Podcast appearances and mentions of stefan dercon

With populist politicians taking power around the world, policymakers are relying less on research and expertise, as their political narratives prioritise emotion and identity over facts. This may have long-term consequences for global development: not least in the US, where the Agency for International Development has been dismantled, with thousands of staff laid off. Critical development programs have been halted, and the future of US foreign assistance is in limbo. In the latest episode of the collaboration between Yale's Economic Growth Center and VoxDev, host Catherine Cheney asks Rory Stewart, former UK Secretary of State for International Development, Stefan Dercon of the University of Oxford and formerly chief economist of the UK Department for International Development, and Trudi Makhaya, former economic advisor to the President of South Africa, how we can ensure that facts and evidence still matter in policymaking. Check out the full show notes here: https://voxdev.org/topic/institutions-political-economy/development-dialogues-future-evidence-based-policymaking-and

Following the UK general election, CGD's Ranil Dissanayake speaks with Stefan Dercon from the Blavatnik School of Government (and CGD) and Laura Chappell from the Institute for Public Policy Research about the unique challenges presented by today's development landscape, the key drivers of economic growth, and what the new UK government should prioritize. 

Stefan Dercon is Professor of Economic Policy at Oxford University, where he also directs the Center for the Study of African Economics. The author of 5 books and many studies, Stefan has had a distinguished career as an academic and policy advisor on economic development. His accomplishments are many. To name just a few:  between 2011 and 2017, he was Chief Economist of the Department of International Development (DFID), the government department in charge with the UK's aid policy and spending; between 2020-2022, he was the Development Policy Advisor to successive Foreign Secretaries at the UK's Foreign, Commonwealth and Development Office. Stefan is a virtuoso of development! His approach to our conversation was equal parts exciting and instructive, a style that also comes across in his writing, making his book very hard to put down. We start by learning about Stefan: his experience growing up in Belgium, being taught by Catholic priests about African socialism, Ujamaa and Julius Nyerere, and Marx and discovering his interest in economics as a means of pursuing development. His early career in Tanzania and Ethiopia highlighted the relationship between risk and poverty and the need to consider uncertainty when engaging in policy advice or research. We then shift to talking about the four propositions that compete as diagnoses of core problems of poverty and development that Stefan outlines in his book: poor initial endowments, market failures that trap the poor in poverty, market failures that are costly for poor countries, weak institutions. He gives us an overview and tells us why the propositions fall short on explaining the successes and failures of development. We also talk about the most important trends in development in recent decades: the dramatic decrease in poverty globally, the Africanization of poverty, and the increasing concentration of poverty in fragile states. The conversation then turns to the elites, what values drive them, and why would they gamble on a development bargain.  We talk about the role of natural resources, political systems, and how external actors can influence the emergence of development bargains. We also discuss the role of Western and Chinese elites in development bargains and what is good policy advice. ***** Stefan Dercon Website: https://www.bsg.ox.ac.uk/people/stefan-dercon X: https://twitter.com/gamblingondev LinkedIn: https://uk.linkedin.com/in/stefan-dercon-45927b104 ***** Mihaela Carstei, Paul M. Bisca, and Johan Bjurman Bergman co-host F-World: The Fragility Podcast.  X: https://twitter.com/fworldpodcast Instagram: https://www.instagram.com/fworldpodcast/ Website: https://f-world.org Music: "Tornado" by Wintergatan. This track can be downloaded for free at www.wintergatan.net. Video editing by: Alex Mitran - x.com/alexmmitran, linkedin.com/in/alexmmitran EPISODE RESOURCES Stefan Dercon, “Gambling on Development: Why some Countries Win and Others Lose,” Hurst, London, 2022. https://www.gamblingondevelopment.com TIMESTAMPS: 00:00:00 Intro 00:01:24 Stefan's background 00:02:49 Economics of poverty 00:04:16 Connection between risk & poverty 00:08:16 Brief overview of development thinking 00:14:57 Recent trends in development 00:19:55 The Africanization of poverty & What is fragility 00:25:39 The problem of fixed mental models of fragility 00:28:47 Who are the elites 00:41:11 The gambling in development bargains 00:47:24 What values drive the elites 00:54:25 Natural resource & political systems in dev. bargains 00:58:51 The role of Western & Chinese elites in dev. bargains 01:09:14 Are the elite bargains in the West still dev. bargains 01:19:09 Citizens' role in dev. bargains 01:29:22 External actors & the emergence of dev. bargains 01:41:28 “Peace is ugly” – can international institutions accept it 01:51:20 Development is 50% history & 50% agency 02:00:40 Private sector role in the dev. bargain 02:09:48 What is good policy advice 02:19:56 Wrap-up

This Week in Global Development is back for its first episode of the New Year, and this week, we took a look ahead at what we can expect to come down the pike in 2024. It's an election year in the U.S., and bipartisanship is in short supply. Many of the legislative challenges of 2023—including those around foreign aid— are carrying into the new year, adding more pressure to a dam that's already quite full. Republican presidential hopefuls are even going so far as to call for the defunding of the United Nations. Luckily, not everything comes down to funding—we also discussed the U.S. Agency for International Development's new Locally Led Programs indicator, which sets a standard for determining whether a given program can be considered, well, locally led. Joining Devex's President and Editor-in-Chief to break down these topics is Stefan Dercon, the former chief economist at the U.K. Department of International Development and current Professor of Economic Policy at the Blavatnik School of Government, as well as Devex Managing Editor Anna Gawel. Welcome to 2024, and thanks for tuning in! Sign up to the Devex Newswire and our other newsletters: https://www.devex.com/account/newsletters

Researchers want to maximise the development impact of their advice. Stefan Dercon tells Tim Phillips, that to do this, they need to consider the local political constraints and opportunities, and not be “The sort of technocrat that says ‘'nothing to do with me, it's someone else's problem'.”

The developing world has undergone tremendous change in the last 30 years, mostly for the better. But some countries have missed the boat. Why? In "Gambling on Development: Why Some Countries Win and Other Lose," economist Stefan Dercon explores the answer to that question. For more information on upcoming episodes and to sign up for our mailing list, visit the Devex Book Club here: https://pages.devex.com/devex-book-club.html

This week we brokehttps://www.devex.com/news/exclusive-us-allies-block-major-un-development-declaration-106006 on the United States, the United Kingdom, and a handful of allied powers blocking an agreement on a draft declaration that advocates the need to accelerate progress on a set of critical development goals, throwing a spanner into high-level negotiations ahead of the United Nations General Assembly taking place next month. In the United Kingdom, an inquiry has been told that development assistance rules are denying “vulnerable” https://www.devex.com/news/exclusive-us-allies-block-major-un-development-declaration-106006, or SIDS, the help they need to combat the climate emergency as they are classified as “too rich” to receive funding. The U.K. government also received strong criticism for its aid being used to fund thehttps://www.devex.com/news/uk-faces-criticism-for-funding-soccer-in-china-amid-aid-cuts-106031, even as spending reductions are predicted to lead to thousands of deaths this year across Africa and Yemen. However, the U.K. is not the only country planning aid cuts. Germany's ruling coalition has proposed to https://www.devex.com/news/development-groups-prepare-to-fight-german-budget-cuts-106033by proposing a 5% cut for 2024, setting off alarm bells in development circles. For the latest episode of the podcast, I was joined by University of Oxford professor Stefan Dercon and Devex Managing Editor Anna Gawel to discuss the past week's important stories from global development. Please note that we will not be recording an episode next week due to the Devex Summer Break. We will be back in two weeks' time to continue bringing you the top stories from the sector. https://www.devex.com/account/newsletters to the Devex Newswire and our other newsletters.

The developing world has undergone tremendous change in the last 30 years, mostly for the better. But some countries have missed the boat. Why? In "Gambling on Development: Why Some Countries Win and Other Lose," economist Stefan Dercon explores the answer to that question.For more information on upcoming episodes and to sign up for our mailing list, visit the Devex Book Club here: https://pages.devex.com/devex-book-club.html

Charles Kenny is a senior fellow at the Center for Global Development in Washington DC. He was previously at the World Bank, where his assignments included coordinating work on governance and anticorruption in infrastructure and natural resources, and managing investment and technical assistance projects covering telecommunications and the Internet. Charles has written several books, two of which we discussed in this conversation: Getting Better: Why Global Development is Succeeding, and Our World, Better: Global Progress and What You Can Do About It. We also discussed a recent report, where Charles and his coauthor Zack Gehan created a set of scenarios for the shape of the global economy in 2050. While their forecast for richer countries is not very optimistic, what they found is largely positive for developing and middle-income nations. For example, the report finds that incomes per capita on the African continent could be 76% higher in 2050 than they were a few years ago, and in India incomes could jump 136%. Twitter: @charlesjkennyKey highlights:Introduction - 00:46Global development viewed from Washington - 02:52Reducing extreme poverty by 2050 - 07:15Economic growth, poverty and “degrowth” - 15:40What should the World Bank be doing more of? - 28:25The global public goods agenda - 39:00OECD DAC aid has lost its credibility - 43:30Combating pessimism and short-term thinking – 50:18 Host:Professor Dan Banik, University of Oslo, Twitter: @danbanik  @GlobalDevPodApple Google Spotify YouTubeSubscribe: https://globaldevpod.substack.com/https://in-pursuit-of-development.simplecast.com/

Matthew Ross talks about how field training officers affect police use of force. “The Effect of Field Training Officers on Police Use of Force” by Chandon Adger, Matthew Ross, and CarlyWill Sloan. *** Probable Causation is part of Doleac Initiatives, a 501(c)(3) nonprofit. If you enjoy the show, please consider making a tax-deductible contribution. Thank you for supporting our work! *** OTHER RESEARCH WE DISCUSS IN THIS EPISODE: “A Few Bad Apples? Racial Bias in Policing” by Felipe Goncalves & Steven Mello. “Does Race Matter for Police Use of Force? Evidence from 911 Calls” by Mark Hoekstra and CarlyWill Sloan. [American Economic Review forthcoming]. “Randomized Controlled Trial of Social Interaction Police Training” by Kyle McLean, Scott E. Wolfe, Jeff Rojek, Geoffrey P. Alpert, and Michael R. Smith. “Is Police Training an Effective Intervention for Addressing Disparities?” by Hunter Johnson, Stephen L. Ross, and Steve Mello. [Available from the authors]. “Can You Build a Better Cop? Experimental Evidence on Supervision, Training, and Policing in the Community” by Emily Owens, David Weisburd, Karen L. Amendola, and Geoffrey P. Alpert. “Learning By Doing in Law Enforcement” by Jeremy West. “The Effect of Minority Peers on Future Arrest Quantity and Quality” by Roman Rivera. “Peer Effects in Police Use of Force” by Justin Holz, Roman Rivera and Bocar Ba. “Whose Help is on the Way? The Importance of Individual Police Officers in Law Enforcement Outcomes” by Emily Weisburst. “A Cognitive View of Police Misconduct” by Oendrila Dube, Sandy Jo MacArthur, and Anuj Shah [Paper available from the authors]. “Proud to Belong: The Impact of Ethics Training on Police Officers” by Donna Harris, Oana Borcan, Danila Serra, Henry Telli, Bruno Schettini, and Stefan Dercon. Episode 73 of Probable Causation: Danila Serra.

The global development domain currently faces huge challenges. Apart from trying to stimulate economic growth and ensuring a fair distribution of the benefits of that growth, national governments and their international partners must also tackle complex conflicts, provide humanitarian assistance, and not least address the harmful impacts of climate disruption. What then should the role of external actors be? How can good intentions be best mobilized into effective actions on the ground?Håvard Mokleiv Nygård is a Deputy Director-General of the Norwegian Agency for Development Cooperation, Norad, where he directs the Department of Knowledge. Until a few years ago, he was Research Director at the Peace Research Institute Oslo (PRIO), where his research focused on armed conflict and political violence, peace building, and patterns of democratic development. Twitter: @havardmnResources:Joint statement by donors on locally led development (December 2022)Norwegian aid statistics (Norad.no)Key highlights Introduction - 00:49Foreign aid vs. development cooperation - 04:52Locally led development - 13:10The aid effectiveness debate - 24:15What works in global development and how to measure success - 43:49Bridging the gap between research and policy and the future of aid - 52:45Host:Professor Dan Banik, University of Oslo, Twitter: @danbanik  @GlobalDevPodApple Google Spotify YouTubehttps://in-pursuit-of-development.simplecast.com/

