Cecchini, Paolo. 1988.

The European Challenge, 1992: The evolution of development thinking

evolution of development thinking

Benefits of a Single Market. Aldershot, U.K.: Gower. A In the international community, a focus on devel-
synopsis of the multivolume report by Paolo Cecchini on opment emerged in the 1940s and 1950s, follow-
the ‘‘cost of non-Europe’’—the cost of not integrating ing the focus on reconstruction and development
the European market. after World War II and the subsequent decoloniza-
Dinan, Desmond. 2004. Europe Recast: A History of Euro- tion of former empires. As academics and senior civil
pean Union. Boulder, CO: Lynne Rienner. A compre- servants turned their attention to how the newly
hensive history of European integration. decolonized regions could catch up to their richer
———. 2005. Ever Closer Union: An Introduction to Eu- counterparts, the arguments of development think-
ropean Integration. 3d ed. Boulder, CO: Lynne Rienner. ers soon became caught up in the schisms of the Cold
A classic textbook on the European Union, now in its War.
third edition. In the heat of the postwar period, the spec-
Eichengreen, Barry. 2006. The European Economy since trum of solutions offered by development thinkers
1945: Coordinated Capitalism and Beyond. Princeton, ranged from solutions inspired by Marxist thought
NJ: Princeton University Press. An excellent history of to those that advocated closer integration in the
economic policymaking in Europe from the end of capitalist system. In the 1950s and 1960s, however,
World War II to the early 21st century. even the procapitalist economic orthodoxy placed
Gillingham, John. 2003. European Integration, 1950–2003: the state at the heart of economic development, and
Superstate or New Market Economy? Cambridge: Cam- the dominant paradigm across the spectrum was
bridge University Press. A controversial book that of state-led growth. For development thinkers, the
characterizes the history of European integration as a lesson of the theories of John Maynard Keynes
struggle between economic centralizers and market re- and the chastening experience of the Great Depres-
formers. sion was that self-regulated markets could not be
Molle, Willem. 2006. The Economics of European Integra- relied on to generate prosperity. This perception
tion: Theory, Practice, Policy. 5th ed. Aldershot, U.K.: had been reinforced by what were regarded as
Ashgate. One of the most popular and authoritative texts the relatively effective planning processes of post–
on the subject. World War II Europe. Meanwhile, the small size
Neal, Larry. 2007. The Economics of Europe and the European and often enclave- or state-dependent private sec-
Union. Cambridge: Cambridge University Press. A new tor in developing countries meant that develop-
version of a book with the same title originally written by ment thinkers had little evidence of, and heard only
Neal and Daniel Barbezat, published by Oxford Uni- muted arguments for, more effective and open
versity Press in 1998, that examines the EU economy markets.
collectively and the economies of the member states The broad aim of development thinkers was to
separately. raise growth in poorer countries to achieve the same
Pelkmans, Jacques. 2006. European Integration: Methods income levels, on average, as developed countries. At
and Economic Analysis. 3d ed. London: Financial Times first, even the non-Marxist development thinkers
Press. A dense textbook on the economic principles and looked for universal models of development and
practices underlying European integration. theories that would initiate the growth process. The
Wallace, Helen, William Wallace, and Mark Pollack. 2005. idea that growth, once initiated, would continue
Policy-Making in the European Union. 5th ed. Oxford: through virtuous circles or reinforcing effects gained
Oxford University Press. An authoritative and compre- wide currency. This was echoed in development
hensive examination of key EU policy areas and of the thinkers’ phrases that persisted into the 1960s, such
policymaking process. as the ‘‘big push’’ (Rosenstein-Rodan), the ‘‘takeoff ’’
(Rostow), and the ‘‘great spurt’’ (Gerschenkron) (see
DESMOND DINAN
Hirschman 1981).

