The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics

Customer Reviews

William Easterly is a Senior Advisor in the Development Research Group of the World Bank. In his first book, he asks why trillion dollars of foreign aid to the countries of the "third world" since WWII have caused essentially no improvement in the quality of life for the people in these countries. I found the writing lucid and the many real stories of poverty and corruption both emotionally powerful and insightful.

Emphasizing a key mantra of economics -- people respond to incentives -- he details the long list of foreign aid tactics that have failed: capital investment (machines, factories, roads), education, birth control, loans, and loan forgiveness. Not that any of the tactics are bad, but rather they are ineffectual in a country lacking key social, political, and economic infrastructure.

Easterly then describes in detail the factors at play in driving growth: increasing returns (Leaks, Matches, Traps), creative destruction through technology, luck, governments kill growth, government corruption, and class and race conflicts.

Easterly shows that achieving economic growth is very difficult, but he does a great job of identifying the key systemic issues that poor countries must address.

Perhaps surprisingly, Easterly's model applies equally well to the economic disparities that exist within countries, even "rich" countries like the United States. The increasing returns model says that highly-skilled people will prefer to live and work with one another ("Matches"), as each of them will be more productive for being around other highly-skilled individuals. So this explains, for example, why areas like Silicon Valley, having once achieved critical mass, continue to grow. And why low-income inner-city and rural areas remain depressed ("Traps").

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