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Dani Rodrik

Dani Rodrik

I am an economist, and a professor at the Harvard Kennedy School. My most recent book is Economics Rules: The Rights and Wrongs of the Dismal Science (Norton, 2015). I was born and grew up in Istanbul, Turkey. I still follow Turkish politics very closely, as you will find out if you spend any time with this blog.

Articles by Dani Rodrik

The Case for a Bold Economics

15 days ago

Although economists are well positioned to imagine new institutional arrangements, their habit of thinking at the margin and sticking close to the evidence at hand encourages an aversion to radical change. But, when presented with new challenges, economists must envision new solutions – as a new group is determined to do.

CAMBRIDGE – At the end of 1933, John Maynard Keynes sent a remarkable public letter to US President Franklin Delano Roosevelt. FDR had taken office earlier that year, in the midst of an economic slump that had pushed a quarter of the labor force into unemployment. He had launched his ambitious New Deal policies, including public works programs, farm subsidies, financial regulation, and labor reforms. He had

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Economics for Inclusive Prosperity (EfIP)

February 15, 2019

We launched today a new initiative for academic economists that we hope will make the discipline of Economics more relevant to today’s pressing policy problems. The initiative consists of a network called Economics for Inclusive Prosperity (EfIP) with an initial set of 10 policy briefs. The briefs open with an introductory statement of our philosophy and go on to specific policy recommendations for finance, trade, labor markets, social policy, technology policy, and political institutions. The network is co-directed by Suresh Naidu, Gabriel Zucman, and me, and has 11 additional founding members. We hope to expand the group and we will add more policy briefs in the months ahead.
As we state in our introduction, we believe

mainstream economics – the kind of economics that is practiced

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The Good Jobs Challenge

February 7, 2019

Every economy in the world today is divided between an advanced segment, typically globally integrated, employing a minority of the labor force, and a low-productivity segment that absorbs the bulk of the workforce, often at low wages and under poor conditions. How should policymakers address this dualism?

CAMBRIDGE – Around the world today, the central challenge for achieving inclusive economic prosperity is the creation of sufficient numbers of “good jobs.” Without productive and dependable employment for the vast majority of a country’s workforce, economic growth either remains elusive, or its benefits end up concentrated among a tiny minority. The scarcity of good jobs also undermines trust in political elites, adding fuel

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Trump’s Trade Game

January 16, 2019

In 2018, US President Donald Trump finally followed through on his “America first” trade strategy. Yet it is already clear that his policies will have little impact on trade growth, and even less effect on China’s behavior.

CAMBRIDGE – US President Donald Trump’s “America first” trade policy came into full bloom in 2018, and it was an ugly sight to behold. In addition to tariffs on steel and aluminum from Europe and other countries, Trump imposed levies on $250 billion worth of imports from China. By the end of the year, he had raised tariffs on 12% of total US imports, causing trade partners to retaliate with levies on 8% of total US exports.Trump’s trade-policy unilateralism is unprecedented in the post-war period, which is

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The Left’s Choice

January 8, 2019

In the face of resurgent right-wing populism, the left’s relative weakness partly reflects the decline of unions and organized labor groups, which have historically formed the backbone of leftist and socialist movements. But four decades of ideological abdication has also played an important role.

CAMBRIDGE – The main political beneficiaries of the social and economic fractures wrought by globalization and technological change, it is fair to say, have so far been right-wing populists. Politicians like Donald Trump in the United States, Viktor Orbán in Hungary, and Jair Bolsonaro in Brazil have ridden to power by capitalizing on the growing animus against established political elites and exploiting latent nativist sentiment.

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China’s Boldest Experiment

December 11, 2018

The conventional wisdom among social scientists is that the demands of advanced economies and growing middle classes can be met only through greater political freedoms and competition. By doubling down on authoritarian single-party rule, China is now testing that proposition.

BEIJING – Forty years ago this month, China’s leaders set the country on a path of reform that has produced the most dramatic economic transformation in history. Mao Zedong had died two years earlier, in 1976, and the newly rehabilitated Deng Xiaoping succeeded in stamping his vision of economic development and modernization on the Third Plenary Session of the Eleventh Central Committee held in December 1978. In the four decades since, China has transformed

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Reclaiming Community

November 9, 2018

Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, and sometimes markets and states undermine them.

CAMBRIDGE – Economics teaches that the measure of an individual’s wellbeing is the quantity and variety of goods he or she can consume. Consumption possibilities are in turn maximized by providing firms with the freedom they need to take advantage of new technologies, the division of labor, economies of scale, and mobility. Consumption is the goal; production is the means to it. Markets, rather than communities, are the unit and object of analysis.

