The Elusive Quest for Growth

The failure of these development crusades over the past century does not have to leave us without hope. Easterly tells the story of the Bangladeshi garment industry, that grew from nothing at all in 1979 to $2 billion of exports--more than half of Bangladesh's exports--today. Noorul Quader's Desh Garments Ltd. agreed in 1979 that Daewoo of Korea would trade 130 of its workers in modern technology and administration. By the early 1980s Desh Garments felt that it did not need the assistance of its Korean collaborators any more. By the end of the 1980s 115 out of those 130 Korean-trained workers had started their own garment firms. By the mid-1980s the rapid growth of Bangladesh's garment industry had come to the attention of that "ardent believer in free enterprise, Ronald Reagan." In 1985 he imposed quotas to restrict U.S. purchases of Bangladesh-made clothing.
So what does all this tell us about our current crusade for development? In Easterly's view, there are a few big lessons from the history: "Prosperity happens when all the players in the development game have the right incentives. It happens when government incentives induce technological adaptation, high-quality investment in machines, and high-quality schooling. …