Everything is Everything Ep 57: How to Do Development
Jul 26, 2024
The hosts dive deep into the failures of development economics, questioning why India lags behind the US in per capita GDP. They explore the Solow model and how early optimism misjudged development's challenges. Lessons from successful nations like Taiwan and South Korea highlight crucial factors for growth. They discuss the importance of a capable state and high-productivity firms, emphasizing that societal trust and collaboration are key. The conversation critiques misguided approaches and advocates for independent thinking in development policy.
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The Tenfold Gap Is The Core Puzzle
- India’s per capita GDP is about one-tenth of the United States on a PPP basis and that gap is the central question of development economics.
- Closing this 10x gap is the highest-impact task because it would dramatically reduce poverty and expand life choices.
Never Seeing A Highway As A Young Student
- Ajay recalls that when he first left for a PhD he had never seen a highway because India had virtually none then.
- This personal memory illustrates how basic infrastructure scarcity shaped postwar development thinking.
Development Is The Exception, Not The Rule
- Early postwar optimism assumed development was inevitable if you supplied capital and technology, but historically success is rare.
- Only a handful of countries converted poverty into sustained prosperity, so failure is the norm not the exception.
