Disagreement and learning about reforms

When it comes to economic reforms in developing countries, many economists agree on broad objectives. Broad objectives, however, can be pursued in different ways, and policy experimentation is often indispensable for learning which alternative works locally. We propose a theoretical model to study this societal learning process. The model explores the role of disagreeing beliefs about ‘what works’. It suggests that such disagreement can stall the societal learning process and cause economic stagnation although everyone knows that growth-promoting reforms do exist. Our analysis is motivated by the observation of a negative relationship between disagreement and economic growth among poorer countries.