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Journal of Economic Perspectives

Few branches of economics have wielded as much influence on the world of policy as development economics. Virtually every major development strategy of the last 50 years is associated with some pioneering research that provided its intellectual underpinnings. Consider some of the key milestones. The dominant import substitution policies of the 1950s and 1960s were the practical realization of the ideas of Prebisch (1959) and Singer (1964) and were based on the famous Prebisch-Singer thesis on the declining terms of trade for primary products and the dynamic benefits of manufacturing. . | Journal of Economic Perspectives Volume 24 Number 3 Summer 2010 Pages 33-44 Diagnostics before Prescription Dani Rodrik Few branches of economics have wielded as much influence on the world of policy as development economics. Virtually every major development strategy of the last 50 years is associated with some pioneering research that provided its intellectual underpinnings. Consider some of the key milestones. The dominant import substitution policies of the 1950s and 1960s were the practical realization of the ideas of Prebisch 1959 and Singer 1964 and were based on the famous Prebisch-Singer thesis on the declining terms of trade for primary products and the dynamic benefits of manufacturing. The emphasis on development planning in those same decades was greatly influenced by Rosenstein-Rodan s 1943 Big Push framework with its stress on increasing returns to scale and the need to kick-start growth through large-scale investments and the planning model of Mahalanobis 1955 which argued that economic development could be accelerated by government encouragement of heavy industry. When such models were discarded in the 1980s in favor of more outward-and market-oriented strategies it was in no small measure because of the research published during the 1970s by Balassa 1971 Bhagwati 1978 Krueger 1978 and Little Scitovsky and Scott 1970 . The Washington Consensus of the 1990s despite its appellation represented the common views of a group of Latin American technocrats and policymakers many of whom had trained at top economics departments in the United States. The influential Human Development Reports of the United Nations Development Programme which rank the well-being of countries according to a combination of GDP health and education statistics were inspired Dani Rodrik is Professor of International Political Economy at the John F Kennedy School of Government Harvard University Cambridge Massachusetts. His e-mail add less is dani_rodrik@harvard.edu . doi 10.1257 .