ECON 112 Lecture Notes - Lecture 3: Agricultural Education, Good Governance, Ethnography
Document Summary
People making rational decisions given their limitations may still contribute to underdevelopment due to market and institutional failures: reasons why markets fail to lead people into ideal choices, and private institutions do not pick up the slack. Where people make sub-optimal choices (in the absence of intervention), it is possible that intervention by governments or ngos could improve development performance. Policies will improve development performance only if: policymakers have the necessary capacity and motivation, policies are well designed, policies are well implemented. When brainstorming about policy design, we should remember that a particular development-enhancing activity may be held back by more than one market and institutional failure: e. g. Policy designs are the most likely to be effective and efficient when they are based on accurate and complete diagnosis of the relevant failures. The diagnoses regarding underlying market and institutional failures may be incorrect: design elements may fail to address critical problems leading to ineffectiveness, e. g.
