A long question, but an important one. It is asked by William Easterly in his review of Alan Beattie’s new book "False Economy: A Surprising Economic History of the World". Easterly writes
Beattie accurately reflects the collapse in self-confidence among economists on our ability to usefully recommend how “developing” countries can rapidly develop. And he’s right about the reasons for this: both success and failure have often caught us by “surprise”, the key word in the book’s subtitle.The strength of the book is its discussion of international trade. Easterly goes on
In a wonderful exposition that should make it into all undergraduate economics classes, Beattie argues that, fertile Nile or not, Egypt is not so much importing wheat as importing water. Only the Nile provides water for the mostly desert country. Wheat takes much water to grow, so the water imports are contained in the wheat imports. By importing wheat, Egypt conserves its own water for drinking and uses other countries’ water to grow wheat shipped to Egypt. This is a wonderful illustration of how trade allows countries to import scarce resources, buying in the goods that would use them, and export their abundant resources, by selling the goods that use those.Easterly sums up by saying
Beattie’s supremely entertaining and informative book is a great reminder that the details of success are often impossible to predict or prescribe: no one can work out how to achieve each component. The best response is not to have increasingly convoluted advice by experts, but to let individuals with local knowledge roam free by trial and error to find their own successes. (emphasis added.)As I said when commenting on Easterly's blog posting on The secret to successful aid.
So in the end, the economics profession does have more sensible things to say about achieving long-run success than Beattie allows: (relatively) free individuals, free markets, free trade, free thinking, and institutions that support all of the above.
In other words, the Hayakian approach to aid, make use of the local tacit knowledge of time and place to achieve a market based solution to the problems that these particular people face. A spontaneous order if you will.