WHITHER DEVELOPMENT. ECONOMICS? James H. Weaver and Kevin M. O'Keefe L·development economics enters its fourth decade as both a field of study and a theoretical launching pad for development assistance policies, it is appropriate to ask some hard questions: 1) Is development economics a legitimate field in its own right? 2) What have been the results of the return to orthodoxy in the 1980s? 3) What is the current state of development economics? and finally, 4) What is the future of development economics? Using these four questions to structure the paper we will attempt to present a critical review of development economics since its inception and to suggest a vision of the key elements likely to be addressed by development economics in the future. A Brief Overview OfDevelopment Economics Development economics has been characterized by its rejection ofthe relevance of classical economic theory and laissez-faire, free trade policy for developing countries. This rejection was based on: the disastrous experience, during the Great Depression, of capitalist countries following laissez-faire policies; the impressive rate of industrialization achieved by James H. Weaver is a professor of economics at the American University and is principal investigator ofthe Development Studies Program ofthe U.S. Agency for International Development. Kevin M. O'Keefe is a graduate student in the American University's School ofInternational Service International Development Program and a research fellow at the Development Studies Program. 113 114 SAISREVIEW the Soviet Union using centralized planning; and the conviction that the institutions necessary for market economies to operate were not present in developing countries. In this early period, development economists equated development with industrialization and virtually ignored agricultural transformation. Convinced that laissez-faire and free trade would not produce development, they argued for increased government planning, a large role for government saving and investment, protection of domestic industry, and greater foreign assistance. Not all orthodox economists accepted the arguments of development economists. Many kept believing in the relevance ofneo-classical economics and the laissez-faire, free trade strategy. Moreover, in addition to the orthodox development economists, there were many non-orthodox economists studying development during this same period. Two schools of non-orthodox economists emerged: dependency theorists and neo— Marxists. Dependency theorists agreed with the critiques made by the orthodox development economists but went further. They argued that successful capitalist development was impossible in developing countries because these countries were so dependent on industrialized countries for technology and capital. Dependency theorists clearly had a more highly developed theory of underdevelopment and its causes than of development . Although the policy prescriptions of this group were diverse, they often called for a de-linking from the international economic system, socialist revolution, or both. In the 1970s a new group on the left, classified as neo-Marxists, rejected dependency theory entirely. They argued that imperialism was a progressive force in developing countries and that the problem was not too much capitalism but too little. According to this school, the main obstacles to development were the same forces that had blocked capitalist development in Asia in the fifteenth century when it was beginning in Europe. These neo-Marxists pointed to the great progress made by Korea, Brazil, and others, in industrializing as proof that successful capitalist development was quite possible; and they concluded that only when pre-capitalist elements, such as feudal land tenure, have been eliminated and the productive forces ofsociety released through capitalism will it be possible to achieve a successful transition to socialism. An Overview of Three Key Development Strategies What practical strategies have arisen from the study ofdevelopment economics? We shall discuss three such strategies: import substitution industrialization, export promotion, and growth with equity. WHITHER DEVELOPMENT ECONOMICS? 115 Import Substitution Industrialization (ISI). In the 1950s, development economists proposed a strategy for rapid industrialization based on domestic production of consumer goods. This approach advocated the imposition of quotas and tariffs to keep foreign goods out and to protect infant industries. It also recommended the maintenance of overvalued or multiple exchange rates in order to encourage the importation ofcapital, intermediate goods, and raw materials, while discouraging the importation of luxury and consumer goods. Governments were advised to control and allocate foreign exchange to crucial...
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Dec 24, 2022
Nadeem Ul Nadeem Ul Haque 
