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Wednesday, Oct 05, 2022

Explained Books: Why the paths to development vary from nation to nation

Why do some countries prosper and others don’t? Stefan Dercon's book is on the basis of his experience of studying the evolution of several key African and Asian economies over the past few decades. He makes three essential points.

Stefan Dercon; his new book

Title | Gambling on Development: Why Some Countries Win and Others Lose
Author: Stefan Dercon
Publisher: C Hurst & Co Publishers Ltd
Pages: 360

Why do some countries prosper and others don’t? If we knew of a silver bullet that would guarantee a country’s development, millions could be lifted out of poverty, all nations would become rich, and good quality education and healthcare would prevail no matter where you lived on the planet. This is especially relevant for India as it embarks on a goal to become a “developed country” over the next 25 years.

In the past, several books have been written on this topic. These include David Landes’ Wealth And Poverty Of Nations: Why Some Are So Rich And Some So Poor (1998), and Why Nations Fail: The Origins of Power, Prosperity and Poverty (2012) by Daron Acemoglu and James Robinson. So what new insight does Stefan Dercon provide?

A professor of economic policy and director of the Centre for the Study of African Economies at the University of Oxford, Dercon has written this book on the basis of his experience of studying the evolution of several key African and Asian economies over the past few decades. He makes three essential points.

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His first contention is that while a lot of existing research has focussed on the specific winning blueprints of development, the fact is successful countries appear to have pursued a relatively diverse set of economic and other policies. For instance, China and India have had different strategies for development. In other words, “there is no one, cost-free path to development.”

Two, a better understanding is needed of why some countries implemented sensible economic and other policies, while others never did, despite often claiming they would. “Understanding why the rhetoric was followed by action in some places and not in others is at the centre of understanding how development works,” writes Dercon.

Three — and this is where Dercon shares with readers his core idea — successful growth and development require the presence of a “development bargain”, that is, an underlying commitment to growth and development by members of a country’s elite (the people within the fabric of society, the economy and politics who make decisions or can disproportionately influence them).

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The obvious question is: What will ensure that such a bargain takes place? For this, Dercon says, three conditions must be met.

First, durable political and economic deals among the elite: for development, long periods of peace and stability are essential. Second, “Success requires finding a balance between what the state should do and what it can do — and local circumstances will dictate what this is.” In other words, a mature, sensible state. Third, says Dercon, is the ability to learn from mistakes and course-correct.

Explained Books appears every Saturday. It summarises the core argument of an important work of non-fiction.

First published on: 20-08-2022 at 03:59:35 am
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