Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-25T05:29:56.605Z Has data issue: false hasContentIssue false
  • English
  • Français

The art of economic development: markets, politics, and externalities

Review products

BauerPeter T.. Reality and Rhetoric: Studies in the Economics of Development. Cambridge, Mass.: Harvard University Press, 1984.
EdwardsSebastian. Real Exchange Rates, Devaluation, and Adjustment. Cambridge, Mass.: MIT Press, 1989.
LaiDeepak. The Poverty of ‘Development Economics.’Cambridge, Mass.: Harvard University Press, 1985.

Show more reviewed productsShow more reviewed products

Published online by Cambridge University Press:  22 May 2009

Wing Thye Woo
Wing Thye Woo
Affiliation:
Assistant Professor of Economics and Head of the Pacific Rim Studies Program at the University of California, Davis.
Get access

Abstract

An abstract is not available for this content so a preview has been provided. Please use the Get access link above for information on how to access this content.
Image of the first page of this content. For PDF version, please use the ‘Save PDF’ preceeding this image.'
Type
Review essay
Information
International Organization , Volume 44 , Issue 3 , Summer 1990 , pp. 403 - 429
Copyright
Copyright © The IO Foundation 1990

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

I am grateful to Edward Chen, Max Corden, Sebastian Edwards, Anne Hay, Albert Hirschman, Lovell Jarvis, Chalmers Johnson, Moshe Justman, Stephen Krasner, Anne Krueger, Ian Little, Jeffrey Sachs, Steven Sheffrin, Jennie Woo, and two anonymous referees for valuable comments on early drafts of this article. I remain indebted as always to the late Professor George Andrews Hay for intellectual mentorship on development issues. I thank Wen Hai and Hong Yi Li for excellent research assistance.

1. Cited in Yotopoulos, Pan A. and Nugent, Jeffrey B., Economics of Development: Empirical Investigations (New York: Harper & Row, 1976), p. 3, fn 1Google Scholar.

2. See Hirschman, Albert O., “The Rise and Decline of Development Economics,” in Hirschman's, Essays in Trespassing: Economics to Politics and Beyond (Cambridge: Cambridge University Press, 1981), pp. 1–24Google Scholar; and Lai, The Poverty of ‘Development Economics’.

3. The first use of the term “activist” was by Okun, Arthur in “Fiscal-Monetary Activism: Some Analytical Issues,” Brookings Papers on Economic Activity, no. 1, 1972, pp. 123–63CrossRefGoogle Scholar. The term was then publicly embraced by Franco Modigliani in his presidential address to the American Economics Association, “The Monetarist Controversy, or Should We Forsake Stabilization Policy?” American Economic Review 67 (03 1977), pp. 1–19Google Scholar.

4. Chenery, Hollis B., “The Structuralist Approach to Development Policy,” American Economic Review 65 (05 1975), pp. 310–16Google Scholar.

5. Hirschman, , “The Rise and Decline of Development Economics,” p. 3Google Scholar.

6. Lewis, W. Arthur, “Economic Development with Unlimited Supplies of Labour,” Manchester School of Economic and Social Studies 22 (05 1954), pp. 131–91CrossRefGoogle Scholar.

7. See Prebisch, Raul, The Economic Development of Latin America and Its Principal Problems (New York: United Nations, 1950)Google Scholar; and Singer, Hans W., “The Distribution of Gains Between Investing and Borrowing Countries,” American Economic Review 40 (05 1950), pp. 473–85Google Scholar.

8. See Rosenstein-Rodan, Paul N., “Problems of Industrialisation of Eastern and South-Eastern Europe,” Economic Journal 53 (06–09 1943), pp. 202–11CrossRefGoogle Scholar; and Rostow, Walt, Stages of Economic Growth (Cambridge: Cambridge University Press, 1960)Google Scholar.

9. See Myrdal, Gunnar, Economic Theory and Underdeveloped Regions (New York: Harper Torchbooks, 1957)Google Scholar; and Seers, Dudley, “The Limitations of the Special Case,” Bulletin of the Oxford University Institute of Economics and Statistics, 05 1963Google Scholar.

10. Myrdal, , Economic Theory and Underdeveloped Regimes, p. 97Google Scholar.

11. Lipsey, Richard G. and Lancaster, Kevin, “The General Theory of Second Best,” Review of Economic Studies, vol. 24, 1956–1957, pp. 11–32CrossRefGoogle Scholar.

12. See Baran, Paul, The Political Economy of Growth (New York: Monthly Review Press, 1957)Google Scholar; and Frank, Andre Gunder, Capitalism and Underdevelopment in Latin America (New York: Monthly Review Press, 1967)Google Scholar.