Bangladesh has transformed tremendously in the last twenty-five years. Average incomes have more than quadrupled, and many of its human development indicators have improved alongside. It has also become an export powerhouse with its garment industry, and generally a shining example of development - though things are far from perfect. Five decades ago, when Bangladesh became an independent country, many were not hopeful about its chances of development. So how did Bangladesh turn its story around? Well, it turns out the history of its transformation is longer than credited - and the process is more complex than what is cleanly presented.I could not think of a better person to help me unpack the Bangladeshi miracle than Dr. Akhtar Mahmood. He is an economist and was a lead private sector specialist for the World Bank Group - where he worked in various parts of the world for three decades on privatization, state enterprise reforms, investment climate, competitiveness, and more broadly private sector development. He has written some excellent books (see embedded links), and his column for the Dhaka Tribune is one of my wisest sources of economic development commentary.TranscriptTobi;Welcome to the show Akhtar Mahmood. It's a pleasure talking to you. I am very fascinated and curious about Bangladesh, and you are my number one option for such a journey. It's a pleasure, personally, for me to be having these conversations. I've been reading your column for about a year now with the Dhaka Tribune, and I've learned so much. They are very perceptive, and I'm going to be putting up links to some of my favourites in the show notes for this episode. Welcome once again, and thank you so much for doing this.Akhtar;Thank you very much for having me. Thanks, Tobi.Tobi;There's so much that I want to talk to you about, as you'd imagine, but let me start right at the end, which is now. There has been a lot of attention on Bangladesh, recently, at least in my own orbit, there have been two quite detailed and interesting columns in the Financial Times about Bangladesh. There is also Stefan Dercon's book, which used Bangladesh as a positive case for what he was describing about the development process. But also, there's the issue of what's going on right now with the global economy. First, it started with COVID and how the economy suddenly stopped, and all the reverberation that comes with that - the supply chain, and now, a lot of countries are going through a sort of sovereign debt crisis and Bangladesh, again, is in the spotlight. So, I just want you to give me an overview, and how this, sort of, blends with countries that put so much into development…you know, in terms of policy, in terms of the things they are doing right, in terms of investment and attracting investment, and the exposure to these sorts of global economic risks and volatility. [This is] because, usually, what you get in Western discourse is that a lot of countries are victims of some of these risks because of some of the wrong policy decisions they make. But in the case of Bangladesh, at least to my knowledge, nothing like that is going on. And yet, it is usually talked about as a very exposed country in that regard. I know you wrote a column recently about this. So I just want you to give me a brief [insight]—is there anything to worry about? How do countries that are trying to get rich, that are trying to do things right, how do they usually manage these sorts of global risks?Akhtar;Right? I think, inevitably, we'll have to go a bit into the history of how we came here. But since you started with the current situation, let me briefly comment on that, and then maybe I'll go to the history. Right now, yes, like most other countries, we are facing challenges, but I think there has been a bit of hype about how serious the challenge is, in terms of the risk of a debt default, the risk of foreign exchange reserves going down very sharply. And I think there is a bit of the Sri Lanka effect, and then also the Pakistan effect, as people are trying to put Bangladesh in the same bracket, which I think is very, very misplaced. I think the IMF has made it clear, [not only] in its latest country report, which came out in March 2022 but also in many recent statements, that Bangladesh has both a solvency situation and a liquidity situation. As you know [that] the solvency is typically measured by the external debt to GDP ratio, one of the ratios is external debt by GDP and the liquidity is measured by debt service requirements - the external debt service requirements by the export earnings ratio. And there are these certain thresholds, and if you go beyond that, it's considered a bit risky. Bangladesh on both these accounts is much below the threshold. So there's already a lot of headroom in the sense that even if things get worse over the next few months and maybe a year or two, Bangladesh would still be able to manage the situation. So I just wanted to make that clear at the beginning. Now, that doesn't mean that there aren't other issues in Bangladesh, issues which have been brewing for quite some time. For example, many of us are concerned with the efficiency of public expenditures. We know of projects where there have been cost overruns. Some of it may be for genuine reasons, some of it may be related to corruption, which sadly still remains a serious problem in Bangladesh. I feel that I've written about it, and you may have read some of these articles about the spectre of rising cronyism, which, again, is not surprising; when an economy grows as fast as Bangladesh's has, there are certain people who become economically powerful. And at some stage they acquire political power as well, and then you start seeing the problem of cronyism. So we have that, we have a serious problem in the banking sector with a lot of non-performing loans. I'm not suggesting that we don't have serious problems, we do. But there is a disconnect between the typical headlines and where the real problems lie in Bangladesh.  Now, this may be a good moment to bring up a little bit of history, and I can go deeper into it. The Bangladesh economy has certain resilience. And I just want to comment on that. One which is not discussed much, because the story often is about garments and remittances, is the transformation that has happened in the rural areas. It started with agriculture, it actually started with rice production, which is the most important crop in Bangladesh. And then it expanded into other crops, and then even non-farm activities in the rural areas, we can go into the details of this later. But agriculture provides a certain resilience. And we saw that again during COVID. Because the agricultural activities in Bangladesh were not affected that much by COVID, and that was a big benefit. The other is the unleashing of an entrepreneurial spirit in Bangladesh. And this spirit has been unleashed across the board, so it's not just some large conglomerates or some large government manufacturers who have become entrepreneurial. This is something which has happened across the board, from small farmers to large conglomerates. And that, I think, is a big asset for the country. Because we don't have natural resources; unlike Nigeria, we don't have natural resources. In some ways, it's actually a good thing. Because then we are forced to use other assets and latent entrepreneurship… you know, Albert Hirschman, the famous economist, wrote a book in 1956, which is a classic, on the strategy of economic development, and he made a very interesting comment. He said, in developing countries, you have a lot of latent resources. In developed countries, the task is how to allocate the resources you have; how to best allocate them. In developing countries, it is about bringing out the latent resources you have; and entrepreneurship is one of the latent resources developing countries have, but many countries have not been able to bring that out and make use of it. Bangladesh has, and that gives a certain resilience to the economy. So yes, the shocks are going to affect us, especially because our major industry, in fact, is export-oriented, which is garments. So that is affected by the shocks, but unlike commodity prices, export earnings don't fluctuate that much. And the industry has proven to be resilient over the years.Tobi;Yeah, I'm glad you touched on history because, really, that's where I wanted to start. But I just want to get the pulse of the moment and how to make sense of all the headlines that we're seeing around. So usually, and I'll refer to the two pieces I've read in the FT [Financial Times] recently that I referenced in my first question. The development trajectory of Bangladesh is usually dated as something that started around 1990. But Bangladesh became an independent country two decades before that. So my question then is: that intervening period before that sort of consensus about the takeoff point, what were the things that were brewing in the background that culminated in that takeoff? I know a lot of things went down, and just to mention that one of the reasons I'm very interested in Bangladesh is that it sort of defies some of the seductive examples of development and progress - the Asian tigers, you know, so to speak - where things seem to be very clear, the prescriptions are very precise, you need to do this and do this. Bangladesh seems like a regular country - like Nigeria, with its history, its complexities, its problems like every other country in the world, but that has also managed, despite a situation that has seemed hopeless, at first, to people who look at these things in terms of hard boundaries - that has emerged as this fantastic example of economic growth and development. So what were the major things that happened before 1990 that sort of made this takeoff possible?Akhtar;Now, one may debate on whether 1990 is the point of the takeoff. In any case, it's very difficult to pinpoint. But anyway, it's good. So 1990, twenty years after independence and also a transition to democratic rule after fifteen years or so of military or quasi military rule. So that's another reason people take that as a counterpoint. But it's a good counterpoint to start discussing these things. Professor Stefan Dercon, whom I think you had on your show recently, who wrote this book Gambling on Development; he has been saying that actually, in some ways, it's a Bangladesh experience which may be more relevant for many developing countries than the East Asian [experience]. And one of the reasons he mentions is, I think, what you just alluded to - that there is a certain messiness, and yet Bangladesh developed. So countries which think that they are also in a somewhat messy situation, or whatever dimensions, say in governance or other dimensions - whether it's possible for them to develop. And that's why the Bangladesh example may be more relevant and encouraging than the East Asian, where one common characteristic has been the strong capabilities of the state. In China, it has been there for hundreds or more,  thousands of years. In East Asia, yes, I'm sure they also have that but they certainly acquired that quite fast. So how do you develop in a country context where the state capacity, the governance quality are not that great, and then you have many other problems as well. So you're right. In that sense, Bangladesh may be very relevant. I think I'd like to first start with, um, even deeper history, because if you look at the region which now constitutes Bangladesh, it used to be part of a province in British India. So it was East Bengal, and then you had West Bengal and then together it was Bengal. Now there was a time in history when Bengal including East Bengal was supposed to be reasonably rich, perhaps the richest province in [the] whole of India before the British came. But if we go back to the beginning of the twentieth century, East Bengal was actually quite backward economically and in many other ways. And if you look at the political discourse in the first half of the twentieth century, before the British left, the political and intellectual discourse in what is now Bangladesh, you'll see there's a lot of talk about peasants being exploited. We were a very peasant dominated economy and society. In many ways we still are, although there has been a lot of urbanisation and industrial activity. At that time it was very much peasant dominated, and the theme which dominated the discourse was exploitation of the peasants. And the aspiration that the leaders whether political or intellectual had is how can we improve the conditions of the poor people. And that sort of got ingrained in the minds of the leaders, and that continued during the time when we were a part of Pakistan. Because you may have heard that there was a lot of disparity and there was a lot of discriminatory treatment by the Pakistani establishment. So that theme was there. When we became independent in ‘71, you could think of the political leadership, you could think of the professional leadership, the bureaucracy, the intellectuals, the media, this theme of doing something for the poor, was actually very strong. So right at the beginning, and, I heard somewhere that our first prime minister, Sheikh Mujibur Rahman, was asked by a foreign journalist: what is the number one problem of your country? And he said, I actually have two number one problems. One is food security, and one is population. And we need to take care of that. So right from the beginning, even in the midst of all the turmoil in the first few years, and all the challenges of relief and rehabilitation, work had started on ensuring agricultural growth and food security. And we were fortunate that the HYV rice, the high yielding variety of rice, had been introduced just before independence, so we had something to work with. So that was very important. And there was a strong program to bring down the rate of growth of [the] population and we succeeded on both counts. So by the time we come to 1990, agriculture is taking off. Rice production had taken off significantly, farmers were diversifying into other crops. And we had started to see the beginnings of a rural non farm sector. So agriculture and non agriculture together. And, Bangladeshis had been going out as migrants, and they're sending back remittances, most of it going into the rural areas. So there was a vibrancy in the rural area by the time you come to 1990. Secondly, sometime in the late 70s, the government decided that not only should we move away from the early talk about socialism, [but] towards a more private sector-oriented or market-oriented economy. They also understood that industry has to grow to absorb the surplus labour in agriculture, and export orientation has to grow, because the market in Bangladesh is simply not large enough. So there was an early emphasis on exports. And of course, fortuitously, you know, the South Koreans were running out of their garment quota, so they wanted to relocate some of the production to Bangladesh, but we were ready to take advantage because by then the government and let's say the elite of the class had decided that we need to industrialise and the major driver of industrialization is going to be exports. And then throughout the 80s, we saw the takeoff of the garment industry. The third thing which happened was the liberalisation of policies, mostly in the 80s. So, privatisation was done, the banking sector was open to the private sector. The agricultural input market, which was previously dominated by the government, was gradually liberalised and towards the late 80s, there was a significant liberalisation of that. And finally, as remittances started coming in, our foreign exchange constraint was relaxed. So that also gave government some comfort that we can decontrol certain things. And we can allow industry to move ahead without too many controls. So all these things coming together sort of created the context in which we entered the 1990s. So a lot of the preconditions - the population growth rate had fallen significantly by the time it came to the 1990s, agricultural growth had taken off, industry was taking off, especially the labour intensive garments, which is export-oriented, that industry was taking off.Tobi;That was such a loaded answer, which has preempted some of my further questions. But let me quickly make one digression on agriculture, because over the past seven years or so, in Nigeria, there's been this debate. There's been a huge debate about agriculture, the current administration sort of prioritised agriculture and a lot of resources (capital) was allocated to that sector. And there's been challenges and there's been critics, sometimes I've found myself on the critic's side of things. Now, what I want to know from you is that,the link between agriculture, especially investment and the agricultural productivity that is necessary for the vibrance of that particular sector, how was the Bangladeshi experience? How did Bangladesh achieve food security, especially in terms of improving yield and productivity?Akhtar;Right, so a few things. Firstly, as I said, the high yielding variety of rice had been introduced in the late 60s, and then just after independence, government continued, but more vigorously with a model of… it was more [of a] public sector driven model, where the public sector would import the major inputs. One is irrigation equipment, because this rice needed irrigation, and the other was fertiliser. So, they're imported by the public sector, then they're distributed by the public sector going all the way to the farmers. Maybe at the last mile, there were some private traders who act as dealers on behalf of the government. So, the government took that responsibility. Later on, as I said, in the 80s, they started liberalising it. We'll come to that later. Second is, there's been quite a bit of investment in agricultural research. Now the HYV rice came from abroad, but as it was being applied in Bangladeshi farms, in many cases, we realised that there was some adaptation needed, because the conditions were not always well suited for this variety. The crop conditions varied even within Bangladesh, even though it's a small country, lots of variation. Later on, for example, salinity became a problem, because a lot of water was coming from the Bay of Bengal into Bangladesh. So there are all kinds of problems - there's flooding also. There were many areas where after floods, the waters don't recede that fast, so they remain underwater for a long time. So the agricultural scientists in Bangladesh, and they were all in the public sector, they came up with innovations to come up with rice varieties and later other varieties like maize varieties or vegetables, which are better suited to the conditions in Bangladesh. And then the public sector effort was also complemented, supplemented by NGO efforts. You may have heard about BRAC [Bangladesh Rural Advancement Committee], which is the largest NGO in the world, and we often talk about their activities in the health sector, in education, in microfinance. They were actually doing a lot of work in the economic sphere as well. R&D in agriculture was one of the things that we're doing, in collaboration with the government often, so there was R&D. Another thing happened, which I forgot to mention, when I mentioned sort of the run up to the 90s. In the 80s, the government started a massive program to build rural roads, connecting the rural areas to the small towns and the small towns to the bigger towns. So,a huge rural road network was built starting from the late 80s. And it continued into the 90s, which broadened the markets of the farmers. So in all of this, the core player was the small farmer. As I said, Bangladesh is a peasant, small farmer dominated economy, so it is remarkable that these farmers were willing to innovate, they were willing to move away from what their parents and grandparents had done for many, many years, and adopt these new varieties. So the combination of the government with some NGOs and the farmers, I think that created the basis for productivity improvements in agriculture. And that was sustained because the market was sustained. There were lots of public policies. And at some point, when the government thought the public sector delivery model was not working that well, they allowed the private sector to come in.Tobi;I don't want to infer anything, but from your answer, I can tell what Nigeria is doing wrong, but maybe we'll get to that later. So let's talk about the conditions, which you've also sort of answered for me but I want to know if there is more. Dercon in his book, I'm talking about Professor Stefan Dercon, talked about elite consensus that sort of becomes the bedrock of deciding to pursue economic development. So this broad consensus amongst the Bangladeshi political elites to improve the conditions of the poor, and, which, I'm speculating sort of enabled an ecosystem of policy consistency, even if there are deviations at the margins, how did it emerge? And how was it sustained?Akhtar;Okay, as I had mentioned to Professor Dercon ‘cause I also had a conversation with him for our Bangladeshi group. And I said that – and, he agreed that, it's really difficult to define if there was an elite consensus because it's not that the elite are sitting in a room discussing and bargaining and one day they come out and say, okay, here is an agreement, we have agreed on these three things, it doesn't happen. And there is a bit of tautology in his book as well. And he agreed with that, that in his country chapters, he says, these countries had an elite bargain. And then he says, Okay, this is how the countries grew. And if they have grown, therefore, they must have had a bargain. So there's a bit of tautology there. But coming back to this, I think, I started giving you a flavour of that when I brought in history, even before the British left and how in East Bengal, there was this deeply ingrained feeling that something has to be done for the poor people. And then just after independence in ‘74, we had a big famine. And that sort of strengthened this feeling amongst Bangladeshis. And you know, you mentioned the word elite and it's a bit difficult to define the elite. I would say that it's a broader… I'm talking about people who can influence policy, both the formulation and the quality of implementation. There are a lot of people in the bureaucracy who may not, in that sense, be called part of the elite, but they do have some authority. Now, most of these people, they actually are not too far away from the poor people of Bangladesh. Many of them still have very strong connections with their villages. They go back regularly. They know what the conditions are there. And in a densely populated country like Bangladesh, you see poverty all around you. So all these things, I think, have ingrained in the minds of the elite, however you define it, this commitment to doing something to safeguard the interests of the poor, but that is the security side - food security, [to] address the vulnerability. But somewhere down the line, people started recognizing that Bangladeshis also have an entrepreneurial potential. And there was a feeling that we should try and help unleash that potential. So, as I said, it's difficult to pinpoint a particular period where there has been a consensus but in a subtle way, there has been this consensus that to achieve food security, to help take advantage of the latent entrepreneurship of Bangladeshis, we should be focusing a lot on growth and more generally on development. And that has survived the transitions in administrations, from one government to another, that common element has been there.Tobi;It's not exactly a push back, and I should note that there is a lot more; there's vastly a lot more to Bangladesh than Dercon's book. So, and I don't want to be caught in debating his book. But, why I find that particular line of thought relevant is that, from what you have described, it's amazing to me, so maybe you can help me understand the difference. Now, how a country can set out to do some of these things; invest in agriculture, agricultural R&D, and all these other support programs with big macro effects. Whereas a Nigeria can set out to do those same things and then you find divergent outcomes in their implementation, particularly the inability to execute. You know? There's always a plan. We want to improve the lot of the poor. We want to invest in agriculture. We want to improve productivity. We want to build infrastructure, you know, this, that, they are always so nice and interesting. But the difference is always at the end of the day, countries often don't do these things, right, they never stay true to these things. And of course, we can talk about various reasons why it fell astray - corruption, state capacity, and all that. But what I… which you mentioned in your last sentence [is] how policies survive, even though there are political transitions, election cycles come and go, the particular direction that policy goes, survives this transition, I think that's really what I'm trying to get at.Akhtar;Okay, so I don't know that much about Nigeria. Now, people say that the fact that you have natural resources may have been in some ways a curse, I don't know if it's true or not, but certainly, that sometimes gives governments a sense of complacency and therefore, even if they start on a certain course, they may not have the discipline to stay that course. Now Bangladesh, we never had the advantage of having natural resources. Nowadays, certain things have improved, you know, foreign exchange reserves have been at comfortable levels for several years. So, that may induce a certain degree of complacency, but for a long time, the government knew that we were operating with very narrow degrees of freedom. So that was the context in which Bangladesh had to operate. Which also meant that we were somewhat dependent on donors and that certainly imposed an additional set of disciplines on Bangladesh. But later on, I may come and comment on exactly the kind of relationships I think existed between donors and Bangladesh. But maybe the best way to answer your question would be to say a little bit about the way in which policies have evolved in Bangladesh. And in a sense, it's a bit of a “muddling through” process. And I wrote a blog for the Brookings Institute a year ago, where I said that Bangladesh did it, alluding to that famous song of Frank Sinatra - “I did it my way.” So what was that “my way?” We all know that the Bangladeshi Government has never been tremendously competent, there's always been corruption problems as well. So the way it has happened is the following. Things happened in the economy, let's say agricultural productivity is improving. But then it hits certain constraints, and the economic actors, or people acting on behalf of the actors; like academics, donors, journalists, will bring up those issues. And they will probably say that, “here are ten things which need to be done.” Now what the governments in Bangladesh have done, successive governments, [is] they have responded to that, not by doing all the ten things. No. They may have picked up two or three things. And they may have done a little bit. Why a little bit? Because they were risk averse. They wanted to test out what would happen in the market, how the market players respond. [As the government], if I do just three or four things and not everything, and then see the response…and here comes the entrepreneurial side - the response was usually quite good, and when the response was good, the government felt encouraged. And then the government said “okay, let's do a few more of the things that were demanded.” The other thing which happened was, as the response came, newer constraints were revealed, or constraints which were not binding before became binding. For example, initially when the agricultural growth was not that great, when production wasn't that huge, the fact that we did not have a good rural road network connecting the rural areas to broader markets wasn't that big a constraint, because you're not producing enough to go out in a big market. When you started producing a lot of marketable surplus, you needed a broader market. And that's when you started feeling the constraint. And people started talking about the need to build up the rural road network. And to the credit of the government, they responded. So, this is what I call the sort of back and forth, policy dynamics - things happen in the economy, government notices it or it is brought to their notice, they react not in a grand way, just doing a little bit here and there;nd then the market responds, may be much more than in many other countries, because of the entrepreneurial spirit, and then the government responds. And that process has gone on uninterrupted throughout the last fifty years. And so, once you accumulate, even if these are modest steps, once you accumulate all of that, you'll see a tremendous result. And that's what we're seeing here. So, what it means is countries – the governments don't have to be very competent, they just have to pick the signals. So, you know, you have this phrase called “picking the winners” and a lot of people say, no, governments should not be in the business of picking winners. I say, in Bangladesh, that what the government just does is pick signals. They've picked signals from the private sector, from the farmers, and they have acted accordingly. And I think the accumulation of all these, the synergies created by all these is, I think, what has made the difference.Tobi;That's interesting. So, generally, the usual story with development is structural transformation. That is, for you to grow rich, the economy has to transform from a largely agrarian, low productivity economy to preferably an industrial high productivity economy. And, I mean, to an extent, we've seen the same process also in Bangladesh. Manufacturing, particularly the garment industry, is eighty or so percent of exports and employment is largely created also in that industry. Now, what I want to ask you is, the role of foreign direct investments in that cannot be understated. You talked about South Korea earlier, and how it played a role in that. For South Korea, so many other scholars would cite the role of Japan in kickstarting the South Korean garment industry; garment and textile industry itself. So, my question then is, is there a link here? I mean, also in your columns, I've read about the role of Samsung, and the electronics industry in Vietnam. Right. So the role of FDI in development, and especially getting industrialization started, what are the favourable conditions? To what degree is it external and internal? I guess that would be my question.Akhtar;Okay. Well, you use the term kickstarting, because in Bangladesh, in the garment industry, a foreign investor helped kickstart that industry, but didn't do much beyond that. So, Bangladesh's Government has been largely domestic…[it is] a case of domestic entrepreneurship leading the sector to the heights that it has achieved now. Yes, we have some Export Processing Zones where we have a number of foreign invested garment factories, but the bulk of it is domestic entrepreneurship. But you're right. The initial thrust came from this partnership with Daewoothe IU. It was a five year partnership. Daewoo trained Bangladeshis, (they) took them to their plants in Korea, trained them. They obviously had the market connections and market knowledge, all that was very useful. But what many people don't know is that the Bangladeshi partner actually quit that agreement just one year into that five year period. So after one year, he thought that he had learned everything that needed to be learned. Now, if he hadn't done that, I believe Daewoo had other plans of coming into other sectors, which we may have lost. But then we did end up with this vibrant mostly domestic-owned garment industry. But foreign investment had a role in jumpstarting that. If you go a little beyond industry, think about sectors which facilitate industry. The entire mobile phone development in Bangladesh, which is also remarkable, was foreign investment led. So, foreign investment played a major role there. So, I agree that foreign investment can play an important role in kickstarting industries, and that is something very important now that we want to diversify