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“Rethinking Development Economics” by Joseph E. Stiglitz Essay

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What government and economic policies that the author J.E. Stiglitz suggests for a developing country to implement?

According to the author, J.E. Stiglitz, knowledge improvement is the primary driver of growth, especially for developing countries. The author’s argument draws support from the World development report for 1998-99 which puts an emphasis on the fact that developing and developed countries are separated by the knowledge gap that exists between them in addition to the basic separator, that is, the resource gap.

The writer, therefore, suggests government and economic policies that promote learning. These include policies that change the composition of sectors, policies aimed at improving the education system so that it instills an attitude that is geared towards change and learning skills. He also suggested that policies that control Gender-Based Micro-credit Schemes, Legal Systems, and Affirmative Action programs be put in place. These will ensure there is no discrimination against persons of a particular gender and also promote the financing of the local innovations and entrepreneurship.

Generally, broad-based policies that promote a learning society will be working towards poverty eradication hence positive economic growth. Policies that strengthen the state in ways such as the creation of effective civil service to improve the standard of the public sector should be adopted. These should be those policies that encourage the industrial policies that are geared towards development. Economic policies should be formulated after careful consideration of the government’s ability to implement them. The writer suggested that broad-based policies such as an intellectual property regime that is development-oriented, investment, and financial policies that promote technology transfer and local entrepreneurship be implemented. These can promote learning and innovation in society.

How can a country implement the concept of “Knowledge” policies into its development agendas?

As we have seen earlier, knowledge is the core factor that drives economic growth. The acquisition of knowledge calls for the creation of a learning society. To promote learning, sectors that are willing to learn are first identified but the benefits of learning should not be captured by the firms themselves as this will be underinvestment. The industrial sector should be encouraged to invest in learning as individuals are not able to pay for their education.

This is one of the many imperfections of the market and therefore policies addressing good financial regulations should be put to place. These should help curb the problem of market imperfections while encouraging the industrial sector to finance learning with its large spillovers.

In the Cimoli reading, what is Emulation in regards to development policy and why does the author suggest the policy of Emulation does not work

Emulation is defined as the purposeful effort of imitation of frontier technologies and production activities irrespective of the incumbent profile of comparative advantages. Basically it encompasses public policies that are formulated in an effort to do what the developed countries are doing. It includes individual and firm involvement in trying to do what the rich countries have already done. However, according to the author, a country’s development policies should be based on its comparative advantage not on what others have done; every country has a comparative advantage in one field or another.

This means that when an aspect of the economy is compared for two countries, one of the counties, though it may not be perfect, has a better placement over the other. This mean that policies formulated to further encourage this aspect should be encouraged. The philosophy of emulation does not work because, whatever a country is trying to copy may not be related to its comparative advantages.

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IvyPanda. (2021, February 20). "Rethinking Development Economics" by Joseph E. Stiglitz. Retrieved from https://ivypanda.com/essays/rethinking-development-economics-by-joseph-e-stiglitz/

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""Rethinking Development Economics" by Joseph E. Stiglitz." IvyPanda, 20 Feb. 2021, ivypanda.com/essays/rethinking-development-economics-by-joseph-e-stiglitz/.

1. IvyPanda. ""Rethinking Development Economics" by Joseph E. Stiglitz." February 20, 2021. https://ivypanda.com/essays/rethinking-development-economics-by-joseph-e-stiglitz/.


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IvyPanda. ""Rethinking Development Economics" by Joseph E. Stiglitz." February 20, 2021. https://ivypanda.com/essays/rethinking-development-economics-by-joseph-e-stiglitz/.

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IvyPanda. 2021. ""Rethinking Development Economics" by Joseph E. Stiglitz." February 20, 2021. https://ivypanda.com/essays/rethinking-development-economics-by-joseph-e-stiglitz/.

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IvyPanda. (2021) '"Rethinking Development Economics" by Joseph E. Stiglitz'. 20 February.

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