Honorary doctorate from International Institute of Social Studies for Dani Rodrik (8 November 2019)

Honorary doctorate from International Institute of Social Studies for Dani Rodrik (8 November 2019)

Dani Rodrik is to be awarded an honorary doctorate by the Erasmus University Rotterdam on 8th November 2019. He was nominated for this honour by Mansoob Murshed and Peter van Bergeijk of ISS.

Not only is he a development economist par excellence, but his work, convictions and attitudes are highly in tune with the heterodox school of Development Economics. He combines his convictions and outlook with an empirical rigour in the tradition of the quantitative skills propounded by the late Jan Tinbergen in the realm of econometric investigation. In this regard, it has to be emphasised that sound econometric investigation goes well beyond correlation, and investigates empirical causality and other inferences permitting the falsification of theories.

First, and foremost, he was in the vanguard of the critique against the ‘Washington Consensus’[1], which was the precursor of what is now called neo-liberalism. His scepticism centres around the one size fits all simplistic prescriptions of the precursor of the Washington Consensus, which was known as ‘monetarism’ at the time of the advent of Margaret Thatcher and Ronald Reagan in the early 1980s. Today we can conveniently label this ideology as market fundamentalism.[2]

Secondly, there his is contribution to the policy assignment problem, for which Tinbergen is so rightly revered. There was a discussion, in the 1970s, followed by an assertion a decade or so later that more outwardly oriented economies (nowadays we would call them more globalised countries; until the end of the cold war not all nations were equally globalised) made more economic progress in terms of growth. In short, it was alleged that the so called East Asian tigers graduated into becoming developed countries because they pursued more open trade policies. This assertion, of course, masked a great deal of complexity as any good anthropologist would point out, but the economists like Dani Rodrik were not inhibited from empirically demonstrating the complexity.[3] Thus, trade policy or openness may be a blunt instrument to meet economic growth targets, which begs the question as to what is the appropriate instrument (in this case there may be a plethora of instruments in contrast to Tinbergen’s concern about the paucity of available instruments).

Rodrik[4] comes up with the view that there has to be a balance between institutional fundamentalism (an ideology that is committed to the belief that good ‘institutions’ promote growth in the long-run in the best tradition of Calvinistic pre-destination), and big-push fundamentalism that asserts that more investment (more ‘money’ or development assistance to poor countries) is what is needed by the alchemist desiring to turn base metal into gold. In Rodrik’s view the policy maker must refrain from making too many offerings at either altar, but instead concentrate on easing the constraints to growth (factors that inhibit investment confidence), as well as making steady but incremental institutional improvements.

Then there is Rodrik’s work on the salience of social protection to cushion economies and the humans that make-up this construct from the vagaries of globalisation and external shocks that can pauperize and immiserize the less fortunate in society.[5] He did this well before the current fashion of pointing out the need for social protection and inequality reducing policies.  Also, the fact that his work presaged the conflict econometricians that internal conflict or the absence of ‘cohesion’ (either in the form of war or other cleavages) retards growth.[6]

Last, but not the least, is his outstanding empirical analysis of Premature De-Industrialisation[7] in developing countries. Several developing countries may be missing out on the benefits of industrialisation by never or only ephemerally experiencing it. Manufacturing is a way of absorbing surplus labour, a source of dynamic technical progress, it gave rise to democracy and the welfare state committed to redistribution and social protection through the struggle of organised labour, and above all promotes secure (as opposed to precarious) employment.

 

 

[1] This term was coined by John Williamson in the light of the close physical proximity of the postal addresses of the White House, the US Treasury Department, the Federal Reserve Board and the Bretton Woods IGOs: the IMF and the World Bank. See Rodrik, Dani (1997). Has Globalization Gone Too Far?. Institute for International Economics. ISBN 0-88132-241-5.

[2] A creed which can be traced back to Friedman, Milton (1968), ‘The Role of Monetary Policy’, American Economic Review, 58 (1): 1-17.

[4] Rodrik, Dani. 2006. “Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank’s Economic Growth in the 1990s: Learning from a Decade of Reform.” Journal of Economic Literature, 44(4): 973-987.

[5] Rodrik, D (1998). Why Do More Open Economies Have Bigger Governments?, Journal of Political Economy, 106 (5): 997-1032.

[6] Rodrik, D (1999) Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses, Journal of Economic Growth, 4(4): 385-412.

[7] Rodrik, Dani (2016) Premature Deindustrialisation, Journal of Economic Growth, 21(1): 1-33.