STOREP is pleased to announce that the 2023 STOREP grant of 3,000€ for innovative small-scale research projects is awarded to
MICHELE ALACEVICH (Università di Bologna)
A History of Development Economics in the XXI Century
Keywords: Development Economics, Institutional Economics, Randomized Controlled Trials, Capabilities Approach, Applied Economics, Critical Development Theory, Knowledge Economics
JEL codes: B20, F63, O10, P10
Development economics emerged as a distinct disciplinary field in the aftermath of World War II, and within a few years the discipline was thriving, with its foundational texts, research centers at prominent universities and multilateral organizations, courses, textbooks and anthologies, and flagship reports and publications. As Gunnar Myrdal wrote, “Many of our resources in the social sciences are now employed in the study of underdeveloped countries. The tide is still rising, and we economists are riding the crest of the wave” (Myrdal 1968: 8). Most importantly, development economists would all agree with Hollis Chenery that there existed crucial “divergences of development economics from mainstream economic theory” (Chenery 1992: 379). John K. Galbraith concluded: “it seems fairly clear that there is an important and separate field of study here.” [1]
By the end of the 1970s, however, the mood was altogether different, and development economists considered their field in deep crisis. According to Albert Hirschman, “the forward movement of our subdiscipline has notably slowed down. . . . I cannot help feeling that the old liveliness is no longer there, that new ideas are ever harder to come by and that the field is not adequately reproducing itself” (Hirschman 1981: 1). The title of Dudley Seers’ article, “The Birth, Life and Death of Development Economics,” was a verdict itself (Seers 1979) [2].
Yet, their conclusion was at once understandable and wrong, for though it is true that development economics underwent a serious crisis and eventually disappeared as a specific disciplinary field with a distinct theoretical core, an economics of development nonetheless continues to exist. Indeed, the Nobel prizes to Amartya Sen in 1998 and to Abhijit Banerjee, Esther Duflo and Michael Kremer in 2019, as well as the editorship of the American Economic Review by Duflo from 2017 to 2022—arguably one of the most influential positions in the economics profession—show how central the development question has become. What the witnesses of the demise of development economics saw was not so much a death as a transformation: by becoming an applied field of mainstream economics, development economics has lost its theoretical identity and separateness; by the same token, it has increased in relevance, moving from the periphery to the core of the economics discipline (Alacevich 2017, Backhouse and Cherrier 2017; on the current relevance of development studies, see Duflo 2022; on the theoretical convergence of development studies and mainstream economics, see Rodrik 2007; for a different perspective, see Sen 1993 and 1999).
With this research project, I would like to analyze the recent history of development economics. In particular, I will focus on six major research concentrations, namely:
(i) the renewed role that economists such as Dani Rodrik, Nicholas Stern and Joseph Stiglitz have envisaged for markets and government in economic development, as well as for industrial policies (Cimoli, Dosi and Stiglitz 2009, Rodrik 2007, Stern and Stiglitz 1997, Stiglitz 1997, 2007);
(ii) the new emphasis on the knowledge economy in development studies, in particular with regard to the work of Stiglitz and Paul Romer (Romer 2010, Stiglitz 1999);
(iii) the use of randomized controlled trials (RCTs) in development policies (Banerjee and Duflo 2009, Duflo and Kremer 2008) and the criticisms that this approach has elicited (e.g., Deaton 2009, Reddy 2012);
(iv) the decades’ long research agenda on the capabilities approach, focused on merging development studies with a fully formed political philosophy (Nussbaum 2011, Sen 1993, 1999);
(v) recent inequality studies based on a much stronger emphasis on household data and geographical disaggregation (Bourguignon 2015, Milanovic 2005, 2016, Piketty 2014) and their relation to the so-called “convergence debate” (Baumol 1986, De Long 1988, Pritchett 1997); and
(vi) critical development theory, its discussion of political and cultural imperialism, and links with subordinate studies and post-development discourse (e.g., Munck and O’Hearn 1999).
The immediate output of the research will be a paper that will serve (i) as a submission for publication in a journal on the history of economic thought, and (ii) as the basis for two chapters of a book-length history of development economics that I am currently researching.
[1] John K. Galbraith, “Economic development as a proposed field,” no date but 1955 or 1956, Box 525, 8/53/E/3/8, Series 5. Harvard University File, 1949–90, John Kenneth Galbraith Personal Papers, John F. Kennedy Memorial Library, Boston University, emphasis added.
[2] Similar comments can be found in Streeten 1981.
