The Bases of Development Policy (Presidential Address)

Syed Nawab Haider Naqvi

Abstract


Development economics seeks to isolate the elemental forces at
work in developing countries that raise per capita income, initially and
then continuously, by exploiting fully the inter-industry and
inter-sectoral network of economies of scale, externalities, and
complementarities; it also analyses the key factors that decide a fair
distribution of the fruits of economic progress, and those which enhance
human happiness more directly. The process of economic development is
seen as complex, even mysterious; which must be tackled by conscious
planning where coordination failures are threatening, and through the
market mechanism if information problems are daunting. Yet a persistent
theme in economic literature has been one of denial of the (marginal)
utility of development economics. Essentially, most of these “arguments”
against development economics are nothing more than a thinly disguised
championing of the ideology of free-market capitalism and neo-classical
economics as the ultimate truths about the economic universe [Heilbroner
(1990)]. They are a frame of thought into which development economics
would not fit “naturally”. As one would expect, these views about
development economics have not gone unchallenged. But the main issue is
far from settled. I, therefore, restate here the case for development
economics to make sure that development policy is saved from the revages
of an incompatible liberalist philosophy. I would concentrate on issues
related to the acknowledged mainsprings of economic progress, and those
related to the relationship between trade and growth and the interface
of the government and the market. Finally, I would like to emphasise the
need to acquire an overarching ethical vision in order to identify the
ends of economic progress and to order the means to achieve
them.

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DOI: https://doi.org/10.30541/v34i4Ipp.321-330

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