Development Policy: What Do We Really Know?

Policy makers in Washington and around the world search for the right policies to speed development, increase global economic growth, reduce poverty and offer the opportunity of better livelihoods to people on all continents.

The policies are usually based on assumptions that trade, migration, foreign direct investment and other cross-border activities will enhance growth and reduce poverty and inequality.  But researchers quarrel intensely over the nature of these links.  The quarrels sometimes go unresolved because of lack of data or because theoretical frameworks do not fit well with the facts on the ground.

To clarify what we do and do not know about the impact of policy on the ground, the Carnegie Project on Trade, Equity and Development is convening a series of discussions between policymakers and leading researchers over the course of 2007.  The goals of the discussions are twofold: to ascertain whether empirical data support particular policy approaches; and to point researchers toward the key unanswered questions that might support better policy making.

Over the course of 2007, the following topics will be explored:  

1.  Do unilateral trade preference programs help developing countries or trap them into dependency?  Are the designs of preference programs effective or do they sabotage results?  Please click here for more information from the event, including video and transcripts.
 
2.  How important is inequality?  Should countries focus on economic growth first and address distribution of income later?  Or does inequality slow economic growth, leading to a vicious cycle of poverty?  More information to follow.

3.  What are the links between trade and poverty?  Trade usually enhances economic growth and economic growth can reduce poverty.  But experience differs among countries:  some have opened to trade and experienced economic takeoff that raised incomes broadly, while others liberalized and experienced neither higher growth nor poverty reduction.  What do we really know about what works? 

4.  Is migration good or bad for development?  Much attention has focused on the economic prospects of migrants, but what happens to the countries they leave behind?  Are they better off or worse off?  How important are remittances, brain drain, and the size and skills of the labor force that stays?