13. Frank, , Capitalism and Underdevelopment in Latin America, pp. 6–7Google Scholar.

14. Frank, Andre Gunder, Lumpenbourgeosie and Lumpendevelopment (New York: Monthly Review Press, 1972)Google Scholar.

15. Nurkse, Ragnar, Problems of Capital Formation in Underdeveloped Countries and Patterns of Trade and Development (Oxford: Oxford University Press, 1967), pp. 199–201Google Scholar.

16. Myrdal presented the special reasons for protection in underdeveloped countries in An International Economy (New York: Harper Torchbooks, 1956), pp. 275–79Google Scholar, and he recognized that export of manufactured goods would perform the same functions. His strong objections to continued economic ties to the West are developed in Economic Theory and Underdeveloped Regions.

17. Matthew 25:29, quoted in Myrdal, , Economic Theory and Underdeveloped Regions, pp. 12 and 24Google Scholar.

18. Balogh, Thomas, Unequal Partners (Oxford: Basil Blackwell, 1963), pp. 16–17Google Scholar.

19. McClelland, David, The Achieving Society (Princeton, N.J.: D. Van Nostrand, 1961)CrossRefGoogle Scholar.

20. Ibid., p. 403.

21. Hirschman, Albert O., Development Project Observed (New York: Brookings Institute, 1967), chap. 1Google Scholar.

22. Ibid., p. 5. The principle of the hiding hand is thus an early statement of the “learning-by-doing” literature and of the human potential movement.

23. Myrdal, Gunner, Asian Drama (New York: Pantheon, 1968)Google Scholar.

24. The two earlier collections of Bauer's, Peter essays are Dissent on Development (Cambridge, Mass.: Harvard University Press, 1971)Google Scholar and Equality, the Third World and Economic Development (Cambridge, Mass.: Harvard University Press, 1981)Google Scholar.

25. Bauer, , Dissent on Development, p. 34Google Scholar.

26. Bauer, , Reality and Rhetoric, pp. 158–59Google Scholar.

27. Ibid., p. 57.

28. Ibid., p. 156.

29. Ibid., p. 43.

30. Lal, , The Poverty of‘Development Economics,’ p. 57Google Scholar.

31. Kuznets, Simon, “Economic Growth and Income Inequality,” American Economic Review 45 (03 1955), pp. 1–28Google Scholar.

32. Hirschman, , “The Rise and Decline of Development Economics,” p. 20Google Scholar.

33. Adelman, Irma and Morris, Cynthia, Economic Growth and Social Equity in Developing Countries (Stanford, Calif.: Stanford University Press, 1973), p. 179Google Scholar. The limited time series evidence now available suggests an indeterminate relationship. Fields, for example, found impoverishment of the poorest groups in three of twelve countries in his sample. See Fields, Gary S., “Income Distribution and Economic Growth,” in Ranis, and Schultz, , The State of Development Economics, pp. 459–81Google Scholar.

34. See Schumacher, E. F., Small Is Beautiful: Economics as If People Mattered (New York: Harper & Row, 1973)Google Scholar; Haq, Mahbub ul, The Poverty Curtain: Choices for the Third World (New York: Columbia University Press, 1976)Google Scholar; Lele, Uma, The Design of Rural Development: Lessons from Africa (Baltimore, Md.: Johns Hopkins University Press, 1975)Google Scholar; and Timmer, Peter et al. , The Choice ofTechnology in Developing Countries: Some Cautionary Tales (Cambridge, Mass.: Harvard University Center for International Affairs, 1975)Google Scholar.

35. For a thorough treatment of ERP, see Corden, W. M., The Theory of Protection (Oxford: Oxford University Press, 1971)Google Scholar. Appendix I of the book gives the history of the development of the ERP measure.

36. See Balassa, Bela, Development Strategies in Semi-Industrial Economies (Baltimore, Md.: Johns Hopkins University Press, 1982)Google Scholar; Bhagwati, Jagdish, Anatomy and Consequences of Exchange Control Regimes (Cambridge, Mass.: Ballinger, 1978)Google Scholar; Krueger, Anne O., Liberalization Attempts and Consequences (Cambridge, Mass.: Ballinger, 1978)Google Scholar; and Little, Ian, Scott, Maurice, and Scitovsky, Tibor, Industry and Trade in Some Developing Countries (Oxford: Oxford University Press, 1970)Google Scholar.

37. Lipsey, Robert in the foreword of Krueger, Liberalization Attempts and Consequences, pp. xv and xviGoogle Scholar.

38. There are, of course, numerous systems to classify policies. Bradford and Branson have proposed a broader spectrum of classification in “Patterns of Trade and Structural Change,” in Bradford, Colin I. and Branson, William H., eds., Trade and Structural Change in Pacific Asia (Chicago: University of Chicago Press, 1987), chap. 1CrossRefGoogle Scholar. The theoretical inconsistency and empirical emptiness of their classification scheme has been discussed in an earlier review; see Woo, Wing Thye, “Review of Trade and Structural Change in Pacific Asia,’ Journal of International Economics 25 (07 1988), pp. 199–204CrossRefGoogle Scholar.

