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Economic Development
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Table of Contents

I. Principles and Concepts

1. Economics, Institutions, and Development: A Global Perspective
How the Other Half Live
Economics and Development Studies
Economies as Social Systems: The Need to Go Beyond Simple Economics
What Do We Mean by Development?

2. Comparative Economic Development
Defining the Developing World
Measuring Development for Quantitative Comparison across Countries
Some Basic Indicators of Development
Characteristics of the Developing World: Diversity within Commonality
How Low-Income Countries Today Differ from Developed Countries in Their Earlier Stages
Are Living Standards of Developing and Developed Nations Converging?
Long-Run Causes of Comparative Development

3. Classic Theories of Economic Growth and Development
Classic Theories of Economic Development: Four Approaches
Development as Growth and the Linear-Stages Theories
Structural-Change Models
The International-Dependence Revolution
The Neoclassical Counterrevolution: Market Fundamentalism
Classic Theories of Development: Reconciling Differences

4. Contemporary Models of Development and Underdevelopment
Underdevelopment as a Coordination Failure
Multiple Equilibria: A Diagrammatic Approach
Starting Economic Development: The Big Push
Further Problems of Multiple Equilibria
Kremer’s O-Ring Theory of Economic Development
The Hausmann-Rodrik-Velasco Growth Diagnostics Framework

II. Problems and Policies: Domestic

5. Poverty, Inequality, and Development
Measuring Inequality and Poverty
Poverty, Inequality, and Social Welfare
Absolute Poverty: Extent and Magnitude
Economic Characteristics of Poverty Groups
The Range of Policy Options: Some Basic Considerations
Summary and Conclusions: The Need for a Package of Policies

6. Population Growth and Economic Development: Causes, Consequences, and Controversies
The Basic Issue: Population Growth and the Quality of Life
A Review of Numbers: Population Growth—Past, Present, and Future
The Demographic Transition
The Causes of High Fertility in Developing Countries: The Malthusian and Household Models
The Consequences of High Fertility: Some Conflicting Opinions
Goals and Objectives: Toward a Consensus
Some Policy Approaches

7.  Urbanization and Rural-Urban Migration: Theory and Policy
The Migration and Urbanization Dilemma
The Role of Cities
The Urban Giantism Problem
The Urban Informal Sector
Urban Unemployment
Migration and Development
Toward an Economic Theory of Rural-Urban Migration
Summary and Conclusions: The Shape of a Comprehensive Migration and Employment Strategy

8. Human Capital: Education and Health in Economic Development
The Central Roles of Education and Health
Education and Health as Joint Investments for Development
Improving Health and Education: Why Increasing Income Is Not Sufficient
Investing in Education and Health: The Human Capital Approach
Child Labor
The Gender Gap: Women and Education
Educational Systems and Development
Health Systems and Development

9. Agricultural Transformation and Rural Development
The Imperative of Agricultural Progress and Rural Development
Agricultural Growth: Past Progress and Current Challenges
The Structure of Agrarian Systems in the Developing World
The Important Role of Women
The Economics of Agricultural Development: Transition from Peasant Subsistence to Specialized Commercial Farming
Toward a Strategy of Agricultural and Rural Development: Some Main Requirements

10. The Environment and Development
Economics and the Environment
Environment and Development: The Basic Issues
The Scope of Environmental Degradation: An Overview
Rural Development and the Environment: A Tale of Two Villages
Global Warming and Climate Change
Traditional Economic Models of the Environment
Urban Development and the Environment
The Need for Policy Reform
The Local and Global Costs of Rain Forest Destruction and Greenhouse Gases
Policy Options in Developing and Developed Countries

11. Development Policymaking and the Roles of Market, State, and Civil Society
The Planning Mystique
The Nature of Development Planning
The Rationale for Development Planning
The Planning Process: Some Basic Models
Aggregate Growth Models: Projecting Macro Variables
Multisector and Sectoral Projections
Project Appraisal and Social Cost-Benefit Analysis
Problems of Plan Implementation and Plan Failure
Government Failure and the Resurgent Preference for Markets over Planning
The Market Economy
The “Washington Consensus” on the State in Development and Its Limitations
Development Political Economy: Theories of Policy Formulation and Reform
Trends in Governance and Reform
Development Policy and the State: Concluding Observations

III. Problems and Policies: International and Macro

12. International Trade Theory and Development Strategy
Globalization: An Introduction
International Trade and Finance: Some Key Issues
Five Basic Questions about Trade and Development
The Terms of Trade and the Prebisch-Singer Thesis
The Traditional Theory of International Trade
The Critique of Traditional Free-Trade Theory in the Context of Developing-Country Experience
Some Conclusions on Trade Theory and Economic Development Strategy
Traditional Trade Strategies for Development: Export Promotion versus Import Substitution
Trade Optimists and Trade Pessimists: Summarizing the Traditional Debate
The Industrialization Strategy Approach to Export Policy
Reconciling the Arguments: The Data and the Consensus
South-South Trade and Economic Integration: Looking Outward and Inward
Trade Policies of Developed Countries: The Need for Reform

13. Balance of Payments, Developing-Country Debt, and the Macroeconomic Stabilization Controversy
The Balance of Payments Account
Financing and Reducing Payments Deficits
The Debt Crisis of the 1980s
Attempts at Alleviation: Macroeconomic Instability, IMF Stabilization Policies, and Their Critics
 “Odius Debt” and its Prevention
Resolution and Continued Vulnerabilities

14.  Foreign Finance, Investment, and Aid: Controversies and Opportunities
The International Flow of Financial Resources
Private Foreign Direct Investment and the Multinational Corporation
Private Portfolio Investment: Boon or Bane for LDCs?
The Role and Growth of Remittances
Foreign Aid: The Development Assistance Debate

15. Finance and Fiscal Policy for Development
The Role of the Financial System
The Road to Macroeconomic Stability
Microfinance Institutions
Reforming Financial Systems
Fiscal Policy for Development
Public Administration: The Scarcest Resource
State-Owned Enterprises
Military Expenditures and Economic Development

16.  Some Critical Issues for the Twenty-First Century
Global Interdependence and the Growth of Developing-World Markets
The Global Environment and the Developing World
The Crisis in Sub-Saharan Africa
Globalization and International Financial Reform
Concluding Remarks

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