Book Review: Beating The Odds; Jump-Starting Developing Countries

A Way Forward

This is the first of three 'summer reading' books to be reviewed.

This Spring, my brother noticed a book being advertised in the NY Review of Books: "Beating The Odds; Jump-Starting Developing Countries", by Justin Yifu Lin and Célestin Monga.  My brother, my cousin and I had been talking about an essay I was writing on the subject of under-developed economies, and my brother, thinking I might be interested, tipped me off.

"Beating The Odds” did just that, as I am rarely enthused enough to write about my reading.  But, the book had just enough skepticism of developmental economics, yet seemed solidly fact-based, with rigorous back-up for its take on why, for example, China is now an economic superpower, while there are countries in Africa, and elsewhere, that not only haven’t developed like China has, but in the 1960s had larger GDPs than did China.

And what is that secret sauce that seems to have done the trick for China, Korea, Singapore, and more recently, India, Indonesia and Brazil?  The authors first address the mistaken paths that have hobbled unsuccessful efforts.  For example, focusing on what are perceived to be ‘prerequisites’ to growth like education, infrastructure, the rule of law, and the other achievements found in our more modern economies.  In country after country, scarce money was mistakenly poured into roads, new capitals, state-of-the-art factories, and other ‘white elephants’ that quickly crumbled with little to show.

What described successful efforts, instead, were careful deliberations to find a few industries that naturally fit the abilities and advantages of a given country.  These were then encouraged by the central government using Special Economic Zones that essentially made doing business easier, by cutting red tape.  These assisted businesses consciously targeted their counterparts in countries with GDPs that were roughly 100-300% higher.  In essence, they laid out a relocation welcome mat that featured cheaper labor and other ‘hard to say no to’ factors.   

In just a few sentences, that’s the secret: follow in the footsteps of economies with roughly 100-300% larger GDPs (economies that were at a roughly equivalent level of development 20 or so years ago), and keep moving up the global supply chain.  In just two words, the secret is: global trade.

So, do I have objections to anything in the book?    I’m obviously not an economist, and though I’ve read The Economist magazine off and on since my college years, and have read Paul Krugman’s blog and tweets for ten years (effectively, an Econ. 101 course), it’s hard to get very excited about industrial plants churning out mass-produced products with cheap labor, no matter one's credentials.  But, the authors are probably right, for the most part; and hard work is rarely glamorous.  I can remember, when a child, seeing ‘Made in Japan’ on most cheap toys, just as now tags read ‘China’ instead.  Soon, perhaps, tags will read “Pakistan” or “Ethiopia”.  If this is how wealth spreads, so be it.  It’s hard to find fault with success, unless your job is threatened, obviously.

A seed of doubt: the authors make a categorical claim that agriculture in developing countries must be made more productive through mechanization, consolidation of small holdings, and the implementation of conventional agriculture (the use of artificial fertilizers, for example).  But the fact that this is the way it's always been done shouldn’t be proof that it's the best way.  A skilled farmer, on just a few acres, can grow enough to feed a small village.  This, of course, assumes access to markets, and most importantly, the necessary skills to enrich and cultivate the soil, while spreading the wealth.  Given several skilled farmers, each producing enough for several dozen, you have a surplus, and income to grow on, with the village gradually enriching itself.  So, it would seem almost certainly possible for development to occur more organically; and, in parts of the world leap-frogging landlines, electric grids and classroom education, one wonders if there might be an unexplored path here that maintains the sense of place that can be lost when populations move to the nearest big city to find work.  

As a practical matter, however, Beating The Odds lays out how a people can focus on their inherent advantages (climate, skills, cheap labor, land, etc.), and fashion a likely way forward, building on their initial successes by taking steps up the global trade ladder.  More power to them.

(A review from an actual economist)