our exports, make them more sophisticated, we can come to that subject later. Now, you asked me about what are the conditions which are conducive for foreign investment. And this is where I would say that in Bangladesh, the conditions are still not that conducive. In the case of garments in the late 70s, it was the exhaustion of the South Korean quota of garments, which was the major inducement for them to come in. But also, as I said, the new government, which came into power in ‘75 was talking a lot about export promotion. So, that was there. But the most important constraint that Bangladesh faces, and it's true of many other countries, is policy and regulatory uncertainty. So, Bangladesh often says that we have got a policy regime which is very friendly to foreign investors. And that may well be true. But the execution has problems. And there are a lot of case by case decisions which are taken, which affect the foreign investors adversely. And that creates uncertainty. And those stories are told to other prospective investors. And when they hear those stories, they get discouraged. And the World Bank where I used to work, in fact, the last unit that I worked on, they did a survey of CEOs of multinational corporations just a few years ago, asking them about what are the factors which are very important for you when you decide to invest or not invest in a country, and policy and regulatory uncertainty was top of the list. So that is where Bangladesh still has got a lot of work to do. It is attractive in many other ways - very large domestic market, relatively cheap labour, the labour is quite fast at learning, a lot of good things there. But I think the policy environment, particularly the implementation, the certainty, that has to be ensured.Tobi;I have a further question, particularly on that point, and referencing another one of your columns, I think I'll just stick to your columns today for all my questions. For example, in Nigeria, I'll give you an example. In Nigeria, recently, foreign airlines are threatening to quit. Over the past three, four years, foreign investment (FDI) has plummeted. It's barely a billion dollars, currently, one of the lowest even in Africa. And of course, a lot of these things you mentioned are the problems that investors and business people talk about - policy uncertainty, especially around the control of the exchange rates and inability of companies to repatriate their capital, and to fund their operating expenses, and so forth. So, I mean, that's one constraint. But one distinction you made is like the types of FDI. There are different categories of FDI; market-seeking FDI, natural resource-seeking, efficiency-seeking [FDI]. And the reason I'm asking this is that there seems to be one problem, which, to my mind, Bangladesh has solved, it's not perfect, that Nigeria is struggling with, which is this inertia to get things started, you know, once you start on a journey, you can muddle through, but the inertia to get that process going is still something that Nigeria struggles with, in my opinion. So, now talking about FDI, if I were a policymaker today talking to you; advise me, what kind of FDI should I prioritise in trying to lure investors into my country, for them to create jobs and [create] a nest of high productivity manufacturing industry? So is it market seeking? Is it natural resources seeking? Is it efficiency seeking? Which one is the best in terms of the necessary incentives for sustainability?Akhtar;Okay, so one of the articles, not as part of the regular column, I think, but I wrote for the same newspaper a few years ago, was titled “investment for what?” So that's a question the governments have to ask. Because everyone talks about attracting FDI. It's a mantra all over the developing world. But governments need to ask why exactly do we want FDI? How is it aligned with our development aspirations and development programs? I wanted to just emphasise that because often governments just go blindly trying to attract foreign investors. And whoever comes in, we welcome that. That's not necessarily a good strategy always. For example, in Bangladesh, if we now have a lot of foreign investors coming in, to make jeans and T-shirts, using the same technology as before, we don't really need that, we can't afford to give our scarce land and utility and other things to do things which our domestic entrepreneurs have become reasonably good at doing. So it has to be something new that comes in. Now, at the same time, we also have to recognize that the foreign investors also have their own interest and their own calculations. So we have to come to a balance between the two as well. Now, it's difficult to say a priori that we prefer market-seeking or efficiency-seeking. On a natural resource, it's a slightly different issue if you have natural resources, and if you don't have the capacity to develop them yourself, you may need foreign investors. And obviously, we all know why foreign investors are often very attracted to that. But let me confine my answer to the choice between market-seeking and efficiency-seeking. Now, let's take the case of Bangladesh. We are now talking about diversifying our exports. And we are talking about going into more sophisticated products like electronics. If that is our objective, we may want to target some people who come and make electronics. Now they may come for two reasons. Bangladesh has a huge market, our per capita income may not be that high, but our total economy size is actually pretty large. We are amongst the top 40 economies in the world. And if you look at the size in the purchasing power parity terms, we're actually in the top 30. That's a very large economy. So, naturally foreign investors would come in looking at the market as well. But if our objective in this sector is to make a breakthrough in the global value chains, and not just serve the domestic market, then we'd like to have foreign investors come in with an efficiency-seeking objective that, in Bangladesh, we can make these things more efficiently, at lower cost, than in other places. So that Bangladesh then can ride on the backs of the foreign investors, who know the markets, who have the brand recognition and show the world that things can be made efficiently in Bangladesh. And, then once we have shown that with the help of foreign investors, maybe Bangladeshi entrepreneurs can also start doing it. So here you see I give you an example, where you have a strategic objective, and you attract foreign investors of a particular type. Now, there are also many needs in the domestic market. Bangladesh needs to develop a very good logistics system. And we may need foreign investors to come in and invest there, but will be more market-seeking. I mentioned the case of mobile telephones, that was not an export-oriented industry, although it may have facilitated exports, that was domestic market-oriented. And we encouraged foreign investors to come in, who were obviously coming in as market-seeking investors. So the answer would vary depending on the sector or the activity. But that brings me back to my first point, the government should have a clearer idea of what is the role of foreign investment in implementing the various dimensions of your development strategy. And accordingly, you're going to target efficiency-seeking investors in some cases, and market-oriented investors in other cases.Tobi;So, now, from a policy perspective, because really, that's what's sort of dominating this conversation. One thing that keeps coming up is the role of government, the strategy it pursues, you know, this, that. But inevitably, that leads to the question of what… in terms of economic development, what role does the government play by itself? Now, China, and, of course, other East Asian economies are very, very popular in the development discourse and these are largely autocratic governance. Right. And, to an extent the gospel of state-led development has travelled far and wide, sometimes in contrast to what is generally called the neoliberal or the Washington Consensus-type policies. But at the same time, at the nexus of all this is the role of markets, how the economy is regulated, liberalisation. How does a government approach regulation and policymaking generally, with the right incentives for the government to take the lead in areas where, maybe because of access to market or not seeing the prospect of returns, private actors are reluctant? And also at the other end, this sort of control, excessive control, that you see in so many developing countries, like Nigeria, and so many others in Africa, where government sees itself as the primary player in the economy, right? What is the balance? What is the heuristic generally, in trying to, [or] should I say, make policy and regulations to encourage economic development, and, of course, your Bangladeshi experience of that?Akhtar;Okay. So, when you say state-led, there are many ways you can define that. One is the direct participation of the state in productive activities. And in China, that is still pronounced, there are different models of state-owned enterprises, including public private partnerships, but the state plays a dominant, or at least an important direct role in the production of activities. That's one thing. The other is playing a direct role, not in production, but in things that facilitate production. So I had mentioned the case of research and development in the agricultural sector of Bangladesh, which was there right from the beginning. It was largely a private sector activity, but that was meant to facilitate productive activities by the private sector, in this case, thousands and thousands of farmers. So, the whole spectrum of things that the government does and, of course, there is the whole regulatory function of the government. And I think in choosing the balance, and the balance itself may shift over time as the economy develops. And I give an example of that, again, from the agricultural sector of Bangladesh, how the government moved away from the direct import and distribution of agricultural inputs, giving more and more space to the private sector over time. So initially, in the 70s, maybe that was the right thing to do. And then later on, the right thing to do was to withdraw and create space for the private sector. So the balance, (a) has to be thought of carefully, in terms of the capacity of the government, that's very important. And, again, if I [could] mention Stefan Dercon, he talks about the self awareness of [the] government. Are governments aware of what they can do and what they cannot do? And that answer would vary by country. Often governments make the mistake of thinking that they can do a lot of things, and therefore they; (a) go into productive activities themselves directly, and (b) also controlling too much the activities of the private sector. Controlling is not that easy. It requires a lot of skills, and many governments actually don't have the skills of doing that. The thing that may have happened in Bangladesh is the government has been more or less self aware, not always, but more or less self aware of what they can do and what they cannot do. And that has led to a certain division of labour between the government and the private sector, and the NGOs. With that division of labour also changing over time. That's very important. So the government needs to be aware of where its capacities are, and they need to also have some faith that the private sector, if given the opportunity, can come and do certain things. Because governments often say, okay, but if we don't intervene, the private sector is not going to come in. Or we have a big factory, if we close it down, then a lot of people will lose their jobs, and the private sector will not be forthcoming to create jobs for them. If you want, I can give you a good example of that kind of thinking. In Bangladesh, we had the world's largest jute mill called the Adamjee Jute Mill, and it was bleeding like hell, and every year the government had to subsidise. So there was lots of debate on whether the factory should be (a) privatised, and there was no taker, then the question is whether it should be closed down. Then, about 20 years ago, exactly 20 years ago, a very bold decision was taken to actually close down the factory. It was a controversial decision. About 26,000 workers lost their jobs. Some of them were ghost workers, maybe 20,000. Now the story of what happened after that is very interesting. That land was converted into an export processing zone. And now the latest figures are that about 65 to 70,000 jobs have been created there. So you had lost about 20 [thousand jobs] and you have created so many. These are all private sector firms, they're all export oriented firms, the government doesn't need to subsidise them. So you can see once given the opportunity what the private sector can come and do. So you don't have to hold on to a loss making enterprise just because you're worried about job losses.Tobi;Let me sort of ask you a big picture question on this particular point, which is the role of democracy in development, generally. Democracies have been taking a beating recently, so maybe you can speak up for it, somewhat. Do you think democracy has some kind of unique weakness in terms of trying to engineer economic development, particularly because of elections? I mean, to cite the example of the jute mill you mentioned, some regime that is sensitive, maybe in an election year, or maybe that wants to appeal to a particular constituency, or, maybe workers Union or something might actually kick the can down the road. An example is (fuel) petrol subsidy in Nigeria, which the bill keeps increasing, but I mean, each government promises to remove it or reduce it, and then kicks it to the next government because nobody wants to annoy the workers union, nobody wants to lose votes, the party wants to remain in power, you know, and these incentives that are common in democracies. So, do you think this makes democracies weak in a way, in trying to develop the national economy? Because a lot of people will say that's why China has developed much faster than India, for example. What's your take?Akhtar;Okay, let me start by giving you an anecdote. So this is from about I think it was 2008 or so, 2007 maybe. Bangladesh then had a quasi military government, it was called a caretaker government, whose major responsibility was to conduct free and fair elections. So they were in power for about two years. And I was actually working in Bangladesh at that time. And we had, I think we had a natural disaster, or maybe we had floods. So conditions were pretty bad. And one of the… well, they were called advisors, but they were de facto ministers, who was having to deal with this problem of getting food to poor people, dealing with rising prices [and] all that; he said to me, “I can feel a certain handicap being part of this kind of government.” What is the handicap? Right now what I need a lot is information from the grassroots, I need to know what is happening in different parts of the country, and I need that information very fast. I need it right now, about what's happening earlier today, or what has happened yesterday. Fortunately, I have some connections in the NGO world, this gentleman was an academic. I'm getting some information. But if this was a political campaign, I would rely on my political network, my workers, my small town leaders, and within a few hours, I'll be getting information from all over the country on what the conditions are. Now, why do I mention this anecdote? Because in a democratic system, your feedback mechanisms may work very well. Yes, there can also be a lot of noise. But otherwise, the feedback which is very, very important for government, they need to know what's going on throughout the country with different groups of people, with different localities etc. That is something that autocratic governments lack. Yes, information flows, flows from lower level bureaucrats, but I'm sure they are modified on their way. Because, the boss often doesn't want to hear certain things. It may happen in political democratic setups, but generally, the flow of information is much better for politicians. Now, how they act upon that information is another issue, but that's very important. Secondly, politicians operating within a democratic setup, (a) they develop a lot of empathy, because of their interactions with people, [b] they also get a good idea of what the trade-offs can be. And these are very, very important in decision making. So those are the good sides of democracy. Now, yes, in democracy, you also need to cater to your political constituencies, and that may lead to certain decisions, which technocrats may feel are sub optimal. But that is the price you pay for democracy. Compared to the gains for having a democratic system, that is sometimes a small price to pay, although sometimes that can get out of hand. But if it gets out of hand, it's usually where you may in name have a democracy system, but in practice, you don't. So the kinds of disciplines that democracy imposes on the government are lacking there. So that is my answer. Now, as you can see, implicit in my answer was some definition of democracy. It's not just about electoral politics. It's not just about having regular elections and free and fair elections. It is the monitoring mechanism. Are governments picking the signals, are they getting the information? How wide is the information that they're getting? That's a very important characteristic of development.Tobi;So another one of my sort of big picture questions to you, and in this case, using the Bangladeshi experience and example, is, in the last couple of years, there has been this big debate in development over, oh, do you prioritise the big things or the small things you can measure? You were with the World Bank, I'm sure you have some familiarity with the so-called empirical revolution and how it has sort of taken over the field of development economics where, yeah, there is a lot more preference in terms of international aid funding for interventions, things that you can measure. So, the RCTs, or, whether it is conditional cash transfers, and all these things – and the atmosphere with which this debate happens sometimes, personally, I find it frustrating because it makes it seem like a zero-sum kind of thing. Like, you can either have one or the other. You either pursue growth, or you forego that and choose to do all these small scale, local and domestic interventions. But Bangladesh, like you mentioned, the issue of BRAC and also people like Naomi and co. have written about – Naomi Hussein [that] Bangladesh managed both. There was a sort of productive combination of both frameworks, that is, the role of non governmental organisations who were able to provide some support for the rural communities. And of course, there was the big macro policies that were explicitly designed to pursue economic growth, get businesses going, create jobs, you know, and all the other things that happen in the private sector. So, my question would be, how did that sort of synergy happen in Bangladesh? How was that cooperation, so to speak… I mean, you talked about the role of BRAC in R&D and agriculture, you know, how did that happen? How did, perhaps, it wasn't intended, but in practice, how does it work?Akhtar;Okay. Let me start by recounting something I heard Abhijit Banerjee, the Nobel laureate, who got a Nobel prize for his work on RCTs, said something about the rationale for going into RCTs. And he's saying that the kinds of interventions that we talk about in the context of RCTs, they're not the only interventions that bring about development. In fact, the most profound development impact may come from other kinds of interventions and policies, and other factors. But his point was that, let's say, as a development practitioner, we are not able to influence these big things. So I'm going to focus on the things that we can influence. So I'm doing a project here, a project there, and we can change the parameters of the project in certain ways that we achieve the most significant impact. And how do we change the parameters or what parameters we choose or how do we design the project? That's where randomised control trials can give us very useful insights. And we can get more bang for the buck from the development expenditures in those kinds of projects. Now, he never said that that's all about development. There are many other things that need to be done. And governments, in their collective wisdom, may have a better idea of what those things can be. And that's different from a particular project team trying to do a project. They won't have all that knowledge, which can lead them to think about much bigger things, but governments can; not perfectly, but governments can. Or large organisations like BRAC can within certain spheres of operation. So, yes, I agree with you that this is a false dichotomy, that you either completely forget about RCTs or you get completely immersed into RCTs. So, one has to find the right places where the randomised control trials, which are after all an instrument, one of the tools in your toolbox… which is the best time and place to deploy it. I would say in Bangladesh, yes, the scope for applying them is more than the actual application so far, which means that we have a scope to improve the efficiency and effectiveness of public spending by using these techniques judiciously in certain areas. Now, coming back to, I think you mentioned the question of BRAC in the context of R&D, but also BRAC has played an important role in market development through their social enterprise world. So, as I said before that the part of BRAC's work which is not discussed much is the work on the economic sphere. So what happened there? I'll just give one or two examples. I think giving concrete examples is the best way to illustrate this. So, they got into, let's say, they got into dairy [farming]. Actually, the way BRAC started most of these activities was from a livelihood concern. They wanted to create livelihood opportunities for the poor people in the rural areas of Bangladesh. So they said, okay, we have dairy farmers whose incomes are limited, we want to do something to help enhance their inputs [output]. So they came up with certain small interventions, which helped improve the productivity of their dairy farming, and they ended up with more production, then they had a problem. Now, milk is not something that you can preserve for a long time, you need to have some cold storage facilities, some refrigeration facilities, and that was lacking. So a lot of these increased output was actually being wasted. That led BRAC to start thinking about what else it needs to do. So then it went into refrigeration plants. So, they set up refrigeration plants, where the dairy farmers would come from adjoining villages and store their milk. And that led to other things also down the road. So there are many examples of BRAC where they went into a certain activity, they went into poultry, for example, and then discovered that there isn't a good supply of day old chicks, which is an important ingredient in poultry. So they went into that. And the interesting thing is, in many cases, BRAC was the first one to go into that, later the private sector came in and came in in a big way. And when they did, BRAC withdrew. Because BRAC thought, okay, we have played the role of a pioneer, we have catalysed the entry of private enterprises, we can now withdraw and attend to certain other things. So what's going on here? What's going on here is, you have value chains, which are underdeveloped - there are gaps in the value chain. And one aspect of development is to make the value chains more complete. And here you have an actor, BRAC, which has entered the market… [enters] one part of the market, trying to do something, discovering that there is not much it can do unless it intervenes in other parts of the value chain. Well, it can do something but the impact will not be that great, so then it intervenes. But at one point, it realises that other players who are better at scaling this up have entered the field so let me withdraw. So judicious entry, and judicious withdrawal. And that is also true of the government. It's also true of BRAC. I think that's the kind of dynamics of development which is very important. And somewhere there, yes, you may have some trials, which may be randomised control trials, it may be just informally observing from your own experience of what is working, what is not working, but this idea of learning by doing, learning by doing, the government has done it in Bangladesh, BRAC and other BRAC-type institutions have done it. The private sector is also doing it.Tobi;The last of my big-picture questions to you is– Another dichotomy that I have observed is the business cycle concerns of an economy and policy and these sorts of other long-run development growth policies. For example, in Nigeria, it's a common refrain that we had growth in some years, but we never really had development. Income didn't grow as fast as GDP, and growth has been cyclical, it's not sustained. And some of the issues that really plague governments and policymakers is that even in trying to make policies that are tolerant and favourable to long-run growth, there are short term issues that you have to deal with [like] foreign exchange policy, inflation, and sometimes I've heard people say that, Oh, as a developing country, you have a lot more tolerance for inflation than developed economies. I think you'll have to tell me whether that's true or not. Because inflation does not happen in a vacuum, it affects the purchasing power of people, poor people even more so. Right. So how do policymakers in growing countries manage these tensions in terms of – and, I'm working my way through your book with Gustav Ranis on this – how policymakers mine through these everyday concerns of the economy, versus the long-term prospects and the projects you are trying to put forth as a government?Akhtar;Okay. Well, since you alluded to that book, I will first briefly mention the main theme of the book, and then come to this specific [question]. The main theme of the book, which we illustrated through a comparative study of East Asian countries and Latin American countries, [was that] we talked about the East Asian pattern of government behaviour and the Latin American pattern of government behaviour. And the period covered was from the mid 60s to the mid 80s so things may have changed after that. And in any case, it's difficult to talk about (a) East Asian pattern, and (b) Latin American pattern. But what we were talking about is that during the course of a business cycle, or terms of trade cycle, as your terms of trade improve, your foreign exchange reserves go on increasing, obviously, growth accelerates. The question is what does a government do when things are good? Do they let growth accelerate according to some normal – “normal trajectory”, or they get excited, and they try to push growth beyond the “normal trajectory”-- making it higher than what the good times normally would make it? So, in the “Latin American” scenario, when things were good, growth was happening, government wanted to have more of it. So they went for expansionary fiscal policies, expansionary monetary policies to push growth beyond what the natural trajectory is. And then inevitably, because we are talking of cycles, inevitably a time came, where things started going down. And conditions were not as conducive as before. At that time, what the East Asian countries did– but first– they never tried to artificially push growth above the natural level. When the downturn came, they allowed the growth to fall. So they went for contractionary policies, they allowed the growth to fall. But in the Latin American scenario, having pushed growth beyond the natural path, it's almost like being intoxicated, you could not get rid of that habit. So, you try to artificially maintain growth even though the signs were all pointing downwards. And then the time came when things just crashed. And you fell into a deep crisis. Whereas the East Asians, they had their ups and downs, but they didn't have a serious crisis at that time. They had later, but not at that time. So that was the main thing about how you conduct your policies during the upturn, and then also during the downturn. Now, coming back to the specific situation like the one we observe now, when there are many economic challenges facing countries, and what can governments do to ensure that the course on which they had been before the crisis started, or the challenges started, and hopefully it was a course of development, how can they stay on that course as best as they can? First is, governments should look for existing inefficiencies. For example, in your public expenditures, there may be a lot of inefficiencies, and if you can identify those and get rid of those [inefficiencies], then you can bring things under control in the context of the challenges without sacrificing growth. Most developing countries, including Bangladesh, do have inefficiencies in their public expenditures. So the question is, do you target those inefficiencies and curtail them? Or, do you target those parts of expenditures which are actually very useful? So that's number one. And that's why we often have this phrase, “don't let a crisis go to waste.” Because a crisis can often focus attention better than good times can. And a crisis can also create the political and social consensus to take some tough decisions. So that's one thing. Second is the importance of social protection. And we must remember that for people at the margin, and in our kind of countries, Nigeria, Bangladesh, a lot of people are still at the margin. Even a small shock which takes them below the threshold is not a temporary damage that after some time they can come back [from], often it's a permanent damage. They have to sell off their productive assets, which means even when things start improving, their conditions won't improve. So that's why it's very, very important to have good social protection systems in place.Third, coming back to a point I made earlier, it's very important to have good monitoring systems. ‘Cause we really want to know what's going on, how the lives of different people across the country is being affected by the tough conditions in which you are, without that your policies will be suboptimal. So that monitoring is very, very important. And it's very important to engage different stakeholders in society. And for two reasons. One is part of the monitoring, because economists, business people, journalists, and others, would know a lot beyond what the government knows and it's important to tap into that knowledge, but also to build consensus about some of the tough decisions that need to be taken. So, at the end of the day, it is a lot about governance. It's a governance challenge that countries face when they're facing an economic challenge.Tobi;My final question to you, I have a couple of other questions, but… from a policy-making perspective, how do you then make knowledge count? Because from everything you have talked about, the role of knowledge… which takes me back to where we started, you know, talking about agriculture. The role of knowledge is actually very important. But you have situations where you can have knowledgeable people in government, world class economists, and the government itself might be making policies that are clearly wrong, which means there's a disconnect somewhere. And I mean, in Bangladesh, it's often talked about how there is a policy knowledge ecosystem that informs the public and shapes their accountability and expectations, and also informs policymakers at the other end of that spectrum. How does a country build and nurture that? Especially, how does knowledge of, whether it is knowledge of economics, whether it is knowledge of society and other programs, how it transmits to the key decision makers, and influence some of the actions or policies, or regulations, that are taken? How does that happen?Akhtar;Okay, so you mentioned the sort of the ecosystem linking policy and knowledge in Bangladesh. We have an ecosystem, I wouldn't say it always functions very well. And we do have many instances where people in government feel that the

