Development in Three … Words

Over the weekend, @bill_easterly very generously posted to this to the @AidWatch blog, with the title “Development in 3 Sentences”:

I liked this formulation from the blog The Coming Prosperity, posted today as a link on Twitter:

“If solutions are known, need $$. If solutions are knowable, need evaluations. If solutions are evolving, need entrepreneurs.”

In response, @calestous, a colleague of mine at the Kennedy School’s Belfer Center (where I’m an external associate), wrote this:

 @auerswald @bill_easterly Problems and solutions are always evolving.

Put these two together, and what do you get?

In my view, you get development in three words: Entrepreneurship, technology, and innovation.

I am not claiming this is original. In fact, it is downright old school. In my next three posts I’m going to look into each of these, one at a time, and how they add up to “development.” But before I do, let me just note again how strong the consensus among economists is around this general framing. In the last century alone (much written of relevance before that!): Joseph Schumpeter, A.O. Hirschman, F.A. Hayek, Robert Solow, Karl Shell, Jane Jacobs, Mancur Olson, Paul Romer, to name but a few. All have articulated variants of this theme. Even apparent intellectual adversaries @jeffdsachs and Easterly agree on this. The Jeffrey Sachs version:

I believe that the single most important reason why prosperity spread, and why it continues to spread, is the transmission of technologies and the ideas underlying them. (The End of Poverty, p. 41)

And Easterly:

Historically, industrialization arose in initially poor countries which have since become rich, with the common theme of a heavy reliance on both domestic and international market opportunities and decentralized private entrepreneurship.

Good that we can all agree on something.

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Note: Thanks to @m_clem for previous shout out about the same three sentences (above). They sum up core point of The Coming Prosperity.