Rodrik (2006) has his own way of thinking about growth strategies. Step 1, what he calls “diagnostic analysis,” involves figuring out where the most significant constraints on economic growth are located in a given setting. In a low-income economy, Rodrik argues, economic activity must be constrained by at least one of two factors: either the cost of finance must be too high, or the private return on investment must be low. Step 2 is creative and imaginative policy design targeted at the identified constraints. The key is to focus on the market failures and distortions associated with the constraint identified in the previous step. The principle of policy targeting offers a simple message: target the policy response as closely as possible on the source of the distortion. Step 3 involves institutionalizing the process of diagnosis and policy response to ensure that the economy remains dynamic and growth does not fizzle out. What is needed to sustain growth? Two types of institutional reform seem to become critical over time. First is the need to maintain productive dynamism. Natural resource discoveries, garment exports from maquilas, or a free trade agreement may spur growth for a limited of time, but policy needs to ensure that this momentum is maintained with ongoing diversification into new areas of tradable commodities or else growth simply fizzles out. Second is the need to strengthen domestic institutions of conflict management. The most frequent cause for the collapse in growth is an inability to deal with the consequences of external shocks—that is, in terms of trade declines or reversals in capital flows. Endowing the economy with resilience against shocks requires strengthening the rule of law, solidifying (or putting into place) democratic institutions, establishing participatory mechanisms, and erecting social safety nets. When such institutions are in place, the macroeconomic and other adjustments needed to deal with adverse shocks can be undertaken relatively smoothly. What is required to sustain growth should not be confused with what is required to initiate it. Such is Rodrik’s alternative proposal.