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Development Economics: A Theoretical and Historical Perspective


  • Davide Gualerzi



This paper is part of a larger project aiming at revitalizing high development theory". It examines the roots of development economics, tracing it back to the seminal contributions of European émigrés to the UK and the US in the 1930s. Developed mainly by German speaking economists it became very influential in the 1950s and 1960. It was virtually pushed out of economic theory and research by the new course in economic analysis, relying more and more on a formalized approach. Discussing the reasons of the dismissal Paul Krugman has identified a basic model where modernization was a self-sustaining process centered on the interaction between scale economies and market size. That is hard to fit into standard competitive analysis and so it was abandoned. The paper focuses on the basic model and argues that a fruitful way to develop the interaction between scale economies and market size is focusing on the process of market formation. This is a key issue for updating and bringing forward the fundamental insight of high development theory. The paper calls attention to the differences in the way the question is articulated in developed and developing economies. In developed economies the main problem is to overcome the tendencies towards market saturation. In developing economies the main problem is to build up the domestic market. Constraints arise from income distribution, social conflicts and environmental problems. We argue that the focus on market formation helps to shape a research agenda that, while based on the approach of high development theory, can address the formidable challenges posed by the development of a heterogeneous periphery dominated by the new giants in Asia and Latin America. "

Suggested Citation

  • Davide Gualerzi, 2012. "Development Economics: A Theoretical and Historical Perspective," REVISTA ECONOMÍA & REGIÓN, UNIVERSIDAD TECNOLÓGICA DE BOLÍVAR, vol. 6(1), pages 27-48, July.
  • Handle: RePEc:col:000411:009788

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    References listed on IDEAS

    1. Fertig, Michael & Schmidt, Christoph M., 2002. "The Role of Background Factors for Reading Literacy: Straight National Scores in the PISA 2000 Study," IZA Discussion Papers 545, Institute for the Study of Labor (IZA).
    2. Roberto Angulo & Alejandro Gaviria & Gustavo Nicolás Páez & Joao Pedro Azevedo, 2012. "Movilidad social en Colombia," DOCUMENTOS CEDE 010323, UNIVERSIDAD DE LOS ANDES-CEDE.
    3. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, March.
    4. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-1177, September.
    5. Jorge Hugo Barrientos Marín, 2001. "Calidad de la educación y rendimiento académico en Bogotá," Grupo Microeconomía Aplicada 021, Universidad de Antioquia, Departamento de Economía.
    6. Ludger Woesmann, 2003. "Schooling Resources, Educational Institutions and Student Performance: the International Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(2), pages 117-170, May.
    7. Ana María Iregui & Ligia Melo & Jorge Ramos, 2007. "Análisis de eficiencia de la educación en Colombia," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, May.
    8. Gerald S. Oettinger, 1999. "Does High School Employment Affect High School Academic Performance?," ILR Review, Cornell University, ILR School, vol. 53(1), pages 136-151, October.
    9. Alejandro Gaviria Uribe & Claudia Marcela Umaña A., 2002. "Estructura salarial de los docentes pu?blicos en Colombia," COYUNTURA SOCIAL 012944, FEDESARROLLO.
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    More about this item


    Development; development economics; Krugman; scale economies; increasing returns; market creation;

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy


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