What does it take for a developing economy to grow and thrive? There are many obstacles that stand in the way, but they can be overcome with the knowledge of where to apply efforts for best results. To understand another country or advise their government on how to grow economies takes someone who has been to the places, spoken to the people, listened to their needs, and can communicate the challenges. Stefan Dercon is a professor of Economic Policy at the Blavatnik School of Government and the Economics Department at Oxford University, a Fellow of Jesus College. And the Director of the Centre for the Study of African Economies. His newest book, Gambling on Development: Why Some Countries Win and Others Lose, deals with his research into what keeps some people and countries poor: the failures of markets, governments and politics, mainly in Africa, and how to best affect change in the different countries there.Stefan and Greg talk all about development economics, the differences between developing economies in Africa and elsewhere, and what successes and mistakes have happened in that region so far. They discuss what pitfalls to watch out for when dealing with planning and action coming from abroad. Stefan talks about the difficulties of foreign organizations understanding the needs of these countries and the ways to use local help to make aid more effective, and help developing economies to flourish.Episode Quotes:Why you can't wait until perfection in anything16:10: You're not going to first spend all your time building good foundations because then you're totally wet, and you don't sleep ever any night. You probably build something that's not quite perfect, but actually make sure that it has a roof that doesn't fall off entirely. So now, after a bit, if you don't put in some things, you have a very weak floor. We put a few more things that you need to strengthen that floor as well. And I'm a strong believer that the more I worked on development, there is agency here and now to already do something. You can't wait until perfection in anything.A framework that we can use for political markets31:51: The best way to be taken seriously by the central state is by starting an armed uprising. And so, for political entrepreneurs, the only route was to create more chaos. So you want to create enough opportunities that new elites can come in as well. And that's political markets thinking about entry and exit, entry deterrence. Learnings from the policy space over the last 20-30 years11:38: It doesn't help to be very ideological. You need to be pragmatic about what you're doing in your own country. Do common sense, and there are certain things we know more in economics about the things we shouldn't be doing than actually the things we should do. So we know that in a particular moment in time, a massive tax cut is probably not a good idea. In other moments, well, maybe it's okay. We don't know. And so it's like that—sensible macro policies and so on. Show Links:Recommended Resources:Ashraf GhaniGuest Profile:Faculty Profile at University of OxfordStefan Dercon on LinkedInStefan Dercon on TwitterHis Work:Stefan Dercon on Google ScholarGambling on DevelopmentGambling on Development Amazon Listing 

