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One Economics, Many Recipes: Globalization, Institutions, and Economic Growth [Paperback]

Dani Rodrik
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Book Description

18 Jan 2009

In One Economics, Many Recipes, leading economist Dani Rodrik argues that neither globalizers nor antiglobalizers have got it right. While economic globalization can be a boon for countries that are trying to dig out of poverty, success usually requires following policies that are tailored to local economic and political realities rather than obeying the dictates of the international globalization establishment. A definitive statement of Rodrik's original and influential perspective on economic growth and globalization, One Economics, Many Recipes shows how successful countries craft their own unique strategies--and what other countries can learn from them.

To most proglobalizers, globalization is a source of economic salvation for developing nations, and to fully benefit from it nations must follow a universal set of rules designed by organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization and enforced by international investors and capital markets. But to most antiglobalizers, such global rules spell nothing but trouble, and the more poor nations shield themselves from them, the better off they are. Rodrik rejects the simplifications of both sides, showing that poor countries get rich not by copying what Washington technocrats preach or what others have done, but by overcoming their own highly specific constraints. And, far from conflicting with economic science, this is exactly what good economics teaches.


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Product details

  • Paperback: 280 pages
  • Publisher: Princeton University Press (18 Jan 2009)
  • Language: English
  • ISBN-10: 0691141177
  • ISBN-13: 978-0691141176
  • Product Dimensions: 22.9 x 15.2 x 2 cm
  • Average Customer Review: 5.0 out of 5 stars  See all reviews (3 customer reviews)
  • Amazon Bestsellers Rank: 249,293 in Books (See Top 100 in Books)
  • See Complete Table of Contents

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Review

"Rodrik packs a great deal into his 260 lucid, cogent pages. Orthodoxies always need serious criticism. Rodrik has supplied it. He has no simple, single recipe for remedying deficient growth--just the eminently sensible advice that there is none--there are many."--Peter Sinclair, Times Higher Education

"Dani Rodrik, a Harvard academic usually associated with the active-government side, has written an intriguing book, One Economics, Many Recipes. He argues that economists who agree who agree in general about where countries should be going can conduct open and honest--and technical rather than ideological--debates about how to get there."--Alan Beattie, Financial Times

"This book is certainly among the best of the many works on development economics recently published. . . . One Economics, Many Recipes is also a model of how applied economics should be done."--John Kay, Prospect

"The Harvard development economist Rodrik here collects a several of his recent papers into a coherent book. . . . In short, [One Economics, Many Recipes] is a critical response to the international 'consensus' approach to economic policymaking, with its implicit assumption that one set of policies is suitable in all, or at least in most, countries. Rodrik has become known for emphasizing the importance of institutions, but he here makes clear that appropriate policies are also important and that effective institutions can take many forms."--Richard Cooper, Foreign Affairs

"Rodrik's book hits many of the right buttons. He has put together a collection of essays of sufficient breadth to engage both the technical observer and the casual reader. His treatment of the subject will come as a bitter pill to both the anti-globalisation movement and the developmentariat, that international coterie of practitioners and commentators working on development issues."--Mario Pisani, New Statesman

"Rodrik is known for rigorous analysis that challenges the conventional wisdom, and this book does not disappoint. Economic growth is a very important goal, Rodrik argues, but the evidence indicates that there is no single recipe for growth."--M. Veseth, Choice

"Rodrik serves as an important, moderating voice in the globalization debate and this book proves no exception."--Sarah Cleeland Knight, Democracy and Society

"In his recent book, One Economics, Many Recipes, Harvard professor of international political economy Dani Rodrik wisely reminds us that there exists no general theory of growth, though he offers pragmatic suggestions in individual cases."--Carl J. Schramm, Claremont Review of Books

"[T]he thoughtful and scholarly elaboration of his pro-industrial policy views in this book should be essential reading for all interested in stimulating growth in these countries."--Robert E. Baldwin, World Trade Review

