How has development economics evolved over the past sixty years? How can we incorporate political, historical, and cultural contexts when addressing economic problems?
Pranab Bardhan’s new book “Charaiveti: An Academic's Global Journey” is available now
Pranab Bardhan has studied, researched and taught economics for over 60 years. His global journey in academia has given him a unique insight into how development economics has changed during previous decades. In this episode of VoxDevTalks, Pranab Bardhan discusses three research areas that have been at the centre of much of his work – institutional economics, collective action and inequality – and explores the links between these topics.
“Economists are quite often narrow in their outlook, partly because the subject demands so much specialisation... but I think everybody’s economics would be better if they keep in mind this larger historical, political and cultural context."
Pranab Bardhan was born in 1939 in a poor neighbourhood of Calcutta, India, where he later studied for his bachelor’s and master’s degree, before moving to the UK for his doctorate at Cambridge University. Pranab begins by reflecting on his personal story, and how this has shaped his academic interests and approach to economics. Originally interested in history, he adds that it was exactly because economic forces shape history that he was drawn to economics. He argues that economics as a discipline must do more to consider the political, cultural, and historical context.
Development economics: From cross-country regressions to research on the ground
A key point in Pranab’s career was deciding to leave the US to carry out empirical work in India. While many development economists at the time focused on macroeconomic cross-country regressions, Pranab wanted to understand microeconomic relationships on the ground. This required collecting micro-level data, and he was a pioneer in this regard, helping to establish a path for the collection of this type of data using surveys. Alongside logistical difficulties, top journals at the time looked down on research using micro data from developing countries.
The collection of such data enabled Pranab Bardhan to study, research and write about institutional economics – for example, in his 1971 article in the AER on sharecropping, a 2-million-year-old agrarian institution. Despite the gains made in empirical analyses through surveys and data collection, Bardhan emphasises that data does not take account of power relations or the historical context. This is an area in which anthropologists have deeper and more specific knowledge, although they lack the generalisability that an economist gains through a well-performed survey.
"the problem with even better quality surveys, they give you data about outcomes, not about processes…you do not observe the processes…you do not usually collect data on relations, production relations, micro-institutions, power and power structures."
Bardhan comments that we need to account for these relations when designing field surveys. Often answers to a survey will depend on the setting: Is a worker’s employer present? Are other community members around? Some questions should be asked on the field and others in the household, and field survey methods need to be designed to account for the political and institutional context.
He draws parallels between the work of Eleanor Ostrom on collective action and his lived experience in Calcutta, India. Solutions to some challenges may often be clear, but the ability to reach such a solution is hindered due to collective action challenges. The problem therefore lies in how to organise individuals.
China and India’s different development paths: A nuanced perspective
Another important area of Bardhan’s research examines the development of China and India. Comparisons of these nations often fall into simple comparisons of growth rate measures, or binaries between authoritarian and democratic states. Instead, Pranab considers how Chinese governance in certain areas excels, and outlines what other countries, both developing and developed, may learn from it. He highlights China’s economic success may in part have been due to its level of economic decentralisation, and its system of rewarding bureaucrats for good economic performance. The latter approach now adapted to account for other measures including environmental indicators.
Economists influencing policymakers, or policymakers using economists?
Finally, on of the role of economists within policy, he argues economists often work along three levels within policy, Firstly, economists may work with ‘policy ideas’, recognising that the real world is more complex than economic theory. In these domains, economists can still use theory to help disentangle an economic problem. Secondly, Bardhan comments that economists can make a good contribution through policy blueprints. On the third level, policy implementation, he remarks that economists may exaggerate their role. Here, economists often play a small part in a broader process of political bargaining and deal making.
To provide economic advice at any level requires a political, historical, and cultural knowledge of the local context – which was often excluded from generic policy formulas of the past like the Washington Consensus.
References
Bardhan, P K, and T N Srinivasan (1971), “Cropsharing Tenancy in Agriculture: A Theoretical and Empirical Analysis,” The American Economic Review, 61(1): 48-64. http://www.jstor.org/stable/1910540.
Bardhan, P K (2010), Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India, Princeton University Press, Princeton.