Let A Thousand Growth Models Bloom
Over recent decades a simplistic view about the fundamentals that govern the theory and practice of development has taken root. Stated nakedly, this view holds that growth requires two things: foreign technology and good institutions. Failure to grow can be attributed to either (or both) of two pathologies. Call one the "protection" pathology, in which governments stymie progress by reducing access to foreign investment and technology. The other pathology is "corruption," where political leaders fail to respect property rights and the rule of law.
The natural remedies for these pathologies are claimed to be economic openness and improved governance. Reforms focused on governance and openness thus became the cornerstones of development strategy in virtually every country during the last fifteen years.
Experience presents an awkward fit (at best) with this conception. Consider Latin America, where there has been greater enthusiasm for the so-called "Washington Consensus" on growth than in any other corner of the world. By the standards of the consensus view, policymaking in Latin America was better in the 1990s than ever before, nonetheless few countries in the region grew faster than in the period before 1980.