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Queen Mary Global Policy Institute

The valley of death of growth and development policies

“My life is such a mess let’s have a Brahma”

Tom Jobim, in Chansong (1986)

In the first of two blog posts, Roberto Alvarez, QMGPI Senior Policy Fellow and Executive Director of the Global Federation of Competitiveness Councils (GFCC), considers solutions to the complexity and reality of policymaking and policy cycles. Should we muddle through, introduce frameworks and processes to help improve coordination, or… have a beer?

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An arid, dried out valley with an animal skull
An arid, dried out valley with an animal skull

Tom Jobim, one of the creators of Bossa Nova, who composed and originally recorded “The Girl from Ipanema”, is possibly the most famous Brazilian musician worldwide. Well… at least he used to be, until Anitta came on the scene – if you haven’t you heard about her and why she matters to Brazil, you can check this thought piece in Portuguese (English translation here). Jobim wrote the lines above. They mean that when things are a mess, you should just let it go, don’t get stressed, chill. “Brahma” is a beer brand that during the 1970’s was almost a synonym of beer in Brazil, in a period when just a handful of brands did exist in the market. As with many occasions in life, policy can also get messy.

Rather than rational design, policymaking processes and policy cycles are commonly confusing and complex, with many stakeholders involved, various worldviews in play, a lot of ambiguity, backtracking, uncertainty, gossip, and power games. To make things more complicated, policy processes are constrained and, to a great extent, shaped by political governance and by politics.

In 1959, Yale Professor Charles Lindblom coined the expression “the science of muddling through” to describe the complexity and reality of policy cycles. From design to evaluation, policy cycles involve various stakeholders and require coordination within the public sector and between public and private sector, including civil society. The need for coordination applies to all policy domains but varies across nations. It is certainly acute for one domain I am familiar with: development, innovation and industrial policies in emerging nations. That is a reality in which I worked in the past and from where I draw some of the insights in this piece.

Coordination is a particularly critical issue for market or hybrid economy (the situation in command economy countries is different – in China, for instance) upper-middle-income countries, like Jobim’s and Anitta’s Brazil. Such countries are in-between, midway in their development processes, and, in that position, are the ones that suffer the most from the lack of coordination. Their situation differs both from advanced and least-developed economies.

A chart showing policy coordination effort required on the Y axis vs development/income level on the X axis. Policy coordination required peaks for middle income countries and is lower for low and high income countries.
A chart showing policy coordination effort required on the Y axis vs development/income level on the X axis. Policy coordination required peaks for middle income countries and is lower for low and high income countries.

High-income countries have well-develop civil society institutions and public-private coordination processes. They have several state and private sector players having a say in industrial, innovation and development policies and strategies, but had the opportunity, over the years, to build consensus about critical ideas, national priorities, and objectives. They tend to be politically more stable than countries coming from behind and, especially in certain parts of Europe, are relatively more homogeneous than most nations. Additionally, they implemented and improved over the years the processes, frameworks and dialogue platforms that allow for better coordination.

Low-income countries, on the other hand, usually do not have well-developed government and civil society structures. The concrete outcome of this reality is that there are fewer players around the table to coordinate positions than one can find in more developed countries.

Upper-middle-income income countries are in-between. They tend to have many more policy players, with a voice in policy design and implementation, than low-income countries but have not yet developed the coordination processes that advanced nations have. Upper-middle-income countries are comparatively in the worst position. Such countries demand more effort to coordinate policy efforts than others.

The lack of coordination comes with a cost. In some cases, it can be associated with the lack of efficiency and the misuse of resources, but it is typically an ‘opportunity cost.’ The tricky thing is that advanced, high-income, countries can absorb such costs more easily than nations coming from behind. It is easy to visualise the costs associated with the lack of coordination in an emergency response situation, those can include the cost of materials wasted (e.g., food, water, and medicine supplies), the opportunity costs of what could have been done with the money that was invested in those lost items and, unfortunately, even lives. But how about in the economic development space?

The lack of coordination in industrial, innovation and development policies has two main components. The first is the cost associated to the duplication of structures (and programs, and the resources wasted through that) and the opportunity costs associated. The second, and most relevant, is the cost of not being able to upgrade the economy, in other words, the cost of stagnation or even regression. The latter can be measured by GDP and jobs lost, and the gap between potential and actual GDP and job levels.

As history and the news tell, most of middle-income nations struggle to upgrade their economies and there is a widening gap between them and advanced countries, as the UNCTAD’s 2021 Technology and Innovation Report informs. That happens although many of such nations have launched and implemented industrial development policies and strategies in recent decades. Effectiveness and efficiency are essential in policy, especially for countries coming from behind. The time is ripe for policy practitioners to realise that in addition to policy content, there is a big need for a strong focus on coordination. In policy, when things are messy, it is not time for a beer, but for frameworks and process that can help improve coordination. Cheers!

An early version of this post was included in

  1. Alvarez. Industrial policies: bridging past and future experiences. In: BALESTRO, Moisés. & GAITÁN, Flavio. (Orgs.) (2019). Untangling Industrial Policy: ideas and coordination between state and business. Brasília : Verbena Editora.

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