of it. It does not mean that these are the only useful questions to ask, or that there is no other kind of data that can help us.