Yesterday I finished reading a very interesting book, “Growth and Policy in Developing Countries. A Structuralist Approach” by José Antonio Ocampo, Codrina Rada, and Lance Taylor. The book is presenting the “real” structuralist view (in contrast to the pseudo-structuralism of the Bretton Woods institutions) of development economics. The approaches chosen differ in a broad way from what mainstream economics teaches us – and, importantly, they are accompanied by strong empirical evidence.
Here the authors’ key messages, as summarized in the last chapter of the book:
- “Convergence in income levels among countries is the exception rather than the rule.” – in contrast to the predictions of most orthodox models of economic growth;
- “International factors play a crucial role in the overall growth dynamics of the developing world.” – here, as well, mainstream economics works under different assumptions, where domestic policies and institutions are emphasized;
- “Structure matters.” – meanwhile, mainstream economic models view production and trade structures rather as a passive outcome of growth;
- “Productivity growth is as much a result as a cause of economic growth, largely because demand matters not only for short-term but also for long-term growth.” – mainstream analyses of growth patterns are essentially supply driven;
- “External shocks, both positive and negative, crucially influence the macroeconomic dynamics of developing countries.” – this brings counter-cyclical macroeconomic policies into the centre of development strategies;
- “The dynamics of sectoral net-borrowing patterns strongly influence possibilities for macroeconomic management, but the dominant patterns are not those usually underscored in orthodox analyses.”
- “Financial development plays a crucial role in both enhancing macroeconomic flexibility but also generates risks of its own.”
- and finally: “Success in the developing world is associated with States as much as markets.” – consider historic examples as China, India, South Korea.
The book by Ocampo et al. scrutinizes the foundations of mainstream development economics, both empirically and theoretically, and is really worth reading. Even if one is not a structuralist.