Development economics
Topic: Schools of Economic Thought and Economic Laws · NCERT: Beyond NCERT
Meaning
Development economics is the branch of economics that studies how low-income countries grow. It also studies how they move from farming to industry and services (structural change), and how they reduce poverty and raise living standards. It asks why some countries stay poor and what policy can do about it.
Key pioneers include Arthur Lewis (dual-sector model with surplus farm labour, 1954), Rosenstein-Rodan (the "big push", 1943), Nurkse (vicious circle of poverty), Hirschman (unbalanced growth, 1958) and Gunnar Myrdal (Asian Drama, 1968).
Example
Amartya Sen's entitlement theory (Poverty and Famines, 1981) showed that famines come from a collapse in people's command over food, not just a shortage of food. Sen won the Nobel in 1998. Later, Banerjee, Duflo and Kremer won the 2019 Nobel for testing anti-poverty policies with randomised controlled trials (RCTs), which are experiments that compare a randomly chosen treated group with an untreated group.
Related concepts
- Institutional economics
- New institutional economics
- Path dependence
- Creative destruction
- Structuralism (development economics)
- Dependency theory
- Developmental state