The death of development theory: From Friedrich von Hayek to the Washington consensus

Abstract

Development strategies followed by many countries in the 20th century bestowed a relevant role to the State. During the 1970s, it all reversed, and free markets became paramount to efficiency. F. von Hayek and the Mount Pelerin Society led the way to eliminate the State as a significant economic player, while P.T. Bauer extended such ideas to development economics, which would eventually give way to the Washington Consensus. Beyond actual results of such policies, it is surprising to see the appeal of Bauer’s theoretical approach, considering that it is constructed disregarding both empirical evidence, as well as the abundant discussion on development that was taking place contemporarily. This article explores the theoretical process of such reversal in development economics theory.     

Assessment of the effect of the financial crisis on agents’ expectations through symbolic regression

Agents’ perceptions on the state of the economy can be affected during economic crises. Tendency surveys are the main source of agents’ expectations. The main objective of this study is to assess the impact of the 2008 financial crisis on agents’ expectations. With this aim, we evaluate the capacity of survey-based expectations to anticipate economic growth in the United States, Japan, Germany and the United Kingdom. We propose a symbolic regression (SR) via genetic programming approach to derive mathematical functional forms that link survey-based expectations to GDP growth. By combining the main SR-generated indicators, we generate estimates of the evolution of GDP. Finally, we analyse the effect of the crisis on the formation of expectations, and we find an improvement in the capacity of agents’ expectations to anticipate economic growth after the crisis in all countries except Germany.     

Who do you care about? Scientists’ personality traits and perceived impact on beneficiaries

We investigate the roots of scientists' perceptions of the impact of their work by examining stable psychological characteristics such as personality traits. An analysis of personality traits highlights the effects of policies related to gender equality, allocation of research time and skills acquisition. It improves our understanding of the conflicts related to scientists’ perceptions of the impact of their research on beneficiaries. For example, conscientiousness increases the perceived impact on clinical beneficiaries, but reduces the perceived impact on industrial beneficiaries. Organizational scientific freedom increases the effects of personality traits on perceived impact on beneficiaries such that scientists affiliated to a university are less likely than colleagues working in other research settings to perceive the simultaneous impact of their work on both industrial and clinical beneficiaries.     

Longitudinal analysis of entrepreneurship and competitiveness dynamics in Latin America

This study analyzes the relationship between entrepreneurial dynamics in Latin-American countries and the level of competitiveness these countries show. Based on the research conducted by Wennekers et al. [Small Business Economics, 24(3):293–309, 2005] that demonstrates a U-shaped relationship between the country’s rate of entrepreneurship and its level of competitiveness and economic development, we hypothesize that Latin-American countries have a descending behaviour under the U-shaped curve approach. The results from three regression models support this hypothesis and suggest that competitiveness and economic growth deter entrepreneurial dynamics on Latin-American countries. We discuss that Latin-American countries need to improve some structural factors to achieve a high level of entrepreneurial dynamics.

Can the North–South trade regime explain intra- and inter-country productivity differences?

The literature identifies North–South disparities in Total Factor Productivity (TFP), which, in turn, justify the bulk of international income differences. By building a dynamic, general equilibrium model of North–South technological-knowledge diffusion with scale-invariant growth, we extend the literature in several directions: (i) growth is driven by Schumpeterian R&D and by high and low-skilled human-capital accumulation; (ii) three trade regimes are considered; (iii) sectoral and aggregate TFP measures are computed; (iv) the extent to which the North–South trade regime explains intra-country TFP and inter-country TFP differences is evaluated. In particular, the results suggest that intra-country TFP differences increase and inter-country TFP differences fall when countries are more interdependent.