This article appears in the following Oxford Review of Economic Policy issue: THE POLITICAL ECONOMY OF DEVELOPMENT [View the issue table of contents]
The political economy of development: an assessment
* University of Oxford, e-mail: christopher.adam{at}economics.ox.ac.uk
** University of Oxford, e-mail: stefan.dercon{at}qeh.ox.ac.uk
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Research in the field of economic development is increasingly engaged with questions of political economy, of how political choices, institutional structures, and forms of governance influence the economic choices made by governments and citizens. We summarize recent developments in the field and introduce a set of papers that illustrate key themes and methodological innovations associated with the ‘new’ political economy of development.
Key Words: political economy • economic development
This special issue has been partly funded by the UK Department for International Development (DFID) as part of Improving Institutions for Growth (iiG), a research programme to study how to improve institutions for pro-poor growth in Africa and South Asia. The views expressed are not necessarily those of DFID. Some of the papers were presented at an iiG sponsored workshop in Oxford in March 2009.
1 Many economists, in fact, would start from this narrower perspective. Robert Lucas (1988, p. 3), for example, describes the problem of economic development as ‘simply accounting for the observed pattern, across countries and time, in levels and rates of growth of per capita income’, adding that ‘This may seem too narrow a definition ... but thinking about income patterns will necessarily involve us in thinking about many other aspects of societies too’.
2 The ‘capital shortage’ diagnosis of the development problem continues to represent an important, if controversial, strand in modern development economics, particularly in regard to the condition of the lowest-income countries. It emerges in some of the empirical literature on aid effectiveness—for example Clements et al. (2004) but the argument is most forcefully reprised in the work of Jeffrey Sachs and his colleagues (e.g. Sachs et al., 2004) who seek to locate Africa's historically low growth and divergence in the presence of market failures—poverty traps—and to argue that large well-directed aid flows are both necessary and sufficient to lift poor countries over the relevant thresholds and put them on high-growth convergent paths. While the genesis of the relevant traps may be different—Sachs et al. place heavy weight on a combination of geographical disadvantage, a high latent disease burden, and a lousy political and historical legacy—the prognosis is pure ‘big push’ in the tradition of the early development economists such as Rosenstein-Rodan (1943) as re-interpreted by Murphy et al. (1989).
3 See www.growthcommission.org
4 The Commission took as its sample all those countries that had averaged 7 per cent per annum growth for a quarter century or more since 1950, a rate being consistent with a doubling in size every decade. Thirteen countries satisfied this condition: Botswana, Brazil, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan, China, and Thailand. (As at the Commission's reference point, India and Vietnam were the closest ‘runners up’.)
5 Article III of the Organization of African Unity Charter, signed in Addis Ababa in 1963 affirms the principles of ‘non interference in the internal affairs of States’ (Art III.2) and ‘respect for the sovereignty and territorial integrity of each State and for its inalienable right for independent existence’.
6 Details on EITI are available at www.eitransparency.org Established in early 2009, the Natural Resource Charter, has been developed by a group of economists and lawyers seeking to distil key lessons from the economics and political economy of natural resource management into a Charter for the effective management of natural resource wealth (see www.naturalresourcecharter.org).