The Unassuming Economist

In a new OCP Policy Center paper, Uri Dadush of Carnegie and OCP writes: “The paper has shown that, over the last thirty years, many economies have been able to double their per capita income and achieve large improvement in other development indicators without relying principally on manufacturing. The main policy implication is not that the manufacturing sector should be shunned or ignored, but that the view that a large manufacturing sector oriented towards world markets is essential to a rapid advance in living standards is mistaken. Instead, policy needs to recognize that, in a globalized economy, all sectors can improve by learning from those at the technology frontier, that many possible sources of comparative advantage exist, and that careful macroeconomic management and flexible exchange rates are a preferable way to maintain external balance than interventions in specific sectors.”