Paul Collier at Project Syndicate:
The world needs a new economics for neglected places – for those who have fallen behind others in the same country, whether it be a rich one or a poor one. The place in question might be a community, a town, or a region: Muslims in France, Rotherham in Northern England, or Colombia’s Atlantic-Caribbean coastal region.
In my last book, Left Behind, I show why such places, once hit by an adverse shock, spiral down unless the shock is mitigated by supportive and timely finance guided by local contextual knowledge. Those in the United Kingdom may recognize this as a critique of the highly centralized, short-horizon, economic micromanagement exemplified by the Treasury; but the consequences should serve as a warning to other countries, too. Through detailed analyses of instances of renewal, I hope to show how both local leadership and bottom-up social movements can be effective in transforming broken places.
The problem, contrary to what Milton Friedman argued (and what the UK’s Treasury assumes), is that financial markets reallocate capital from shock-hit places to those that are unaffected. The smartest money flees from adversity toward success, and it is soon followed by other investors.
More here.
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