China‘s policies on property rights, subsidies, finance, the exchange rate and many other areas have so flagrantly departed from the conventional rulebook that if the country were an economic basket case instead of the powerhouse that it has become, it would be almost as easy to account for it. (18)
Dani Rodrik, The Future of Economic Convergence
Dani speaks the truth. One of the biggest problems with discussions revolving around development is that usually analysis is based on the “dependent variable”, that is to say, that the sample, or outcomes, explain the causes in an erroneous fashion.
The purpose is to hypothesize the causes and see if they cause the outcomes. Instead of asking if institution x leads to growth throughout a wide sample, many economists argue that since country z has institution x, and is successful, while country f does not have x, or not enough of x, it is not successful. However, if one were to include a historical and geographically large sample, one would begin to see that these factors that supposedly explain outcomes do not have universal effects, but rather their efficacy is determined by contingent and historically determined factors (path dependence). For example, if institutions were as important as economists claim they are, then China shouldn’t be as successful as it is and Brazil should be more than it is. Choosing on the dependent variable is helpful in explaining the causal mechanisms, specific to the case being studied, but it does not give us valuable explanations.
Dani speaks the truth. One of the biggest problems with discussions revolving around development is that usually analysis is based on the “dependent variable”, that is to say, that the sample, or outcomes, explain the causes in an erroneous fashion.
The purpose is to hypothesize the causes and see if they cause the outcomes. Instead of asking if institution x leads to growth throughout a wide sample, many economists argue that since country z has institution x, and is successful, while country f does not have x, or not enough of x, it is not successful. However, if one were to include a historical and geographically large sample, one would begin to see that these factors that supposedly explain outcomes do not have universal effects, but rather their efficacy is determined by contingent and historically determined factors (path dependence). For example, if institutions were as important as economists claim they are, then China shouldn’t be as successful as it is and Brazil should be more than it is. Choosing on the dependent variable is helpful in explaining the causal mechanisms, specific to the case being studied, but it does not give us valuable explanations.
