now let's turn to Jeffrey Sachs perhaps
the most famous living development
economist. Sachs has had a wide-ranging
career which is in some ways tracked the
course of world events. It spanned both
development practice and research into
development economics. He spent most of
his career by the way at Harvard
University and later at Columbia. Sachs
is pretty well known to the general
public, in part because he spent time
associating with various movie stars and
rock stars, so Jeff Sachs really is the
Economist as celebrity himself. But we're
going to look at another angle of his
work, namely his impact on the theory and
practice of economic development. But if
you were thinking hmm Sachs isn't that the
guy I saw with Angelina Jolie? well
that's probably right! Sachs first made his
name as an economist in the early 1980s.
He wrote a series of papers on
international trade exchange rates and
international policy coordination and in
the 80s he became tenured at harvard as
one of the youngest full professors at
Harvard ever. If you're interested in
reading Sach's on international trade
there's a good synthetic 1995 paper he
did, which is online it's called economic
reform and the process of global
integration. In that paper he talks about
how the opening up of economies to trade
is really is a prerequisite and driver
of further policy reform, but although
this work on international trade had a
real impact it's actually not what Sachs
is best known for today. Sachs moved more
into the public eye in the mid-1980s,
with the Bolivian reforms especially the
reforms against hyperinflation in 1985
the government of Bolivia asked Sachs if
you would come down and help them with
their economy and he came up with a
comprehensive fairly drastic plan for
ending their hyperinflation and
reforming their economy. By no means did
this plan fix all or even most of their
problems but it did help the Bolivians
end the hyperinflation, and overall it
can be judged a success. It was a form of
what later came to be called shock
therapy. Plans of this sort where
based on tight controls over the money
supply, freeing up prices, and
liberalizing the economy. Sachs'
connection to this so-called shock
therapy continued, and indeed it
intensified as Eastern Europe started to
throw off communism in the late 1980s. At
that point it was then necessary to have
plans for reform, Sachs visited Poland
and he was very important there as an
advisor and it's an advisor for
dismantling the communist system and
moving to our to market economy. Again
Sach's recipes were often fairly drastic,
namely the sense that an economy could
and indeed should do a lot of things
upfront very quickly to reestablish a
market economy right away. With the
passage of time I would judge shock
therapy in Poland actually to have been
quite a success. Lately Poland has been
growing rapidly and it really has joined
the community of Western European
nations as a more or less equal partner.
In Russia the use of shock therapy was
more controversial because it was
accompanied by a series of
privatizations which led to a lot of
corruption and redistributed wealth in a
manner which many people consider unjust.
In fairness to Sachs these privatizations
in Russia happened after he left the
country and stopped serving there as an
advisor. Nonetheless the important point
here is that shock therapy remains a
somewhat controversial concept. By the
way if you'd like to read sacks on shock
therapy I recommend this piece which is
available online. In any case you can
already see that Sachs has been
extremely important as a practitioner of
the science and art of economic
development. Moving back to economic
theory and research, Sachs has had an
important piece on what is called the
natural resource curse it resurrected
the notion that possibly countries could
experience growth problems precisely
because they had natural resources, that
this natural resource might make the
country more corrupt or it might make
them rely too much on those natural
resources. We consider this argument in
more detail in our video unit on the
natural resource curse, so I would refer
you to that. Needless to say Sachs made
important contributions
solutions in this area, and he brought up
a new what had been in old and at the
time somewhat abandoned debate. Sachs has
been an important researcher on African
economic growth, and Why it has
chronically been so slow, Sachs
attributes many of Africa's economic
problems to its unique geography, a lower
productivity of the soil, greater
problems with rainfall, and also
demography, Africa has an especially high
youth dependency ratio that is a lot of
young people who need to be supported.
And Africa has many more infectious
diseases which need to be worried about
when you put all these factors together
according to Sachs Africa faces really
some very special burdens in attempting
to achieve economic growth. In particular
Sachs co-authored a piece called the
economic burden of malaria, which looked
closely at just how much malaria held
back the economies of Africa. The problem
of malaria is not only that it kills
people, but also when you are young if
you're infected by malaria it stunts
your physical growth, it may stunt your
brain growth, and it can lead to
long-lasting and persistent problems. The
importance of infectious disease has
been a recurring theme of sach's work on
Africa. For a summary of a lot of sach's
thought on this topic I would refer you
to his piece, "Institutions don't rule", and
also Alex's video on geography
development disease which talks about
Sachs' ideas here at much greater length.
More recently Sachs has been at the
forefront of the millennium villages
project in Africa, which is being done
jointly with the Earth Institute at
Columbia, and also the United Nations. The
idea here is really quite ambitious, that
a sufficiently comprehensive program of
foreign aid can help targeted villages
escape a poverty trap and blossom into
economic development. This is occasioned
a lot of debate and we have an entire
video just on the millennium villages
project, and so I'll refer you to that.
Needless to say ,this project has
captured a lot of media attention and
right now it's the single biggest
project which Sachs
is most closely identified with. Sachs
has done so many different things of
importance in development economics, and
I've tried to offer references to each
as we've been going along. I also
apologize too many of Sachs co-authors,
we just haven't had time to mention them
all. Sachs also has numerous books if
you're going to read just one, I think
the best one is an introduction to his
thought . It's the one called the end of
poverty in any case there's plenty of
Sachs available online and free. Keep in
mind that what's really special about
Sachs is a development economist is this
dual role as advisor / practitioner and
researcher.