When it comes to prescribing policy, policy makers are greeted with numerous policy recommendations. Let say, you want to develop an economic diversification policy. One option is of course to do nothing. Another option is to look at existing economic activities and attempt to deepen and broaden each of the activities to create new value within existing niche areas. Another option is to look for new sources of economic activities that are yet to be introduced, such as auto industry, artificial intelligence or medical tourism. Which one of these choices should policy makers adopt?
One method to evaluate the many policy prescriptions is to embark on “value clarification” exercise. Value clarification is an exercise where policy makers identify and classify the value of each policy prescription. Each policy prescription has an underlying objective and thereby the need for policy makers to understand the value attached to it. For instance each prescription could serve objectives such as efficiency, competitiveness, equity, capacity building, appropriateness etc. and so by doing “value clarification” the policy maker undertakes an exercise to locate and classify the value premises of each prescription. How do you go about doing this?
The first is to understand the objectives of a policy. For instance, identifying new economic sector would serve the objective of developing new capacities. Or one of the objectives to deepen and broaden existing economic sector is to develop more expertise in the sector that would distinguish the economy from other economies in the region.
The second method in “value clarification” is to identify the stakeholders who are affecting or will be affected by the objectives of the various prescription. How will embarking on an auto making industry impose on current players in sectors like agriculture, retail, services or education? Will the objectives of having auto industry affect the distribution of resources to other sectors of the economy?
The third step in “value clarification”, identify the stakeholders who have an interest in particular policy prescription and list the value premise of each of these stakeholders. For example, when prescribing to deepen and broaden existing sectors, list the values of people who have interest in such policy. The values could involve competitiveness, specialisation, harnessing existing skill sets, intensifying technological capabilities in a sector that is known etc.
The fourth step is to classify those values under generic categories. The categories can be in the form of value expression ( such as “personal preference”) or it could be about value statements ( neo-liberal ideas, state-led development etc,) or it could be about value judgement ( waste of resources, equitable growth , “economic rationality”, “Are those values etc.)
The final step is to attempt to explain the reasons for the various judgement. For example, economist might think that embarking on an auto industry is not rational given the cost-benefit analysis, as the cost of embarking on a project that has large economies of scale could grossly outweigh the benefits of having one, because resources could be put to better use in industries that can have greater added value given existing skill sets.
The various steps are just one of the many synthesized indicators to making a policy prescription. There are many ways to skin the cat. The most important thing to get out from this exercise is that there need to be a systematic way of offering policy prescription for optimum policy output.