Over the next few weeks, a major economic conference will be convened in tandem with the launch of the meetings of the national dialogue, which includes an economic focus under its three main pillars. The question that arises is: why the call for such meetings and what is their purpose?
This question has certainly multiple answers, depending on to whom it is directed, but most answers don’t generally consider one of the primary goals of the national dialogue, namely “building consensus” over the major economic orientations pertaining to growth and development, rather than just trying to find solutions to partial problems such as budget deficit, unemployment, and investment, etc.
Such consensus is still lacking, particularly among the actors involved in the economic sphere, including the state, the political forces, and public opinion leadership.
Consensus on economic policies was the subject of a recent book by Stefan Dercon, titled “Gambling on Development: Why Some Countries Win and Others Lose”. Dercon is an English economist who worked for a long time in the field of economic development worldwide. Earlier, I’ve touched on some ideas included in Dercon’s book but I’d like to further highlight them for being related to the economic dialogue.
The central idea in the book is that countries that have managed to achieve development started by building consensus among the elite and that successful growth and development require a development bargain, i.e. a fundamental commitment by the elite to growth and development.
According to Dercon, the elite is “the people within the fabric of society, the economy, and politics who make decisions or can disproportionately influence them”. So, an elite doesn’t only comprise the political class or the state bureaucracy, but also includes those involved in the economy, especially the business sector, intellectuals, civil society, and union leaders, as well as any other groups that have a significant economic impact, including the media and opinion writers.
Dercon states that “the defining feature of a development bargain is a commitment by those with the power to shape politics, the economy, and society, to strive for growth and development. This shared commitment is what, above all, more successful countries appear to have in common, despite disagreements over important details, including those on economic policy-making.”
According to Dercon, “countries with a development bargain tend to have three features in common: (1) the politics of the bargain favoring development are real and credible, not just some vague official statement or pronouncement; (2) the capabilities of the state are used to achieve the goals of the bargain, but, importantly, the state avoids doing more than it can handle; and (3) the state possesses a political and technical ability to learn from mistakes and correct course.”
In this respect, Dercon notes that when it comes to economic development, two schools of thought dominate: the first focuses on institution-building as a precondition for achieving growth and development while the second requires adopting policies such as “focusing on the Sustainable Development Goals”, “getting economic policies right”, and “committing to green growth”. Dercon views that there is no uniform recipe for development and that there are countries that have been able to achieve growth in the absence of strong “institutions” and others have declared their commitment to certain “policies” but failed to adhere to them, and that successful countries have pursued a relatively diverse set of economic policies.
Dercon believes that the starting point for development and growth is not necessarily related to “strong institutions” or the adoption of a specific package of “policies,” but rather related to building “consensus” among the economic elite, especially with regard to economic resources and distribution policies.
Building this consensus is not related to the nature of the political system, as the pursuit of development has been observed across democracies as well as authoritarian regimes that managed to build consensus among their elites. The writer presents examples of success in this respect, including China, South Korea, India, Taiwan, Thailand, Malaysia, Indonesia, Bangladesh, as well as African countries such as Kenya, Uganda, and Ghana, among others.
Dercon points out that there is no single “recipe” for finding the right way to achieve and sustain growth. Naturally, failures are possible and there may be challenges along the way regarding what has been agreed upon. There may be a need to correct course and find mechanisms to hold accountable those entrusted with implementing the deal.
In short, the convening of the economic conference and the national dialogue meetings may present a good opportunity to build consensus among the elites on the main orientations of growth and development, towards ensuring clarity of visions and sustainability of policies.
This article was originally published in Al-Masry Al-Youm on 19 September 2022.