References
Alacevich, Michele. 2017. “Theory and Practice in Development Economics”. History of Political Economy, Vol. 49 (supplement): 264-91
Backhouse, Roger, and Béatrice Cherrier. 2017. “The Age of the Applied Economist: The Transformation of Economics since the 1970s”. History of Political Economy, Vol. 49 (supplement): 1-33
Banerjee, Abhijit V. and Esther Duflo. 2009. “The Experimental Approach to Development Economics”. Annual Review of Economics, Vol. 1 (September): 151-178
Baumol, William J. 1986. “Productivity Growth, Convergence, and Welfare: What the Long-Run Data Show”. American Economic Review, Vol. 76, No. 5: 1072-85
Bourguignon, François. 2015. The Globalization of Inequality. Princeton, NJ: Princeton University Press
Chenery, Hollis B. 1992. “From Engineering to Economics”. BNL Quarterly Review, No. 183: 369-405
Cimoli, Mario, Giovanni Dosi and Joseph E. Stiglitz (eds.). 2009. Industrial Policy and Development. The Political Economy of Capabilities Accumulation. New York, NY: Oxford University Press
Deaton, Angus. 2009. “Instruments of Development: Randomisation in the Tropics, and the Search for the Elusive Keys to Economic Development”. Working Paper 14690, National Bureau of Economic Research
De Long, J. Bradford. 1988. “Productivity Growth, Convergence, and Welfare: Comment,” American Economic Review, Vol. 78, No. 5: 1138-54
Duflo, Esther. 2022. “Development Economics”. In “The Future of Human Behaviour Research”, Nature Human Behaviour, Vol. 6 (January): 15-24
Duflo, Esther and Michael Kremer. 2008. “Use of Randomization in the Evaluation of Development Effectiveness”. In William Easterly (ed.), Reinventing Foreign Aid. Washington, DC: Brookings Press, 2008: 93-120
Hirschman, Albert O. 1981. “The Rise and Decline of Development Economics”. In Albert O. Hirschman, Essays in Trespassing: Economics to Politics and Beyond. Cambridge, MA: Harvard University Press: 1-24
Milanovic, Branko. 2005. Worlds Apart: Measuring International and Global Inequality. Princeton, NJ: Princeton University Press
Milanovic, Branko. 2016. Global Inequality. A New Approach for the Age of Globalization. Cambridge, Mass.: Belknap Press of Harvard University Press
Munck, Ronaldo and Denis O’Hearn (ed.). 1999. Critical Development Theory: Contributions to a New Paradigm. London and New York: Zed Books
Myrdal, Gunnar. 1968. Asian Drama. An Inquiry Into the Poverty of Nations. New York, NY: Pantheon
Nussbaum, Martha. 2011. Creating Capabilities. Cambridge, Mass.: Harvard University Press
Ocampo, José Antonio and Joseph E. Stiglitz (eds.). 2008. Capital Market Liberalization and Development Capital Market Liberalization and Development. New York, NY: Oxford University Press
Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, Mass.: Belknap Press of Harvard University Press
Pritchett, Lant. 1997. “Divergence, Big Time,” Journal of Economic Perspectives. Vol. 11, No. 3: 3-17
Reddy, Sanjay. 2012. “Randomise This! On Poor Economics”. Review of Agrarian Studies, Vol. 2, No. 2 (July-December): 60-73
Rodrik, Dani. 2007. One Economics, Many Recipes. Globalization, Institutions, and Economic Growth. Princeton, NJ: Princeton University Press
Romer, Paul M. 2010. “What Parts of Globalization Matter for Catch-Up Growth?” American Economic Review, Vol. 100, No. 2: 94-98
Seers, Dudley. 1979. “The Birth, Life and Death of Development Economics”. Development and Change, Vol. 10, No. 4: 707-719
Sen, Amartya K. 1993. “Capability and Well-being”. In Martha Nussbaum and Amartya K. Sen (eds.), The Quality of Life. Oxford: Clarendon Press: 30-53
Sen, Amartya K. 1999. Development as Freedom. New York, NY: Knopf
Stern, Nicholas and Joseph E. Stiglitz. 1997. “A Framework for a Development Strategy in a Market Economy”. In Edmond Malinvaud et al., Development Strategy and Management of Market Economy. Oxford: Clarendon Press: 253-295
Stiglitz, Joseph E. 1997. “The Role of Government in the Economies of Developing Countries”. In Edmond Malinvaud et al., Development Strategy and Management of Market Economy. Oxford: Clarendon Press: 61-110
Stiglitz, Joseph E. 1999. “Knowledge as a Global Public Good”. In Inge Kaul, Isabelle Grunberg and Marc A. Stern (eds.), Global Public Goods: International Cooperation in the 21st Century, New York, NY: Oxford University Press, 1999: 308-325
Stiglitz, Joseph E. 2001. “Development Thinking at the Millennium”. In Proceedings from the Annual Bank Conference on Development Economics 2000, Washington: World Bank, 2001: 13-38
Stiglitz, Joseph E. 2007. “What is the Role of the State?” In M. Humphreys, J. Sachs and J.E. Stiglitz (eds.), Escaping the Resource Curse, New York: Columbia University Press, 2007: 23-52
Streeten, Paul P. 1981. Development Perspectives. London: Macmillan
Mario Cedrini