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Understanding the mechanisms of economic development

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Listed author(s):
  • Angus S. Deaton

Abstract

I argue that progress in understanding economic development (as in other branches of economics) must come from the investigation of mechanisms; the associated empirical analysis can usefully employ a wide range of experimental and non-experimental methods. I discuss three different areas of research: the life-cycle saving hypothesis and its implication that economic growth drives higher rates of national saving, the theory of speculative commodity storage and its implications for the time-series behavior of commodity prices, and the relationship between economic growth and nutritional improvement. None of these projects has yet been entirely successful in offering a coherent account of the evidence, but all illustrate a process of trial and error, in which although mechanisms are often rejected, unlikely theoretical propositions are sometimes surprisingly verified, while in all cases there is a process of learning about and subsequently modifying our understanding of the underlying mechanisms

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15891.

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Date of creation: Apr 2010
Publication status: published as Angus Deaton, 2010. "Understanding the Mechanisms of Economic Development," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 3-16, Summer.
Handle: RePEc:nbr:nberwo:15891
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Find related papers by JEL classification:
  • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
  • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
  • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
  • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
  • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
  • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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  1. Angus Deaton, 2010. "Instruments, Randomization, and Learning about Development," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 424-455, June.
  2. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
  3. Eyal Dvir & Kenneth S. Rogoff, 2009. "Three Epochs of Oil," NBER Working Papers 14927, National Bureau of Economic Research, Inc.
  4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
  5. Angus Deaton, 2005. "ERRATUM: Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 395-395, May.
  6. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
  7. Paxson, Christina, 1996. "Saving and growth: Evidence from micro data," European Economic Review, Elsevier, vol. 40(2), pages 255-288, February.
  8. Angus Deaton, 1999. "Commodity Prices and Growth in Africa," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 23-40, Summer.
  9. Angus Deaton & Christina Paxson, 2000. "Growth and Saving Among Individuals and Households," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 212-225, May.
  10. Angus Deaton & Christina Paxson, 1998. "Economies of Scale, Household Size, and the Demand for Food," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 897-930, October.
  11. repec:pri:rpdevs:deaton_instruments_randomization_learning_all_04april_2010 is not listed on IDEAS
  12. Johnson, Simon & Larson, William & Papageorgiou, Chris & Subramanian, Arvind, 2013. "Is newer better? Penn World Table Revisions and their impact on growth estimates," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 255-274.
  13. Kuznets, Simon, 1976. " Demographic Aspects of the Size Distribution of Income: An Exploratory Essay," Economic Development and Cultural Change, University of Chicago Press, vol. 25(1), pages 1-94, October.
  14. Eyal Dvir & Ken Rogoff, 2009. "The Three Epochs of Oil," Boston College Working Papers in Economics 706, Boston College Department of Economics.
  15. Kotlikoff, Laurence J & Summers, Lawrence H, 1981. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 706-732, August.
  16. Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October.
  17. Chang-Tai Hsieh & Peter J. Klenow, 2007. "Relative Prices and Relative Prosperity," American Economic Review, American Economic Association, vol. 97(3), pages 562-585, June.
  18. A. B. Atkinson, 1969. "The Timescale of Economic Models: How Long is the Long Run?," Review of Economic Studies, Oxford University Press, vol. 36(2), pages 137-152.
  19. Christopher D. Carroll & Lawrence H. Summers, 1991. "Consumption Growth Parallels Income Growth: Some New Evidence," NBER Chapters,in: National Saving and Economic Performance, pages 305-348 National Bureau of Economic Research, Inc.
  20. Gregory Clark & Michael Huberman & Peter H. Lindert, 1995. "A British food puzzle, 1770–1850," Economic History Review, Economic History Society, vol. 48(2), pages 215-237, 05.
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Cited by:

  1. Pauw, Karl & Thurlow, James, 2011. "Agricultural growth, poverty, and nutrition in Tanzania," Food Policy, Elsevier, vol. 36(6), pages 795-804.
  2. David Card & Stefano DellaVigna & Ulrike Malmendier, 2011. "The Role of Theory in Field Experiments," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 39-62, Summer.
  3. Chen, Xi & Zhang, Xiaobo, 2017. "Costly Posturing: Ceremonies and Early Child Development in China," IZA Discussion Papers 10662, Institute for the Study of Labor (IZA).
  4. Chen, Xi, 2014. "Fetus, Fasting, and Festival: The Persistent Effects of in Utero Social Shocks," IZA Discussion Papers 8494, Institute for the Study of Labor (IZA).
  5. Sunil Mitra Kumar, 2016. "RCTs for better policy? The case of public systems in developing countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(1), pages 83-98, April.
  6. repec:unu:wpaper:wp2012-70 is not listed on IDEAS
  7. Mehlum, Halvor & Torvik, Ragnar & Valente, Simone, 2016. "The savings multiplier," Journal of Monetary Economics, Elsevier, vol. 83(C), pages 90-105.
  8. Jean Cartier-Bresson, 2013. "Le pouvoir du positivisme et ses limites : microéconométrie et macroéconométrie actuelles du développement," Working Papers hal-00847005, HAL.
  9. Miguel Szekely, 2011. "Toward Results-Based Social Policy Design and Implementation - Working Paper 249," Working Papers 249, Center for Global Development.
  10. Chen, Xi & Zhang, Xiaobo, 2012. "Costly posturing: relative status, ceremonies and early child development in China:," IFPRI discussion papers 1206, International Food Policy Research Institute (IFPRI).
  11. Mlambo, Kupukile & Murinde, Victor & Zhao, Tianshu, 2011. "How Does the Institutional Setting for Creditor Rights Affect Bank Lending and Risk-Taking?," Stirling Economics Discussion Papers 2011-03, University of Stirling, Division of Economics.

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