I've been attending a conference at the Kennedy School at Harvard on Equality in the New Global Order. Most of the other attendees are philosophers, with a few economists and a couple of lawyers. Dani Rodrik spoke yesterday, focusing on growth. His main argument, as is well known, is that the most important determinant of growth is the extent to which states have "policy space" to engage in industrial policy. The only kind of subsidy Rodrik dislikes is subsidies of FDI. Policy space to subsidize (including export subsidies), to protect, to impose conditions on FDI, and to appropriate intellectual property. He believes that the opening of developed country markets in agriculture and other products will contribute little to developing country growth. He believes that foreign aid will contribute little to growth. The question some of us asked is whether, given a political economy critique of the degree to which governments are concerned about the public interest, unconstrained policy space is the right way to achieve Rodrik's prescription of optimizing domestic industrial policy.
This morning there will be an interesting paper by Kaushik Basu, justifying international labor rights standards from a neo-classical perspective.
