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Diagnostics before Prescription

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  • Dani Rodrik

Abstract

Development economists should stop acting as categorical advocates (or detractors) for specific approaches to development. They should instead be diagnosticians, helping decisionmakers choose the right model (and remedy) for their specific realities, among many contending models (and remedies). In this spirit, Ricardo Hausmann, Andres Velasco, and I have developed a "growth diagnostics" framework that sketches a systematic process for identifying binding constraints and prioritizing policy reforms in multilateral agencies and bilateral donors. Growth diagnostics is based on the idea that not all constraints bind equally and that a sensible and practical strategy consists of identifying the most serious constraint(s) at work. The practitioner works with a decision tree to do this. The second step in growth diagnostics is to identify remedies for relaxing the constraint that are appropriate to the context and take cognizance of potential second-best complications. Successful countries are those that have implemented these two steps in an ongoing manner: identify sequentially the most binding constraints and remove them with locally suited remedies. Diagnostics requires pragmatism and eclecticism, in the use of both theory and evidence. It has no room for dogmatism, imported blueprints, or empirical purism.

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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 24 (2010)
Issue (Month): 3 (Summer)
Pages: 33-44

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Handle: RePEc:aea:jecper:v:24:y:2010:i:3:p:33-44

Note: DOI: 10.1257/jep.24.3.33
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Cited by:
  1. Hodler, Roland & Dreher, Axel, 2013. "Development (paradigm) failures," Journal of Development Economics, Elsevier, vol. 101(C), pages 63-74.
  2. Robert, Christopher LeBaron & Zeckhauser, Richard Jay, 2010. "The Methodology of Positive Policy Analysis," Scholarly Articles 4450129, Harvard Kennedy School of Government.
  3. Foellmi, Reto & Oechslin, Manuel, 2012. "Globalization and Productivity in the Developing World," Economics Working Paper Series 1203, University of St. Gallen, School of Economics and Political Science.
  4. Richard Bluhm & Adam Szirmai & UNICEF Innocenti Research Centre, 2011. "Institutions, Inequality and Growth: A review of theory and evidence on the institutional determinants of growth and inequality," Innocenti Working Papers inwopa634, UNICEF Innocenti Research Centre.
  5. Binswanger, J. & Oechslin, M., 2014. "Disagreement and Learning About Reforms," Discussion Paper 2014-020, Tilburg University, Center for Economic Research.
  6. Muhammad, Yusuf & C.A, Malarvizhi, 2012. "Good-Governance and Poverty Reduction Relationship a case study of Nigeria," MPRA Paper 52351, University Library of Munich, Germany, revised Jan 2013.
  7. Christopher, Robert & Zeckhauser, Richard Jay, 2011. "The Methodology of Normative Policy Analysis," Scholarly Articles 4669672, Harvard Kennedy School of Government.
  8. Marc Deschamps, 2013. "Pourquoi des politiques de concurrence ?," GREDEG Working Papers 2013-23, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  9. Riccardo Crescenzi & Andrés Rodríguez-Pose, 2011. "Reconciling top-down and bottom-up development policies," Environment and Planning A, Pion Ltd, London, vol. 43(4), pages 773-780, April.
  10. Jean Cartier-Bresson, 2013. "Le pouvoir du positivisme et ses limites : microéconométrie et macroéconométrie actuelles du développement," Working Papers hal-00847005, HAL.
  11. Shaikh, Salman, 2012. "Examining Theories of Growth & Development & Policy Response Based on Them from Islamic Perspective," MPRA Paper 38530, University Library of Munich, Germany.
  12. Choon-Yin Sam, 2013. "Partial privatisation and the role of state owned holding companies in China," Journal of Management and Governance, Springer, vol. 17(3), pages 767-789, August.
  13. Dandume, Muhammad Yusuf, 2013. "Institution and Economic Growth performance in Nigeria," MPRA Paper 52356, University Library of Munich, Germany, revised 2013.
  14. Harald HABERMANN & Pablo PADRUTT, 2011. "Growth Diagnostics: Strengths and Weaknesses of a Creative Analytical Framework to Identify Economic Growth Constraints in Developing Countries," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(7), pages 25, December.

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