39. Evans, Peter, “Foreign Capital and the Third World State,” in Weiner, Myron and Huntington, Samuel, eds., Understanding Political Development (Boston: Little, Brown, 1988)Google Scholar.

40. Schultz, Theodore W., Transforming Traditional Agriculture (New Haven, Conn.: Yale University Press, 1964)Google Scholar.

41. Friedman, Milton, A Monetary History of the United States (Princeton, N.J.: Princeton University Press, 1963)Google Scholar.

42. See Bank, World, World Development Report (Oxford: Oxford University Press, various years)Google Scholar.

43. See Edwards, Real Exchange Rates, Devaluation, and Adjustment; and Lin, Latin America Versus East Asia.

44. Lin, Latin America Versus East Asia.

45. See Edwards, Real Exchange Rates, Devaluation, and Adjustment; and Lin, Latin America Versus East Asia.

46. Edwards, Real Exchange Rates, Devaluation, and Adjustment.

47. Lai, , The Poverty of ‘Development Economics,’ p. 109Google Scholar.

48. Corbo, Vittorio, “Problems, Development Theory, and Strategies of Latin America,” in Ranis, and Schultz, , The State of Development Economics, pp. 145–86Google Scholar.

49. Ranis, Gustav and Fei, John, “Development Economics: What Next?” in Ranis, and Schuitz, , The State of Development Economics, p. 103Google Scholar.

50. Ibid., p. 130.

51. Ibid.

52. Findlay, Ronald, “Trade, Development, and the State,” in Ranis, and Schultz, , The State of Development Economics, pp. 78–99Google Scholar.

53. Ibid., p. 91.

54. Ranis, and Fei, , “Development Economics: What Next?” p. 101Google Scholar.

55. Ibid., p. 110.

56. Sachs, Jeffrey, “External Debt and Macroeconomic Performance in Latin America and East Asia,” Brookings Papers on Economic Activity, no. 2, 1985, especially pp. 548–65Google Scholar. East Asia in Sachs' usage includes Southeast Asia.

57. Ibid.

58. The exception is the brief interlude of emergency rule in 1975–77.

59. Woo, Wing Thye, “The Economic Policy-Making Equation in Indonesia,” Pacific Rim Studies Program Working Paper no. 5, University of California, Davis, 1988Google Scholar.

60. This implies that the constraints are not binding.

61. See Johnson, Chalmers, “Political Institutions and Economic Performance: The Government Business Relationship in Japan, South Korea, and Taiwan,” in Scalapino, Robert, Sato, Seizaburo, and Wanandi, Jusuf, eds., Asian Economic Development: Present and Future (Berkeley: University of California Institute of East Asian Studies, 1985), pp. 63–89Google Scholar; and Pye, Lucian, “The New Asian Capitalism: A Political Portrait,” in Berger, Peter and Hsiao, Michael, eds., In Search of an East Asian Developent Model (New Brunswick, N.J.: Transaction Books, 1988), pp. 81–98Google Scholar.

62. Johnson, , “Political Institutions and Economic Performance,” p. 67Google Scholar.

63. Pye, , “The New Asian Capitalism,” p. 83Google Scholar.

64. Gordon, Robert J., “Fresh Water, Salt Walter, and Other Macroeconomic Elixirs,” expanded version of a paper that appeared in Economic Record, 03 1989Google Scholar.

65. JrLucas, Robert E., “On the Mechanics of Economic Development,” Journal of Monetary Economics 22 (07 1988), p. 14CrossRefGoogle Scholar.

66. Lai, , The Poverty of ‘Development Economics,’ pp. 46–47Google Scholar.

67. Balassa, Bela and Sharpston, Michael, Export Subsidies by Developing Countries: Issues of Policy (Geneva: Graduate Institute of lnternational Studies, 1977), p. 34Google Scholar.

68. Li, , The Evolution of Policy Behind Taiwan's Development Success, pp. 104 and 142Google Scholar.

69. Ibid., p. 106.

70. Jennie Hay Woo, “Taiwan as a Case of Successful Educational Planning,” World Development, forthcoming.

71. Li, , The Evolution of Policy Behind Taiwan's Development Success, p. 147Google Scholar.

72. Woo, “The Economic Policy-Making Equation in Indonesia.”

73. Lai, , The Poverty of‘Development Economics,’ p. 46Google Scholar.

74. Johnson, Chalmers, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 (Stanford, Calif.: Stanford University Press, 1982)Google Scholar.

75. Lucas, , “On the Mechanics of Economic Development,” p. 12Google Scholar.

76. The slope of the balanced growth path is known as the steady-state growth rate, and it equals the sum of the population growth rate and the rate of technical innovation. The trade regime can affect the slope only if it affects either of these two rates.