Past and Future of Empirical Development Economics

This chapter briefly summarizes the trajectory of empirical development economics and discusses the recent advancements and future challenges. The increased use of randomized controlled trialsRandomized Controlled Trial (RCT) (RCTs) has led to a growing understanding of what development policies work. However, it also increased RCT studies with little theoretical foundation and ignorance of local contextsLocal context, which do not help effective policy discussion and deep understanding of issues in reality. Recent advancements in structural estimationStructural estimation and development macro-analysis methods help us address major development issues based on economic theories, including general equilibrium effectsGeneral equilibriumeffect, and conduct appropriate counterfactualCounterfactual analyses using simulationsSimulation. However, we should not ignore the fact that constructing credible counterfactuals requires a deep understanding of local contextsLocal context. We conclude the chapter by addressing the importance of meta-analysisMeta-analysis and the future direction of research towards a deeper comprehension of human behavior and market-level analyses based on micro-level evidence.