Proponents and critics alike agree that the policies spawned by the Washington Consensus have not produced the desired results. The debate now is not over whether the Washington Consensus is dead or alive, but over what will replace it. An important marker in this intellectual terrain is the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform (2005). With its emphasis on humility, policy diversity, selective and modest reforms, and experimentation, this is a rather extraordinary document demonstrating the extent to which the thinking of the development policy community has been transformed over the years. But there are other competing perspectives as well. One (trumpeted elsewhere in Washington) puts faith on extensive institutional reform, and another (exemplified by the U.N. Millennium Report) puts faith on foreign aid. Sorting intelligently among these diverse perspectives requires an explicitly diagnostic approach that recognizes that the binding constraints on growth differ from setting to setting.

Unlike economies as a whole, manufacturing industries exhibit strong unconditional convergence in labor productivity. The article documents this at various levels of disaggregation for a large sample covering more than 100 countries over recent decades. The result is highly robust to changes in the sample and specification. The coefficient of unconditional convergence is estimated quite precisely and is large, at between 2–3% in most specifications and 2.9% a year in the baseline specification covering 118 countries. The article also finds substantial sigma convergence at the two-digit level for a smaller sample of countries. Despite strong convergence within manufacturing, aggregate convergence fails due to the small share of manufacturing employment in low-income countries and the slow pace of industrialization. Because of data coverage, these findings should be as viewed as applying to the organized, formal parts of manufacturing.

Journal Article Policy Targeting with Endogenous Distortions: Theory of Optimum Subsidy Revisited Get access Dani Rodrik Dani Rodrik Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 102, Issue 4, November 1987, Pages 903–911, https://doi.org/10.2307/1884288 Published: 01 November 1987

This paper analyzes the resource-allocation and welfare effects of export-performance requirements imposed on foreign investors. It argues that a satisfactory analysis must consider the presence of tariff distortions and oligopolistic behavior in host-country markets. These create a second-best environment in which an evaluation of the welfare effects of such requirements is no longer straightforward. It is concluded that export requirements can improve home welfare by reducing payments to foreign capital, reducing the output of commodities which are being overproduced, and shifting profits toward domestically owned firms.

This paper examines short-term volatility in the real effective exchange rates of industrial countries and its impact on their imports. It yields three conclusions. First, volatility has not diminished as markets have gained experience with floating exchange rates; the trend appears to be in the opposite direction for some countries. Second, exposure to short-term volatility has differed among countries; Japan and Sweden have experienced much more than most other industrial countries. Third, volatility appears to depress the volume of international trade. This third finding is consistent with results reported by Cushman and by Akhtar and Hilton and challenges earlier findings by Hooper and Kohlhagen.

In Search of the Holy Grail: Policy Convergence, Experimentation, and Economic Performance by Sharun W. Mukand and Dani Rodrik. Published in volume 95, issue 1, pages 374-383 of American Economic Review, March 2005