DEVELOPMENT PUZZLES

Students of economic development have commonly focused on the question of why some countries grow and others stagnate, and with good reason. Empirically, the spectacular income gap separating the world's rich and poor nations has become “the central economic fact of our time.” This gap, moreover, now extends beyond the industrialized vs. developing worlds to stark differences among developers. The rich–poor gap has defied easy theoretical explanations. Cultural explanations, for example, foundered on the unexpected success of East Asian countries whose Confucian ethic had previously been identified as an obstacle to growth. Initial endowments of assets such as human resources or manufacturing experience failed to explain the disappointing performance of countries such as the Philippines. Regime type – democracy or authoritarianism – failed to correlate with variation in development outcomes. Postwar development economists' belief that large, state-led projects could liberate entrepreneurs from traditional practices and other rigidities ran up against Latin America's state-led stagnation and Africa's institutional bloat. Finally, the fact that global income levels exhibit not convergence but “Divergence, Big Time,” has undermined the claims of neoclassical economists. As one long-time practitioner notes,