Friday, March 28, 2008

How not to give economic policy advice to governments

Per Kurowski, a former World Bank executive director writes in a comment on Rodrik's blog;

What should a World Bank economist know about governance and growth?

Easy answer!

The importance of being very clear about: the governance by whom, and the growth for whom.

The biggest confusions that I have seen in this respect is when World Bank economists have teamed up on the government side, which is anyhow quite logical given that they are their direct bosses, but ending up working against the interests of the people.

“Dear government privatize this electrical distribution company and offer some future high rate adjustments (defended on the based of this questionable model) and that way you can obtain a very good price for it; and thereby get your hands on plenty of resources to spend on your favorite projects… and not having to worry about repaying loans or such nonsense… as the electrical consumers will take care of that for you by paying the higher than needed tariffs. Of course, please make sure though that the tariff increases occur somewhat down the line, since we do not want to be so transparent that the consumer, following the dots, makes the connection.”

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