Gambling on Development: Why Some Countries Win and Others Lose

                    This post is a summary of three reviews of the book with the title above,  published in 2022. The first summary was published at https://blogs.lse.ac.uk/lsereviewofbooks/2022/09/14/book-review-gambling-on-development-why-some-countries-win-and-others-lose-by-stefan-dercon/. The second was published at https://www.hurstpublishers.com/book/gambling-on-development/. The third was published at https://www.ft.com/content/e1f203a4-2b6a-4fe3-b29b-5517d1207696

                     Stefan Dercon is a former chief economist at the U.K. department for international development, a professor at Oxford and , until recently, a policy adviser to the U.K. Foreign Secretary. I started off predisposed to scepticism, but ended up being 80% won over. Why sceptical? Because I have read too many books where economists say 'wow, I've just discovered this thing called politics, let me explain it tot you.' But Dercon goes well beyond econo-splaining, making a good effort to bring together economics and politics into a coherent whole. Happily, most of the book is not about aid, but a discussion of the nature of the 'elite bargain' in the countries Dercon knows best, and why/how some elite bargains evolve into 'development bargains' that lead to economic and developmental take-off. For Dercon, this is about how the big men divide up power and the spoils of rule, and how they move to a more long-term vision, submitting to institutions, the rule of law and the needs of the wider economy rather than just grabbing what they can and heading for the nearest airport. His big idea, is important: 'A development bargain is a specific form of elite bargain, one of many possible ones. It is an agreement among those with power that growth and development should be pursued, even if they disagree over policy details. Countries with a development bargain tend to have three features in common: 1) the politics of the bargain are real and credible.  2) the capabilities of the state are used to achieve the goals, but importantly, the state avoids doing more than it can handle.  3) the state possesses a political and technical ability to learn from mistakes and correct course.' But (isn't there always?) two things grated. Firstly, the elitism. The people in all these countries rarely make an appearance, except as grateful recipients of the development bargain or (very occasionally) holding decision makers to account. Second, while Dercon does his best to say that elites have agency, that not everything is pre-determined by history and structure, he struggles to explain how such agency arises. Fair enough: evryone struggles to find ways to help communities in countries with predatory states. But I feel that Dercon's focus on state elites perhaps bilnds him to some alternatives approaches that are worth trying.                                                                                         In the last thirty years, the developing world has undergone tremendous change. Overall, poverty has fallen, people live longer and healthier lives, and economies have been transformed. And yet many countries have simply missed the boat. Why have some countries prospered, while others have failed? Stefan Dercon argues that the answer lies not in a specific set of policies, but rather in a key development bargain, whereby a country's political elites shift from protecting their own position to gambling on a growth-based future. Despite the imperfections of such bargains, China is among the most striking recent success stories. Gambling on Development is about these winning efforts, in contrast to countries stuck in elite bargains leading to nowhere. Building on three decades's experience across forty-odd countries, Dercon winds his narrative through Ebola in Sierra Leone, scandals in Malawi, mobile phone licences in Mozambique, and relief programmes behind enemy lines in South Sudan. 'Dercon's message is sobering: there is no silver bullet for development. But any success must rest on the foundation of a bargain among the political elite, who commit to developmentand are willing to learn. This should and will be a classic in international development." said Yuen Yuen Ang, author of How China Escaped the Poverty Trap and China's Gilded Age. The most important book on international development in a decade. An intensely political story of economic development, one that could only be written by someone with Dercon's mix of scholarship and statemanship. 'Why is there persistent divergence in development outcomes around the world? The focus has been on policies, but this insightful book proposes we focus instead on implicit bargains among political and entrepreneurial elites. Superbly incisive, engaging and timely," said Leonard Wantchekon, Professor of Politics and International Affairs at Princeton University.                                                                                                                                                                                      A sustained period of growth does not guarantee long-term success, as recent conflict in Ethiopia demonstrates. Nor, as China shows, does attainment of a certain standard of living necessary lead to liberal democracy. But fast growth, reasonably equitably shared, remains a prerequisite for a better life. Why do some countries remain poor while others stumble on a path to growth and development? This has been the subject of much academic study and many popular books. Jeffrey Sachs' The End of Poverty emphasises the role of aid to deliver a "big push", while Why Nations Fail by Acemoglu and James Robinson see a country's institutions as a critical determinant of success or failure. Stefan Dercon, a economist at Oxford university and an international development practitioner, is the latest to try to crack the mystery. The result is the book, Gambling on Development, both scholarly and grounded in experience. It may come as close as any to answering this critical question. Its thesis is brutally simple. "The defining feature of a development bargain is a commitment by those with the power to shape politics, the economy and society, to striving for growth and development," writes Dercon. Growth happens, in other words, when elites try to bring it about. To do so, they must gamble on increasing the size of the economy pie rather than carving up the one that already exists. The idea of an "elite bargain" may seem obvious. It is not. Dercon's insight came after meeting in 2013 when he was chief economist of the U.K.'s now defunct Department for International Development, first with officials from the D.R.Congo and then with those from Ethiopia. He came away thinking that, for all their fine words, D.R.C. officials were not serious about development, whereas those from Ethiopia, though they spoke in more unorthodox terms, meant what they said. The facts bore this out. In the 15 years to 2019, resource-poor Ethiopia grew on average at 7% annually per capita, three times faster than the D.R.C. In DRC, it suited a small elite to capture the nation's mining resources and sell them off to foreign conglomerates, leaving most Congolese to fend for themselves. Too many countries, in Africa and elsewhere, fall into this category. Some successful governments may marshal domestic savings, others foreign investment. Some prioritise exports and spending on schools and hospitals. Dercon quotes a study by Michael Spence, a Nobel laureate in economics, who concluded that there was no recipe for development, even if we know some of the ingredients. Dercon's theory offers escape from determinism. History counts. But history and circumstance can be overcome. Bangladesh has overcome a war of independence, political assassinations and widespread poverty to attain more than 20 years of growth. There are gaps in Dercon's argument. Elites do wield outsized power, especially in the absence of democratic accountability, but there is little room in the book for ordinary people's influence over events, if only through the actions of civil society. Nor, for many readers' taste, will there be sufficient acknowledgment of a colonial history that left countries, particularly in Africa, ransacked, traumatised and dismembered. Yet it is precisely the simplicity of Gambling on Development that is its strength. Dercon's message is ultimately an empowering one. "Magic and miracles happen," he writes. But those in charge have got to want it.