ABSTRACT
The HISTORICAL EVOLUTION of DEVELOPMENT THEORY In the previous chapter, we identified potential sources of economic growth and the inevitable structural transformation that accompanies economic development. We turn now to ideas and theories that attempt to explain how these sources of growth can be integrated into transformation processes that produce higher living standards. The search for appropriate theories of economic development has received economists’ attention for two centuries. Different theories have led to different implications for what governments, private firms, or individuals might do to achieve their goals. One especially important contrast concerns
the relative roles attributed to technology and productivity (reflected in the quotation above from Jeffrey Sachs), as opposed to institutions and incentives (reflected in the quotation above from Steven Landsburg). Emphasis has shifted over time, partly because of changes in constraints that limit economic growth, partly because of changing technological possibilities, and partly because of experiences with what has or has not worked. We consider in this chapter the historical progression of thinking among economists. Over time, a synthesis of ideas has emerged, with increased focus on the interaction between technology and institutions.