We spend a lot of money on aid - although not as much as we used to. Does it work or is it, as some claim, a waste? And behind that, why do some countries develop and others not? In this episode Nick Spencer talks to Stefan Dercon about this book Gambling on Development

Links I LikedCan the UK become a development superpower again? Stefan Dercon's memo to the new Development Minister 'Imagine There's No Money' - a thought experiment on aid without $ Adaptive Management in large programmes: Great new Practical Guide Words v Deeds: Rishi Sunak at the Egypt Climate Summit Aid v Global Public Goods; the fear in the system and multi-dimensional poverty: A conversation with Norway's Development Agency 

Development is a gamble because success is not guaranteed when benefits materialize in the long-term and a host of factors may undermine elite positions. Some countries are able to settle on elite bargains that favour growth and development, and others are unable to reach such settlements.While elite bargains in China, Indonesia, Bangladesh, Ethiopia, Rwanda and Ghana ended up being development bargains, the opposite was the case in Nigeria, DRC, Malawi and South Sudan. Stefan Dercon is Professor at the Blavatnik School of Government and the Economics Department at theUniversity of Oxford, where he also directs the Centre for the Study of African Economies.His latest book – Gambling on Development: Why some countries win and others lose– draws on his academic research and his policy experience across three decades. Twitter: @gamblingondevKey highlights:Introduction - 0:55Bridging the gap between research and policy – 3:09Why a general recipe for development is not very helpful – 11:22Gambling for development: Key arguments – 28:38The future of foreign aid – 45:13 Host:Professor Dan Banik, University of Oslo, Twitter: @danbanik  @GlobalDevPodInstagram: @GlobalDevPodApple Google Spotify YouTubehttps://in-pursuit-of-development.simplecast.com/E-mail: InPursuitOfDevelopment@gmail.com 

