The state and the market, their functions and failures in the history of economic development thought

Abstract

Outlines the ideas incorporated in “development economics” and criticizes the lack of distinction made by some writers between development and economic growth. Asks whether underdeveloped countries really need a different economic theory from Western Europe and suggests that growth (in gross national product) and development (i.e. structural change) are actually complementary processes. Reviews various theories on the causes of underdevelopment (e.g. market failure, government failure) and strategies to cure it (e.g. government intervention, private initiative, market mechanism); and cites some examples of successful positive intervention.