The Growth Commission 2006 - 9.
Chaired by Michael Spence 22 policy makers, academics and business leaders reported on economic growth.
Following the 2008 financial crisis and the 'bad press triumphalism' associated with the 'Washington Consensus' the Growth Commission issued a 'Special Report on Post Crisis Growth in Developing Countries'.
'The strategy, as suggested in the original Growth Report, remains broadly valid' - 'high growth can be explained & repeated, it is not an end in itself but it alleviates poverty & drudgery creating resources for health & education. There are distinctive characteristics but no generic formula exists just a framework for long term commitment'.
Globalisation. Open & integrated allows economies
to import know how from the rest of
the world through foreign direct investment AND export their own comparative advantages. Catch up growth is possible from an abundant labour supply from agriculture to cities. The Doha round is substantively & symbolically important.
trade - liberalised - any protection by low and relatively uniform tariffs
foreign direct investment - liberalised technology transfer
Macroeconomic stability. All the action is in the microeconomic undergrowth, where new limbs sprout, and dead wood is cleared; creation and destruction and protection of people who are adversely affected by these dynamics by maintaining price stability and fiscal responsibility.
fiscal policy - discipline
Not debt & inflation.
Saving & Investment. Future rewards are worth the effort, thrift and upheaval. Public spending on infrastructure, education & health should 'crowd in' private investment.
public spending - redirect from subsidies toward provision of key pro-growth, pro-poor services like education, health care and infrastructure investment
tax reform - broad base & moderate marginal rates
Not tax & spend.
Market Incentives. Relying on markets to allocate resources efficiently is necessary there is no known, effective substitute.
interest rates - competitive market determined
exchange rates - competitive market determined
deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds ... and prudent oversight of financial institutions ...
Not moral Hazard.
Institutions of Liberal Democracy and UDHR. Deep institutions are needed which define property rights, enforce contracts, convey prices & bridge informational gaps. Governments should not try to replace markets or close the economy. Patience, a long horizon, and focus on inclusive growth. Rival political parties can agree on a bipartisan growth strategy.
property rights - legally secure
state enterprises - competitively privatised
Not elitist imposition.
back to neo classical economics