Development Economics: An Academic Note
Introduction
Development economics is a specialized field of economics that emerged after World War II,
primarily aimed at addressing the economic conditions of newly independent and
underdeveloped countries in the Global South. It evolved as a response to the inadequacies of
classical economic theories in explaining poverty, structural inequality, and
underdevelopment in the postcolonial world. Strongly influenced by Keynesian principles,
development economics emphasized the role of the state in stimulating economic growth,
planning national economies, and addressing socio-economic disparities. It also became
deeply entwined with Cold War geopolitics, as development became a site of ideological
struggle between capitalism and socialism.
Major Contributors
The field of development economics has been shaped by a range of economists who
contributed both theoretical frameworks and practical models for economic transformation in
the developing world.
W. Arthur Lewis proposed the dual economy model, distinguishing between a traditional
agricultural sector and a modern industrial sector. He argued that development requires
transferring surplus labour from the low-productivity rural economy to the high-productivity
industrial economy.
Paul Rosenstein-Rodan advanced the Big Push Theory, asserting that large-scale,
coordinated investments across multiple sectors are necessary to overcome the structural
barriers that keep economies in a low-equilibrium trap.
Raúl Prebisch, working with the United Nations Economic Commission for Latin America
and the Caribbean (ECLAC), critiqued the global trading system through the lens of centre-
periphery relations. He argued that developing countries needed to protect their economies
through import substitution and diversification, as international trade tended to favour
industrialised nations.
Amartya Sen significantly broadened the scope of development economics by introducing
the capabilities approach. Moving beyond GDP and industrial output, Sen emphasised
human freedoms, agency, health, education, and social justice as core elements of
development.
Theoretical Contributions
Development economics is characterised by a set of interrelated theories and strategies, each
aimed at addressing the challenges of economic underdevelopment through state intervention
and long-term planning.
1. State-Led Industrialisation
One of the foundational ideas in development economics is the central role of the state in
directing economic growth. Inspired by the New Deal in the United States, implemented by
President Roosevelt and the planning models of the Soviet Union, many developing countries
implemented state-led programs to build infrastructure, establish public sector industries, and
guide national investment strategies.
2. Big Push Theory
This theory argued that isolated investments in a single sector would fail to generate
sufficient demand or growth. Only large-scale, coordinated investments across a range of
interdependent sectors could trigger the multiplier effects necessary for sustained economic
development.
3. Import Substitution Industrialization (ISI)
A dominant strategy in Latin America and parts of Asia and Africa, ISI called for reducing
dependence on imported manufactured goods by building domestic industries. This involved
high tariffs, state subsidies, and targeted investment to protect and nurture infant industries.
4. Five-Year Planning and National Development Plans
Many countries adopted centralized planning mechanisms to allocate resources, define
development goals, and coordinate sectoral growth. India’s Planning Commission and its
Five-Year Plans exemplify this model, combining public investment with regulatory
oversight to shape economic priorities.
5. Dual Economy Model
Lewis’s dual economy model viewed underdeveloped economies as structurally divided.
Development was understood as the process of transforming surplus labour in the subsistence
rural sector into productive labour in the industrial urban sector. The model assumed that
capital accumulation and urban employment would eventually absorb rural labour and
generate economic modernisation.
Criticisms and Limitations
Despite its early influence, development economics has been widely critiqued for its
assumptions, methods, and outcomes. These critiques have come from a range of disciplines,
particularly anthropology, political economy, and postcolonial studies.
1. Overemphasis on Economic Growth
One of the main criticisms is that development economics focused disproportionately on
metrics like GDP and industrial output, while neglecting broader social, political, and cultural
aspects of development. Anthropologists argue that such models ignore local knowledge
systems, power relations, and community priorities.
2. Technocratic and Top-Down Approaches
Development strategies based on this framework often adopted a technocratic perspective,
where decisions were made by central planners or external experts with little participation
from local communities. Scholars such as James Ferguson and Arturo Escobar argue that
these approaches depoliticize development and reduce it to administrative exercises, ignoring
the complexity of on-the-ground realities.
3. Western-Centric Models
Development economics has also been criticized for assuming that all countries should follow
the same trajectory of industrialization and modernization that was pursued by Western
nations. This universalist perspective fails to account for historical, cultural, and institutional
diversity, and reinforces notions of the Global South as “lagging behind” the West.
4. Reinforcement of Dependency and Inequality
From a dependency theory perspective, development economics has often reinforced unequal
trade relationships and global hierarchies. Strategies such as import substitution frequently
led to new forms of dependency, including reliance on foreign capital, imported technology,
and Western advisors.
5. Inefficiency and Corruption in State Institutions
Neoliberal critics have pointed to cases where state-led development resulted in bloated
bureaucracies, corruption, mismanagement, and rent-seeking behavior. The inefficiency of
many public sector enterprises and the failure of planning in some countries contributed to
growing disillusionment with the development economics model by the late 1970s.
Conclusion
Development economics played a pivotal role in the post-World War II global order, offering
a roadmap for economic transformation in newly decolonized states. It combined Keynesian
insights with the specific challenges of underdevelopment, emphasizing the centrality of the
state in fostering economic modernization. While it achieved notable successes in
infrastructure development, literacy improvement, and industrial growth, it also suffered from
deep structural flaws. The emergence of critiques from anthropologists, postdevelopment
theorists, and political economists marked a turning point in how development was
conceptualized and practiced. These critiques paved the way for new approaches, including
neoliberalism, dependency theory, and post-structural critiques, all of which continue to
shape the field of development studies and the anthropology of development.
