ABSTRACT
Near the end of Chapter 4, the Solow neoclassical growth theory was introduced. It has been interpreted as predicting that the per capita incomes of economies will tend to converge to the same level over time. This happens as lower-income nations grow faster than higher-income nations, assuming they all have access to the same technology and share similar savings, investment, and population growth rates.1 Along with Harrod and Domar, Solow was one of the pioneers in one of the two new fields of economic analysis that emerged during, and shortly after, the Second World War. These new fields, growth theory and development economics, had little in common. Growth theory largely consisted of highly abstract formal models of economic dynamics, where the subject of analysis was the performance of the advanced, industrialized national economies. Development economics emerged as an interdisciplinary field of study, demanding deep socioeconomic knowledge and historical context to interpret the dynamic behavior of heterogeneous societies. In the early phase establishing development economics,
many of these societies were at the threshold of transitioning from colonial dependencies to independent nationhood. Many were also slowly overcoming a legacy of semi-feudal, oligarchic, rule-and embedded-resource-based economic structures. In short, growth theory emerged as a new area where abstract mathematical models were utilized to interpret and understand economic performance using conventional economic analysis. In contrast, development economics necessitated new ways of thinking and new forms of analysis built from observing concrete situations of underdevelopment. Thus, these two new fields of economics evolved along largely separate paths.
