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Beating the Odds: Jump-Starting Developing Countries
How poor countries can ignite economic growth without waiting for global action or the creation of ideal local conditions
Countries that ignite a process of rapid economic growth almost always do so while lacking what experts say are the essential preconditions for development, such as good infrastructure and institutions. In Beating the Odds , two of the world's leading development economists begin with this paradox to explain what is wrong with mainstream development thinking―and to offer a practical blueprint for moving poor countries out of the low-income trap regardless of their circumstances.
Countries that ignite a process of rapid economic growth almost always do so while lacking what experts say are the essential preconditions for development, such as good infrastructure and institutions. In Beating the Odds , two of the world's leading development economists begin with this paradox to explain what is wrong with mainstream development thinking―and to offer a practical blueprint for moving poor countries out of the low-income trap regardless of their circumstances.
384 pages, Paperback
First published May 15, 2017
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About the author
Justin Yifu Lin
52 books35 followersJustin Yifu Lin is a Chinese economist and former Chief Economist and Senior Vice President of the World Bank.
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Displaying 1 - 3 of 3 reviews
June 15, 2021
Let me begin with the disclaimer that I'm not an economist, although I've taken some modules on various econ topics at university and have recently been reading around the topic of development economics.
With that out of the way, this is my first reading on the topic of New Structural Economics as promoted by Justin Yifu Lin and Celestin Monga, two economists who may not be household names but who certainly have impeccable pedigrees, with Lin being a former Chief Economist at the World Bank and Monga being a former Chief Economist at the African Development Bank.
What baffles me is that despite the authors' experience and credentials plus endorsements by three Nobel Laureates in Economics, on the back of my edition of this book, I could hardly find any discussion of this book beyond a few initial reviews when it first came out. There are also currently hardly any reviews of the book on Amazon or Goodreads, which compelled me to write this review.
Perhaps this might be because of the authors' criticism of the failings of the World Bank and the IMF and development economics in general. But that can't be the case because the books of another strident critic, William Easterly has received plenty of reviews. Plus, post-Covid the conversation around the failings of multilateral organisations is only getting louder.
Another possibility might be that the ideas of New Structural Economics lend support to China's growth story in the past decades and why the Chinese government has been successful despite "western" criticisms of its flaws. I hope someone who knows more about New Structural Economics can set me straight.
In this book, Lin and Monga provide historical context and evidence why past economic development paradigms have not seen much success. Starting with the early "Structuralists" post-World War II who promoted inward-looking import substitution strategies, and moving on to the Washington Consensus policies imposed on the developing world that led to "lost decades" in the 1980s and 1990s, to the recent "Small Development" randomised controlled trials (RCTs) most famously promoted by Banerjee and Duflo that are in vogue today.
The authors argue that while the Washington Consensus in and of itself is an excellent vision and is reasonable, it is not realistic for countries in lower stages of development and with different factor endowment structures, comparative advantages, and sociopolitical circumstances to be expected to transform overnight, what other successful countries have taken decades to achieve. Among the many examples, the authors single out the World Bank's "Doing Business" indicators and remark that countries as diverse as China, Vietnam, Bosnia, Liberia, and Qatar that have achieved high growth all score poorly in the Doing Business ranking.
Furthermore, "motherhood and apple pie" aspirations of fiscal discipline, reordering public expenditure priorities, tax reform, liberalising interest rates, setting competitive exchange rates, liberalising trade, liberalising inward foreign direct investment, privatisation, deregulation, and strengthening property rights are a long list of recommendations that "in addition to being a tall order... is likely to be open ended, infinite, and unrealistic. Imagine if you were a politician, you wouldn't know where to start in order to credibly achieve these goals, much less with elections round the corner and a whole range of stakeholders who would not be pleased if you were to rock the boat.
Instead the authors' propose a practical solution in just six steps! The growth identification and facilitation framework (GIFF) which entails:
1. Identifying sectors with latent comparative advantages
2. Removing constraints for existing firms
3. Seek foreign direct investment or facilitate new firm incubation programs
4. Scale up self-discovery by private firms
5. Transform "special economic zones" (SEZs) and "export processing zones" (EPZs)
6. Provide limited subsidies to compensate for externalities
This book is highly recommended for those interested in the topic and suitable for the general reader though parts of it are repetitive (there are bits of math which can also be skipped without detracting from the authors' arguments). There is also plenty of data and examples. While many of the examples given were in the African context which was new to me and therefore enlightening, there are many other global examples. Indeed, the success of Penang, Malaysia in developing an electrical-electronic cluster is mentioned by the authors and one which I'm fairly familiar with as it is in my hometown.
