Waylaid Dialectic

May 24, 2013

The Little Push

Filed under: Aid — terence @ 11:11 am
Tags: , , ,

Once, back in the dark old days of development economics, the thinking was: to grow, countries need to invest capital, but very poor countries have no capital to invest, so they are stuck in a poverty trap, which is why we should give them aid; with our aid they can invest (in human capital, in infrastructure, in industries), and then they will grow.

Trouble was, we gave the aid and they didn’t grow.

Theory extinct.

Yet here comes Chris Blattman* to exhume it. Except he’s claiming we had the unit of analysis wrong. Don’t give money to countries. Give it to people. And they’ll invest it in training, and businesses, and so develop their countries**. Or, if not, at least develop themselves.

Call this the Little Push.

His evidence looks good. Although, of course, all he’s showing is temporary improvements, not a new trajectory.

My only question would be, how dependent is this result on Uganda (i.e. a country with bad but not terrible institutions and at least some national level economic development taking place)? If you did the same in the PNG highlands what would the impact be? I certainly wouldn’t count on it being positive, but I’m interested enough to want to do the RCT.

*Ok, so this is a simplified narrative (the refund’s yours): the big push never completely died, and others (Sachs, Collier) have exhumed it in interesting ways. And unconditional cash transfers aren’t Chris Blattman’s brainchild.

**Actually Blattman isn’t, in his blog post, making national development claims, he’s just making improved welfare claims, but today is simple narrative day, sorry.



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