"Rodrik wins all hearts and minds by a careful consideration of the facts and sheer breadth of coverage. . . . Thus, market mavens, policy pros, global gurus and institutional irredentists can all savor what he says!"--Alice Amsden, EH.net

"Rodrik lays out a broad critique of prevailing approaches to development policy, offers fresh ideas for countries seeking to improve their economic performance, and argues for important reforms in the World Trade Organization (WTO) to make room for those ideas. The book is actually a collection of Rodrik's recent papers on growth, institutions, and globalization, but they constitute a remarkably coherent view of the development problem. . . . The book should have a deep and lasting effect on the way we think about economic development."--Andrés Rodríguez-Clare, Journal of International Economics

"I would highly recommend One Economics, Many Recipes to anyone interested in understanding how economics can help to improve the lives of the poor. Rodrick is innovative, challenging and extremely bright; and he has thought long and hard about this question. In addition to providing a good introduction to his own ideas, Rodrick has filtered, digested and provided his expert summary of the enormous literature on Globalization, Institutions and Economics Growth."--Emma Aisbett, Economic Record

From the Inside Flap

"Dani Rodrik is a leader in applying rigorous economic analysis and informed common sense to the challenges of economic development. His knowledge, his sense of what we do and do not know, his important pointers to humility, pragmatism, and attention to context--all of these qualities permeate these excellent chapters. A book for academics and practitioners alike."--A. Michael Spence, Nobel Laureate in Economics, Stanford University

"Maybe Tolstoy was right about happy and unhappy families, but the same rule of thumb does not apply to developing economies. The success stories are not all alike. There is no practical, universal formula for rapid economic growth. That is Dani Rodrik's central argument, and he develops it forcefully and convincingly with many examples. Best of all, he insists that the need for policies tailored to local circumstances is exactly what basic economic theory suggests. He may not be right about every single thing, but I think he is right about that."--Robert M. Solow, Nobel Laureate in Economics, Massachusetts Institute of Technology

"One Economics, Many Recipes does for economic development what Julia Child did for French cooking. Child taught would-be cooks how to be excellent chefs. Dani Rodrik teaches economists and policy planners how to construct successful, sustainable development programs. He teaches and preaches the subtle correct practice of development economics."--George Akerlof, Nobel Laureate in Economics and Koshland Professor of Economics, University of California, Berkeley

"Dani Rodrik is that rare beast, both fox and hedgehog: a first-rate economist who steeps himself in politics, technology, and history to come up with striking insights and overarching principles for generating economic growth. Scholars and general readers alike will be swept along by the current of Rodrik's good-natured erudition--even those who do not share his faith in neoclassical economics. One Economics, Many Recipes is a landmark in post-Washington Consensus thinking."--Robert H. Wade, London School of Economics and Political Science, author of Governing the Market

"Dani Rodrik's One Economics, Many Recipes is a deep and important book about the relative success of nations. It considers the substance of economic policies over their superficial form. Highly successful countries have leaders who respect economic principles but keenly observe how their country differs from others and are flexible and creative in applying these principles to their own circumstances."--Robert J. Shiller, Yale University, author of Irrational Exuberance and The New Financial Order

"Although there are many articles and books on economic growth, this book is different because it proposes a new perspective that is likely to have a significant influence on academic economists as well as policymakers around the world. Dani Rodrik's new approach respects the fundamental economic principle of the market, but it also allows individual countries to formulate their own growth strategies based on their own local conditions."--Yingyi Qian, University of California, Berkeley

"In this important book, we have an author (Dani Rodrik) whose views are eminently worth hearing and a subject (globalization) in constant need of hearing them. Rodrik has long been a passionate but nuanced thinker on the role of 'economic fundamentals' in shaping growth. He resolutely uses the tools and methods of economics even as he arrives at conclusions that often do not square with what orthodox economics might prescribe or want to hear."--Michael Woolcock, the World Bank

--This text refers to an out of print or unavailable edition of this title.

