The Weak Instruments Problem
Fairly Recently: Must- and Should-Reads, and Writings... (March 6, 2019)

Noah Smith: Bangladesh and India Pursue Different Economic Models for Growth: "When a country first shifts from agrarian poverty to industrialization, it tends to start out in light manufacturing.... Later it masters more complex manufactured products, and finally it progresses to inventing its own cutting-edge technology. Thus, each country’s development tends to look a bit that of nations that already went through the process. That certainly seems to describe the experience of South Korea and Taiwan.... Recently, one of the biggest beneficiaries of this process has been Bangladesh. The garment industry accounts for more than 80 percent of the South Asian nation’s export revenue, and about a fifth of its gross domestic product...

...India, meanwhile, has generally underperformed in manufacturing.... Despite its struggles in manufacturing, however, India is growing rapidly.... Has India stumbled upon a new development model that cuts out the need for a country to do a stint as the workshop of the world? This is a crucial question because as technology advances, there’s a concern that the traditional path out of poverty might be closing. Automation is making textile manufacturing less labor-intensive.... In other words, the developing world is at risk of premature deindustrialization....

Although the leaders of Bangladesh and India have similar goals, the difference in the country’s development models is making for an interesting experiment. Countries in Africa hoping to follow these two South Asian giants’ growth trajectories should be watching keenly...


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