A sneak peak at the Growth Commission's report

I just attended a pre-launch presentation by Michael Spence summarising the findings of the independent Commission on Growth and Development, which will be available from noon tomorrow at growthcommission.org.

Much of the report will be familiar to those who follow international development closely and have tracked trends in scholarly opinion in recent years, so I’ll only comment on a few highlights. Most importantly, the Commission concludes that we do not know the necessary and sufficient conditions for growth, and its aim is to launch a discussion with its report, not reach a conclusion. Nonetheless, it takes positions on a number of issues, ranging from coping with climate change to openness to international trade.

The Commissions considered the thirteen economies that experienced seven percent growth for more than twenty-five years since World War II. Since such high growth rates are not possible absent engagement with the global economy, globalisation plays a major role in the report — perhaps too much, according to some.

Also of interest is that international economics is one of the most controversial areas of the report. The Commission, aiming to help policymakers rather than only making remarks on settled matters, included discussion of topics on which the Commissioners themselves disagreed. Fiscal stability and solvency rules and central bank independence and policy were difficult areas. Outside those two, all the other controversies listed by Spence were related to international economics: capital controls, capital and current account liberalisation, exchange rate measures, and industrial policy for export promotion. Plenty of research left to do in this field!

Finally, Spence noted that the Commission will endorse Paul Collier’s call for trade preferences favouring Africa over Asia (1,2,3,4) on a ten year time horizon. According to Spence, now is the time that Africa desperately needs preferences and the cost of failure is zero. I think that this policy prescription is based on a small number of papers (such as Collier and Tony Venables in the World Economy) that haven’t been critically scrutinised. I’d like to see more research on this one.

The report, a product of about two years of work, is one hundred pages long and highly readable, according to those who have already seen it. I expect it will be much-discussed in the coming months.