Chapter 2

Overview of
development
economics
theoretical
frameworks

Copyright © 2009 Pearson Addison-Wesley. All rights reserved.

Income and Happiness:
Comparing Countries

Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-2

Theoretical frameworks for analyzing development
process

- Late 1700s and early 1800s: Classical Theories in Economics

- 1930s - 1940s: Marx, Keynes and the Neo-classicals
- Post World-War II: Classic Theories of Economic Development
(1) the linear-stages-of-growth model (Rostow, Harrod-Domar) – 1950s,
1960s
(2) theories and patterns of structural change (Lewis) – 1960s, 1970s
(3) the international-dependence revolution – 1970s
(4) the neoclassical, free-market counterrevolution (Solow) – 1980s, 1990s
- Contemporary Models of Development and Underdevelopment
(1) The Big Push Model (pioneered by Paul Rosenstein-Rodan)
(2) Michael Kremer’s O-Ring Theory
(3) Self-Discovery
(4) The Hausmann-Rodrik-Velasco Growth Diagnostics
Source: Meier, G. M., 2000

Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-4

Theoretical frameworks for
analyzing development process
Maslow’s Hierarchy of Needs

Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-5

Theoretical frameworks for
analyzing development process

Todaro’s viewpoint
• Three Core Values of Development
(Goulet,Todaro, Smith, Sen,..)
– sustenance, self-esteem, freedom
• The Three Objectives of Development
– Increase availability of life sustaining goods
– Raise levels of living (income, education, health,
other values)
– Expand range of economic and social choices

Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-6

Theoretical frameworks for
analyzing development process
Hayami’s viewpoint: Explaining development

1-7
Development Economics

• Target
– Analyses all the pillars for the development:
Production function, Factors of production,
Values, Institutions (Chapter 3,4)
=> To attain the core values of development and
satisfy the human needs (Chapter 5)

1-8