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3 of 3 people found the following review helpful
Format:Paperback
Dani Rodrik, Professor of International Political Economy at Harvard University, advises developing countries not to rely on financial markets or the international financial institutions. He argues that the principles of property rights, the rule of law, sound money, and honest public finances need to be put into practice, and the conditions for doing so vary from country to country. There is no single, simple recipe for growth.

He proposes six policies to help implement industrial policy: export subsidies, domestic-content requirements, import-export linkages, import quotas, patent and copyright infringements, and directed credit.

He argues against relying on foreign direct investment, writing, "careful studies have found very little systematic evidence of technological and other externalities from foreign direct investment, some even finding negative spillovers. In these circumstances, subsidizing foreign investors is a silly policy, as it transfers income from poor-country taxpayers to the pockets of shareholders in rich countries, with no compensating benefit."

Rodrik says countries cannot have `globalisation', nation-states and democracy all at once, only any two of the three. So if we want a nation-state and democracy, we must limit our participation in the global economy.

If trade liberalisation brought wealth, Haiti would be the richest country in the world. As Rodrik observes, "no country has developed simply by opening itself up to foreign trade and investment." And, "there is no convincing evidence that trade liberalisation is predictably associated with subsequent economic growth. ... integration with the world economy is an outcome, and not a prerequisite, of a successful growth strategy.
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5.0 out of 5 stars Finally some room for diversity 3 Nov 2012
Format:Paperback|Verified Purchase
Excellent book, actively encouraging developing countries find idiosyncratic solutions without abandoning a common framework. Especially encouraging considering Rodrik's previous position within the World Bank, is his brave proposals that developing country reformers be given freedom to pick and choose among policy prescriptions so as to maximise the impact of limited political capital. Highly recommendable, even if a bit technical at times.
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5.0 out of 5 stars Amazing, and surprising all the way 24 Feb 2012
Format:Paperback|Verified Purchase
Usually, economics books are not something I enjoy reading but this one is different. Since it is composed of different articles published in other places it doesn't really start with a big "I'm going to tell you how the world works and why!" but slowly moves into that topic.

The examples on how China's particular policies are going the Washington consensus that a free and open society and economy are amazing and surprising. They are explained clearly and logically despite questioning a lot of what we would call "common sense" but is actually "common believe".

A great book for those who are interested in the development of economies not only in the developing world but also in the developed work. It definitely changed my view on some old hats.
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Amazon.com: 4.7 out of 5 stars  9 reviews
39 of 39 people found the following review helpful
5.0 out of 5 stars a terrific book on globalization and development 7 Aug 2008
By Russell Pittman - Published on Amazon.com
Format:Hardcover
This is a terrific book. It begins with a good and troubling question: If economists are so smart, why have the most prominent success stories in economic development in recent decades been in countries (China, India, South Korea, Taiwan, Singapore) that ignored our advice? Rodrik's answer is that the advice - mainly Washington Consensus and then its follow-ons - was not so much wrong as a) premature and b) insufficiently flexible. His analysis of recent experience suggests that there are many ways to get growth started in a stagnant economy, and that it takes a very specific, informed, and open-minded local analysis - what he terms "growth diagnostics" - to determine what exactly are the binding constraints in each setting. Furthermore, policies that address those constraints must be politically viable, and that may mean tailoring them so that they create better incentives at the margin without destroying or transferring existing rents.

Once economic growth has started, THEN some of the more standard policy prescriptions, introduced carefully and gradually, may be appropriate and even necessary in order to make growth sustainable. Thus, for example, Rodrik argues that both China and India are moving now in more orthodox policy directions, and appropriately so, but that both relied on quite unorthodox measures to make their initial way out of stagnation.

