The Elusive Quest for Growth
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| Author | William Easterly |
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| Language | English |
| Subject | Development Economics |
| Publisher | MIT Press |
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Publication date
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July 1, 2001 |
| Pages | 400 |
| ISBN | |
The Elusive Quest For Growth: Economists’ Adventures and Misadventures in the Tropics is a 2001 book by World Bank development economist William Easterly. Upon its release, the book received acclaim from such figures as Bruce Bartlett, Robert Solow, and Paul Romer, and has since become widely cited in the Economic Development literature.
Easterly’s primary thesis is that the numerous efforts to remedy extreme poverty in the Third World have failed because they have neglected that individuals, businesses, governments, and donors respond to incentives. Thus, he argues, the failure of economic development in poor tropical nations is not the failure of economics, but the failure to apply economic principles to practical policy work. Inspired by the moral imperative to improve the lives of the poor, his recommendation is not to abandon the quest, but to improve the institutions of governments and international actors to create incentives that promote growth.
The first section of the book is dedicated to the various Post-WWII efforts to promote economic growth among impoverished tropical nations. Early efforts to promote investment and capital accumulation were based on the Harrod-Domar Model, the Lewis Model, and Rostow's stages of growth, which proposed that GDP growth would always be proportional to the share of investment in GDP, and that capital accumulation was the critical factor for growth. These models justified huge amounts of aid from Western governments and intergovernmental organizations, to fill the “finance gap” between domestic savings and required investment. Easterly, however, demonstrates that most aid did not go into investment in the years 1965-1995, and finds no statistical association between investment and growth. As Robert Solow discovered in the late 1950s, it is not just investment in machines but investment in ever-improving machinery—technological progress—that improves worker productivity in the long-run.
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