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 Development practitioners and thinkers observed trialization, reinforced by fixed exchange rates, im-

evolution of development thinking

that market failures were particularly prevalent in port tariffs, and exporting cartels, were seen by many
developing countries. The private sector, which was as the appropriate response. These would prime the
relatively poorly developed and driven by narrow pump for a virtuous circle of increased employment
interests, had shown itself to be an inadequate engine and incomes, which would be coupled with im-
of growth. In newly decolonized Africa and in Asia proved health and education as well as rising con-
and Latin America, new national states were deter- sumer demand and investment. To the extent that
mined to establish postcolonial models of develop- the rich countries were seen to have a role, it was
ment. Given that the majority of professionals were primarily as providers of capital and technology.
concentrated in public service and had limited These ideas reflected the view that the prices for
knowledge of the private sector, and that the absence agricultural goods, expected to be primarily exported
of democracy meant that the state exercised virtually by developing countries, would fall in the long run
all the levers of power, the preoccupation with the and that the technological spillover effects from
role of the state was not surprising. manufacturing were greater than those from agri-
Two strands of thought emerged, both of which culture (Prebisch 1950). Raúl Prebisch not only
reflected this heavy reliance on the state. The first was exercised a powerful influence in the evolution of
the dominant strand within developing countries, development thinking but also was instrumental in
particularly on the political left. This was import- the establishment of institutions that continue to
substitution industrialization (a policy intended to carry his ideas forward, notably the Economic Com-
promote industrialization by protecting domestic mission for Latin America (ECLA) and the United
producers from competition from imports), which Nations Conference on Trade and Development
informed government thinking in Latin America, (UNCTAD).
Africa, and Asia. The second strand of thought was The oil price increases of the 1970s also had
multilateralism (a policy of multiple nations working important impacts on ideas about trade policy and
cooperatively to solve world problems), which was development. Many developing countries consid-
given added impetus in the strategic agenda of ered that cartelization, as used by the Organization
Western Europe and North America. of the Petroleum Exporting Countries (OPEC),
Industrialization plans aimed at getting around could be extended to other commodities to ensure
the problems of coordination of industry develop- that the gains from trade were more equally shared
ment became the dominant currency of development with developing countries. Government interven-
thinkers residing in developing countries and some tion at the national and supranational levels in mar-
developed countries, particularly the United King- kets and trade became a key element of what some
dom. Planning models, at times elaborated through termed the ‘‘New International Economic Order.’’
input-output matrixes, provided a vision of an inte- UNCTAD and an array of marketing boards at
grated chain in which domestically produced raw the national and international levels (including the
materials and local labor provided the building international coffee, cocoa, sugar, and commodity
blocks of industries that met first domestic and then bodies established in the 1960s and early 1970s)
export requirements. To the extent that the con- were seen as providing the means to rebalance the
cept of dynamic comparative advantage influenced international trading system for the benefit of de-
thinking, it was within the constraint of perceptions veloping economies.
regarding the unequal terms of trade and pro- While some thinkers continued to pursue global
tectionism in rich countries, which were seen as solutions, by the late 1970s many development
effectively preventing the balanced integration of specialists saw the evident constraints faced by
developing countries into a global trading system. bankrupt governments and narrowed their ambi-
Greater self-reliance and import-substitution indus- tions. Focus shifted toward filling needs such as those

367
 for food, education, and health and away from politically sustainable led to a reconsideration of
evolution of development thinking

