Update: Prof. Rodrik says that I’ve got his examples exactly wrong (see his comment) and that he meant that the World Banks’ “globalizers” including Vietnam have outperformed those higher on the Heritage Foundation’s index. Well… that certainly makes more sense. My apologies to him—and to you—for the misunderstanding. [2 April, 2009]
I am sympathetic to Dani Rodrik’s underlying thesis in his ‘One Economics, Many Recipes’ publications because, like most who’ve witnessed development policies go off-the-rails, I’ve blamed the failure of simple-minded economic ‘orthodoxy’ to account for the complex imperfections of real markets.
But ‘sympathetic to’ doesn’t mean ‘agree with’. I think Rodrik fails to explain how a’ solid application of second-best thinking’—by which he means, roughly, ‘non-laissez-faire’ intervention—can be distinguished from managerialism (by technocrats) and dirigism (by autocrats). I’ve seen plenty of examples of that kind of policy derailment, too.
The Rodrik thesis about the value of planning based on ‘second-best’, it seems to me, can be tested only by reference to examples. It’s an empirical, rather than theoretical, question. But his examples are often at best arguable and, in his most recent presentation of his case, bizarre.