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Will New Technologies Help or Harm Developing Countries?

October 8, 2018

Trade and technology present an opportunity when they are able to leverage existing capabilities, and thereby provide a more direct and reliable path to development. When they demand complementary and costly investments, they are no longer a shortcut around traditional manufacturing-led development.

CAMBRIDGE – New technologies reduce the prices of goods and services to which they are applied. They also lead to the creation of new products. Consumers benefit from these improvements, regardless of whether they live in rich or poor countries.

NAZEER AL-KHATIB/AFP/Getty Images

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Mobile phones are a clear example of the deep impact of some new technologies. In a clear

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Can Trade Agreements Be a Friend to Labor?

September 14, 2018

To date, labor clauses in trade agreements have remained a fig leaf, neither raising labor standards abroad nor protecting them at home. Real change would require a significantly different approach, including how trade agreements uphold and enforce workers’ rights.

CAMBRIDGE – Labor advocates have long complained that international trade agreements are driven by corporate agendas and pay little attention to the interests of working people. The preamble of the World Trade Organization Agreement mentions the objective of “full employment,” but otherwise labor standards remain outside the scope of the multilateral trade regime. The only exception is a clause, left over from the 1947 General Agreement on Tariffs and Trade (the precursor to the

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No to Academic Normalization of Trump

August 7, 2018

Those who have served the current US president are necessarily tainted by the experience. While they should not be barred from speaking at universities, they should be accorded none of the trappings of institutional esteem such as fellowships, named lectures, and keynote speeches.

CAMBRIDGE – The University of Virginia recently faced a storm of protest after its Miller Center of Public Affairs appointed President Donald Trump’s former Director of Legislative Affairs, Marc Short, to a one-year position as Senior Fellow. Two faculty members severed ties with the center, and a petition to reverse the decision has gathered nearly 4,000 signatures. A similar protest erupted at my home institution last year, when Corey

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How To Avoid a Trade War

July 10, 2018

Economists typically argue against focusing excessively on the losers from freer trade, and they decry the tendency to overlook the beneficiaries on the export side. They should not be prone to the same fallacy now, by ignoring that US protectionism surely will generate some beneficiaries as well in other countries.

CAMBRIDGE – Defying common sense as well as business and financial elites, US President Donald Trump seems to relish the prospect of a trade war. On July 6, his latest trade restrictions – 25% tariffs on about $34 billion of Chinese imports – took effect. They were promptly met by retaliatory tariffs on an equivalent volume of US exports to the Chinese market. Trump has threatened further measures against China,

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My preface to Santiago Levy’s Book: Under-Rewarded Efforts — The Elusive Quest for Prosperity in Mexico

June 25, 2018

A few years ago as I was finishing up my book Economics Rules: The Rights and Wrongs of the Dismal Science (Norton 2015), I realized that the manuscript contained a serious omission. I had written at length about how and why economists misuse the powerful tools of their discipline, but had said little about the successes. So I decided I would open the book with three vignettes of economics at its best. Each vignette would have its hero: an economist who combined economic models with real-world judgement to make life better for lots of people. 
Santiago Levy was one of the three heroes I chose. (The names of the other two heroes will let the reader gauge how demanding was the standard I applied: John Maynard Keynes and William Vickrey.) Santiago was the principal force behind the

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How Democratic Is the Euro?

June 11, 2018

If the European Union is to remain viable and democratic at the same time, policymakers will have to pay closer attention to the demanding requirements of delegating decisions to unelected bodies. They should promote such a delegation of sovereignty only when it truly enhances the long-term performance of their democracies.

SAN SERVOLO, ITALY – When Italy’s president recently vetoed the appointment of the Euroskeptic Paolo Savona as finance minister in the government proposed by the Five Star Movement-League party alliance, did he safeguard or undermine his country’s democracy? Beyond constitutional strictures specific to the Italian context, the question goes to the heart of democratic legitimacy. The difficult issues it

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The Double Standard of America’s China Trade Policy

May 10, 2018

Many liberal commentators in the US think that Donald Trump is right to confront China over its trade tactics, and object only to his methods. Yet Trump’s trade agenda is driven by a narrow mercantilism that privileges the interests of US corporations above those of all others.
CAMBRIDGE – A high-profile United States trade delegation appears to have returned empty-handed from its mission in China. The result is hardly a surprise, given the scale and one-sided nature of the US demands. The Americans pushed for a wholesale remaking of China’s industrial policies and intellectual property rules, while asking China’s government to refrain from any action against Trump’s proposed unilateral tariffs against Chinese exports.

EZEQUIEL BECERRA/AFP/Getty Images

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What’s Been Stopping the Left?

