What should [Indonesian president Joko] Widodo do? Indonesia is a large, populous middle-income country. It faces no major near-term security threats. It has a small manufacturing base and no major non-commodity export sectors. What is the best non-bureaucratic 10 page economic development briefing document and set of prescriptions that one could write for Indonesia’s president? For Indonesia, substitute Philippines, Chile, or Morocco.Economists do not know the answer to this question; there is no formula for raising the income of a stable, middling nation. Nor do they know the answer to most of the other important questions facing policy makers: How could the US or Britain preserve manufacturing jobs without severely hurting the rest of the economy? How could Russia promote its middle class? How can west African nations develop modern economies? Etc.
This is what makes me think that economists don't actually understand the economy very well. Many of them promote laissez-faire policies, and that did work fairly well in Hong Kong and Chile, but the most spectacular examples of modern growth (Japan, Taiwan, South Korea, and now China) were in nations with very active government planners.
My question that economists should investigate would be, how did the East Asian nations do it? In particular, what did the central planners actually do, and why did it work? And what role did culture play?