Just Get out of the Way: How Government Can Help Business in Poor Countries

Just Get out of the Way: How Government Can Help Business in Poor Countries

Just Get out of the Way: How Government Can Help Business in Poor Countries

Just Get out of the Way: How Government Can Help Business in Poor Countries

Synopsis

Economic growth is the only way out of poverty, and the private sector is best at generating that growth.

Excerpt

This book is based on two beliefs. First, economic growth is essential for reducing poverty in third world or developing countries. Second, an efficient, dynamic, and growing private sector is the only way to increase the rate of economic growth. This book then takes the next step and asks what governments can do to help develop the private sector.

The main conclusion is that the government often does too much. Many government programs and policies designed to help the private sector actually impede its development. The major reasons are the low level of ability or competence in most government institutions, the high level of corruption, and the influence of specialinterest groups. Though private markets often fail to provide perfect outcomes, the ability of the government in poor countries to fix these failures is limited.

This conclusion reminds me of what my exasperated father told me many years ago when I was attempting to help him carry out a home improvement project: “Son, if you can't help, at least get out of the way.” The best that governments can do in many poor countries is just get out of the way. The following chapters analyze which government policies intended to help the private sector are likely to succeed and how they can be designed to compensate for the government's poor ability to implement them.

Government Corruption and Incompetence

I first became concerned about government corruption and incompetence in 1991 when I went to work for the agency that managed privatization in Russia (the State Property Committee). Previously, I had worked on the privatization program in New Zealand managed by the Treasury. Though I was a U.S. citizen, the New Zealand Treasury recruited me along with a number of other foreign citizens to be regular members of the New Zealand civil service. The Treasury . . .

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