W8 - Market, State and Development Policy

Question 1

What does Robbins say the role of the state is?

Answer 1

To protect economic activity via lawmaking, not intervene all the time. This moves away from the night watchmen role - Krugman said excessive intervention reduced India’s GDP by 15%
Variation of theory of second best( if one condition for pareto optimality cannot be satisfied, do not satisfy the rest) by intervening in economic activity.

Question 2

What is grafting? How could we reduce it?

Answer 2

High level corruption - use of office for private gain
Reduce via decentralisation as closer proximity

Question 3

What is political economy?

Answer 3

Bring politics and economics concepts together to analyse the governments actions, identifying forms of government failure 1) Rent seeking 2) Corruption

Question 4

What is Rent seeking?

Answer 4

Generation of directly
unproductive activities (DUP)

Question 5

What is the proximity argument for decentralisation benefits?

Answer 5

More proximity assumed to deliver better services and participation

Question 6

Define decentralisation

Answer 6

Set of measures that transfer a range of powers and resources from central to subnational governments

Question 7

What are the 3 routes to accountability (the triangle) ?

Answer 7

Political/Long route - citizens influence the state
Administrative/ Compact - State oversees providers
Direct/Short - Citizens influence providers