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Development Policy Competition and Positive Sum Growth: Incentive Competition and Its Alternatives

IJED, Vol. 1 No. 3, (1999)

This essay directly challenges the assumption that development competition is undesirable by examining how development policy can enhance social welfare. I address the desirability of development competition by demonstrating that the efficiency of development efforts depends upon the types of development programs employed and the context in which governments compete. After discussing the role of government policy competition in general, I examine incentive competition. I argue that, while development competition can lead to zero-sum outcomes, the zero-sum result is a special case. From this perspective, the social benefits resulting from development competition depend on the characteristics of the economic development market. I next examine three alternatives to conventional development strategies: institutional development, human capital development, and social capital development. After describing each of these approaches I argue that they have the potential to create positive sum gains for the states and communities that employ them.

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