INTERNATIONAL ASPECTS OF DEVELOPMENT ECONOMICS
Most issues in development economics arouse intense controversy, and none more so than the international aspects. The early debates on the distribution of gains from trade and investment between the less developed countries (LDCs) and more developed countries (MDCs) are well known. The neo-Marxist and dependency theories of underdevelopment, in fashion during the 1970s, revived and fuelled these controversies. The 1980s witnessed a resurgence of the neoclassical orthodoxy with its advocacy of minimalist state intervention in economic activity and outward-looking economic policies, exemplified by the structural adjustment and stabilization policies of the World Bank and the International Monetary Fund (IMF). The developments, however, have served to revive the old debate between the orthodox neoclassical, or liberal, economists and the structuralists who have long emphasized structural rigidities and market failure due to social, institutional and political factors which act as bottlenecks to development. Their advocacy of state intervention and regulation of foreign trade and investment as a way out of these bottlenecks is well known. These debates between the orthodox neoclassical economists and the structuralists might be relegated to the pages of history were it not for the fact that the division continues to influence discussion on major policy issues. These include the structural adjustment and stabilization policies of the World Bank and the IMF, liberalization of trade in services, foreign direct investment and the international debt problem.