The development economics I’d like to see
Development economics is missing a whole ecosystem working on growth.
I recently attended the Growth Summit in Morocco. It was the best conference I’ve ever attended, both in terms of the people brought together, and how useful the sessions were. (Shout out to the Growth Teams, the Center for Global Development, and the Policy Center for the New South for organising).
My main takeaway though, was not what I learned, or the cool people I met, but what development economics is missing. It struck me that almost all of the work, policies and experience being discussed by the policymakers, practitioners, investors and funders at the summit is absent from development economics research. We are missing a whole thriving ecosystem working on growth.
On my new VoxDev podcast, Ideas in Development, Kartik Akileswaran and I asked Piero Ghezzi whether he felt like the research he saw provided answers to the types of question he had as Minister of Production in Peru. Clearly, he’d reached the same conclusion from his time in government.
“I wasn’t too impressed in general with the development literature”
It’s vital that development economics grapples with this mismatch between research questions and policy questions, which is particularly severe when it comes to growth.
Development economics is missing a whole ecosystem of growth
I read a lot of development economics research. But at the summit, I felt as though much of the research I’ve seen, commissioned and edited over the past three years did not speak to the issues being discussed, or the questions policymakers were asking.
While development economics should be a broader tent than just growth, growth, growth, it has become a sprawling discipline, covering essentially any topic that econometrics can be brought to bear on, in countries making up the majority of the world’s population (there is no single definition, but I collected some good ones here).
In a variety of areas, we have made wonderful strides in our understanding of what works for policy. Across education, health, microfinance, trade and many other areas, we are making lots of progress. I’m particularly bullish on education – I don’t think it gets the attention it deserves from funders, but that’s for another blog (maybe).
And these do all have indirect implications for growth. But if we are thinking directly about economic growth, and the type of questions a policymaker would ask on that subject – something along the lines of: how can I get growth going before the next election, or replicate the success of East Asian economies – development economists have little to say on one of the main levers they can pull, industrial policy.
Meanwhile, away from the pages of economics journals, every government, everywhere, has been doing industrial policy in some form. Some well. Some poorly. Some without realising it.
It’s a bizarre oversight by the discipline. One that was probably partly ideological, partly methodological, and partly a matter of incentives (some similar issues which I surfaced in my recent AI blog). If research questions remain divorced from policy questions, then development economists have nothing to say about this key pillar of most countries’ growth strategies.
An aside: What even is industrial policy?
This table from Ana Margarida Fernandes and Tristan Reed’s new World Bank report, Industrial Policy for Development, is a good primer on what industrial policy looks like in practice, outlining the main industrial policy tools available to governments.
This report has drawn its fair share of ire, some reasonable – I can understand the frustration of policymakers around the developing world at this about turn by the World Bank – and some lazy – courtesy of The Washington Post.
I like what I’ve read of the report (not all 270 pages FYI, as Todd Moss says, death to 100+ page policy report). And the graphic above is a nice summary of what industrial policy entails, which are some of the first ports of call for governments looking to kickstart growth. But this list alone is not earth-shattering news. Most policymakers know their options, and what they want to know which one they should choose, and crucially, how they should implement it.
Chapter 3 of the report details what we know so far on the ‘how’ for these different options, it’s certainly worth a read (I like the principles of practice), but my impression is that we have a lot more to learn.
And that makes sense, as it’s exactly these questions, on choosing between policy options, and actually getting stuff done (implementation), where development economics research has really dropped the ball.
The mismatch between research questions and policy questions
How you actually do industrial policy well was a key theme of the conference.
On the last day, I visited an industrial park with policymakers and practitioners from across Africa. Their questions were almost entirely practical, on implementation, e.g. how does power come through, what does it cost, how do you make people deliver on their contracts to build the necessary infrastructure, which government agency is really in charge, how do they coordinate the different actors, where does the money come from.
Across the conference, similar questions arose. Those who’d had success on the policy side reflected on the importance of having talented and capable bureaucrats working with them, effectively coordinating the public and private sector by creating mechanisms for useful dialogue, the nitty gritty of attracting investors, and the importance of that first anchor investor.
