Indonesia | Economics

Thursday, June 22, 2006

Rethinking development planning

Economists knew it a long time ago, but it takes one angry development economist to put the issue to the forefront. I am talking about the planner's information problem -- the reason why so many market failures often don't find their cure in government interventions.

It is this exact same reason why the kind of hubris displayed by many western development planners towards developing-cum-aid-recipient countries can be hazardous for poor economies' health. It is against this hubris that William Easterly lashed out in his recent, compelling book, The White Man's Burden (TWMB).

The argument, based on the idea that planning development is doomed to fail -- in part, due to the extremely difficult task of getting information for proper planning, but more importantly, because development through planning and more planning usually ends up diluting accountability to "a committee".

Yet, despite decades of failure to rely on "planning documents" as an engine of development, the planning mentality stuck on. Easterly pulled no punches against the United Nations and its Millennium Project, and was especially critical of the kind of approach proposed by proponents of the Millennium Development Goals (MDGs). Beyond these international bureaucrats, the same planning mentality permeated through various rich country governments, who often imposed this on the bureaucrats of poor countries.

As an alternative to planning, Easterly suggests instead to "let the thousands of development innovations bloom" -- support little innovations that help the poor, instead of grandiose plans with no-one in charge and responsible to answer for their failures.

As usual with Easterly's book, this one is sharp, well-argued and well-researched. Personally, although I find his previous book, The Elusive Quest for Growth, to be a better book overall -- one of the finest writing on development -- the arguments presented in TWMB are timely and particularly important. With increasing calls for "more aid to end poverty" (in itself, a rather naive proposition), it is important that aid, if not actually achieving this impossible goal, at least moves us a little further there, instead of away from it.

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