There are many other issues addressed, including the importance of political arrangements that allow local needs and preferences to be expressed and the case for international trade policies that allow for diversity in national institutional arrangements. The book closes with a detailed and (to me) quite persuasive critique of the focus of the WTO on increasing trade for the sake of trade rather than considering more carefully which changes in trade policy actually make a difference in the lives of the world's poor. His analysis of the Doha Round suggests that, contrary to the received wisdom, a general worldwide liberalization of agricultural markets and removal of developed country subsidies would lead to only small reductions in poverty, and in fact would likely harm many poor consumers in many countries.

I recommend this book highly to anyone interested in globalization and development. It is extremely well written, though some sections may be slow going for non-economists. The overall analysis should be quite readable and thought-provoking for the general reader wishing to get a fresh perspective on these important issues.
20 of 20 people found the following review helpful
4.0 out of 5 stars A provocative diagnosis 11 Mar 2009
By Declan Trott - Published on Amazon.com
Format:Hardcover
One Economics, Many Recipes is a collection of nine essays by Dani Rodrik that has something to annoy almost everyone.

The first three essays lay out Rodrik's interpretation of the post-World War 2 growth experience, and the `growth diagnostics' framework that he proposes in response. He argues that development is fundamentally about the introduction of new products and new methods of production. This may fail to happen because the returns to such innovation are too low, or because the cost of finance is too high. Following one path down his decision tree, the returns to innovation may be low because of poor infrastructure, lack of human capital, or unfavourable geography. Or, the returns may be high but not appropriable by the innovator, due to government or market failure. Rodrik argues that each of these potential problems will produce a different set of symptoms if it is really the binding constraint on the economy. A shortage of finance will reveal itself with high interest rates or current account deficits, a shortage of human capital with a high skill premium, and so on.

The rest of the book suggests how reforms might be designed and implemented. Rodrik pays by far the most attention to the `market failure' branch of the tree. His ideal industrial policy is not about `picking winners' or comprehensive planning, but encouraging experiments with new types of economic activity. Many will fail, but even a few successes can amply repay the costs of failure.

This is a self-confessedly modest program. Yet it contradicts everyone currently making a noise on the subject: activists because it does not demonise the IMF, World Bank, and WTO; heterodox economists because it asserts the value of neoclassical theory; neoclassical economists because it advocates industrial policy ; foreign aid advocates because it denies the importance of poverty traps; and pessimists because it offers, if not a one-size-fits-all solution, at least some concrete advice on how to engineer growth.

It is no small achievement to disagree with so many luminaries and still receive back-cover endorsements from three Nobel laureates. He is very convincing arguing against the `laundry lists' of comprehensive reforms that have been advocated by international institutions, whether the first generation of privatisation and liberalisation, or the more ambitious second generation focused on institution building. The case against a generalised poverty trap is equally strong: spurts of growth lasting several years are relatively common, while sustained growth over decades is rare.

This very fact, however, points to a weakness, or gap, in the book. If lighting the fire is relatively easy compared to keeping it going, why spend so much time focusing on ignition techniques? For the long run, Rodrik's only specific advice is to actively diversify the industrial base, and build institutions of conflict management, which he links with democracy. There is a more general recommendation to use the time bought by growth accelerations to gradually implement more ambitious institutional reforms, but this is rather vague. Is this just the standard `laundry list' implemented more slowly? Then what becomes of the `many recipes'? Or is the long run, from a policy point of view, just a series of short runs -- life is one binding constraint after another? In this case, growth diagnostics offers no way to identify and fix constraints before they start to bind, which is what he seems to be recommending. How can you avoid Argentina's long decline, or Japan's stagnation, or the East Asian financial meltdown, except with hindsight?

Short-run success is, of course, not to be disparaged. It would be nice to have a reliable method of making poor countries rich, but failing that (which we have been), significantly raising the number of growth accelerations would be a great start. With this more limited goal in mind, Rodrik's advice seems sensible, although I am sceptical of his emphasis on `cost discovery' as a justification for industry policy. He argues that those entrepreneurs who introduced garment manufacturing to Bangladesh and soccer balls to Pakistan were revealing new information about what was profitable in those countries, which could then be copied by others. This treats manufacturing as some exotic crop that will only grow under particular conditions of soil and climate, as if it was not equally likely that Pakistan would have ended up making shirts and Bangladesh balls. Rodrik's own summary of the evidence concludes that `managerial and labour turnover' is the key mechanism by which innovations spread, which points to a `learning by doing' or `human capital' interpretation. He mentions these only briefly, which is strange, as he has argued elsewhere that the widely accepted economic case for government involvement in education is similar to the case for industry policy. I would go further and say that they are practically identical.