overall integrated frameworks that attempted to in- governments’ roles. The tension between the infor-
corporate all sectors of an economy. This evolution mational requirements of central planning and the
largely reflected a lack of success in kick-starting increasing complexity and integration of develop-
growth and a growing realization that theories did ing economies was also becoming more evident.
not account for political economy factors related to Macroeconomic instability associated, at least in
institutions, governance, and conflict. There was also part, with spikes in oil and interest rates led to deep
evidence that the benefits of growth were not nec- crises, which in turn were seen by a new wave of
essarily trickling down to the poorest people in de- development thinkers as symptomatic of a deeper
veloping countries and that some types of growth malaise. By the 1980s, the global economic slow-
were environmentally unsustainable. down and the debt crisis had increasingly constrained
Development thinkers recognized that state-led the potential for state action in initiating develop-
models, at least in the medium term, had failed to ment, and the voices of those who argued that gov-
address poverty and that stubborn levels of high ernments should ‘‘get out of the way of development’’
unemployment were endemic in many societies. were being heard more widely.
Chenery and others argued that policies should be In the late 1970s, a new cohort of development
devised to specifically benefit the poor (Chenery et al. thinkers, based mainly in the United States, was in
1979). The Basic Needs Approach was adopted by the ascendant. They argued that state planners could
the International Labor Organization and later by not possibly possess all the knowledge required to
the World Bank. Rather than challenging the role of make decisions reflecting efficiency as well as people’s
governments, it sought to ensure that governments differing preferences. An influential World Bank
adopted pro-poor policies that would ensure that study (Krueger et al. 1988) argued that import sub-
minimum needs would be met to enable all citizens stitution often resulted in inefficient industries and
to lead productive lives. In the 1980s, the capability an antiagriculture bias, undermining both growth
approach developed by Amartya Sen and others built and poverty reduction. Moreover, governments
on this understanding with the United Nations had revealed themselves to be collections of interests
Development Program in its 1990 Human Devel- rather than the benevolent arbiters of the collective
opment Report. This report went beyond the interest that the import-substitution industrializa-
analysis of the World Bank’s annual World Devel- tion model required. The development thinkers
opment Reports to provide a broad understanding at the fore in the 1980s eschewed state-led develop-
of the issues and data required to address poverty ment and focused on the removal of regulations,
(Stewart 2006). The shift in development aims was tariffs, and other government-induced economic
accompanied by an expanded set of measures by and trade distortions. Governments were now
which to track development. In particular, the hu- viewed as a barrier to entrepreneurs and develop-
man development indicators published in 1990 ment, rather than as initiators of development. It was
covered poverty, health, education, and the status of argued that the private sector, left to its own devices,
women in many of the world’s countries. A number would be the engine of economic growth.
of these indicators, as well as others covering envi- The increasing market focus of development
ronmental sustainability, are now part of the Mil- thinkers and practitioners reflected in part the eco-
lennium Development Goals. nomic experiences and the broader political climate
Primacy of Markets By the late 1970s, the oil of the time. Global economic growth slowed fol-
crises, interest rate hikes, and widespread macro- lowing the oil price shocks of 1974 and 1979. The
economic instability had led to a reconsideration of second oil price shock was followed by higher U.S.
the balance of state and market. Growing awareness interest rates to control inflation, which pushed the
that the pressure on public-sector finances was not United States into recession. With falling demand

368
for their exports and rising interest rates, many de- the Washington-based World Bank and Inter-

