Raghuram Rajan: belief

Transcript context

…But Spain has democracy, Belgium has democracy. They might be splitting apart. I think there is a reasonable . . . We found a balance. Every country has to find that balance between regional power and central power. And it goes back and forth. Increasingly what we find is, in India, the states are demanding more power, and more is being decentralized to them. This is something that every country has to work out. How much do you allow a state like Catalonia the freedom to express itself within the larger nation? And sometimes repression has the wrong consequences. We in India know that. We have had a number of states where there has been repression, and there has been pushback. Jeff Sachs wrote a famous review of Acemoglu and Robinson, and he pointed out that if you go back in time and try to predict which countries will do well on the basis of their institutions, it’s very hard to predict, using institutions, which countries will be the high-growth winners. To most economists that sounds counterintuitive. We feel in our bones institutions have to matter. Are we mismeasuring institutions? Are we not looking at the right ones? How do you account for this paradox?…

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