written by Matt Andrews
A lot of people ask me how governments should support economic growth in the period ‘After Coronavirus’. It is a vital question that I wrestle with daily in preparing for the forthcoming Leading Economic Growth Online executive education program (which I teach with my amazing colleague, Ricardo Hausmann). Here are some of my personal thoughts on the issue.
1. I believe we must focus on future growth, even if it seems misplaced in the current crisis
At times in the last few weeks I have found myself asking if I am a little tone deaf focusing on how governments should be supporting growth tomorrow when many people are dying, starving or falling into deep poverty today. Then I remember that economic growth is actually key to helping those who are suffering today have better lives in the future. As my colleague Dani Rodrik wrote in One Economics, Many Recipes, ‘Historically nothing has worked better than economic growth in enabling societies to improve the life chances of their members, including those at the very bottom.’ Dani’s comments echo studies that find many connections between growth, jobs, prosperity and well-being. I can’t see why these connections will matter less tomorrow than they did in the past, so we need to keep focusing on growth as a key to getting lots of other stuff right. To keep motivated in this work, I recommend that everyone focused on growth scour the literature to identify how growth does connect to other improvements in their country, city, or region.
2. We should focus on growth as a means, not an end
We who work on growth should consider growth as a means to various ends, not an end in itself. Growth matters because it helps us achieve other ends we really care about—like ensuring our people have high quality work or access to education or better health care or (building on Dani Rodrik’s words) ‘improved life chances for our members’. When we develop our growth strategies it should be with these ends in mind, such that we promote the kind of growth that our society needs. This is really important because governments can foster growth in ways that undermine their real objectives. For example, I worked in a country where officials told me their biggest problem was that twenty-something university graduates were emigrating because they did not have good quality jobs (where the implied policy ‘end’ would be ‘more jobs for recent university graduates’ so that ‘college educated twenty-somethings emigrate less’). A consulting firm encouraged the country to pursue growth in tourism and mining, which it did, and which led to growth. Very few jobs in the newly expanded tourism and mining sectors went to the target population, however. As a result, the country’s growth did not achieve the needed objective or end. To ensure we focus our growth strategies on ends we really care about, I recommend developing an ends means growth chart that (i) lists the key problems we hope growth will help to solve; (ii) suggests a simple theory on how growth can help address each problem; and (iii) we use to guide our choice of which growth opportunities to pursue and which to pass on. Continue reading Growth after the Coronavirus: Thoughts and Questions