An economics professor with the spirit of a mischievous blogger—that is perhaps the best way to describe William Easterly, author of The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics.
Although his book has recently been used as a textbook at some economics schools, Easterly’s writing style is as engaging and accessible as that of a sharp-tongued columnist.
He provides a critique and reassessment of growth theories adopted by the World Bank (WB) and the International Monetary Fund (IMF). As the title suggests, he focuses primarily on their failures and the reasons behind them. Easterly keeps his analysis straightforward, weaving stories and field evidence into his arguments to ensure clarity.
Easterly poses a fundamental question: ‘Why does growth matter?’ He innocently presumes the logical answer should be, ‘To help the poor.’ But does it? Through his book, he delves into this critical question.
As a former employee of the WB, Easterly brings valuable insider knowledge, offering perspectives rarely found in other literature. He unveils the internal debates shaping development thinking within the Bank and provides fascinating insights. His analysis extends to the development policies applied to nations in need over nearly 50 years following World War II.
Easterly illustrates how capital injected into developing countries has not always spurred economic growth. In some cases, it even led to negative outcomes. He provides detailed examples of international organisations extending loans or loan guarantees to poor countries, despite clear evidence that the funds would soon be squandered by recipient governments. This mismanagement resulted in massive debts that these nations could never hope to repay, given their limited export outputs on the global market. Such loans were often the root cause of debt and financial crises that devastated countries across Asia, Africa, and Latin America over the past two decades.
Radically, Easterly underscores Joseph Schumpeter’s concept of ‘creative destruction.’ This theory suggests that all societal improvements and innovations necessitate replacing existing systems with new ones. While this process drives progress and raises living standards in the long run, it often comes at a short-term cost to those negatively affected by competitive and innovative changes.
The book ultimately argues that ‘good institutions’ are essential for economic growth, provided they create the right market-based and market-guided incentives. These institutions include the rule of law, competitive markets, low taxation, non-inflationary monetary policies, and free trade. Such institutions, in turn, nurture cultural practices such as hard work, savings, industrialisation, creativity, and self-responsibility. These, Easterly suggests, are the foundations of the ‘wealth of nations.’ Yet, he questions whether this ideal scenario can truly materialise. He remains sceptical, noting that no organisation—aside from a select few humanitarian actors—offers aid without strings attached.
With The Elusive Quest for Growth, William Easterly revisits the same ironic tension between donors and recipients of development aid that he explored in his acclaimed book The White Man’s Burden. As always, Easterly is both scientifically rigorous and journalistically compelling.
Another version of this article is published by AlBorsa English.