Balance of Trade
Balance of Trade. Harvard Kennedy School Magazine [Internet]. 2017. Publisher's Version

Winter 2017

Is Global Equality the Enemy of National Equality?. 2017.Abstract

The bulk of global inequality is accounted for by income differences across countries rather than within countries. Expanding trade with China has aggravated inequality in some advanced economies, while ameliorating global inequality. But the “China shock” is receding and other low-income countries are unlikely to replicate China’s export-oriented industrialization experience. Relaxing restrictions on cross-border labor mobility might have an even stronger positive effect on global inequality. However it also raises a similar tension. While there would likely be adverse effects on low-skill workers in the advanced economies, international labor mobility has some advantages compared to further liberalizing international trade in goods. I argue that none of the contending perspectives -- national-egalitarian, cosmopolitan, utilitarian -- provides on its own an adequate frame for evaluating the consequences.


January 2017

Rodrik D, Diao X, McMillan M. The Recent Growth Boom in Developing Economies: A Structural-Change Perspective. 2017.Abstract

Growth has accelerated in a wide range of developing countries over the last couple of decades, resulting in an extraordinary period of convergence with the advanced economies. We analyze this experience from the lens of structural change – the reallocation of labor from low- to high-productivity sectors. Patterns of structural change differ greatly in the recent growth experience. In contrast to the East Asian experience, none of the recent growth accelerations in Latin America, Africa, or South Asia was driven by rapid industrialization. Beyond that, we document that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. The African experience is particularly intriguing, as growth-enhancing structural change appears to have come typically at the expense of declining labor productivity growth in the more modern sectors of the economy. We explain this anomaly by arguing that the forces that promoted structural change in Africa originated on the demand side, through either external transfers or increase in agricultural incomes. In contrast to Asia, structural change was the result of increased demand for goods and services produced in the modern sectors of the economy rather than productivity improvements in these sectors.


January 2017

Put Globalization to Work for Democracies
Put Globalization to Work for Democracies. The New York Times [Internet]. 2016. Publisher's Version

September 17, 2016

Dani Rodrik and Mr. Trump
Dani Rodrik and Mr. Trump. Economic Principals [Internet]. 2016. Full Article

July 24, 2016

Rodrik D, Mukand S. The Political Economy of Liberal Democracy. 2016.Abstract

We distinguish between three sets of rights – property rights, political rights, and civil rights – and provide a taxonomy of political regimes. The distinctive nature of liberal democracy is that it protects civil rights (equality before the law for minorities) in addition to the other two. When democratic transitions are the product of a settlement between the elite (who care mostly about property rights) and the majority (who care mostly about political rights), they generically fail to produce liberal democracy. This is because the minority has neither the resources nor the numbers to make a contribution to the settlement. We develop a formal model to sharpen the contrast between electoral and liberal democracies and highlight circumstances under which liberal democracy can emerge. We show that liberal democracy requires quite special circumstance: mild levels of income inequality as well as weak identity cleavages.  We also provide a new classification of countries as electoral or liberal democracies.


Revised, June 2016

Rebel with a Cause
Rebel with a Cause. Finance & Development, IMF [Internet]. 2016. Publisher's Version PDF
Will the World Economy Ever Boom Again?
Will the World Economy Ever Boom Again?. [Internet]. 2016. Video

May 12, 2016

The Elusive Promise of Structural Reform: The Trillion-Euro Misunderstanding. Milken Institute Review. 2016;18 (2) :26-35. PDF
Rodrik D, Mukand S. Ideas versus Interests: A Unified Political Economy Framework. 2016.Abstract

We develop a conceptual framework to highlight the role of ideas as a catalyst for policy and institutional change, making an explicit distinction between ideas and vested interests. We show how ideas and interests make separate contributions to the determination of policy, as well as how they feed into each other. In doing so we integrate the Keynes-Hayek perspective on the importance of ideas with the currently more fashionable Stigler-Becker (interests only) approach to political economy. The model allows us to distinguish between two kinds of ideational politics – the battle among different worldviews on the efficacy of policy (worldview politics) versus the politics of victimhood, pride and identity (identity politics). Our framework suggests a complementarity between worldview politics and identity politics. In particular, an increase in identity polarization may be associated with a shift in views about how the world works. Furthermore, an increase in income inequality is likely to result in a greater incidence of ideational politics.

