The New Development Economics: We Shall Experiment, but How Shall We Learn?

Development economics has long been split between macro-development economists—who focus on economic growth, international trade, and fiscal/macro policies—and microdevelopment economists—who study microfinance, education, health, and other social programs. Even though the central question that animates both sets of economists ostensibly ishow to achieve sustainable improvements in living standards in poor countries, the concerns andmethods of these two camps have at times diverged so much that they seem at opposite extremesof the economics discipline.I shall argue in this paper that there are some good reasons to be optimistic about the reunificationof the field, as these sharp distinctions are eroding in some key respects. But thereare also some reasons for pessimism, related to divergence in empirical methods. This papercovers both the good and the bad news.