My guest on this episode is Stefan Dercon - author of the recently published and most excellent book ‘Gambling on Development: Why Some Countries Win and Others Lose'. Development scholars have produced many explanations for why some countries did better than others after the Second World War. Factors like geography, quality or type of institutions, foreign aid, and protective trade policies, have been argued as what explains this divergence in national prosperity between countries. Dercon's contribution will no doubt be plugged into this long-running debate - and in my opinion, he comes closest to having a ‘‘first principles'' explanation than anyone I have read on the subject. Other theories leave you with nagging questions - Where do good institutions come from? Are countries condemned by their histories? Why do some countries use foreign aid better? Why are some countries with rich geographic endowments doing worse? Why does protective trade lead some countries toward becoming industrial exporting giants, and some others into a macroeconomic crisis?Dercon argues that countries that have done better do so by working out a ‘development bargain'. This comes about when the people with power and influence (elites) in a country find a cooperative agreement (bargain) to consciously pursue economic development and national enrichment. Development bargains are not simple, they are often messy. And elites are not a bunch of altruistic do-gooders. Rather, through many complicated networks of intra-elite competitions and cooperation, they decide to gamble on the future by betting that economic development will deliver the biggest win. Dercon does not claim to have found the holy grail of development - and there are still many questions to be answered. But his argument does lead to one inevitable conclusion. Countries and their people will have to figure out what works for them and how that delivers prosperity.Stefan Dercon is Professor of Economic Policy at the Blavatnik School of Government at Oxford University. He was the Chief Economist of the UK's Department of International Development (DFID).TranscriptTobi; Was your experience really what inspired you to write the book?Stefan; Well, you know, what inspired me definitely is just the contrast that I've had in terms of things I do. Because I've been an academic for a long time, I have more than 30 years writing and studying and, you know, I was one of these academics who like to, as one sometimes puts it, you know, like, likes to get mud on their feet, you know, mud on their boots. I used to work mostly on rural households and in most countries, these are amongst the poorest people, and you just get to know what's going on there. I have a policy interest, and I was just lucky 10 years ago, a bit more than that, I got a job as a Chief Economist in the UK aid agency, and it's just that contrast of having had the chance and the opportunity to get involved on the policy side, on meeting all the more senior people...and it's just that contrast between still enjoying being surrounded by people and what they do and understands livelihoods of poorer people, combined with being in the policy space, I felt like, you know, I have a unique perspective that I wanted to communicate. And it was just a quest to communicate, actually. If anything, I wanted just to tell more of these stories because I think, from all sides, we tend to misunderstand a lot of what's going on and how things work in practice. And that's definitely the case on the academic side. We're so far sometimes from reality that I wanted to tell that story a bit more.Tobi; And I mean, after you wrote the book, and after publication, I presume from some of the feedback that your book is actually quite successful. I gave so many copies away, right, I can't even count. I think at some point, I temporarily bought out Roving Heights' entire stock. So how has the reception been generally?Stefan; I mean, look, what you just told me makes it much more worthwhile than if white kids in Oxford are buying the book. So what I'm really pleased with is that it appealed to a much broader group of people. And actually, you know, if I'm really honest, I hadn't expected that people like you or I was in Bangladesh last week that young people there would actually appreciate the book, you know, that you would actually get people that think about these problems in these countries are actually interested in it. And I'm very pleased that people find it both worthwhile to read and quite interesting. Of course, I get some academics. One story last week in Bangladesh, I had a question, you know, how Lenin fitted in my book. Now, I had to struggle with the answer of how Vladimir Lenin would actually fit into the book and thinking, you know, that's an academic typically responding to, you know... I don't know, I'm not a deep theoretician but it was written out of a kind of pragmatic sense of what can I learn from economics and politics that actually is worthwhile communicating. So it's well received. And if I'm really honest, I don't mind that there are pdf copies circulating as well and things like that. Actually, as long as it's read, you know, you write a book, not because you want the highest sales, but you actually want it to be read, and that actually makes it really interesting that people seem to be able to relate to it. Another group that, actually, I found really interesting that can relate to it is people that are either civil servants working in governments like - in yours, as well as maybe aid officials and International World Bank officials, IMF officials, who actually find it helpful as well. You know, and there's usually a huge bridge between them, there's a huge gap between how in Washington when we think about these things, or in London or in Abuja, and so that's pleasing as well. You know, I don't give a solution to the things but I think I touched on something of where a big part of the problem of development lies is that actually, we are, unfortunately, in quite a few countries, still with governments that fundamentally are backed by elites that don't really want to make the progress and do the hard work. And that's an unfortunate message. But at the same time, you have other countries that are surprising countries that make the progress. And so clearly, there is a lesson there that it's not simply like the problem is simple. Actually, the problem is to some extent, simple. It's about, fundamentally, do you want to actually make it work, make this progress work? And I think that echoes with quite a lot of people - the frustration that many of us have, that some countries seem to be stuck and not making enough progress and we need to be willing to call it out for what it is that it's not entirely the fault of those people who are in control, but they could do far more for the better than they actually do.Tobi; For the purpose of making the conversation practical and accessible, in the spirit of the book itself, I'm going to be asking you some very simple... and what I consider to be fundamental questions for the benefit of the audience and people that probably have not read the book. So there have been so many other books on development that have also been quite as popular as yours, Why Nations Fail comes to mind, and so many others, The End of Poverty by Jeffrey Sachs, some of which you actually reviewed in the opening chapters of the book. And at the heart of most of them is some kind of fundamental concept that then defines how the body of work itself or the central idea itself works, whether it's institutions, or culture, or industrial policy, or whatever. For your book, you talked a lot about the development bargain, what is the development bargain? And how does it work?Stefan; So the way I look at any country in the world, and I mean, any country, rich or poor country is that one way or another, there is a group of people, which I call for convenience, ''the elite.'' It's not like a pejorative title or a title to applaud them, but simply as a descriptive title. The group of people, in politics, civil service, in business definitely, maybe the military, maybe even civil society, key universities, public intellectuals, I talk about the group that I refer to as the elite, these are the people that have power, or they have influenced one way or another, that can be quite broad. Now in every society, I think it's that group that tends to determine what politics and the economy will look like, what the direction of a country will look like, in any society. And I call that underlying idea [as] they have essentially a form of an elite bargain, a bargain between the different people, they don't have to agree on everything, but to have some kind of an agreement that this is the principle by which, you know, my country will be run in politics and in the economy. Now we could have lots of these elite bargains. We could have an elite bargain that, for example, is based on: if I happen to have power, then everything that I'll do is to reward the people that brought me to power. I'll give them jobs in government. I'll give them maybe contracts, I'll do something, you know, technically, we call this Clientelist. You could have another one where he's saying, Look, no, we're going to run this country, totally, where everybody gets an equal right or equal opportunity, and in a particular way. And so you could have political systems that are around this. Now you could have all these things coming together. You could have also regimes that basically say, Well, the main purpose for us is to keep us as a small group in power, you know, he could have a particular way of doing it. Or indeed, to make sure we use it entirely to steal anything we can get and we'll actually put it in our own pockets, you could have a kleptocracy. You could have lots of these different things, you know, you could have different societies. Now, what I mean by development bargain, is actually fundamentally where that underlying elite bargain values, the underlying idea is that we want to grow our economy, and we want to do this in quite an inclusive way. We want to have developmental outcomes as well. And we make this a key part of the elite bargain. So basically, I define a development bargain as an elite bargain - the deals that we have in running our economy and our politics, that fundamentally, one big way we will judge it is that when we make progress in the growth of the economy, and also in development for the broader population, and I call that the development bargain. And I want to actually go a step further and say if you don't have this, you will never see growth and development in your country. You could have leaders talk about it. They could make big development plans, but if underlying all this there is not a fundamental commitment by all these key players that actually it's worthwhile doing, we're not going to achieve it. And maybe I'll make a quick difference here with say, how does that difference...(now, you mentioned Why Nations Fail.) Now, that underlying elite bargain, of course, the nature of your rule of law, your property rights, all these things, they clearly will matter to some extent, but Why Nations Fail puts this entirely into kind of some historical process. And a lot of people that talk about getting institutions right, they say, Well, you need to get institutions right before you can develop, and they seem to come from a long historical process. In my concept of elite bargain, I would actually emphasize [that] even if your country is not perfect in these institutions, even if there's still some corruption left, even if there are still some issues with the political system, even with the legal system, we actually have countries that can make progress if, fundamentally, that commitment is there amongst the elite. So you don't have to wait until perfection starts before you can start to develop. And that actually [means that] I want to put much more power into the hands... sorry, agency is the better word, I put much more agency in those who at the moment are in control of the state. History may not be favourable for you, there may be a history of colonialism, there may be other histories, factors that clearly will affect the nature of your country at a particular moment in time. But actually agency from the key actors today, they can overcome it. And in fact, in the book, I have plenty of examples of countries that start from imperfection, and actually start doing quite interesting things in terms of growth and development, while other countries are very much more stagnant and staying behind. Tobi; You sort of preempted my next question. I mean, since say, 1990, or thereabout, when the results of some of the ''Asia Tigers'' started coming in, maybe also through the works of people like Wade, Hamsden and co., countries like South Korea, Taiwan, Hong Kong, Singapore, have become like the standard for economic development, and subsequent analysis around issues of development always look at those countries and also their neighbours who have actually made some progress, maybe not as much as those specific countries. But what I want to ask you about in your book is, you talk about some of the works on development trying to reach for some kind of long history or some kind of historical...I don't want to say dependency or determinism, but you get my point. So my point is, if we go outside of these Asian Tigers, if we go back to say, Japan, or even the second industrial revolution, America, Germany, the Netherlands, can we observe the development bargain as you have described it? Is it also consistent through history?Stefan; I would say Absolutely. I mean, one of the things with when we look at these countries with longer-term success, you mentioned correctly, you know, the Koreas and also Japan, or going back in time to the Industrial Revolution, the second industrial revolution and so on, actually, we take for granted that actually they really wanted to succeed. And it's actually one of these things, and especially in recent history, [South] Korea came out of deep conflict, of course, it was also called War so they got certain support as well. But it was really important for both Japan and Korea after the Second World War, for Japan to re-emerge and for Korea to emerge. It was a form of also getting legitimacy towards their own population. So it was a real underlying deep commitment by that elite in these countries to try to make a success of it. We take it for granted, if we go back in history, take England in the 19th century...I mean, it was a very strong thing, it's like, you know, we wanted to show that actually, we are ruling the world on commerce and all the kinds of things, there was a deep motivation. And of course, also the pressures, you know, remember, the society was being very fractured, and we can't call growth in the 19th century in Britain very inclusive. [There was] a lot of change happening, and indeed, you know, very poor people I think actually initially didn't manage to take up. But especially if we come to the early 20th century became this kind of thing surely [where] development in the form of growth was also when it's a little bit broader shared, became quite part of it. And it's one of these things that when you look at politics, whether it's in the 1930s or 40s or 50s or now, whether it's in England or in America, actually growth and development, I won't take it for granted. People are voted out of office because they are not managing the economy well. There is a lot of political pressure in Europe now. And it's really political because ''oh you're not dealing with the cost of living crisis right or you're undermining the real income increases.'' You know, the US election, we ended up interpreting Trump as an election that actually [served] people [who] had stayed behind in the process of growth and development. Actually, in the politics of most richer countries, it's so much taken for granted that that's a big part of the narrative. So it's an interesting one (maybe, if I may) just to [use] China, I find it a really interesting one. Because, you know, the historical determinism is problematic there. And of course, some people would say, China should never have grown because it has the wrong institutions. But of course, it is growing fast. But if you think of a bit of what would be historical institutions that are relevant? China has had centralized taxation for 2000 years, a centralized bureaucracy for 2000 years, a meritocratic bureaucracy for 2000 years, you know, it actually had a history that actually acquired strong institutions. But funnily enough, when did it start? Just at the moment of deep weakness in the 1970s. When the Cultural Revolution had destabilised the legitimacy of the state, ideology was totally dominating, Mao died in the early 1970s and mid 1970s the Gang of Four came up, which was his widow, it was all turbulence. And actually lots of people thought China would disappear. It's at that moment, it picked up that kind of thing, you know, and actually, fundamentally, if you read all the statements of that periods, they became fundamentally committed, ''we need to make progress in our economy, that's our source of legitimacy.'' So even there there, that's where you see that actually really emerges and this became something that they needed to achieve - a fundamental commitment to growth and development as a form of getting legitimacy to the population. So in a very different way, as some of the other countries, but it's the same principle. Legitimacy of a lot of countries is equated with progress and growth and development, which is essentially a feature of a development bargain.Tobi; Obviously, all societies have some form of elite bargain. Not all elite bargains are development bargains. That's the gist of your book, basically. Now, what I'm trying to get at here is elite bargains that are not for development, that do not benefit the rapid progress of a society, how do they emerge? You talk about the agency of the people that are running the country at a particular point in time. To take Nigeria as an example, a lot of people will blame Nigeria's problems on colonialism. And I'm also quite intolerant of such arguments, at least up to a point. But what I'm trying to get at is that how do elite bargains that are not for development, how do they emerge? Is it via, also, the agency of the elites of those societies? Or are there features of a particular society that kind of determine the elite bargain that emerges? For example, sticking with Nigeria, a lot of people will argue that our elites and our institutions will think and look differently if we don't have oil.Stefan; Yes. Tobi; Right. The state will be less extractive in its thinking, the bureaucracy will be less predatory, right? A lot of people would argue that. So are there other underlying factors or features in a society that shape the kind of elite bargain that emerges, or this is just down to the agency of the people who find themselves with power and influence? They are just the wrong type of people.Stefan; So, Tobi, you make an excellent point here, and, so let's take this a little bit in turn. Leonard Wantchekon, the economic historian at Princeton, from Benin… he gave a nice lecture not so long ago, at Yale, it's on YouTube. And he made this very helpful statement, and he said, you know, if it's between history and agency, I would put 50% history 50% agency, okay. And I will actually add to it [which] is that depending on where you are, history is a little bit more or a little bit less. And so clearly, and he was talking about Africa in general, colonialism will matter. It has shaped your institutions and, you know, the way countries have emerged and the way they decolonized, all these things will have mattered, and they make it harder and easier and so on. But you alluded to it as well [that] at some level, it's already a long time ago now. Of course, it's still there, but it's a long time ago. So over time agency should become much more important. The point though, that you raise about oil makes a lot of sense. So the problem with a development bargain is that actually for a political elite, and for a business elite, dare I say for a military elite, the status quo is, of course, very convenient. Status quo is something that is very convenient because it involves very few risks. So the problem with growth typically is that, actually, new elites may emerge, a new type of business elites may emerge, they may question the economic elite that exists. As a result, it may change the politics. And in fact, if you go back to history, as we were saying, of course, that's the history of Britain where all the time, you know, there has been a shift of who is the elite, there's always a new elite, but it's shifting. So growth is actually a tricky thing. Because it actually, in that sense, changes relative positions in society. Now, that's obviously the case in every society. But it will even more so if the status quo is actually quite of relative affluence, if the status quo is actually quite a comfortable position to be. Now if you have natural resources, you don't need growth, to be able to steal. You can just basically control the resources that come out of the ground. And so your supply chain for stealing money can be very short, you don't have to do a very complicated game. If you need to get it from growth in the economy, it's much more complicated, and it's much more risky. Okay. And so it's not for nothing, that actually clearly, more countries that didn't have natural resources in recent times, over short periods of time, managed to actually get development bargains and basically leads gambling on it. Because actually, the status quo was not as lucrative as the status quo can be if you have a lot of oil or other minerals. And so you're right, and it makes it just really hard...and it actually means in fact [that] even well-meaning parts of the business elite in Nigeria will find it very hard to shift the model entirely. Because you know, you are a business elite, because you benefit from the system one way or another. I'm not saying that you steal, but it's just [how] the economy is based in Nigeria on a lot of non-tradables, is helped with the fact that you have so much to export from oil and so you end up importing a lot, but you can also keep your borders closed or anything you feel like keeping the borders closed for. And that helps for a lot of domestic industries, because protectionism, you know, you do all the things. So the system self sustains it. And with oil, there is not that much incentives to change it. So yes, it is actually harder if you have natural resources to actually reengineer the system to actually go for growth and development. So yes, it is the case. But it hasn't stopped certain countries from not going that route. You know, Malaysia has oil? Yes, it's not a perfect development bargain. But it has done remarkably well. Indonesia, in its early stages, also had oil in the 1970s as an important part, it managed this kind of relationship, and then maybe come the agency in it, you know, do we get enough actors that actually have the collective ability to shift these incentives enough to start promoting more outward orientation, try to export some new things from your country, all that kinds of stuff? And that is indeed what happened in Indonesia. There in the early 1970s, they had oil, but they also learned to export shoes and garments early on, they took advantage of good global situations. And Nigeria didn't, you know, and then agency comes into it, you know, the managers of both the politics and the relationship between politics and business, including from the military, they went in a particular route, and they had choices and they didn't take them. I'm pretty sure if you go back and, you know, there will be moments of choice and we went for another - as people call it - political settlement... another equilibrium that actually didn't involve development and growth as the key part. So yes, it makes it harder. But the agency still, still matters.Tobi; From that point, my next question then would be, what shifts an elite bargain more? That's kind of like do question, right? What shifts an elite bargain? These questions do sound simple. And I'm sorry, but I know they are incredibly difficult to answer. Otherwise, you wouldn't have written an entire book about it. Right. So what shifts an elite bargain more towards development? I mean, you talked about China, we've seen it also in so many other countries where the country was going in a particular direction that's not really pro growth, pro-development, and then there's this moment where things sort of shifts. So it may be through the actions of particular actors or events that inform those. So what... in your experience as a development practitioner and looking at all these places...What are the factors that have the most influence in shifting the elite bargain? Is it just luck? I mean, when I think about China, what if Deng Xiaoping and his colleagues had actually lost that particular power struggle after the death of Mao? So did they get lucky? Is it luck? What's going on?Stefan; You know, I wouldn't use title of gambling but there has to be a little bit of luck involved as well, you know, the circumstances have to play in your direction. But it's not just luck. Okay. So it's an interesting thing when you look at a couple of the countries, what were the moments that people within the elite managed to shift it in another direction? So. China is interesting because it was going through conflict, not deep conflict or violent conflict, but there was a lot of instability in China at the time, at the end of the Cultural Revolution in that period. Other countries like Bangladesh came out of conflict. And so conflict, definitely, or coming out of conflict creates a moment. But of course, there are lots of countries that come out of conflict that make a mess of it. It's a window of opportunity. And it probably is linked with something related to it, which is legitimacy. When you come out of conflict, most of the time, leaders need to reestablish legitimacy. This is clearly something that happened to Rwanda coming out of the genocide, Kagame clearly had to establish legitimacy, you know, he represented a very small group of people within the country and he needed to get legitimacy overall and he chose growth and development to doing that. I think Ethiopia is similar, that actually Meles Zenawi coming from Tigray, he needed, you know, post 2000, coming out of the Eritrean war at a time, and all kinds of other crisis that he was facing in his own party even, he needed to get legitimacy, and they thought he could get legitimacy for his regime through growth and development. So legitimacy-seeking behavior can be quite important. Now it has another side to it. If there's a crisis of legitimacy, that's the moment when the leader can actually take advantage of it. A crisis of legitimacy is actually saying, ''Well, look, we better go to something that begins to deliver to people.'' And why I'm actually suggesting it is that actually, there are in certain countries, a bit of pressure from below also seems to be quite useful. But there is a role there and I find it very hard to define exactly because I'm always scared of autocrats and so on. But the point of leadership is there. So I don't mean it as the strong leader, but more to do with the kind of group of people that manages to take other people along and convince them that is the kind of thing that they need to do. So if you go to Indonesia, I don't think it was Suharto personally, who was the great thinker there that did it. But he clearly surrounded himself with a group of people that included technocrats and also other people from politics, that actually managed to push this in a particular direction in doing it. So how do we get it? While it is actually people taking advantage of windows of opportunity to actually nudge towards it? Okay. But it's hard. We're talking Nigeria, other people have asked me questions about Brazil, about India, you know, large countries like yours with very complicated elite bargains that have national and state level things and so on... it's really complicated. Rwanda in that sense is well defined, you know, we have one well-defined problem and, you know, we could go for a particular model. It can be quite complicated to have some ideas on that on Nigeria, but maybe we can come to that a bit later.Tobi; So, I'm curious. I know you didn't cover this in your book. So let me let you speculate a bit on the psychology of elite bargains or development bargains specifically now. Given that I've also tried to look at some of the societies that you described, and even some others that you probably didn't mention, I don't think there's been a society yet where this is a gamble true, but where the elites have sort of lost out by gambling on development. So why don't we see a lot more gambles than we are seeing currently?Stefan; Actually, unfortunately, we see gambles that go wrong. I mean, for me, and I've worked a lot on Ethiopia, Ethiopia as a gamble that went wrong at the moment. And Ethiopia... you know, just think a little bit of what happened and maybe typify a little bit in a very simplistic way the nature of the gamble. You know, you had a leader under Meles Zenawi, under the TPLF - the Tigray and rebel group - where in the end the dominant force in the military force that actually took power in 1991. And they stayed dominant, even though they only represent, you know, five 6% of the population, they remain dominant in that political deal. Though other groups joined, but militarily, it was the TPLF that was the most powerful. So it also meant that the political deal was always fragile because in various periods of time, you know, my very first job was teaching in Addis Ababa University so I was teaching there 1992 93... you know, we have violence on the streets of students that were being actually repressed by the state, they were demonstrating against the government. You know, over time, we have various instances where this kind of legitimacy, the political legitimacy of that regime was also being questioned. Now, one of the gambles that Meles Zenawi took was to actually say, look, there's a very fragile political deal, but I'm actually going to get legitimacy through growth and development. So he used development as a way of getting legitimacy for something that politically and you know, just as Nigeria is complicated, Ethiopia is complicated with different nationalities, different balances between the regions, that he actually wasn't quite giving the space for these different nationalities to have a role, but he was gambling on doing it through growth and development. How did this go wrong? You know, I kept on spending a lot of time, but in the 2010s after Meles Zenawi died, very young from illness, the government still tried to pursue this. But actually, increasingly, they couldn't keep the politics together anymore. They were almost a different nationality, they were always on the streets, there was lots of violence and so on. And then in the end, you know, the Tigrayans lost power in the central government, and then, of course, we know how it escalated further after Abiy. But in some sense, the underlying political deal was fragile and the hope was that through economic progress, we could strengthen that political deal to legitimacy. That gamble is fine. Now it's a very fractured state and unfortunately, all the news we get from the country is that it's increasingly fractured. And I don't know how we'll put it together again. So that's a gamble that failed. Now, we know more about it. And it was very visible because it lasted quite a long time. Many of these gambles may actually misfire if they don't pick the right political moments. You know, if you don't do it at the right moment, and if you're a little bit unlucky with global circumstances, you fairly quickly could get into a bit of trouble politically, and whatever. For example, with the high inflation we have in virtually every country in the world now, it is clearly not the moment to gamble. It's extremely risky, [and] fragile, and your opponents will use it against you. So it's another thing like, you know, we don't see them gambling, you know, there are relatively few windows of opportunities at which you can gamble. And there are some