Easterly on State-Promoted Industrialization

Easterly will be visiting BYU next week. His blog today has implications for the likely effectiveness of the Obama administration's attempt to drive the economy via the government.

http://blogs.nyu.edu/fas/dri/aidwatch/2009/02/asian_success_mythology.html

Highlights:

So my general claim is that heavy reliance on markets is associated with long-run success, using as data the Asian successes, the earlier European and North America/Australia/New Zealand successes, the failure of non-market central planning in the Communist Bloc, and the failures of statist policies in Latin America, the Middle East, and Africa. It is true that Asian successes used state intervention more than the earlier European examples, but on average state intervention does poorly across all countries, so we have no Popper-standard evidence that state intervention contributed to their success. So my claim is based on evidence, not ideology.

So I stand by my claim that the 66-year-old idea of state-promoted industrialization has failed, and that it was irresponsible of Collier and UNIDO to resurrect it as a “major conceptual breakthrough.”