evolution of development thinking

veloping countries could not service the debts they national Monetary Fund, in the 1980s and the
had built up over the preceding ten years, resulting first half of the 1990s. These policies included mac-
in the debt crisis that began in Mexico in 1982 and roeconomic stabilization; liberalization of trade, ex-
spread to other developing countries. The belief that change rates, and financial markets; deregula-
government officials and bureaucrats would act in tion of domestic industries; and privatization of
their own interest led many thinkers to push for rapid government-owned businesses. What Williamson
change. Jeffery Sachs and others argued that a crisis identified was not only the prevailing Washington
would provide only a limited amount of time for view. It also was applied by a growing number of
reform. Reforms would have to be pushed through developing countries, often under the duress of fiscal
quickly, despite attendant costs, to ensure that the adjustment, as these countries sought a prerequisite
rent seekers who sought to gain wealth through bene- to sustainable growth.
fiting from the imbalances and lack of transparency The consensus broke down over the extent
in the legal and regulatory environment could not of liberalization required for growth. For the
reestablish their interests (Sachs 1994; Lal 1997). Washington-based multilateral lending institutions,
In the richer members of the Organisation this required the removal of regulations including
for Economic Co-operation and Development trade barriers, freeing prices from controls, and the
(OECD), the oil shock and subsequent rise in in- dismantling of marketing boards and similar state
terest rates and debt servicing costs also led to a institutions to allow markets to work to achieve their
growing appreciation for the need for fiscal adjust- reputed efficiency. Like the classical economists of
ment. With the dominant political mood more open the 19th century, these thinkers advocated a highly
to the arguments of those economists who called for restricted role for the government involving the
reductions in pubic expenditure, policies became provision of public goods such as law and order,
more promarket in key developed economies. defense, and a sound currency, and when necessary,
The broader geopolitical context also contrib- primary education, primary health care, and a social
uted to this pendulum swing. The hardening of safety net.
the Cold War caused a reaction against state-led The late 1980s saw improvements in macroeco-
growth models, with these models being seen as part nomic stability and an opening to trade, financial,
and parcel of socialism. In this context, advanced and other flows in much of the developing world.
economies such as the United States, Britain, and From the 1980s to 2005, trade barriers fell across
Germany began the wave of deregulation and pri- developing economies from average levels of more
vatization under the leadership of Ronald Reagan than 30 percent to about 10 percent. The ‘‘tiger
(United States), Margaret Thatcher (United King- economies’’ of East Asia were held up as examples
dom), and Helmut Kohl (Germany). Given the of the benefits of getting rid of government regula-
power that these governments exercised over the tion and controls, promoting exports, and ‘‘letting
Bretton Woods institutions, and that the trend re- markets work,’’ and several studies appeared to con-
flected a broad shift in economic thinking, it is not firm that these policies were responsible for the rapid
surprising that in this period the strongly promarket growth of these economies (World Bank 1993).
Anne Krueger replaced the long-serving develop- These studies were later shown to provide an inade-
ment economist Hollis Chenery in the influential quate explanation of the success of the ‘‘Asian Tigers.’’
role as chief economist of the World Bank. The interpretation of the industrialization of Asian
In this environment, Williamson (1990) identi- economies has been challenged by a number of critics
fied a set of policies that he termed the ‘‘Washington who argued that the state played a pivotal role in
consensus.’’ These policies reflected the prevailing development (Amsden 2001; Wade 1990), and even
view of orthodox development thinkers, not least at the World Bank later developed a more nuanced

369
 view of the East Asian experience (Stiglitz and Yusuf heterodox view that highlighted the importance of
evolution of development thinking

2001). sequencing and country specificity.

Importance of Institutions By the late 1990s, Complementarity of Markets and Govern-
the failure of the rapid transition from centrally ments By the mid-1990s, the dominant devel-
planned to capitalist economies to deliver broad- opment discourse had begun to move away from
based benefits in Eastern Europe, together with the market-led approaches. In its place, a consensus
Asian crisis of 1997, in which institutional weakness was forming around the complementarities between
played a part, and a growing perception that the markets and governments. Attention focused on how
distribution of globalization’s gains was inequita- government and the private sector may best work
ble, led to a widening acknowledgment of the together. A vibrant private sector was now seen as the
shortcomings of a purely ‘‘promarket’’ approach to driver of economic growth, but this required prop-
development. In particular, it neglected the impor- erly functioning state institutions to build a good
tance of institutions and the provision of public investment climate and deliver basic services com-
goods, not least good governance, both at the national petently. Investment climate analysis was focused
and at the global level. The pendulum shift in de- on the ease and cost of starting legitimate businesses,
velopment thinking built on the work of the 1993 including the bureaucratic costs and access to credit
Nobel laureate Douglass North, who noted that in- and basic infrastructure and utilities. Indicators
dividual behavior was constrained by numerous rules based on World Bank surveys provide a comparison
and social norms of the society in which the indi- of the performance of different countries (World
vidual lives (North 1990). It was argued that without Bank Doing Business Project and World Bank In-
studying these constraints, including how they arise vestment Climate Surveys).
and their impacts, attempts to promote development Countries that combined institutional improve-
would be unlikely to succeed. ments with market-oriented policy reforms and
The constraints provided by history became par- greater engagement with the world economy saw
ticularly obvious following the attempted shock their per capita incomes grow in the 1990s at the
therapy in the former Soviet states. In contrast, China historically very rapid pace of more than 5 percent
continued to implement market-oriented reforms per year. Some countries have achieved even faster
while nevertheless holding to its core commitment growth, with China’s per capita growth averaging
to a powerful state and with only partial reform of 8.7 percent from 1990 to 2005. That a sound state
key macroeconomic and institutional levers. is required for solid growth was shown in the un-
Development practitioners began promoting even development outcomes of the former Soviet
stable and effective government institutions, strong countries. Promarket policies could not be expected
enforcement of property rights, the absence of to succeed without strong market-based institutional
bureaucratic harassment, a lack of corruption, and foundations.
protection from organized crime—all things that Important too is local ‘‘ownership’’ of the devel-
matter for the functioning of markets and that had opment agenda rather than imposition from outside.
been previously neglected. In retrospect it was now The countries that have achieved rapid development,
considered naı̈ve to think that the institutions that such as China and India, have done so through the
enable markets to work could evolve quickly and actions of their own people and government, and
without state intervention. with very little development assistance.
The Asian crisis, Soviet transition, and Chinese Growth Theory and Development Thinking
experience highlighted the importance of sequenc- Growth has been a concern throughout the history
ing, the order in which policies were put into effect. of development thinking, albeit with a general de-
The orthodox position promoting liberalization of cline in expectations of what development assistance
all aspects of the capital account was replaced by a and policies can do. Yet growth theory and devel-

