Review – The Elusive Quest for Growth

The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics by William Easterly is an honest answer to part of the question, “why hasn’t the world improved like we thought it would?” Easterly conducts a post-mortem conference on western aid programs since the end of World War II, finding that in many cases we should have known better. The incentives created by some nations’ economic environment, or the aid programs themselves led national economies into periods of stagnant or negative growth. Easterly’s mantra is “people respond to incentives.” Ignoring this truth, a central tenet of economics, has led to several irrational choices in the area of development aid, and many failures to achieve our objectives.

Easterly punctuates his book with personal stories of real people, the ones who pay the price for their own leaders’ and our leaders’ mistakes in the quest to move poor nations out of their poverty. The description of the issues of corruption and self-destructive policies and how aid policies unintendedly encouraged that corruption and those bad policies provided a moment of enlightenment. Easterly also addresses issues with education, technology, disasters, and ethnic strife and describes how the incentives provided by aid programs or policies established as pre-conditions for aid can backfire and fail to achieve what at first seems the obviously expected improvement.

While the historical mistakes come in a flood and the success stories are a trickle, Easterly does scatter some throughout to demonstrate his hypothesis. The objective then, is not to give up on the idea of aid programs to move poor nations out of their poverty, but to correct our own policies so that we can achieve the most good and stop throwing good money after bad. We could and should be much more effective with our aid. As demographic forecasts make clear, the future of our world will depend on our choices in that area.

Overall, a valuable and essential piece of information in understanding the state of the world today in regards to differing economic outcomes and how it has come to be that way.