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The Other Hand: High Bandwidth Development Policy

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  • Hausmann, Ricardo

    (Harvard U)

Abstract

Much of development policy has been based on the search for a short to do list that would get countries moving. In this paper I argue that economic activity requires a large and highly interacting set of public policies and services, which constitute inputs into the production process. This is reflected in the presence, in all countries, of hundreds of thousands of pages of legislation and hundreds of public agencies. Finding out what is the right mix of the public inputs, and more importantly, what is a valuable change from the current provision is as complex as determining what is the right mix of private provision of goods. In the latter case, economists agree that this process cannot be achieved through central planning and that the invisible hand of the market is the right approach, because it allows decisions to be made in a more decentralized manner with more information. I argue that a similar solution is required to deal with the complexity of the public policy mix.

Suggested Citation

  • Hausmann, Ricardo, 2008. "The Other Hand: High Bandwidth Development Policy," Working Paper Series rwp08-060, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp08-060
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    1. Maria Victoria Murillo & Ben Ross Schneider & Mercedes Iacoviello & Carlos Scartascini & Francisco Monaldi & J. Mark Payne & Cecilia Martínez-Gallardo & Ernesto H. Stein & Koldo Echebarría & Laurence , 2006. "The Politics of Policies: Economic and Social Progress in Latin America: 2006 Report," IDB Publications (Books), Inter-American Development Bank, number 79599 edited by J. Mark Payne & Ernesto H. Stein & Koldo Echebarría & Eduardo Lora & Nancy Morrison & Mariano Tommas, February.
    2. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    3. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, pages 603-633.
    4. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    5. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    6. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    7. Dani Rodrik & Arvind Subramanian, 2005. "From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition," IMF Staff Papers, Palgrave Macmillan, vol. 52(2), pages 193-228, September.
    8. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    9. Ricardo Hausmann & Bailey Klinger, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," CID Working Papers 128, Center for International Development at Harvard University.
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    Cited by:

    1. ROUGIER Eric, 2015. "\"The parts and the whole”: Unbundling and re-bundling institutional systems and their effect on economic development," Cahiers du GREThA 2015-12, Groupe de Recherche en Economie Théorique et Appliquée.
    2. Piveteau, Alain & Rougier, Éric, 2010. "Émergence, l’économie du développement interpellée," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 7.
    3. Cadot, Olivier & Iacovone, Leonardo & Pierola, Martha Denisse & Rauch, Ferdinand, 2013. "Success and failure of African exporters," Journal of Development Economics, Elsevier, pages 284-296.
    4. Lant Pritchett & Salimah Samji & Jeffrey Hammer, 2012. "It’s All About MeE: Using Structured Experiential Learning (‘e’) to Crawl the Design Space," CID Working Papers 249, Center for International Development at Harvard University.
    5. Mary Hallward-Driemeier & Gita Khun-Jush & Lant Pritchett, 2014. "Deals versus Rules: Policy Implementation Uncertainty and Why Firms Hate It," NBER Chapters,in: African Successes, Volume I: Government and Institutions, pages 215-260 National Bureau of Economic Research, Inc.
    6. repec:idb:brikps:72918 is not listed on IDEAS
    7. Lant Pritchett & Salimah Samji & Jeffrey Hammer, 2013. "It‘s All About MeE: Using Structured Experiential Learning (“e”) to Crawl the Design Space," Working Papers 322, Center for Global Development.

    More about this item

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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