370
opment thinking diverged considerably in the 1960s, widely cited Brundtland report, which defined sus-

evolution of development thinking

with growth theory identifying formal mathematical tainable development as meeting the needs of the
models—these were mainly focused on growth in present without compromising the ability of fu-
advanced economies. Underlying these models were ture generations to meet their own needs (WCED
assumptions of well-functioning markets and a sys- 1987). It would be 20 years, however, until the evi-
tem of economic incentives. dence of climate change became so overwhelming
In contrast, development theorists typically es- that the largely grassroots movement influenced by
chewed mathematical models and focused on the the Brundtland report could see sustainability be-
failure of the assumptions used in growth theory. coming central to development thinking.
Interest in input-output and later general equilib- No Single Model for Development Develop-
rium analysis has provided a heavily quantitative ment thinking has evolved rapidly since the 1950s
seam within the development literature, but such and is continuing to change. Different development
methods remain a relatively minor feature of de- concepts have emerged in response to specific eco-
velopment thinking (Goldin, Knudsen, and Bran- nomic and political conditions and problems, at-
dao 1994). tempting to address these challenges, but typically
With increasing macroeconomic stability has only partially succeeding. Concepts have been less
come a greater recognition of the importance of useful when they have been exported without ac-
microeconomic and institutional development. To counting for different economic, social, and cultural
the extent that the focus of many development conditions, or when they have continued to be ap-
thinkers today is mainly on how to affect the actions plied after economic and political conditions have
of individuals and firms rather than on macroeco- changed. Development strategies have been most
nomic aggregates, interest in models based on broad successful when they addressed the specific challenges
aggregates of national accounts has diminished. facing a country at a particular point in time. This
Both growth theory and development theory have requires that countries have the capacity for policy
had a considerable influence on development policy. formation in terms of skilled researchers and the
The simplistic stories that emerge from growth relevant data. Both are vital to policy reform. Since
models have encouraged theories of missing com- the mid-1990s, development thinking has continued
ponents of production and policies that fill these to evolve. Increasingly, development is seen not
gaps. These have variously included capital, foreign through the lens of actual outcomes but through the
exchange, human capital, and technology. Devel- outcomes that a person is able to choose. This con-
opment thinkers have been more active than growth cept gives greater prominence to empowerment of
theorists in exploring the reasons why these factors the individual and the expansion of individual free-
may be missing. In this sense, recent development dom; and individuals are seen as agents for change
thinkers have focused on the incentives for people to rather than as passive recipients of assistance.
accumulate physical and human capital, and on an It has become clearer since the 1950s that there
efficient use of these types of capital. is no development panacea or universal path for de-
Questions regarding the sustainability of growth velopment. Development thinkers and practitioners
have only recently begun to enter the mainstream of can benefit from understanding the experiences of
development theory. The oil price shocks of the different countries and by drawing on the latest
1970s and the rapid recovery of the 1980s, not least theory. There is, however, no shortcut. If any-
in East Asia, led to a growing recognition of the need thing, the evolution of development thinking shows
to focus on resource degradation and what was how today’s truths are replaced by tomorrow’s wis-
termed (by the Club of Rome) as the Limits to dom. The application of development thinking
Growth. The United Nations Commission on En- requires an arsenal of knowledge that includes eco-
vironment and Development in 1987 published the nomic theory and is informed by comparative and

