Yesterday I spent an interesting afternoon participating in a meeting convened by BOND, the UK membership organisation for NGOs working in international development, looking at inclusive growth. There were presentations by Malcolm Ridout, head of the DFID Growth Team, Sven Kuhn von Burgsdorf, who leads the EU consultation on growth, Alex Cobham, the senior policy advisor from Christian Aid and me (see Bond website for the presentations).
Perhaps the remarkable thing about the event was that it was difficult to find much to disagree about. We all more or less agreed on three issues:
- Growth is good - we shouldn’t be against it
- But it isn’t the be all and end all of development – policies in many other areas are essential for ensuring inclusive and sustainable growth (whatever that means) and
- We know surprisingly little about how to create growth (never mind how to make it inclusive or sustainable).
To some extent this is a good thing – agendas change as we glean new evidence about what matters in what contexts, or realise that we have forgotten lessons from the past. But a bit of me finds the constant policy fashion parade a little tiring too. We are constantly drawn into what William Easterley’s wonderful book called “The Elusive Quest for Growth”. Yet the truth is that there is no magical elixir of policy that drives growth – the right policies depend on the country and evolve over time. This, no doubt, is why Hausmann, Rodrik and Velasco’s Growth Diagnostics has become so popular, since it provides a simple analytical tool for how one might be able to identify the binding constraints to growth. Too simple. Although, such analysis, well done, can be very valuable, it often provides insights which are just too generic to be useful for practical policymakers in real countries.
My suggestion therefore was, to some extent, to give up the hunt for the “right policies” for economic growth and instead draw on Dani Rodrik’s work on Industrial Policy for the 21st Century, and focus on the process for how policy gets made in individual countries. I suggest six things that countries can do (and donors can help with):
- Ensure that all voices are heard, including those of the poor and marginalised
- Build accountability mechanisms, checks and balances to prevent collusive policymaking
- Promote dialogue between the public and private sectors
- Do good technical analysis
- Monitor, evaluate and kill things that aren’t working
- Build effective systems for domestic resource mobilisation.