Development Economics: The Winds of Change (PresidentialAddress)

Ever since its birth as a new discipline, developmenteconomics has experienced the heights of universal acclaim as a pioneer(ready to slay the dragon of poverty single-handed) as well as thedepths of a heretic isolation (as an outsider to the realm of mainstreameconomics). Between these two views a consensus is emerging that thereis a role, though a reduced one, for development economics. This roleexists because the concern for growth and distribution, though in thevery veins of mainstream economics, has been highlighted fully only bydevelopment economics. However, it is a somewhat reduced role because agreater recognition of the (marginal) utility of free markets, in placeof an overly interventionist state – which requires it to speak thelanguage of neo-classical economics, makes it difficult for it todifferentiate its ‘products’ from those offered by others. There alsoappears to be a changing perception about the key variable(s) thatdevelopment economics should focus on: the ends of development (i.e.,improving the welfare of the people) rather than the means of achievingit (i.e., the growth of per capita income); a more comprehensiveindicator of development composed of such components as longevity andliteracy, rather than just per capita income; human capital rather thanjust physical capital to account for the positive contribution ofeducati0n and health to economic growth; the gains from internationaltrade, instead of looking a. it as an instrument of exploitation of the’periphery’ by the ‘centre’; the central role of total factorproductivity in achieving high rates of economic growth; and soon.