A Farewell to Alms

"It’s a very exciting book that shows how for hundreds, even thousands of years basic economic progress was largely stagnant. As economies were able to produce more food, populations grew. You didn’t have rapid compound increases in living standards until around 1800. Around then, the industrial revolution and its precursors created a massive divergence. Some countries and some societies got on a pathway towards growth – towards better health, longer life expectancy, higher income per person and more investment in education. While other countries remained on a slower-moving pathway. That great divergence, and the study of it, is at the core of development. It is that divergence which we try to learn from and correct for. We define success in development as helping communities and countries get on that pathway towards improved health and education and greater wealth creation. I disagree with Clark here. With the right conditions in place, you can unlock a formidable work ethic from a range of different cultures and communities. The last 50 years have shown us that. I didn’t choose this book because I think it is the definitive story on development, but rather because I share its focus on core economic growth as the driver of divergence. Solow is absolutely right. Institutions are very important. I keep referencing the Solow growth model, which defines the core driver of economic growth as technological innovation. We try to make science, technology and innovation a bigger part of what USAID does around the world. By investing in local capacity and local institutions, we can leave a legacy of economic infrastructure, strong and capable leadership and transparent, effective public and private sector institutions. USAID’s partnerships in Latin America, or with South Korea, helped country after country develop strong institutions. Unfortunately, there have been examples where aid and assistance have been provided in a manner that was not as sensitive to building lasting local capacity and local institutions. This is true for all partners, not just our agency. That’s why we’ve launched a programme called USAID Forward, to refocus on working in a way that will create durable and sustained progress."