18 July 1993 Paying more attention to ideas The power of ideas is more than theoretical. Some of the most successful development strategies are based on using imported ideas and creating new ones Most economists tend to ignore the role of ideas as a critical element of economic growth. That is why development strategies typically focus on measuring labor and capital, on devising policies for the growth and efficiency of markets, and on determining the merits of various interventions to influence behavior. But World Bank consultant Paul Romer's examination of what has actually worked in developing economies over the past three decades shows that progress often is not readily explained by such traditional analysis.
Big ideas can make a major difference.
And millions of little ideas, such as better ways to sew a shirt, can turn a poor back-water village into a boomtown. These differences in growth rates should not be seen as simply reflecting different population growth rates. In Mauritius and Sri Lanka, the population growth rates have been nearly the same while their economic growth rates have diverged. In these four economies, at least, there is also no direct correlation between economic growth and investment rates, literacy rates, or comparative work force education, as the table shows. Something else is at work here.