Chapter One - The Sectoral Approach to Economic Policy and Its Limits

Summary

“[…] To be sure, development economics has provided us with some remarkable insights. But as a subdiscipline of economics, it has so far been unable to provide a convincing intellectual agenda for generating and distributing wealth in poor countries, as evidenced by the persistence of poverty in many parts of the world. […] The questions before us are what to do with all these elements and how to organize them in a convincing new theory and a practical framework to help policymakers in poor countries solve the mystery of growth and sustain the dynamics of structural transformation.”

Justin Yifu Lin, former chief economist and senior vice president at the World Bank

Introduction

This chapter seeks to clarify and bring out the shortcomings of the sectoral approach that many African countries seem to pursue in the conception and implementation of their economic policy.

What Is Meant by a “Sectoral Approach” to Economic Policy?

Records indicate that many of the economic policies adopted by African countries to stimulate development after independence can be summarized as a succession of priorities accorded to different sectors of the economy or to certain specific thematic preoccupations considered to be of valuable importance to the economic development of the nation. This approach works as follows: once the importance of a sector or theme has been asserted, the next step is to seek sufficient resources in order to obtain the desired sectoral results, since it is projected that this would consequently produce positive effects that would in turn spread throughout to stimulate economic growth and reduce poverty. This is what I refer to in this book as the sectoral approach to economic policy.