This is, however, splitting hairs. Specifying the exact market failure is far less important than recognising that a particular activity (in this case, innovation) is likely to be undersupplied by profit-seeking enterprise. First-best intervention is usually impractical, if not impossible, so there is no one-to-one mapping from diagnosis to policy. It is a great strength of the book that it does not offer such precise, pre-packaged answers, even in a country-specific form but, rather, hints as to the right questions to ask as part of an open-ended policy-making process.

Original version published in Agenda 15(1), 2008
12 of 12 people found the following review helpful
5.0 out of 5 stars Brilliant study of the policies needed for economic growth 8 Sep 2009
By William Podmore - Published on Amazon.com
Format:Paperback
Dani Rodrik, Professor of International Political Economy at Harvard University, advises developing countries not to rely on financial markets or the international financial institutions. He argues that the principles of property rights, the rule of law, sound money, and honest public finances need to be put into practice, and the conditions for doing so vary from country to country. There is no single, simple recipe for growth.

He proposes six policies to help implement industrial policy: export subsidies, domestic-content requirements, import-export linkages, import quotas, patent and copyright infringements, and directed credit.

He argues against relying on foreign direct investment, writing, "careful studies have found very little systematic evidence of technological and other externalities from foreign direct investment, some even finding negative spillovers. In these circumstances, subsidizing foreign investors is a silly policy, as it transfers income from poor-country taxpayers to the pockets of shareholders in rich countries, with no compensating benefit."

Rodrik says countries cannot have `globalisation', nation-states and democracy all at once, only any two of the three. So if we want a nation-state and democracy, we must limit our participation in the global economy.

If trade liberalisation brought wealth, Haiti would be the richest country in the world. As Rodrik observes, "no country has developed simply by opening itself up to foreign trade and investment." And, "there is no convincing evidence that trade liberalisation is predictably associated with subsequent economic growth. ... integration with the world economy is an outcome, and not a prerequisite, of a successful growth strategy."

All countries have the right to protect their own institutions and development priorities; none has the right to impose its preferences on others. So Rodrik opposes any country's using the World Bank, the IMF and the WTO to enforce its views. He writes, "Trade rules should seek peaceful coexistence among national practices, not harmonisation."
2 of 2 people found the following review helpful
5.0 out of 5 stars 4.5-Develops Adam Smith's model for creating national wealth 6 July 2010
By Michael Emmett Brady - Published on Amazon.com
Format:Paperback
The author has written an excellent series of essays that essentially develop the details of Adam Smith's basic approach to the formation of wealth .The importance of basic institutions,such as the rule of law, an independent judiciary and police,the provision of basic infrastructure provided by a government not subject to bribery and corruption,an educated work force created by the provision of education for free for all those who can't afford it,etc.,is crucial.Economic growth is not possible without these basic prerequisites.
The author's economic solutions are in line with Smith's support for both retaliatory and revenue tariffs.Opening up an economy to foreign imports should be done in very slow gradations to make sure that the underdeveloped countries agricultural and industrial sectors are not crushed by giant multinational corporations attempting to institute trade relations based on absolute advantage, which is what has been going on for the last 30 years, at least as far as the policies of the World Bank,International Monetary Fund,Export -Import Bank amd World Trade Organization are concerned.
One can apply the basic model to Haiti.Economic growth in Haiti is an absolute impossibility as long as the Haitian government is controlled by a totally corrupt and rapacious upper class devoted to using government institutions and power to loot the country.The same holds for the Haitian army ,poloce force,judicial system and judges.All of these institutions would have to be eliminated first before any development plan could have any probability of working.Haiti has been a failed state for the last 60 years.
1 of 1 people found the following review helpful
4.0 out of 5 stars Summarizing the arguments 4 Jun 2010
By D. Watson II - Published on Amazon.com
Format:Paperback
Though it's largely a reprinting of a group of previously published essays that fit well together, One Economics, Many Recipes: Globalization, Institutions, and Economic Growth by Dani Rodrik helped me understand how he would apply his principles of "diagnostic development." The first section (3 chapters) lays out the case that successful countries develop using different strategies that may or may not follow standard prescriptions, with the emphasis on NOT. This sets up the second section (2 lengthy chapters plus a very short summary) on what industrial policy and governance institutions look like in the context of diagnostic development. The final section - a little less-well integrated with the other two - expounds on the lessons of different policies for the case of globalization.

