Thursday, December 27, 2007

Don't Know Much About Economic Growth

I got interested in economics after traveling to a number of third world countries and being puzzled by why economic conditions are so different in those countries compared to the US. As I started reading books on economics, it seemed like they offered some of the best explanations I had ever heard -- property rights, good institutions, rule of law, freedom to make individual choices, etc. I decided to pursue a PhD in economics (in part) to try to understand these issues better.

Since starting school, I've worked for Enterprise Africa, took an economic development seminar with Bill Easterly, and have specialized in the economics of law, politics, and religion to try to understand how all of these factors play a role in economic development. Sadly, I can't say I know much more about what causes economic development than I did when I started. Apparently, no one else does either:

In short, the last six years has not changed the basic conclusion that the growth literature has taught us much less about how to get rich than it has about who is already rich. There is nothing particularly new in recent growth theory, but perhaps that is no surprise because there is remarkably little new in growth, either – the rich today are by and large those who were rich yesterday. That there might not be a holy grail of growth policy, however, is no reason for people of economic faith to stop looking, so no doubt the next six years will see another 13,000 articles on the subject to review.

What I can say is that I do know a lot more about what we don't know. That just might be something worth knowing.

(HT Tyler Cowen)


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