He is the recipient of numerous awards, including the inaugural Albert O. Hirschman Prize of the Social Science Research Council, was included in Prospect magazine's World's Top 50 Thinkers list (2019) among others,
and last but not least, very soon today, he shall be given a “Doctorat honoris causa” from University of Lyon.
Indeed. From a bibliometric view, Professor Rodrik has written, to my knowledge, 23 books, 164 articles, and a considerable number of blog and newspapers contributions. He had many different co-authors. His articles have been published in American Economic Review, Quarterly Journal of Economics, Journal of Political Economy, Economic Journal, Journal of Economic Growth, Journal of International Economics, Journal of Development Economics, and other academic journals.
“Quand on aime on ne compte pas” as we say in France : there is more than just numbers and more than an uncontroversially impressive list of great journals to assess the value of Dani Rodrik’s contribution to economics, and to tell our pride to host him here for this special occasion.
Dani Rodrik is part of what we now call the “new economists”.
What is a new economist? Recently the economist Jared Berstein, in Vox (last Sept. 13, 2019, The new economics, and how it can create a more just America) wrote « A generation of economists helped get us into this mess. A new generation can get us out”.
There are indeed good reasons to complain about economists.
Economists are criticized for their belief that individuals are rational and selfish, although we now know – especially here in the Lyon research group – that this is not the case neither the good assumption to think about policies.
Economists are criticized because they pretend to be value neutral, although – especially here in Saint-Etienne – that values are important and should be taken seriously.
Economists are criticized because they propose theories and models with no awareness of the contexts, although we are now used to the consideration of numerous econometric results to describe and understand specificities and local determinants – as we do in Lyon Saint-Etienne.
Economists are criticized because they seemed to defend a unified apparent consensus against tax, government, policy, and in favor of free trade, although there is now a generation of economists who focus on distribution issues, alternative vision of monetary policies, fiscal policy and budget constraints, poor agents, children, nutrition, housing issues, income, education, the design of safety nets for those who are particularly vulnerable to trade.
Dani Rodrik was indeed part of the list of these new “saviors”.
Some colleagues of Professor Rodrik make fun of his so-called “revolutionary inclination”, maybe this is way to express that they dislike his conclusions. But what we especially value here in the research centers in Economics in Lyon and Saint-Etienne is that Professor Rodrik not only says different things about economics and the economy, but also that he does economics differently.
There is no way by which I could give all the deserved credit to Dani Rodrik’s wide and diverse contributions to economics in just a few minutes. So I am not going to try. Let me just choose and describe here a few results to capture the diversity and the consistency of his works.
I Let me first talk about growth, international trade and development economics
Usual questions in international economics concern volumes of exchanges, specialization of countries, what they produce, how they specialize, whether specialization per se induces a higher growth.
(EER2007) Dani Rodrik shows that, when local cost discovery generates knowledge spillovers, specialization patterns become partly indeterminate. Yet the mix of goods that a country produces may have important implications for economic growth.
(China & World Economy 2006) China finally exported more sophisticated products than what would be normally expected for a country at its income level. And notice this was helped by many specific government policies. That is what has been an important determinant of China's rapid growth. What matters for China's future growth is not the volume of exports, but whether China will continue to latch on to higher-income products over time. Dani Rodrik published this result in 2006.
We undoubtedly confirm this analysis today.
According to the Washington consensus – supposed to represent the set of the “horrible economists” –, liberalization, privatization, international opening of the economy and the so-called good governance are the necessary ingredients for growth, whichever the country and the situation.
DD showed a number of cases where quite obviously, in second best economies, alternatives politics can perform much better than these seemingly ideal devises. At last, one economist had told us why we should and how we can go beyond the Washington consensus:
we need to address local insights.
II- Political economy helps to address the importance of the local context
The context depends on many different dimensions, among which democracy and all institutions. From this, Dani Rodrik has been highlighting the stakes of inequality, integration, identity cleavages, and also studied rights and populism.
If institutions matter, let us choose the optimal institution! Is a given optimal recipe, a same solution, (for instance focused on relative prices), able to perform the same everywhere? Probably not.
(SCID2000) Dani Rodrik asked which of the market and non-market institutions are likely to secure high-quality growth. Well, he shows that there is no correlation between given institutions and the performance of the markets and the economy. There is no such thing as “a good institution, in all cases and whatever happens”.
How should we acquire an institution likely to secure high-quality growth? He rather emphasizes the importance of experimenting, adapting to local situations, to rely on hands-on experiences and tacit local knowledge. He adds that the most effective way to process and make use of local knowledge is democracy and more precisely, participatory political systems perform much better than top-down approaches.
Should we reject all scientific blueprint approaches? Like populists do?
(AEA P&P 2018) In a recent paper, D. Rodrik made a distinction between political populism and economic populism.
Political populists claim to represent “the people” at large, hence they dislike restraints on the political executive, among which the separation of powers, an independent judiciary, or free media. In parallel, economic populists would reject any restraints in economic policies, such as a monetary policy delegated to an independent central bank. And those may be likely to serve vested interests.
When economic rules and regulations are designed at considerable distance from democratic deliberation at the national level, there may be also a frequent complaint of a democratic deficit. Dani Rodrik analyzes Roosevelt’s new deal in the 30s as an instance of economic populism, likely to be the only way to forestall political populism. It appears to be an illustration that economic populism could be supported under certain circumstances.
So different solutions should apply to different situations. To put it differently, the choice of a policy should definitely depends on the context; models do not provide general teachings about the world, whatever the context.
Although they might help to get local insights.
III- Dani Rodrik is concretely providing a novel approach to methodology of economics
Talking about the way economics is done, let us observe that there has been an evolution from what happened in the last fifty years: some say that economics is now going empirical. We are now facing an infinite number of piecemeal econometric results.
Rodrik has done an uncontroversial move from general models (e.g. of international economics) to the accounting of local insights.
Dani Rodrik does prevent from the idea that a general theory may be able to explain a complex reality, even if the theory is made very complicated. We should certainly not believe nor impose the dictates of the general theory. There is no such thing as the proof in economics of an uncontroversial truth. He invites us to a more humble attitude.
But in contrast with the “empirical turn”, Dani Rodrik does not definitely give up with theory. We cannot provide any general catalogue of all cases. Above all, we cannot make sense of the observations without theories: the distancing from theories would be hindering any interpretations of facts. Only models are able to lay bare at a very large variety of causal relationships.
Between these two extreme views – a complexified unique theory likely to explain everything on the one hand, and on the other hand a meaningless catalogue of cases –,
Rodrik suggests a middle way which is to adapt a complex reality with local models.
In the end, Dani Rodrik invites us to consider economics as a “portofolio of models”.
Models are indeed not universal but they are numerous, and their diversity helps to grasp the diversity that is characterizing reality. Models, if properly chosen, are providing a storyline to tell a specific consistent narrative.
There are still two problems that we now need to address: the capacity to navigate among the diversity of models, and the ability to identify the critical assumptions in models.
But anyways, sound observations and models all together can be applied to tell a consistent, plausible and convincing story about the world.
Professor Rodrik’s academic work, because of its depth, rigor and, last but not least, thanks to its reflexivity, has been able to feed the public debate for decades, concerning the most important issues of the world economy.
For us as citizens, thank you, Dani, for being a “new economist”!
Antoinette Baujard, Lyon Saint-Etienne, November 6th, 2019