In his thought-provoking book, Gambling on Development: Why Some Countries Win and Others Lose, Stefan Dercon, a development economist, examines the key factors that explain why certain countries experience growth and prosperity while others remain mired in poverty and instability. The book delves deep into the “development gamble,” emphasizing that successful nations rely on a pragmatic mix of market strategies, political stability, and economic openness. Through extensive research, case studies, and personal experiences, Dercon sheds light on the critical role of leadership and institutional buy-in in fostering economic success. His compelling argument centers around the idea that nations must bet on development as a coordinated gamble, aligning political, economic, and social incentives. Dercon’s expert analysis challenges the common assumptions that poverty is primarily a result of external factors, instead offering a nuanced explanation of development’s inner workings.

The opening section of Gambling on Development sets the stage for Dercon’s central thesis: development is a calculated risk taken by governments, where success hinges on a country’s ability to build coalitions committed to growth. Countries that win this gamble, according to Dercon, do so by fostering elite consensus and institutional frameworks that embrace global markets, innovation, and political stability. In contrast, those that lose the gamble often experience a breakdown in political alignment or fail to establish incentives that drive long-term prosperity.

To illustrate his argument, Dercon highlights several key examples of countries that have both succeeded and failed in their development gambles. These case studies vividly bring to life the book’s central arguments, offering readers tangible examples of the factors that contribute to a country’s development trajectory.

One of the most striking case studies Dercon explores is that of China, which he describes as a classic example of a country that successfully gambled on development. The reforms launched by Deng Xiaoping in the late 1970s represented a calculated risk, opening China to global markets and abandoning strict socialist economic policies. Dercon points out that this gamble was not without its challenges; it required intense political maneuvering to create consensus within the Communist Party. By maintaining a firm grip on political power while simultaneously embracing market-oriented reforms, China has been able to lift millions out of poverty and establish itself as a global economic powerhouse.

In contrast, Dercon discusses Zambia, a country rich in natural resources but plagued by underdevelopment and economic stagnation. Zambia, like many resource-rich African nations, faced the challenge of balancing elite interests with the need for inclusive growth. Unfortunately, Zambia’s leadership failed to make the necessary reforms, falling into the trap of rent-seeking behavior and short-term political gains. Dercon emphasizes that Zambia’s inability to craft a cohesive development plan resulted in its failure to capitalize on its natural wealth, leaving it behind in the global development race.

Dercon also explores Ethiopia, a country he knows well due to his involvement as a policy adviser there. Ethiopia embarked on its own developmental gamble under the leadership of Meles Zenawi, a leader who, despite authoritarian tendencies, placed a strong emphasis on economic development and state-led growth. Dercon argues that Ethiopia’s gamble was built on a strong political commitment to development, but it remains fragile due to ongoing political tensions and the exclusion of key groups from the development process.

A central theme of Gambling on Development is the critical role of leadership and institutional buy-in in determining the success of a country’s development strategy. Dercon argues that successful leaders are those who understand the need to align elite interests with long-term development goals. This requires not only economic reforms but also the establishment of political institutions that can sustain growth.

Rwanda, under the leadership of Paul Kagame, is another powerful case study in Dercon’s analysis. After the genocide in 1994, Kagame’s government undertook a series of radical reforms aimed at fostering economic growth and reconciliation. Dercon credits Rwanda’s leadership with creating a stable political environment conducive to development, despite its authoritarian nature. By ensuring that key elites were invested in the country’s growth, Kagame has been able to transform Rwanda into one of Africa’s fastest-growing economies.

Dercon is clear in his advocacy for market-friendly policies and economic openness. He argues that countries that succeed in development are those that integrate themselves into global markets and encourage innovation and entrepreneurship. However, he warns that market reforms alone are not enough—political stability and institutional strength must accompany them to ensure sustainable growth.

A significant portion of Gambling on Development is dedicated to discussing the impact of globalization on development. Dercon explains that while globalization has created opportunities for many developing countries, it has also exacerbated inequalities in those that fail to take advantage of it. He stresses the importance of striking a balance between openness to trade and maintaining social cohesion, noting that countries like Vietnam have been able to do this successfully.

While Dercon is optimistic about the potential for development, he does not shy away from discussing the risks and challenges that countries face in their development gambles. Corruption, short-term political interests, and external shocks (such as economic crises or pandemics) can derail even the most well-intentioned development strategies. Dercon urges policymakers to remain adaptable and to recognize that development is not a linear process—it involves setbacks and course corrections.

The COVID-19 pandemic serves as a stark reminder of the risks inherent in development. Dercon discusses how the pandemic has disrupted global supply chains and exacerbated inequalities within and between countries. He uses this example to highlight the importance of resilience in development planning, arguing that countries must be prepared to adapt to unforeseen challenges.

In the final chapter of Gambling on Development, Dercon reflects on the future of development and the need for continued investment in education, health, and infrastructure. He argues that while development is always a gamble, it is a gamble worth taking. Countries that embrace uncertainty, adapt to changing circumstances, and remain committed to long-term goals are more likely to succeed.

Dercon’s book provides a nuanced and insightful analysis of why some countries win and others lose in the global development game. His emphasis on the role of leadership, elite consensus, and market integration offers valuable lessons for policymakers and development practitioners alike.

Gambling on Development has been well-received for its balanced approach to development theory, offering both optimism and caution. In a world facing increasing economic uncertainty and inequality, Dercon’s analysis is more relevant than ever. The book’s focus on leadership and the role of institutions makes it a critical read for anyone interested in understanding the complexities of global development.

Keywords: Gambling on Development, Stefan Dercon, development strategies, economic growth, political stability, global markets, leadership in development, case studies in development, successful countries, failed development, Rwanda, China, Zambia, Ethiopia, economic openness, globalization, institutional buy-in, development risks.