April 10, 2018

If progressive political parties had pursued a bolder agenda in the face of widening inequality and deepening economic anxiety, perhaps the rise of right-wing, nativist political movements might have been averted. So why didn’t they?
CAMBRIDGE – Why were democratic political systems not responsive early enough to the grievances that autocratic populists have successfully exploited – inequality and economic anxiety, decline of perceived social status, the chasm between elites and ordinary citizens? Had political parties, particularly of the center left, pursued a bolder agenda, perhaps the rise of right-wing, nativist political movements might have been averted.

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Trump’s Trade Gimmickry

March 9, 2018

The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse. Such protectionism is a gimmick, not a serious agenda for trade reform.
CAMBRIDGE – US President Donald Trump’s bark on trade policy has so far been far worse than his bite. But this may be changing. In January, he raised tariffs on imported washing machines and solar cells. Now, he has ordered steep tariffs on imported steel and aluminum (25% and 10%, respectively), basing the move on a rarely used national-security exception to World Trade Organization rules.

The Year Ahead 2018

The world’s

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The Double Threat to Liberal Democracy

February 13, 2018

Illiberal democracy – or populism – is not the only political menace confronting Western countries. Liberal democracy is also being undermined by a tendency to emphasize “liberal” at the expense of “democracy.”
CAMBRIDGE – The crisis of liberal democracy is roundly decried today. Donald Trump’s presidency, the Brexit vote in the United Kingdom, and the electoral rise of other populists in Europe have underscored the threat posed by “illiberal democracy” – a kind of authoritarian politics featuring popular elections but little respect for the rule of law or the rights of minorities.

The Year Ahead 2018

The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what

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Can Economic Populism Preempt Political Populism?

January 30, 2018

Harvard University Professor Dani Rodrik argues that while political populism stifles pluralism and undermines liberal democratic norms, economic populism is occasionally necessary. In some cases, it may even help forestall the arrival of its more dangerous cousin.

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More on distinguishing ideas and interests — an exchange with Peter Hall

January 19, 2018

My recent post on ideas versus interests elicited some comments from Peter Hall, my Harvard colleague who has done probably more thinking on this issue than any other scholar I know. With his permission, I am attaching these comments below, along with the brief subsequent exchange we have had.
________________________________
Dani,
A few quick thoughts inspired by your recent blog post on ideas and interests.  As you know, this is a topic that has long interested me.  These are rather cryptic thoughts (ars longa, vitae brevis) but I pass them along in case they are stimulating.
You are, of course, right to observe that interests are always interpreted (by ideas), i.e. they do not arise unambiguously from the material world.  And I think you are on the right track when you contrast the

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Has Global Finance Reformed Itself More Than It Appears?

January 18, 2018

The answer is yes, according to Ilene Grabel in her fascinating new book When Things Don’t Fall Apart. I wrote a preface for the book, which is reproduced below. It explains why I liked the book so much.
It happens only rarely and is all the more pleasurable because of it. You pick up a manuscript that fundamentally changes the way you look at certain things. This is one such book. Ilene Grabel has produced a daring and delightful reinterpretation of developments in global finance since the Asian financial crisis of 1997–1998.
The book addresses, and resolves, a long-standing puzzle: Why has our present model of financial globalization been so resilient, despite an abysmal track record that includes the most severe global financial crisis since the Great Depression, recurrent sovereign

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Telling interests and ideas apart

January 16, 2018

A long standing debate in the social sciences is whether behavior is driven by “interests” or “ideas.” The debate is central in political science, where it plays out as an argument between realists and constructivists. It is less well articulated in economics, to the discipline’s detriment. (See here for my thoughts on what economists would gain by taking the role of ideas seriously.)
As constructivists like to point out, interests are “congealed ideas.” Or to put it differently, we don’t have interests; we have ideas about what our interests are. Perhaps it’s all about interests in the short run and it’s all about ideas in the long-run.     
But if so, is there an analytically meaningful distinction between ideas and interests? And could we ever distinguish empirically between cases

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My Twitter account has been hacked

January 12, 2018

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In Defense of Economic Populism

January 9, 2018

Populists’ aversion to institutional restraints extends to the economy, where they oppose obstacles placed in their way by autonomous regulatory agencies, independent central banks, and global trade rules. But while populism in the political domain is almost always harmful, economic populism can sometimes be justified.
CAMBRIDGE – Populists abhor restraints on the political executive. Since they claim to represent “the people” writ large, they regard limits on their exercise of power as necessarily undermining the popular will. Such constraints can only serve the “enemies of the people” – minorities and foreigners (for right-wing populists) or financial elites (in the case of left-wing populists).