With that out of the way, this is my first reading on the topic of New Structural Economics as promoted by Justin Yifu Lin and Celestin Monga, two economists who may not be household names but who certainly have impeccable pedigrees, with Lin being a former Chief Economist at the World Bank and Monga being a former Chief Economist at the African Development Bank.
What baffles me is that despite the authors' experience and credentials plus endorsements by three Nobel Laureates in Economics, on the back of my edition of this book, I could hardly find any discussion of this book beyond a few initial reviews when it first came out. There are also currently hardly any reviews of the book on Amazon or Goodreads, which compelled me to write this review.
Perhaps this might be because of the authors' criticism of the failings of the World Bank and the IMF and development economics in general. But that can't be the case because the books of another strident critic, William Easterly has received plenty of reviews. Plus, post-Covid the conversation around the failings of multilateral organisations is only getting louder.
Another possibility might be that the ideas of New Structural Economics lend support to China's growth story in the past decades and why the Chinese government has been successful despite "western" criticisms of its flaws. I hope someone who knows more about New Structural Economics can set me straight.
In this book, Lin and Monga provide historical context and evidence why past economic development paradigms have not seen much success. Starting with the early "Structuralists" post-World War II who promoted inward-looking import substitution strategies, and moving on to the Washington Consensus policies imposed on the developing world that led to "lost decades" in the 1980s and 1990s, to the recent "Small Development" randomised controlled trials (RCTs) most famously promoted by Banerjee and Duflo that are in vogue today.
The authors argue that while the Washington Consensus in and of itself is an excellent vision and is reasonable, it is not realistic for countries in lower stages of development and with different factor endowment structures, comparative advantages, and sociopolitical circumstances to be expected to transform overnight, what other successful countries have taken decades to achieve. Among the many examples, the authors single out the World Bank's "Doing Business" indicators and remark that countries as diverse as China, Vietnam, Bosnia, Liberia, and Qatar that have achieved high growth all score poorly in the Doing Business ranking.
Furthermore, "motherhood and apple pie" aspirations of fiscal discipline, reordering public expenditure priorities, tax reform, liberalising interest rates, setting competitive exchange rates, liberalising trade, liberalising inward foreign direct investment, privatisation, deregulation, and strengthening property rights are a long list of recommendations that "in addition to being a tall order... is likely to be open ended, infinite, and unrealistic. Imagine if you were a politician, you wouldn't know where to start in order to credibly achieve these goals, much less with elections round the corner and a whole range of stakeholders who would not be pleased if you were to rock the boat.
Instead the authors' propose a practical solution in just six steps! The growth identification and facilitation framework (GIFF) which entails:
1. Identifying sectors with latent comparative advantages
2. Removing constraints for existing firms
3. Seek foreign direct investment or facilitate new firm incubation programs
4. Scale up self-discovery by private firms
5. Transform "special economic zones" (SEZs) and "export processing zones" (EPZs)
6. Provide limited subsidies to compensate for externalities
This book is highly recommended for those interested in the topic and suitable for the general reader though parts of it are repetitive (there are bits of math which can also be skipped without detracting from the authors' arguments). There is also plenty of data and examples. While many of the examples given were in the African context which was new to me and therefore enlightening, there are many other global examples. Indeed, the success of Penang, Malaysia in developing an electrical-electronic cluster is mentioned by the authors and one which I'm fairly familiar with as it is in my hometown.
December 24, 2017
A powerful and thought compelling look at development theory as well as an extraordinarily practical guide to specific ways in which developing countries can move to prosperity and reduce poverty. Lin's work is a necessary corrective to the "Doing Business" theology that dominates current thinking and that requires a long list of necessary preconditions for sustainable growth. What I particularly appreciated was the emphasis on the political perils of attempting reform without anything to show for it and the need for quick wins.
December 29, 2023
Really good read for diving into the details of economic diversification that works, and pitfalls to avoid
Displaying 1 - 3 of 3 reviews