371
 historical analysis. The application also requires that Goldin, I., and K. Reinert. 2006. Globalization for Devel-
evolution of development thinking

the thinking respond to a country’s specific priorities opment: Trade, Finance, Aid, Migration and Policy.
and circumstances. Greater investment in research is Washington, DC: World Bank and Palgrave Macmil-
required to ensure that development thinking evolves lan. Examines the key economic flows and shows how
even more rapidly in response to the enormous cur- policies at the national and global level are required to
rent challenges, many of which, such as global equity make globalization work for development.
and climate change, go the heart of questions of Hirschman, A. O. 1981. Essays in Trespassing: Economics to
sustainable development. Politics and Beyond. Cambridge: Cambridge University
Press. A collection of essays providing an overview of the
See also aid, international; development; economic de-
author’s scholarship, including work on economic de-
velopment; Millennium Development Goals; poverty,
velopment and its political repercussions, as well as on
global; Washington consensus
political participation, rational choice theory, and the
FURTHER READING history of economic thought.
Adelman, I. 2001. ‘‘Fallacies in Development Theory and Krueger, A., M. Schiff, and A. Valdes. 1988. ‘‘Agricultural
Their Implications for Policy.’’ In Frontiers of Develop- Incentives in Developing Countries.’’ World Bank Eco-
ment Economics: The Future in Perspective, edited by nomic Review 2 (3): 255–71. Estimates the impact of
G. M. Meier and J. E. Stiglitz. Oxford: Oxford Uni- sector-specific (direct) and economywide (indirect)
versity Press, 103–34. Discusses the impact of the policies on agricultural incentives for 18 developing
narrow preoccupation of economics in the field of de- countries for the period 1975–84.
velopment economics. Lal, D. 1997. The Poverty of ‘‘Development Economics.’’
Amsden, A. 2001. The Rise of ‘‘The Rest’’—Challenges to the London: Institute of Economic Affairs. Argues for
West from Late-industrializing Economies. New York: market-based economic management and less gov-
Oxford University Press. Challenges convergence theory ernment intervention to address development chal-
and examines models of late industrialization, compar- lenges.
ing the ‘‘independent’’ model of China, Korea, India, Lindauer, D. L, and Lant Pritchett. 2002. ‘‘What’s the
and Japan, and the ‘‘integrationist’’ model of Argentina, Big Idea? The Third Generation of Policies for Economic
Brazil, Mexico, and Turkey. Growth.’’ Economia: Journal of the Latin American and
Bruton, H. J. 1998. ‘‘A Reconsideration of Import Sub- Caribbean Economic Association 3 (1):1–28. Puts the
stitution.’’ Journal of Economic Literature 36 (2): 903– Latin American experience of reform in global context
36. Provides a critical view of import substitution and and offers policy advice on economic growth.
contrasts it to the ‘‘outward-oriented’’ approach to de- Myrdal, G. 1957. Economic Theory and Underdeveloped
velopment. Regions. London: Gerald Duckworth. Based on a series
Chenery, H., et al. 1979. Redistribution with Growth. Ox- of lectures delivered in Cairo in 1955, examining the
ford: Oxford University Press. Coauthored with leading basic principles of classical economic theory (particularly
development thinkers of the time, this is a key statement international trade) in relation to the problems of un-
of World Bank development strategy under Hollis derdeveloped regions.
Chenery. New Palgrave: A Dictionary of Economics. 1989. ‘‘Economic
De Soto, H. 2001. The Mystery of Capital. London: Black Development.’’ Basingstoke: Palgrave Macmillan.
Swan. Argues that property rights and other reforms are Compendium of economics concepts and leading the-
required for the poor to turn ‘‘dead’’ into ‘‘liquid’’ capital. orists.
Goldin, I., O. Knudsen, and A. Brandao. 1994. Modeling North, D. 1990. Institutions, Institutional Change, and
Economywide Reforms. Paris: OECD. Examines the im- Economic Performance. Cambridge: Cambridge Uni-
pact of macroeconomic and sectoral reforms using a versity Press. Develops an analytical framework for ex-
variety of economic models, comparing methodologies plaining the ways in which institutions and institutional
and outcomes. change affect the performance of economies.

