Video: Ideas@IDRC: Shantayanan Devarajan
Dr. Devarajan outlines government vs market failure in the context of development. Produced during the Development Ideas authors’ workshop, Ottawa 2011. ©IDRC/CRDI (French transcript)

— Abstract

The evolution of development economics thinking after World War II has shifted between addressing market failures and government failures. Going from statist “big push”, through market-oriented “Washington Consensus”, to a more balanced approach that includes the state, market and civil society. These swings are the result of political forces and institutional incentives more than technical responses to real-world problems. Future development thinking discussions will go beyond the “market-versus-state” dichotomy to include: sub-national pockets of poverty and global public goods. Development economics thinking proceeds in evolutionary rather than revolutionary steps, with each shift building on the experience of the previous phase.

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— Suggested Readings

Commission on Growth and Development (2008). The Growth Report: Strategies for Sustained Growth and Inclusive Development. World Bank, Washington, DC.

Devarajan, Shantayanan, David. R. Dollar, and Torgny. Holmgren (eds.) (2001). Aid and Reform in Africa. Washington, DC: World Bank.

Gilpin, R., & Gilpin, J. M. (2000). The challenge of global capitalism: The world economy in the 21st century (Vol. 5). Princeton, NJ: Princeton University Press.

Kanbur, Ravi. (2001). “Economic Policy, Distribution and Poverty: The Nature of Disagreements,” World Development, 29(6): 1083–94.

Reyes, Celia, Evan Due and International Development Research Centre (Canada). (2009). Fighting poverty with facts: Community-based monitoring systems. Ottawa: International Development Research Centre.

Reyes, C., Due, E., & International Development Research Centre (Canada). (2009). Les faits, une arme contre la pauvreté: Systèmes de suivi communautaire de la pauvreté. Ottawa : Centre de recherches pour le développement international.

Rodrik, Dani. (2011). The Globalization Paradox: Democracy and the Future of the World Economy. New York: W. W. Norton.

Williamson, John. (1990). “What Washington Means by Policy Reform,” in J. Williamson (ed.), Latin American Adjustment: How Much Has Happened? Washington: Institute for International Economics.