that will go wrong. And even some that I described as successes, you know, we don't know whether they will last, whether they will become the new Koreas. I'm cautious about that. So, we need to just see it a little bit. Although I don't see Nigeria taking that gamble. So that's another matter.Tobi; No, no. I mean, that's where I was going next. Let me talk to you a bit about the role of outsiders here. We're going to get the aid discussion later. So currently in Nigeria, obviously, the economy has been through a lot in the last several years, a lot of people will put that firmly into the hands of the current administration. Rightly so. There were some very terrible policy choices that were made. But one point that I've quite often made to friends is that, to borrow your terminology, I don't think Nigeria was under the influence of a development bargain that suddenly went astray seven years ago. We've always been heading in this direction, some periods were just pretty good. And one of those periods was in the mid to late 2000s, when the economy seemed to be doing quite well, with high oil prices and also, the government actually really took a stab at macro-economic reforms. But if also you look carefully at the micro-history of that period, you'll see the influence of, should I say, outside legitimacy, you know, trying to get the debt forgiveness deal over the line and, you know, so many other moves that the government was making to increase its credibility internationally was highly influential in some of those decisions and the people that were brought into the government and some of the reform too. And my proof for that when I talk to people is to look at the other things that we should have done, which, we didn't do. We had the opportunity to actually reform either through privatization, a more sustainable model of our energy policy - the energy industry, generally. Electricity? People like to talk about telecommunications and the GSM revolution, but we didn't do anything about electricity, we didn't do anything about transportation. Infrastructure was still highly deficient and investment was not really serious, you know. So it was not... for me, personally, it was not a development bargain. Now, my question then would be, could it have been different if some of the outside influences that are sometimes exerted on countries can be a bit more focused on long-term development, as opposed to short-term macro-economic reforms on stability? You know, institutions like the IMF, the World Bank, I know they have their defined mandates, but is it time for a change? I think they actually have a lot more influence than they are using currently.Stefan; You make extremely valid points. And I think I will broadly agree with you with what you just implied. And I'll take a stance on it now. So the first thing, of course, and you correctly saw that something very misleading in Nigeria's growth figures is that periods of high growth are not at all linked to much action by economic policymakers. But it's still largely linked to oil prices. And we have this unfortunate cyclical behaviour in policymaking. Where the behaviour when prices are really good, is just always missing taking advantage of the opportunity. While when things are bad, we're talking about all kinds of things one ought to be doing but then saying, ''we can't do it because the prices are low.'' And so there is this kind of strange, asymmetric thing about policymaking that we always have the best ideas when we can't do them, and then we don't have the ideas we should have when the going is good. And this is in a way what you're alluding to. Of course, the role of outsiders that gets very interesting is what these outsiders were focusing on, actually, I think it was in the interest of the, call them, semi-outsider inside government...some of these technocrats that were brought in. And I can understand it entirely, you know, there were some really sensible finance ministers at various moments and so on. They were focused on actually things that were relatively easy in that period. So they were actually relatively easy, because the going was quite good. And so actually you created that strange impression, and it's a little bit like together with the outsiders, with World Bank, IMF, but actually, we're dealing with something really dramatic but, actually, we were not at all setting a precedent because it was actually, relatively... relatively politically low cost to do these things at that moment. Okay. So it was progress of sorts, you know, getting the debt relief, and so on. But arguably, you know, it's not a bad thing. But this actually was quite a low-hanging fruit and many of these organizations like these ideas of low-hanging fruits, because actually, politically, it played well, it increased the stature internationally of Nigeria...but, actually, it didn't really cost the elite much. It wasn't really hard for the elite to do these things. [If they did] the difficult things, they would really have started to change Nigeria. And so there is something there that I'm struck by the last sentence you said that some of these outsiders may be focusing on the wrong things. I think it has to be the insiders wanting to focus on these things, on these more difficult things. And then I do agree with you, the outsider should be smarter, and better able to respond to this. There's a problem with the outsiders here as well, take something that clearly you still struggle with and struggled forever with - electricity reform, the electricity sector. It's so complicated, and it's set up so complicated in all kinds of ways and whatever. So much inefficiency, so much waste that then it doesn't function and everybody, you know, complains about it. But it becomes politically very sensitive because there are definitely vested interests linked to it now and it becomes very hard to unravel it. Now the problem is if you ask typically a World Bank or an IMF for advice, they will make it very simple and say, Oh, just privatize the whole thing and do the whole thing. Now. You know that in a politically sensitive environment, you just can't privatize everything, so you privatize a little bit, but anything that's really with vested interests you won't touch. But these are the inefficient bits. So the easy prey, you privatize, and that's someone else making even more money off it because it's actually the efficient part of those systems that gets privatized, and then the inefficient part is still there and costs even more money. And so what I think these outsiders could do better is to have a better understanding of Nigeria's political economy, which is complicated at the best of times, but really understand, where can we start actually touching on something that we are beginning to touch on something vested interests that we begin to unravel a little bit some of the kind of underlying problem of, you know, politically connected business, you know, all the way to party financing or whatever...that you need to start unraveling somehow, where actually the underlying causes of inefficiency lie. Because the underlying causes of inefficiency are not just technical, they're actually not just economic. The underlying causes are these kinds of things. So I think why the outsiders did what they did at that time, it actually suited the government at the time, the technocratic ministers, that's the best they could do because that was the only mandate they had. Together with the outsider, they'd say, Well, that's certainly something we could do. But actually, fundamentally, you didn't really change that much. You don't still have then wherever it goes a bit bad, I'll get six or whatever exchange rates, and I'll get all kinds of other macroeconomic poor management, and, of course, nothing can happen when there's a crisis. There's no way we can do these more micro sector-specific reforms than doing it. So yeah, you're absolutely right. But let's not underestimate how hard it is. But starting to do the things that you refer to is where we need to get to to doing some of these difficult things.Tobi; The way I also read your book is that the two classic problems of political economy are still present, which is, the incentive and the knowledge problem. So I want to talk about the role of knowledge and ideas here. Let's even suppose that a particular group of elites at a particular time are properly incentivized to pursue a development bargain. Right? Sometimes the kind of ideas you still find floating around in the corridors of power can be quite counterproductive. A very revealing part of your book for me was when you were talking about the role of China. Also, I have no problem with China. The anecdote about Justin meme stood out to me quite well, because I could relate to it personally because I've also been opportuned to be at conferences where Justin Lin spoke, and I was slightly uneasy at how much simplification happens. I mean, just to digress a little bit, there was a particular presidential candidate in the just concluded primaries of the ruling party, I'm not going to mention the name, who is quite under the heavy influence of the China model. Right? Always consults with China, always meeting with Chinese economists and technocrats. And my reaction when he lost the primaries was ''thank god,'' right? Because what I see mostly in development thinking locally, I don't mean in academic circles, a lot of debates are going on in academics... is that the success of China and Asia more broadly has brought the State primarily into the front and centre. If you look at this current government, they will tell you seven years ago that they meant well. You know, judging by the Abba Kyari anecdotes where government should own the means of production. He may not believe that, like you said, truthfully, but you can see the influence of what has been called ''state-led development.'' In a state where there is no capable bureaucracy. The government itself is not even optimized to know the problem to solve or even how to solve that particular problem. Right. So broadly, my question is, if an elite chooses to pursue a development bargain, how does it then ensure that the right ideas, which lead to the right kind of policies, and maybe there might not even be the right policies - one of the things you mentioned is changing your mind quickly, it's an experimental process - but, you know, this process needs people who are open to ideas, who change their minds, who can also bring other people in with different ideas, you know, so this idea generation process in a development bargain, how can it be stable even if you have an elite consensus is that chooses to pursue development?Stefan; Look, it's an excellent question. And last week, or 10 days ago, when it was in Bangladesh, I was very struck that, you know, as a country I think that has the development bargain, there was a lot of openness. And you know, I was in the Ministry of Finance, and people had a variety of ideas, but they were all openly debated, there was not a kind of fixed mindset. And it is something that I've always found a bit unfortunate dealing with both politicians and senior technocrats in Nigeria. Nigeria is quickly seen as the centre of the world, there's nothing to learn from the rest of the world, we'll just pick an idea, and then we'll run with it and there's nothing that needs to be checked. And, you know, I love the self-confidence, but for thinking and for pursuit of ideas, you know, looking around and questioning what you hear whether you hear it from Justin Lin, who by the way, I don't think he's malign and he means well, he just has a particular way of communicating but it is, of course, a simplified story that you can simply get, and then you'll pick it up. And of course, if you ask the UK Government, the official line from London, they will also tell you there is only one model when they're purely official, but privately they will be a bit more open-minded, and maybe Chinese officials don't feel they have that freedom to privately encourage you to think a bit broader and so you have maybe a stricter line. So how do we do that? I think we can learn something here from India in the 1970s and 1980s. So when India after independence, it had a very strict set of ideas. In that sense, India was as a child of its time as a state, you know, state control, state-led development, there were strong views around it and India ended up doing a lot of regulation. They used to refer to India as the License Raj. Like a whole system based around licensing and everything was regulated by the state. So the state had far too much say in terms of the activity, despite the fact that the underlying economy was meant to be very entrepreneurship and commerce-led, but you had a lot of licensing rules, and so on. And of course, its growth stayed very low in the 1970s and 80s, it was actually very stagnant. It changed in the 1990s. Partly came with a crisis - in fact, a balance of payments crisis - it needs to reform and Manmohan Singh was the finance minister, then, later on, he became maybe a less successful Prime Minister. But as a finance minister in the early 90s, he did quite amazing things. And then during the 90s, gradually, every party started adopting a much more growth-oriented, more outward-oriented type of mindset. Now, why do I say this? Because actually, during the 1970s, and 80s, you had think-tanks, all the time pushing for these broader ideas. It took them 20 years. But there were really well-known think-tanks that kept on trying to convince people in the planning commission, economists in the universities and so on. And to critically think, look, there must be other ways. So actually, funnily enough, in India, it has a lot to do with the thinking and the public debates, that initially the politicians didn't take up, but actually found the right people to influence... you know, you actually have still in the civil service some decent technocrats there, they don't get a chance. But there are decent people, I know some of them and so on. But there needs to be a feeding of these ideas. And actually, this is where I would almost say there's a bit of a failing here, in the way the public discourse is done [in Nigeria] and maybe voices like you, but also more systematically from universities from think tanks and so on to actually feed and keep on feeding these ideas. There is a suggestion [by] Lant Pritchett - you know he's a former Harvard economist, he is now in the UK - [who] wrote this very interesting paper and he said, some of these think tanks who are actually getting a little bit of aid money here and there and he said, that's probably the best spent aid money in India ever. Because the rate of return and he calculates this number is like 1,000,000%, or something. Because he basically says the power of ideas is there. And I do think there is something there that I'm always surprised by that there are some very smart Nigerians outside the country, they don't really get much of a hearing inside the country, then there are some that are actually inside the country, the quality of debate is maybe not stimulated to be thinking beyond. It has to do probably with how complicated your country is, and of course, the Federal status plays a role. I just wonder whether maybe this is something that needs to start in particular states. You know, there are some governors that are a little bit more progressive than others. Maybe it is actually increasing and focusing attention over this on a few states to get the debate up to a high level and to actually see what they can do and maybe it's where the entry point is, but you need ideas I agree with you and I do worry at times about the kind of critical quality... there are some great thinkers in Nigeria, don't get me wrong, but the critical quality of ideas around alternative ways of doing the economy and so on, and that they get so easily captured by simple narrative, simple national narratives that are really just too simple to actually pursue. I mean...yeah.Tobi; That's quite deep. That's quite deep. I mean, just captures my life's mission right there. It's interesting you talked about Lant Pritchett and the question of aid, which is like my next line of question to you. There was this brief exchange on Twitter that I caught about the review of your book in the guardian, and the question of aid came up. I saw responses from Martin Ravallion, from Rachel Glennerster, I'm not sure I'm pronouncing her name right. So it's sort of then brings me to the whole question of development assistance, aid, and the way intervention has now been captured by what works. One fantastic example I got from your book is on Bangladesh, and how both systems work. You know, there's a broad development bargain, it's not perfect, nothing is, no society is. And there's the pursuit of economic growth. And also, it's a country where aid money and all forms of development assistance is quite active, and is quite huge, and it's actually quite effective. Now, my question is that basic insight from your book, which is for aid spending to be a little bit more biased, not your word... a little bit more bias to countries that have development bargains broadly? Why is that insight so difficult for, I should say, the international NGO industry to grasp? Why is it elusive? Because the status quo, which I would say, I don't mean to offend anybody, but which I will say is also aided by development economists and academics who have sort of put methodology and evidence above prosperity, in my view... because what you see is that, regardless of how dysfunctional the country is, broadly, the aid industry just carves out a nice niche where they do all sorts of interventions, cash transfers, chickens and, of course, you can always do randomized control trials and you say you have evidence for what works. But meanwhile you don't see the broad influence of some of these so-called assistants in the country as a whole. And these are institutions who proclaim that they are committed to fighting extreme poverty and we know what has vastly reduced poverty through history has always been economic growth and prosperity. So why is this elusive? Have those agencies and international development thinking itself been captured?Stefan; Look, I think I should make you do my interviews in the future. Yeah. So I've got to hire you to give...Because, look, I've been inside the aid industry and, in fact, the two people that you mentioned, you know, I would call them my friends, although one of them clearly is very cross at me at the moment. But you know, these are people I've worked with, and so on. And I am worried that there is such an obsession within the aid industry to prove their effectiveness. And I know I've been under pressure, you know, I've worked in it and sitting in London and getting your newspapers to say you're wasting all this money. It's really affecting a lot of people. And it was really hardwork for these 10 years that I sat inside it. But it's about just the humility that you just described, you know, and I want to make this distinction between...I'm about to make two distinctions. So the first one is - you made it well, even Bangladesh, something is going on. And you know, with all the imperfections, the government is trying to do something, and largely by staying to some extent out of the way. And there's some good stuff happening. So there's growth picking up and so on. So you can do all kinds of things. And I think aid in Bangladesh has been great at trying to make sure that the growth that was taking place in that country was a bit more inclusive than it probably would have been. I think it's great. And I think the aid industry should be proud of it. There is a great book that I quote as well also by Naomi Hossein and she calls it The Aid Lab and this is a bit like in praise of it. You know, if we do it carefully with some community and complement what's going on in a country that is deeply poor, you know, you can actually do really good things. Because in the book, I also mentioned Ghana that, actually, aid has been pretty effective because something had begun to change in the 90s, and so on. And we can question that to some extent and, of course, it's none of this perfection. But if you then come to a country where, you know... probably the two of us agree [that] there is some form of stagnation in that kind of [country], there's no development bargain, the elite bargain doesn't really push everything forward. Just be humble to say, look, I have a little niche, and there will be some chicken farmers that are happier, we'll do some good things in health... in health, actually, it's quite straightforward to do good things. But they are to call these good things, don't classify this as if you are leading the fight against extreme poverty, leading the fight against the change in these countries. Because, actually, if the local elite is not leading their change, and those people who have the power and influence not leading their change, the best you can do is doing good things. So I'm happy for us to be able to say we do good things. And it led me in the context of an interview to say like in India, as doing a lot of good things means that aid was actually in itself quite irrelevant, because the real change came, as I described in the 90s, actually, there was a real shift in gear, and suddenly their own development spending became gradually more effective. And of course, you can help them then to make it more effective. But, you know, I was a bit sad, and Martin Ravallion now took issue with it and wanted to emphasize... you know, and I don't want us to ever say, look, we did it. I mean, it's such a lack of humility I'll say this. At some point, we may have been supportive of doing it, but it's always the countries that did it. And the people there that did it. And other times just be humble and say, well, we may be doing something reasonably good, we may improve health outcomes, education outcomes, but not necessarily the whole country may do it in the schools that we work in, or whatever. And it's, that's good, you know, that's just as there are Nigerians that do good things via their own organizations and so on, they do good things. And it's probably teachers in the country, within the state schools that do some of these good things in the best practice stuff. And so yeah, they improve things, but overall, have the humility to say you're not changing Nigeria, because unfortunately, Nigeria is not being changed at the moment.Tobi; So my question then would be, is it reflective of the current intellectual climate in development economics where randomized control trials, they pursue...I know Lant Pritchett has really come down quite heavily on this particular movement, though, sometimes he seems to be the only one standing, maybe not quite literally true and I'll give you two examples from Nigeria, right? In 2012, when the anti subsidy-removal protests broke out, when the government on the first day of January removed fuel subsidy and prices suddenly went up. And the labour movement, the student movement, opposition politicians mobilized the population against that particular move. Some form of resolution that the current president at that time reached was to do what they call a partial removal of subsidy, you know, prices will go up a little bit and the government then did a scheme - an entrepreneurship scheme - where you submit a business plan and you're paid to get $50,000 to do a business.And I read a particular study by David Evans of the World Bank of how fantastically successful this particular scheme was, and of course, no doubt, it was successful. I mean, if you get $50,000 to do business in Nigeria, that's a lot of money. I don't need econometric analysis to know that, but maybe some people do. But the truth is, if you look today, I can bet you that a lot of those businesses are probably dead now due to how the economy as sort of evolved after that. Secondly, at the time we were having these debates and protests in 2012, the subsidy figure there was $8 billion annually, today it is $15 billion. So if you say you have evidence that something works, what exactly is your time horizon for measuring what works? And if you say something works, works in whose benefit, really? The most recent example was in 2018, 2019, where the government was given a small amount of money to small retailers, they call it Trader Moni. I'm sure there were World Bank officials and economists (I have a lot of respect for them) who are measuring the effectiveness of this thing. But you could see clearly that what was politically going on was the government doing vote buying. Right? So if you say something work, works for whom? Right? That was my response to Rachel on Twitter, but she didn't reply me. My question then to you... Sorry, I'm talking too much... Is this reflective of the current intellectual climate in development economics? Stefan; So yes and no? Okay. So, well, i'm going to have to be very careful. Of course, Rachel...I know her very well. And, actually, I have not that many gripes with her. She comes out of, indeed, the whole school of RCTs. By the way, I also actually do RCTs. I like it as a tool to actually study things. And I'll explain in a moment a bit more. So I do these randomized control trials as well. But I am very, very sympathetic. And I actually totally agree with your frustration around this idea to creating that impression about what works. You know, I have it in the book, I even mentioned it, there was a particular minister that at some point announced we're only going to spend our money on what works, you know, like a great slogan, as if you have all the answers, you know what to do. And of course, there is a technical meaning to it. Technical meaning would mean, if I do something and if you haven't done it, what would have been the outcome? And the paper that you refer on the entrepreneurship, this entrepreneurship for the $50,000... I know actually the research very well, the original was from David McKenzie and then other people commenting on it. Yes, relative to a counterfactual, yes, it was actually much bigger than an alternative scheme, you know, then that's something. So you could say, well, you know, as a research question, as a researcher, I find it interesting. From a policy point of view, I'm so much more cautious. And I'm totally with you. You know, first of all, in the bigger scheme of things, how tiny maybe it be... now there are some people who would say, well, we don't know anything, really, what to do in this whole messy environment so at least [to] have something that does a bit better than other things is maybe a useful thing to know. I think it comes back to that humility. As a research tool, it's great at getting exact answers. As a policy tool, I think we need to have much more humility. Because are these ideas tha totally transforms everything, that is actually makes a huge difference? Not really. It probably means that we can identify a little bit and I think even Pritchard wouldn't disagree with [that] sometimes a few things are a little bit better than other things. And if we want to do good, maybe it's helpful in medicine whether we know whether we should spend a bit more money on X or on Y, that it actually does a little bit better in the functioning of a health facility or not, if we spent a bit more money on that practice or on that practice, same in teaching in the school, if we do a little bit more of that in a very constrained environment than something else, that's useful, it doesn't change dramatically. And I categorize it with doing good. With humility, if we do good, it's helpful to know which things are a bit better than other things...when we try to do good. It's an interesting thing, even in Rachel's thread, she actually used it, we can still do quite a lot of good with aid. Actually, funnily enough, I don't disagree that deeply with her and say, Yeah, we may be able to do it good, but don't present it as if we, in the bigger scheme of things, which is where you're getting that, make any difference. And this is where I'm also sympathetic with Lant in saying, Look, sometimes we seem to be focusing on the small trivial things and yeah, it's useful to know but meanwhile the big picture is what you were describing, there's so much going on and, actually, nothing changes there. And so I categorize it in a bit of the same thing. Because I'll now give you an account, which is then go to Bangladesh again. Look, I think it was extremely useful in Bangladesh at some point to really have ... an RCT - a randomized control trial. So really careful evidence to show that a particular program that BRAC, the biggest NGO in the world, the local NGO, was actually what it was actually doing to the ultra-poor. In fact, two weeks ago, I was visiting the program again. And I find it really interesting because it's really helpful for BRAC to know that that program, when I do it in a careful evaluation relative to other things, that actually this program is really effective. And that, actually, we know for BRAC that they can have so much choices to spend their money on poverty alleviation, the things that we can dream up, to actually know this is actually a really good thing. And why of course does it work? Well, it works relative to doing nothing, but of course, it helps in Bangladesh {that] growth is taking place and it actually can get people to become [a big] part of it. In fact, I was visiting people that, whether we use a Nigerian or Bangladeshi definition of extreme poverty, they wouldn't have been in that state 10 years ago and so this is their being six, seven years in that program, and it was really interesting that I was sitting into some interviews they were doing, and I looked over my shoulder, and they now had a TV and a fridge. And I say, okay, an extremely poor person in Bangladesh would not have had this. So there's clearly something happening. Now, that's not simply because of the program. It's also because the whole country is improving. But I'm pretty sure and what the data showed is that those who actually had a program would have found it a bit easier to take part in that progress. And I'm pretty sure that the TV, and the fridge, probably was helped, to some extent, by the programme. In fact, we have very good evidence in the kind of evidence that Rachel Glennerster talks about. So again, I think it's all about a bit of humility, and understanding better what we mean by it. And to be honest, I think there are lots of people who work in that field that are careful with it. And that actually will do it, use it well. It gets just really worrying that people, often more junior people than Rachel, they've never really been in the field properly and then they make massive statements. So they work in big organizations, and they use that evidence, overuse it and overstate it. I think Rachel is actually careful, even her thread was very careful, although your question is a very good one. But it's very careful. But it still allows other people to overinterpret this whole thing. And then I get really worried. I'm actually going to put out a thread on Twitter in the coming days where I'm going to talk about tribalism in development economics... where I'm good to deal with your question as well because I think the way the profession has evolved is that you need to be in one tribe or another, otherwise, you're not allowed to function. I think, you know, you need to be eclectic, you know, no one has this single answer. And there's too much tribalism going on, much more than I've ever known before. You know, you need to be Oh, a fan of that, or you need to be the historical approach, or the Political Economy approach, and the whole... we should learn from all these bits. That's the idea of knowledge that you learn from... as much as possible from the progress in different parts of a discipline, or in thinking.Tobi; I'm glad to have caught you on a free day because having a lot more time to have this conversation has made it quite rich for me personally, and I'm sure for the audience as well. So I just have a couple more questions before I let you get back to your day. The first of those would be...um, when I first became aware of your book on Twitter, it was via a Chris Blattman thread. And he mentioned something that I have also struggled with, both personally in my thought and, in my conversation with people. And somethin

