Economic Policy and Program Practice

Abstract

We have seen that economic policy doctrines often do not correspond with the latest theories of development economics. Yet, to an even greater extent, economic policy practice has departed from theories and doctrines. Examining how and why these departures have occurred will build our understanding of the challenges that policymakers continue to face. We shall see that the decision-aiding methods derived from economic theory do not provide the guidance required to select optimal economic policies, programs, or projects. We shall also see the faltering progress of the major policy reform designed to further both equity and efficiency. These include liberalizing the economy to reduce rent-seeking, reforming or privatizing state-owned enterprises, enhancing tax collection, creating propoor social safety nets, extending social services, stimulating propoor regional development without provoking violence, managing natural resources soundly, redressing the bias against agriculture, developing sound physical infrastructure, and decentralizing economic decision making. While poverty alleviation has made progress in most developing countries, the full potential to redress poverty has been hampered by the failure to translate these propoor doctrines into practice. Finally, the inability to specify technically which sectors to promote for greatest societal gain leaves the field open to organized interest groups, often at the expense of the most vulnerable families.