Organizations and Markets

Bottom-up Approaches to Economic Development

19 November 2014 at 11:25 am Peter G. Klein 2 comments

| Peter Klein |

Via Michael Strong, a thoughtful review and critique of Western-style economic development programs and their focus on one-size-fits-all, “big idea” approaches. Writing in the New Republic, Michael Hobbs takes on not only Bono and Jeff Sachs and USAID and the usual suspects, but even the randomized-controlled-trials crowd, or “randomistas,” like Duflo and Banerjee.  Instead of searching for the big idea, thinking that “once we identify the correct one, we can simply unfurl it on the entire developing world like a picnic blanket,” we should support local, incremental, experimental, attempts to improve social and economic well being — a Hayekian bottom-up approach.

We all understand that every ecosystem, each forest floor or coral reef, is the result of millions of interactions between its constituent parts, a balance of all the aggregated adaptations of plants and animals to their climate and each other. Adding a non-native species, or removing one that has always been there, changes these relationships in ways that are too intertwined and complicated to predict. . . .

[I]nternational development is just such an invasive species. Why Dertu doesn’t have a vaccination clinic, why Kenyan schoolkids can’t read, it’s a combination of culture, politics, history, laws, infrastructure, individuals—all of a society’s component parts, their harmony and their discord, working as one organism. Introducing something foreign into that system—millions in donor cash, dozens of trained personnel and equipment, U.N. Land Rovers—causes it to adapt in ways you can’t predict.

Entry filed under: - Klein -, Business/Economic History, Food and Agriculture, Myths and Realities, New Institutional Economics.