Here's why economists should be more humble, even when they have great ideas
Here's why economists should be more humble, even when they have great ideas. The Washington Post [Internet]. 2016. Full article

March 25, 2016

Is Liberal Democracy Feasible in Developing Countries?. Studies in Comparative International Development. 2016.Abstract

Liberal democracy has been difficult to institute and sustain in developing countries. This has to do both with ideational factors—the absence of a liberal tradition prior to electoral mobilization—and structural conditions—the prevalence of mass mobilization along identity rather than class cleavages. This paper considers the conditions under which liberal democracy emerges and speculates about its future in developing countries.

An African Growth Miracle?. Journal of African Economies Advance Access. 2016.Abstract

SSA has grown rapidly over the last decade, but a curious feature of this growth was that it was accompanied by little structural change towards non-traditional tradables (such as manufactures). Now that China, the advanced economies, and most emerging markets are all slowing down, the question whether Africa’s high growth can be sustained looms larger. This article looks at this question from the lens of modern growth theory, paying particular attention to structural issues that are crucial for low-income countries. It comes down on the pessimistic side, due to what appear to be poor prospects for industrialization. This article also considers alternative models of growth, based on services instead of manufactures.


Revised version of the paper written for the Center for Global Development, Richard H. Sabot Lecture, on April 24, 2014.

Work and Human Development in a Deindustrializing World
Work and Human Development in a Deindustrializing World.; 2015. PDF

UNDP Human Development Report Office, 2015

Premature Deindustrialization. Journal of Economic Growth. 2015;21 :1-33.Abstract

I document a significant deindustrialization trend in recent decades that goes considerably beyond the advanced, post‐industrial economies. The hump‐shaped relationship between industrialization (measured by employment or output shares) and incomes has shifted downwards and moved closer to the origin. This means countries are running out of industrialization opportunities sooner and at much lower levels of income compared to the experience of early industrializers. Asian countries and manufactures exporters have been largely insulated from those trends, while Latin American countries have been especially hard hit. Advanced economies have lost considerable employment (especially of the low‐skill type), but they have done surprisingly well in terms of manufacturing output shares at constant prices. While these trends are not very recent, the evidence suggests both globalization and labor‐saving technological progress in manufacturing have been behind these developments. The paper briefly considers some of the economic and political implications of these trends.

An Economist Turns Sleuth
An Economist Turns Sleuth. The Chronicle of Higher Education [Internet]. 2015. Publisher's Version PDF

The Chronicle of Higher Education's Feature on Dani Rodrik, Pinar Dogan, and the Sledgehammer Case. October 16, 2015

Economics Rules: The Rights and Wrongs of the Dismal Science
Economics Rules: The Rights and Wrongs of the Dismal Science. [Internet]. 2015. YouTube Video

Video presentation at LSE, October 7, 2015

Dani Rodrik at Conversations with Tyler
Dani Rodrik at Conversations with Tyler. [Internet]. 2015. YouTube Video

September 24, 2015

Economics Rules: The Rights and Wrongs of The Dismal Science
Economics Rules: The Rights and Wrongs of The Dismal Science. New York: W.W. Norton; 2015. Publisher's VersionAbstract

A leading economist trains a lens on his own discipline to uncover when it fails and when it works.

In the wake of the financial crisis and the Great Recession, economic science seems anything but. In this sharp, masterfully argued book, Dani Rodrik, a leading critic from within the science, renders a surprisingly upbeat judgment on economics. Sifting through the failings of the discipline, he homes in on its greatest strength: its many—and often contradictory—explanatory frameworks.

Drawing on the history of the field and his deep experience as a practitioner, Rodrik insists that economic activity defies universal laws. But when economists embrace their expertise as a set of tools, not as a grand unified theory, they can improve the world. From successful antipoverty programs in Mexico to growth strategies in Africa and intelligent remedies for domestic inequality, Rodrik highlights the profound positive influence of economics properly applied.

At once a forceful critique and a defense of the discipline, Economics Rules charts a path toward a more humble but more effective science.

Austerity Has Failed: An Open Letter From Thomas Piketty to Angela Merkel. [Internet]. 2015. Publisher's VersionAbstract

Five leading economists warn the German chancellor, “History will remember you for your actions this week.”
By Thomas Piketty, Jeffrey Sachs, Heiner Flassbeck, Dani Rodrik and Simon Wren-Lewis