Evidence at the conference mostly came in the form of anecdotes, reflections, experience, diagnostics and case studies – not the type of evidence that you could publish in an economics journal, but important nonetheless, and the best we’ve got given the oversights of modern development economics.
Sure, there are lots of messy questions here. But they are extremely policy relevant ones. So, if you are looking to do impactful research, that corresponds to what policymakers actually ask, there are a wealth of important questions in this space.
The real plumbers
Luckily for researchers, there is an established and growing community of organisations that have already been thinking about these issues and directly involved in the nitty gritty of implementing on the ground.
I’d love to see development economists interacting with, and who knows, maybe even partnering up with, these organisations (I am listing some of the many examples from the conference here). Development economics would be far richer for it. And I think it could wind up helping these organisations, who might struggle to quantify the exact impact they have when talking to funders.
Growth Teams – they have built a cool Export Boom Atlas full of case studies.
The Harvard Growth Lab – who produce growth diagnostics (and a range of other resources) for governments around the world, that attempt to answer how a Minister should decide to spend their limited budget.
Gatsby Africa – who work on sector transformation in East Africa.
Another aside: The missing middle in development economics
As I mentioned in my communicating economics guide, I feel there is a sweet spot where evidence is most useful to policymakers, between the country-wide macro and the village-level micro, between what can be studied credibly, and the importance of the question. Research at that sector or ministry level, between the remote village and the entire country, seems to better match the level at which decisions are made.
One last aside, I promise: Expert-based policymaking
The evidence-based policymaking debate has always felt a bit odd. Countries that successfully industrialised did so without needing ‘rigorous’ (by today’s standards) development economics research. That doesn’t mean they did so without evidence, they just relied on different, less ‘rigorous’, more practical evidence.
A big theme of the conference was that learning by doing is a crucial part of the growth process, and successful industrial policy efforts. There’s a necessary process of accumulating institutional knowledge that helps countries move up the ladder. Another key form of evidence on industrial policy, it seems, comes from sending delegations to South Korea, China and other recent industrial policy success stories (delegation-based policymaking?). And experts have also played their role from China – The Cruise That Changed China – to Vietnam – Pham Chi Lan discussed the importance of different international experts and advisors on our podcast.
I have been working on a series of podcasts on the role of evidence in policymaking – subscribe to Ideas in Development to receive these, first episode with Michelle Rao coming sometime in May. One point that surfaced in a scoping discussion with Michelle is that development economics currently does a lot of ‘expert-based policymaking’. That is, development economists earn their stripes, publish in Top Five journals, get tenure, and are then unleashed on the policy community to give expert advice to senior politicians.
But my view is that often the research they earn their stripes doing does not actually make them an expert on the types of questions policymakers ask. So, more policy aligned research would not only improve the evidence base, but also the expert base, who seem to be one of the main avenues by which research currently shapes policy.
Of course, there are some experts out there who have been doing the type of work I’m calling for. One example that comes to mind, on industrial policy specifically, is Dani Rodrik. I guess my argument is that there should be ten Dani Rodrik’s, each with different perspectives and focused on different countries or regions.
This is not an original take
Many have been making this argument. Lant Pritchett has some particularly strong views, as he discussed at the conference in Morocco, and outlines on his Substack.
The problem with the move of development economics to RCTs is not that they only answer a small part of the needed knowledge to help countries develop. The problem is that they address none of it. That is, ask the question: “How would my country replicate the success in economic growth (or more broadly national development) that leads to higher levels of human wellbeing, like South Korea or Chile or Vietnam?”… The reason this research is chicken feed is that it is about feeding “chickens”—about how to do charity work, which mitigates the worst consequences of the lack of national development, better—and not about development at all.
As is probably obvious now, I agree with Lant’s overall take, and he has certainly shaped my thinking on this. Unfortunately, while I understand his frustration, I am not convinced that his combative approach is actually going to win hearts and minds in the discipline, or do much other than annoy, offend or put people off.
I realise that this is my second blog in a row ‘criticising’ development economics, which is slightly at odds with my day job at VoxDev, promoting and sharing the development economics I critique above. I’ve written many blogs highlighting the lessons we have learnt from development economics, so my intention is not to bash researchers, but highlight some of the high value work I’d like to see done.
