Publications

2017
McMillan M, Rodrik D, Sepulveda C. Structural Change, Fundamentals and Growth: A Framework and Case Studies. 2017.Abstract

Developing countries made considerable gains during the first decade of the 21st century. Their economies grew at unprecedented rates, resulting in large reductions in extreme poverty and a significant expansion of the middle class. But more recently that progress has slowed with an economic environment of lackluster global trade, not enough jobs coupled with skills mismatches, continued globalization and technological change, greater income inequality, unprecedented population aging in richer countries, and youth bulges in the poorer ones. This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes seven developing countries—Botswana, Ghana, Nigeria, Zambia, India, Vietnam and Brazil —all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework which draws a distinction between the “structural transformation” and “fundamentals” challenge in growth. Out of these seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam.

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NBER Working Paper, May 2017

Structural Change, Fundamentals, and Growth: A Framework and Case Studies
Rodrik D, McMillan M, Sepulveda C ed. Structural Change, Fundamentals, and Growth: A Framework and Case Studies. Washington, DC: International Food Policy Research Institute; 2017. PDF
Rodrik D, Mukand S. The Political Economy of Liberal Democracy. 2017.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 circumstances: mild levels of income inequality as well as weak identity cleavages. We provide some evidence consistent with this result, and also present a new classification of countries as electoral or liberal democracies.

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Revised, March 2017

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.

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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.

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January 2017

2016
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

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.

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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.

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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.

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

2015
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.

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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

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