I find myself in large agreement with the overall diagnostic principle, which says that we as economists should identify the most binding constraints on an economy's growth and develop context-appropriate policies to deal with that particular constraint. He argues that one of three basic problems likely to lead to low investment: low social returns, low private appropriability of those returns, or high costs of finance. Each of these might have several causes. You go through the country's (or sector's) statistics to determine where the constraint is likely to be. If interest rates, capital account deficits, and the returns to investment are very high, like Brazil, it's probably the high cost of finance. He narrows it down further to the low availability of domestic savings. In El Salvador, on the other hand, interest rates and returns to human capital are low, taxes and corruption are low, there's macro stability and good property right protection ... leaving by a process of elimination that there is a lack of entrepreneurship and new ideas that is inhibiting growth there.

I'm more reticent to accept his push for industrial policy, however. While he can cite a number of successful cases where direct government support of a sector paid large developmental dividends, it seems as a practice to have as many failures as the Washington Consensus. In part he calls this a virtue: a government that has only successes probably hasn't been doing enough, he claims. I'm less convinced.

Among the things I liked from his discussion were the institutions that need to be in place in order for good outcomes to be more likely: "Effective industrial policy is predicated less on the ability to pick winners than on the ability to cut losses short once mistakes have been made," addressing bureaucratic capacity as a scarce resource (which is just as scarce a resource for employing Wash. Cons. reforms too), and an acknowledgement that this is not a story of "omniscient planners ..., but of an interactive process of strategic cooperation between the private and public sectors that ... elicits information on business opportunities and constraints and ... generates policy initiatives in response." He puts a large premium on transparent, accountable, participatory governance, another point in his favor. Since he argues throughout that higher-level economic principles do not translate obviously one-to-one into particular institutional frameworks -- multiple institutional arrangements can generate substantively similar results -- he focuses on those higher level principles ... and then oddly enough spends a large chunk of the chapter on cross-country large-n regressions, which are nice and supportive but perilous, particularly when he criticizes similar work by other high-caliber economists (Jeff Sachs and Daron Acemoglu and their co-authors, for instance).

His discussion of globalization largely focuses on preserving policy space for countries that want to use industrial policy or other heterodox methods, and the difficulties (he says impossibilities) of simultaneously preserving national sovereignty, mass politics, and global economic integration. There's a brief plug for expanded migration as part of a multilateral framework.

The globalization section shines in discussing the international governance architecture. 1) Instead of trying to maximize trade, put the emphasis back on maximizing economic growth and poverty reduction; 2) Instead of trying to harmonize (i.e. make uniform) trade, finance, etc. policies, the global institutions should preserve nations' policy space while reducing the transaction costs between them.

Things I thought were missing: aid institutions, more discussion of when Washington Consensus reforms are likely to be the binding constraints, doing more to answer why import substitution industrialization largely failed (he just asserts it worked and is done). He lists 83 episodes of sustained growth spurts, and I would have liked more information about more of them, particularly in Africa.

(This review reprinted from [...])
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