So, what to do about this
Development economics has become all of economics as it happens in the ‘developing’ world, which itself lacks a good definition. I’d like to see the discipline recapture a central mission, growth (and/or structural transformation).
As development economics sprawled, it lost this central purpose – that is, trying to understand how countries can develop.
But over time, the line is becoming increasingly blurred between what is currently counted as development economics, and what would better be described as labour economics that just so happens to be in Kenya, or health economics that just so happens to be in Colombia.
It’s great that development economics provided a home to those academics who wanted to study questions in LMICs, but were shunned by an economics discipline focused exclusively on the US and Europe. But we are reaching the point where labour economics should take a global view, rather than implicitly referring to the labour markets of the US and Western Europe. Health economics should think about China and India, as much as the US. Public economics should investigate public policy from Madagascar to Norway. Looking at the growing geographic diversity of field-specific journals and conference programmes, this does seem to be happening naturally, if slowly.
And in that world, development economics should still exist, but in a narrower, more focused form, on the big questions about development and structural transformation. In fact, it just so happens that we are now at a funding cross-roads that could act as a final push. With universities and development budgets under pressure, as researchers scramble for new funders of their development research, the new players in town (themselves funded by newly minted tech billionaires who have committed to giving away significant portions of their wealth) will have an outsized ability to shape research, and a lot of money to do it with.
Finally, I will reiterate a point from my last blog, that I hope this period of disruption (not just in terms of funding, but AI too) can also wrest control of development economics away from universities in the US and Europe – and move the discipline from epistemic authority to context authority. I think that would also help close the gap between research and policy questions, as local researchers are closer to, and understand better, policy priorities in their context.
The research gap you describe is recognisable, but it isn't accidental. Given that academic incentives reward specific kinds of work: causal identification, clean variation, publishable evidence, researchers quite rationally adapt to those incentives. Journals reward what senior peer reviewers value, and senior reviewers got there by doing exactly the kind of research you're critiquing. The system keeps reproducing itself, not through conspiracy or ideology, but because everyone inside it is responding sensibly to how their careers work.
Which means the call for more policy-aligned research, while obviously correct, is, on its own, weaker than it appears. Researchers who want to answer the questions policymakers are asking face real career costs for doing so. And Lant's frustration, warranted as it is, can't fix a system just by pointing out it's broken.
The new funders point is where I think you're onto something — but it will stick only if they actually change what gets rewarded, rather than just who gets funded. Money flowing into the existing academic system buys more of the same research, faster. The shift requires treating sustained engagement with a government agency as something worth putting on a CV, counting a diagnostic that actually helped a minister make a better decision as legitimate evidence, and not just funding economists to study practitioner problems from a distance.
There's also something your expert-policymaking section touches on. Economists become experts in the questions they spent a decade studying for tenure, not necessarily the ones ministers face. Simply being from the country doesn't fix this — a locally embedded researcher trained in identification strategies is still asking US/EU-style questions in a different geography.
Delegation visits (like the one on the last day of the Rabat Growth Summit are a useful illustration of what real proximity looks like, especially to countries 15-20 years further along the development pathway. Think about what actually happens on such visits. It's not that you get better information than you'd find in a case study; it's that you ask completely different questions. Who makes the EPB function when the minister stops showing up? What happened when the first set of targets got gamed? How did they handle the inevitable early failure without the whole thing collapsing politically? Those questions don't appear in the academic literature because the people who faced them weren't writing papers — they were fixing things.
That's the environment that actually builds implementation expertise. Not a PhD on state capacity, but years where recommendations got tested, and you had to account for why they didn't work. The economists who are genuinely useful to ministers — and there are a good number — mostly got that way by being around long enough to see the consequences of being wrong.
I recently attended a lecture by a researcher who was criticising the obsession with RCTs, and the point that stood out most to me was that considering RCTs (and more generally quantitative evidence) and the supreme source of knowledge, pushes us to only ask the 'small' questions, which can be answered clearly through quantitative methods, while drifting away from the 'big' questions.
While reading your wonderful post, I felt that this is a similar idea.
I am a Public Policy and Development student at the Paris School of Economics and I am truly glad I found your post and all the references you mentioned, as I had started to question my interest in Development Economics because it seemed too focused on the 'small' questions.