Paul Romer as Chief Economist of the World Bank Is Great News

Paul Romer becoming chief economist at the World Bank looks quite promising for economic development. 

In a 1990 explanation of new growth economics, Paul Romer and Robert Barro wrote, “If government taxes or distortions discourage the activity that generates growth, growth will be slower.” 

Speaking about the “Mauritian Miracle” at a 1992 World Bank conference, Romer emphasized that  “income and corporate tax rates were halved in 1983 (from about 70 to about 35 percent).” He also noted that free-trade zones allowed “unrestricted, tariff-free imports of machinery and materials, no restriction on ownership or repatriation of profits, [and] a ten-year income tax holiday for foreign investors.”  

Romer’s new growth economics should prove quite compatible with a timely rediscovery of the many global success stories with supply-side reductions in marginal tax rates and tariffs in the 1980s and 1990s in countries as diverse as Botswana, India, Chile, New Zealand, China, Ireland, Singapore, Mexico and more recently Turkey and Eastern Europe.