Source: FT, Jul 2016
The World Bank is set to appoint Paul Romer, a longtime advocate of the economic power of human capital and student of urbanisation.
Mr Romer is an ardent supporter of the power of economic growth to reduce poverty and will be joining the World Bank at a time when slowing emerging economies are presenting it with a host of new challenges. Economists at the bank last month warned that slowing developing economies had set back their efforts to catch up with rich economies like the US by decades.
“We often lose sight of how important even small changes in the average rate of growth can be,” Mr Romer wrote in a blog post published on Saturday.
Too often, he argued, the need for data to prove a theory led economists in the path of small ideas and projects rather than bigger bolder ones whose eventual impact on poverty were exponentially larger.
“Our goal should be to recommend treatments and policies that maximise the expected return, not to make the safest possible treatment and policy recommendations,” he wrote.
“We have to weigh the trade-offs we face between getting precise answers about such policies as setting up women’s self-help groups [against] other policies [like] facilitating urbanisation or migration that offer returns that are uncertain but have an expected value that is larger by many orders of magnitude.”