#18 – Stefan Dercon: Gambling on Development - Why Some Countries Win and Others Lose

Stefan Dercon is Professor of Economic Policy at Oxford University, where he also directs the Center for the Study of African Economics. The author of 5 books and many studies, Stefan has had a distinguished career as an academic and policy advisor on economic development. His accomplishments are many. To name just a few:  between 2011 and 2017, he was Chief Economist of the Department of International Development (DFID), the government department in charge with the UK’s aid policy and spending; between 2020-2022, he was the Development Policy Advisor to successive Foreign Secretaries at the UK’s Foreign, Commonwealth and Development Office.

Stefan is a virtuoso of development! His approach to our conversation was equal parts exciting and instructive, a style that also comes across in his writing, making his book very hard to put down.

We start by learning about Stefan: his experience growing up in Belgium, being taught by Catholic priests about African socialism, Ujamaa and Julius Nyerere, and Marx and discovering his interest in economics as a means of pursuing development. His early career in Tanzania and Ethiopia highlighted the relationship between risk and poverty and the need to consider uncertainty when engaging in policy advice or research. We then shift to talking about the four propositions that compete as diagnoses of core problems of poverty and development that Stefan outlines in his book: poor initial endowments, market failures that trap the poor in poverty, market failures that are costly for poor countries, weak institutions. He gives us an overview and tells us why the propositions fall short on explaining the successes and failures of development. We also talk about the most important trends in development in recent decades: the dramatic decrease in poverty globally, the Africanization of poverty, and the increasing concentration of poverty in fragile states.

The conversation then turns to the elites, what values drive them, and why would they gamble on a development bargain.  We talk about the role of natural resources, political systems, and how external actors can influence the emergence of development bargains. We also discuss the role of Western and Chinese elites in development bargains and what is good policy advice.

*****

Stefan Dercon

Website: https://www.bsg.ox.ac.uk/people/stefan-dercon

X: https://twitter.com/gamblingondev

LinkedIn: https://uk.linkedin.com/in/stefan-dercon-45927b104

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Mihaela Carstei, Paul M. Bisca, and Johan Bjurman Bergman co-host F-World: The Fragility Podcast. 

X: https://twitter.com/fworldpodcast

Instagram: https://www.instagram.com/fworldpodcast/

Website: https://f-world.org

Music: "Tornado" by Wintergatan. This track can be downloaded for free at www.wintergatan.net.

Video editing by: Alex Mitran - x.com/alexmmitran, linkedin.com/in/alexmmitran

EPISODE RESOURCES

Stefan Dercon, “Gambling on Development: Why some Countries Win and Others Lose,” Hurst, London, 2022. https://www.gamblingondevelopment.com

TIMESTAMPS:

00:00:00 Intro

00:01:24 Stefan’s background

00:02:49 Economics of poverty

00:04:16 Connection between risk & poverty

00:08:16 Brief overview of development thinking

00:14:57 Recent trends in development

00:19:55 The Africanization of poverty & What is fragility

00:25:39 The problem of fixed mental models of fragility

00:28:47 Who are the elites

00:41:11 The gambling in development bargains

00:47:24 What values drive the elites

00:54:25 Natural resource & political systems in dev. bargains

00:58:51 The role of Western & Chinese elites in dev. bargains

01:09:14 Are the elite bargains in the West still dev. bargains

01:19:09 Citizens’ role in dev. bargains

01:29:22 External actors & the emergence of dev. bargains

01:41:28 “Peace is ugly” – can international institutions accept it

01:51:20 Development is 50% history & 50% agency

02:00:40 Private sector role in the dev. bargain

02:09:48 What is good policy advice

02:19:56 Wrap-up