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Prebisch, R. 1950. The Economic Development of Latin Stiglitz, J., and S. Yusuf, eds. 2001. Rethinking the East Asian

exchange market pressure

America and its Principal Problems. New York: UN Miracle. New York: Oxford University Press. Compares
Economic Commission for Latin America. Challenges the industrial policies of East Asian countries, including
comparative advantage as a basis for development, ar- China, and sheds new light on the ‘‘East Asian Miracle.’’
guing that developing countries (the ‘‘periphery’’) are in Wade, R. 1990. Governing the Market: Economic Theory and
a structurally unequal relationship with industrialized the Role of Government in East Asian Industrialization.
countries (the ‘‘center’’), and that nonmarket solutions Princeton, NJ: Princeton University Press. Examination
at the national and global level as a consequence are of industrial policy in East Asia focusing on the inter-
required to address development challenges. action of state and market.
Ray, D. 1998. Development Economics. New Delhi: Oxford Williamson, J. 1990. ‘‘What Washington Means by Policy
University Press. Synthesizes literature in the field and Reform.’’ In Latin American Adjustment: How Much Has
raises policy questions, arguing that there is no single Happened? Edited by J. Williamson. Washington, DC:
cause for economic progress, but that a combination Institute for International Economics, 5–20. The text
of factors (physical and human capital, reduced in- that gave rise to the notion of the ‘‘Washington con-
equality, and strong institutions) consistently favor de- sensus’’ and which summarizes the orthodoxy of the
velopment. time.
Rostow, W. W. 1990. Theorists of Economic Growth from Wolf, M. 2003. ‘‘The Morality of the Market.’’ Foreign
David Hume to the Present. New York: Oxford Uni- Policy 138: 46–50. Argues for the ethical and equity basis
versity Press. Explores how growth theorists since the of capitalism on the basis of superior outcomes.
mid-18th century have dealt with variables and prob- World Bank. 1993. The East Asian Miracle: Economic
lems posed by the dynamics of economic growth. Growth and Public Policy. New York: Oxford University
Sachs, J. 1994. Understanding Shock Therapy. New York: Press. World Bank policy report which argues that
Social Market Foundation. Motivation for rapid ad- strong macroeconomic policies, a focus on the market,
justment of the former Soviet Union to a market econ- narrowly targeted government interventions, and phys-
omy, and the need for radical reform of prices, liber- ical and human capital account for the success of the East
alization, and privatization. Asian economies.
Sen, A. 1999. Development as Freedom. New York: Knopf. World Commission on Environment and Development
Argues that open dialogue, civil freedoms, and political (WCED). 1987. Our Common Future. Oxford: Oxford
liberties are vital dimensions of sustainable development. University Press. United Nations report that provided
Stern, N. H., J. Dethier, and F. Halsey Rogers. 2005. the first global attempt to locate environmental prob-
Growth and Empowerment: Making Development Hap- lems in the context of growth and development and to
pen. Cambridge, MA: MIT. Analysis of the interaction identify the long term implications of rising consump-
between growth and poverty reduction which empha- tion and resource depletion.
sizes the importance of focusing on the ‘‘twin pillars’’ of
IAN GOLDIN
investment and empowerment.
Stewart, F. 2006. ‘‘Basic Needs Approach.’’ In The Elgar
Companion to Development Studies, edited by D. Clark.
Cheltenham: Edward Elgar, 14–18. Provides a synthesis exchange controls
of the basic needs approach and places it in the context of See capital controls
the evolution of development thinking.
Stiglitz, J. 2000. ‘‘Capital Market Liberalization, Economic
Growth, and Instability.’’ World Development 28 (6):
1075–86. Drawing lessons from the Asian crisis, high- exchange market pressure
lights the importance of sequencing and of a nuanced Foreign exchange market pressure (EMP) indexes are
approach to capital market liberalization. weighted schemes of variables designed to gauge

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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.