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Doing growth diagnostics well The language of "growth diagnostics" and of "removing binding constraints" is becoming so commonplace in multilateral agencies and donor organizations these days that I sometimes wonder whether we have not unleashed something out to the real world before its time.
The trouble is that what I see being implemented in practice is often the rhetoric and not the substance. That is because the framework cannot be applied mechanically and requires an inquisitive, detective's mind set. You need to use economic theory and evidence judiciously to look for a series of clues that will identify the most likely suspect. So while the approach comes with a decision tree (reproduced below), which probably accounts for its good reception in policy circles, it is different from just checking a series of boxes which is what is often done. There is an element of craft in doing the diagnostics right, but it is a craft solidly based on economic science. That the framework has to be applied with care and in an economically sophisticated way rather than mechanically is also the main message I take from some of the critiques that have begun to appear (see for instance the papers by Dixit and by Aghion and Durlauf). The framework does not economize on inputs (the thoughtfulness required to reach decisions), only on outputs (the list of things that we recommend governments should do to get growth going). Encouragingly, there are some quite good exercises along these lines, showing how the framework can be used to good effect and to shed light on the requisite policy agenda. See for example the studies on Egypt by Klaus Enders, Bolivia by Sara Calvo, and Mongolia by Elena Ianchovichina and Sudarshan Gooptu. I know from my own experience that there is still a lot that we need to learn about how to do this right. To those who say that the framework is difficult to implement in practice, my answer is "right, it is indeed hard to determine policy priorities, but louis vuitton iphone 4 case amazon this approach at least forces you to confront those difficulties in a systematic way." Why is everyone just montblanc watches willing to accept power cuts? 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