This book, which deals with the fiscal and monetary policies of developing countries, can be said to fall largely within the sphere of what has come to be known as ‘normative’ economics. Although this is not universally acknowledged, any work concerned with issues of economic policy must inevitably embody certain value judgments, whether or not expressly stated, derived from the moral and political philosophy of the author. These value judgments are generally reflected in the basic assumptions underlying the analysis of policies and often influence the theoretical framework of the analysis. Because of this, we believe that the reader is entitled to be informed in advance of the more important value judgments contained in the book, and this introductory chapter is devoted largely to that purpose.

We first explain what is understood here by the concept of ‘economic development’ and consider the difficult question of measurement of the rate, or pace, of economic development. We then set out what we regard as important reasons for government intervention and participation in the process of economic development. Lastly, we draw attention to the key role which, in our view, is played by institutional and political factors in determining the course of economic development – a thesis frequently invoked in the monograph.