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Half a century of development economics : a review based on the"Handbook of Development Economics"

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  • Waelbroeck, Jean
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    Development economics has made remarkable progress in 50 years, says the author, summarizing changes in the field since Nehru's first proposals for an independent India. Synthesizing insights about changes in the field from the many contributors to the"Handbook of Development Economics,"the author observes (among other things): 1) Different schools of thought may dominate, but the range of research has broadened. Economics has"hardened"as its practitioners have learned to use data more carefully and to reason more rigorously. 2) The policy message has been turned upside down. Gone is the idea that development is industrialization and that the main policy problem is to manage the interface between country and city. Today urbanization and industrialization are viewed as mere components of an integrated transformation, in which the expansion of foreign trade is central. Traditional institutions are viewed with far more understanding, because overhasty modernization has often proved counterproductive. 3) More than ever, development is seen as a"whole replacement"process, the key to which is mastery of Northern technology--now understood to be both simpler and more complex than previously thought. Simpler, because much technology is uncomplicated, and complex because even simple technology requires ingenuity and a costly investment in adaptations. 4) There has been a radical change in economists'view of market agents and policymakers. Gone are the days when economists thought their advice should be aimed mainly at planners. Policymakers are utility maximizers, too. Employees of state enterprises coalesce into powerful interest groups that block efforts to raise productivity. The new thinking is sometimes modified by evoking the vague concept of"governance,"under which the economist's view is to help design a system of interacting state and private institutions that, led by the state, cooperate in achieving social goals. Whether something useful will come from this line of thinking remains to be seen. The author detects major gaps in economists'undrstanding of development, suggesting a particular need for further study of collective action (a far more pervasive component of human action than is realized) and the selection of roles by individuals and the costly investment this entails (a concept that may shed light on Schumpeter's well-known but little-studied entrepreneur).

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1925.

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    Date of creation: 31 May 1998
    Handle: RePEc:wbk:wbrwps:1925
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    1. Chenery, Hollis B, 1975. "The Structuralist Approach to Development Policy," American Economic Review, American Economic Association, vol. 65(2), pages 310-316, May.
    2. Jonathan Isham & Daniel Kaufmann, 1999. "The Forgotten Rationale for Policy Reform: The Productivity of Investment Projects," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 149-184.
    3. Young, Alwyn, 1994. "Lessons from the East Asian NICS: A contrarian view," European Economic Review, Elsevier, vol. 38(3-4), pages 964-973, April.
    4. Lance Taylor & Edmar L. Bacha, 1976. "The Unequalizing Spiral: A First Growth Model for Belindia," The Quarterly Journal of Economics, Oxford University Press, vol. 90(2), pages 197-218.
    5. Victor Ginsburgh & Jean Waelbroeck, 1981. "Activity analysis and general equilibrium modelling," ULB Institutional Repository 2013/1649, ULB -- Universite Libre de Bruxelles.
    6. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    7. A. K. Sen, 1963. "Neo‐Classical And Neo‐Keynbsian Theories Of Distribution," The Economic Record, The Economic Society of Australia, vol. 39(85), pages 53-64, 03.
    8. W. E. G. Salter, 1959. "Internal And External Balance: The Role Op Price And Expenditure Effects," The Economic Record, The Economic Society of Australia, vol. 35(71), pages 226-238, 08.
    9. Barro, Robert J & Grossman, Herschel I, 1971. "A General Disequilibrium Model of Income and Employment," American Economic Review, American Economic Association, vol. 61(1), pages 82-93, March.
    10. Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
    11. Alan M. Taylor, 1996. "International Capital Mobility in History: The Saving-Investment Relationship," NBER Working Papers 5743, National Bureau of Economic Research, Inc.
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