The Year Ahead 2018

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The Economics Debate, again and again

December 21, 2017

The debate on the economics profession – its alleged ills and failings — abates at times, but never ends. A recent piece in The Guardian taking the profession to task for its lack of reform has prompted a response from a group of economists. I thought it was time to re-up my own views on this debate, in the form of two sets of ten commandments. The first set is directed at economists, and the second to non-economists.   

Ten commandments for economists

1.      Economics is a collection of models; cherish their diversity.

2.      It’s a model, not the model.

3.      Make your model simple enough to isolate specific causes and how they work, but not so simple that it leaves out key interactions among causes.

4.      Unrealistic assumptions are OK; unrealistic

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Does Europe Really Need Fiscal and Political Union?

December 11, 2017

There is a growing sense in Europe, among conservatives and progressives alike, that fiscal and eventual political union is necessary to maintain the euro without damaging economic performance or democratic values. But there is also an alternative, much less ambitious view, according to which only banking union is needed.
CAMBRIDGE – Greece’s combative former finance minister, Yanis Varoufakis, and his nemesis, former German finance minister Wolfgang Schäuble, were at loggerheads on Greek debt throughout Varoufakis’s term in office. But they were in full agreement when it came to the central question of the eurozone’s future. Monetary union required political union. No middle way was possible.

The Year Ahead 2018

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How to Combat Populist Demagogues

November 13, 2017

We will never know whether greater honesty on the part of mainstream politicians and technocrats would have spared us the rise of nativist demagogues like Donald Trump in the US or Marine Le Pen in France. What is clear is that lack of candor in the past has come at a steep price.
CAMBRIDGE – At a recent conference I attended, I was seated next to a prominent American trade policy expert. We began to talk about the North American Free Trade Agreement (NAFTA), which President Donald Trump has blamed for American workers’ woes and is trying to renegotiate. “I never thought NAFTA was a big deal,” the economist said.

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Lukas Schulze/Getty Images

Stefan Rousseau/PA/Getty Images

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Taking a Crack at Neoliberalism

November 8, 2017

Here is the back story for my new piece “Rescuing Economics from Neoliberalism,” just out in the Boston Review.
I have never been a fan of the term “neoliberal.” It has never been quite clear what it means. Nor is it obvious who today’s neoliberals are. Thatcher, Reagan, Pinochet in their day, yes. But today?
Nevertheless, the term is widely used by its many critics to condemn in quite broad brush terms a certain way of thinking of the role of the market in society. There are more careful exegeses that give neoliberalism a more precise meaning and a specific historical trajectory (see here and here). But in public discourse the term has become a loose cannon – or to use perhaps a more appropriate metaphor — a spray gun directed at one’s intellectual opponents.
I was happy to keep

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Growth Without Industrialization?

October 10, 2017

Low-income African countries can sustain moderate rates of productivity growth into the future, on the back of steady improvements in human capital and governance. But the evidence suggests that, without manufacturing gains, the growth rates brought about recently by rapid structural change are exceptional and may not last.
CAMBRIDGE – Despite low world prices for the commodities on which they tend to depend, many of the world’s poorest economies have been doing well. Sub-Saharan Africa’s economic growth has slowed precipitously since 2015, but this reflects specific problems in three of its largest economies (Nigeria, Angola, and South Africa). Ethiopia, Côte d’Ivoire, Tanzania, Senegal, Burkina Faso, and Rwanda are all projected to achieve growth of 6% or higher this

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Macron’s Labor Gambit

September 7, 2017

French President Emmanuel Macron’s entourage has been wisely telling anyone who will listen not to expect too much from the proposed new labor code. Indeed, the economics of the reforms suggest that they are unlikely to make a big difference on their own.
CAMBRIDGE –At the end of August, French president Emmanuel Macron unveiled the labor-market overhaul that will make or break his presidency – and may well determine the future of the eurozone. His goal is to bring down France’s stubbornly high rate of unemployment, just a shade below 10%, and energize an economy that badly needs a kick-start.

Spencer Platt/Getty Images

Etienne Laurent/Getty Images

Pacific Press/Getty Images

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Macron’s Labor Gambit

September 7, 2017

CAMBRIDGE –At the end of August, French president Emmanuel Macron unveiled the labor-market overhaul that will make or break his presidency – and may well determine the future of the eurozone. His goal is to bring down France’s stubbornly high rate of unemployment, just a shade below 10%, and energize an economy that badly needs a kick-start.

Federico Parra/Getty Images

Nur Photo/Getty Images

Vyacheslav Prokofyev/Getty Images

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Labor reform has long been on France’s agenda. Practically every French administration in recent memory has tried to rewrite the country’s gargantuan labor code, typically failing in the face of trade union protests. Macron makes no bones about what he is up

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