Why do some countries remain poor, despite continuous policy efforts over decades to chart an economic path out of poverty? Development expert Stefan Dercon argues that it comes down to an implicit or explicit bargain among the elites to prioritize national progress. We speak to him about this theory put forth in his book, "Gambling on Development: Why Some Countries Win and Others Lose."

Why do some countries remain poor, despite continuous policy efforts over decades to chart an economic path out of poverty? Development expert Stefan Dercon argues that it comes down to an implicit or explicit bargain among the elites to prioritize national progress. We speak to him about this theory put forth in his book, "Gambling on Development: Why Some Countries Win and Others Lose."

Why have some countries experience durable economic progress while other countries remain left behind? This basic question has vexed development economists for decades -- and for decades economists have tried to reverse engineer one country's economic successes story to discover a blue print that could be applied elsewhere.   Stefan Dercon, was one of those economists when he had an insight that forever changed his approach to the field of development economics. He explains this insight in his new book: Gambling on Development: Why Some Countries Win and Others Lose. Stefan Dercon is professor of economic policy at the University of Oxford and a former senior official in the UK government, including as the senior economist of the United Kingdom's premier overseas development agency. 

Hosted by Andrew Keen, Keen On features conversations with some of the world's leading thinkers and writers about the economic, political, and technological issues being discussed in the news, right now. In this episode, Andrew is joined by Stefan Dercon, author of Gambling on Development: Why Some Countries Win and Others Lose. Stefan Dercon is Professor of Economic Policy and Director of the Centre for the Study of African Economies at the University of Oxford. Combining an academic career with long experience in international development policy, he is a former DFID chief economist and a policy advisor to the UK foreignsecretary. Learn more about your ad choices. Visit megaphone.fm/adchoices

Stefan Dercon is the author of Gambling on Development, in which he details his theory of the elite bargain framework for development in low-income countries. Stefan is a Professor of Economic Policy at the University of Oxford, and also serves as the Director of the Center for the Study of African Economies. Prior to his current academic posts, he has extensive experience in the world of policy, as the Chief Economist at the Department for International Development and as an advisor to the UK's Foreign Secretary. In our conversation with Stefan in today's show, we get to delve deep into his elite bargain idea, the impact of effective altruism, the need for self-awareness within governments, and how far lessons from certain examples can be applied to other states. We also get to talk about political settlements and how his framework fits into the context of current popular theories and explanations for economic growth. So to catch all this and a whole lot more, be sure to listen in to this great chat with Stefan Dercon! Key Points From This Episode: •   Stefan's perspective on the different skills needed for policy implementation and idea generation. •   The challenges of communicating the need for policy experimentation to politicians. •   Some key ingredients to effective government meetings and common mistakes that Stefan has seen. •   Examples from Stefan of the kind of practical implementations he has seen used well in governance.  •   Stefan shares some examples that underline his book's main thesis about successful development. •   An approach to determining a country's emerging development bargain. •   Our guest unpacks the three conditions for development bargains noted in his book. •   Why a certain model for development cannot be expected to have the same success in a different context. •   The impact that studying Asia later in his career has had on Stefan's frameworks and philosophy. •   Stefan talks about his findings on possible lessons from urbanization in China. •   Issues that Stefan has with the idea and terminology of political settlements. •   Contrasting Stefan's argument with the thesis of Why Nations Fail. •   Suggestions on how to motivate elites to engage and gamble on development.   •   Stefan's personal perspective on economic growth and its role in poverty alleviation.  •   Why meaningful progress is dependent on a certain amount of risk.  •   How Stefan would suggest spending money on growth interventions and lessons from Africa in the 1990s.  •   What the situation in Sri Lanka right now teaches us about investment in people. •   The danger of consolidating authoritarianism in countries such as China and Rwanda. •   How the mobility of a burgeoning middle class can impact the development of a state.  •   Stefan weighs in on the potential scalability problem in a technocracy. •   Some of Stefan's reflections on his time at DFID and its challenges. •   Looking to the horizon with Stefan and his forthcoming projects.     Links Mentioned in Today's Episode: https://www.bsg.ox.ac.uk/people/stefan-dercon (Stefan Dercon) https://www.gamblingondevelopment.com/ (Gambling on Development) https://twitter.com/gamblingondev (Stefan Dercon on Twitter) https://www.ox.ac.uk/ (University of Oxford) https://www.gov.uk/government/organisations/department-for-international-development (Department for International Development) https://www.gov.uk/government/people/justine-greening (Justine Greening) https://www.rorystewart.co.uk/ (Rory Stewart) https://www.bsg.ox.ac.uk/people/paul-collier (Paul Collier)...

Stefan Dercon is Professor of Economic Policy at the Blavatnik School of Government and the Economics Department, and a Fellow of Jesus College. He is also Director of the Centre for the Study of African Economies. He combines his academic career with work as a policy advisor, providing strategic economic and development advice, and promoting the use of evidence in decision making. Between 2011 and 2017, he was Chief Economist of the Department of International Development (DFID), the government department in charge with the UK's aid policy and spending. Between 2020-2022, he was the Development Policy Advisor to successive Foreign Secretaries at the UK's Foreign, Commonwealth and Development Office. His research interests concern what keeps some people and countries poor: the failures of markets, governments and politics, mainly in Africa, and how to achieve change. His latest book, Gambling on Development: Why some countries win and others lose was published in May 2022. It draws on his academic research as well as his policy experience across three decades and 40-odd countries, exploring why some countries have managed to settle on elite bargains favouring growth and development, and others did not. Previously, Dull Disasters? How Planning Ahead Will Make A Difference was published in 2016, and provides a blueprint for renewed application of science, improved decision making, better preparedness, and pre-arranged finance in the face of natural disasters.

Over the last thirty years, in many developing economies, poverty has fallen, people live longer and healthier lives, and economies have been transformed. But this is not the case across the board. In his new book, “Gambling on Development: Why some countries win and others lose”, former Chief Economist at the Department for International Development, and Policy Advisor to the Foreign Secretary, Stefan Dercon, asks why some of the previously poorest countries have prospered, while others have failed. He argues that development is most likely to happen when a country's elites want it to happen – what he calls a ‘development bargain'. In this conversation with Stefan, we explore the implications of this thesis for the role of impact investors, including development finance institutions (DFIs), in fragile and conflict-affected countries. For example, the track record of DFIs in fragile states is mixed. Should DFIs focus on countries where a ‘development bargain' looks likely? This conversation is chaired by British International Investment's Colin Buckley, Managing Director and General Counsel.  Additional links:  Watch a recording of this event here.  Subscribe to our newsletter here.

In the latest episode of the GDI podcast Professor Stefan Dercon talks to Dr Sophie van Huellen. They discuss Stefan's new book, "Gambling on Development: why some countries win and others lose", his recent departure from the Foreign, Commonwealth and Development Office, and his advice to academics wanting to work with civil servants and policy makers. Stefan Dercon is Professor of Economic Policy at Oxford University. Between 2011 and 2017, he was Chief Economist of the Department of International Development (DFID), and from 20200- 2022, he was the Development Policy Advisor to successive Foreign Secretaries at the UK's Foreign, Commonwealth and Development Office. Sophie van Huellen is a Lecturer in Development Economics at the Global Development Institute. Transcript and more information is available here: https://wp.me/p79faF-1Lc

Danila Serra talks about the effects of a new ethics training program for police officers in Ghana. “Proud to Belong: The Impact of Ethics Training on Police in Ghana” by Donna Harris, Oana Borcan, Danila Serra, Henry Telli, Bruno Schettini, and Stefan Dercon. *** Probable Causation is part of Doleac Initiatives, a 501(c)(3) nonprofit. If you enjoy the show, please consider making a tax-deductible contribution. Thank you for supporting our work! *** OTHER RESEARCH WE DISCUSS IN THIS EPISODE: “Can You Build a Better Cop? Experimental Evidence on Supervision, Training, and Policing in the Community” by Emily Owens, David Weisburd, Karen L. Amendola, and Geoffrey P. Alpert. “Shaping Police Officer Mindsets and Behaviors: Experimental Evidence of Procedural Justice Training” by Rodrigo Canales et al. “The Greater Manchester Police Procedural Justice Training Experiment” by Levin Wheller, Paul Quinton, Alistair Fildes, and Andy Mills. “Can Police Training Reduce Ethnic/Racial Disparities in Stop and Search? Evidence from a Multisite UK Trial” by Joel Miller, Paul Quinton, Banos Alexandrou, and Daniel Packham. “Procedural Justice Training Reduces Police Use of Force and Complaints Against Officers” by George Wood, Tom R. Tyler, and Andrew V. Papachristos. Revised findings for “Procedural Justice Training Reduces Police Use of Force and Complaints Against Officers” by George Wood, Tom R. Tyler, Andrew V. Papachristos et al. “Doing Research with Police Elites in Ghana” by Emmanuel Addo Sowatey and Justice Tankebe. “The Effect of Field Training Officers on Police Use of Force” by Chandon Adger, Matthew Ross, and CarlyWill Sloan.

Stefan Dercon is Professor of Economic Policy and Director of the Centre for the Study of African Economies at the University of Oxford. He is a former DFID chief economist and a policy advisor to the UK foreign secretary. Stefan Dercon argues that countries develop if they achieve an elite bargain, in which the country’s […]

Stefan Dercon introduces his new book, Gambling on Development: why some countries win and others lose What did I learn from trying to teach 50 senior aid people about influencing? Links I Liked The UK's new Development Strategy shows it's in the midst of an identity crisis Hunger, Inequality and the Birth of Oxfam East Africa v Ukraine. Two tragedies; two very different responses

Timely, flexible funding is a bottleneck is most if not all humanitarian operations. Daniel Clarke has a solution to that problem. He is the co-author of the book Dull Disasters, and the director of the Center for Disaster Protection. In this conversation with Lars Peter Nissen he discusses how risk based financing and smarter financial instruments such as parametric insurance can enable us to fundamentally change the way in which crises are managed. You can learn more about the Center for Disaster Protection their http://disasterprotection.org/ (website) and find Dull Disasters by Daniel Clarke and Stefan Dercon https://global.oup.com/academic/product/dull-disasters-9780198785576?cc=fr&lang=en& (here). Support this podcast

Stefan Dercon is professor of economic policy at the University of Oxford, and is the former chief economist at the Department for International Development (DFID) in the UK, where he was involved in political discussions about how to shape aid. This episode is a deep dive into the financing model of humanitarian response, and how insurance instruments could change that model, and potentially reshape how we respond to crises. Displaced is produced by the Vox Media Podcast Network in partnership with the International Rescue Committee.  Find our show notes here: https://www.rescue.org/displaced Email us at displaced@rescue.org Learn more about your ad choices. Visit megaphone.fm/adchoices

Development aid by its very nature is provided in messy environments, is often very political and has inherent negative incentives. In such situations, often exacerbated by limited data and imminent deadlines, can we improve how we provide aid? In this interview, **Stefan Dercon**, discusses the various aspects of aid effectives; the importance of cost-benefit analyses, feedback loops, prioritising the engines of inclusive growth, theories of change, and planning for humanitarian aid. Find out more at [VoxDev](https://voxdev.org/topic/institutions-political-economy/aid-effective)

Stefan Dercon DFID's Chief Economist introduces DFID's first Economic Development Strategy. DFID’s Economic Development Strategy sets out how Britain will establish new trade, investment and economic links and end global poverty. https://www.gov.uk/government/publications/dfids-economic-development-strategy-2017

Stefan Dercon, CSAE Director, provides a short overview of the Centre for the Study of African Economies

In this episode of Development Drums, I speak with Ben Ramalingam and Stefan Dercon about whether complexity and systems thinking offers actionable insights for better development interventions.

In this episode of Development Drums, I speak with Ben Ramalingam and Stefan Dercon about whether complexity and systems thinking offers actionable insights for better development interventions.