chapter  10
Relevance of Keynes for Developing Countries
ByH. W. Singer
Pages 17

Albert Hirschman credits Keynes with the major methodological step in establishing the analysis of problems of developing countries on a firm scientific footing, which he dates from some thirty-five years ago. That step was, in his own terminology, to move away from monoeconomics to the proposition that different laws and rules apply to economics that find themselves in different situations. If The General Theory is based on the special case of the British economy, the question arises whether a model of the typical economy of an underdeveloped country can be substituted for the Keynesian model. The Harrod-Domar growth model based on the Keynesian analysis underlines the identification of investment with the production of capital goods. The question of unutilized capacity in the consumption-goods industries, which is essential for the operation of Keynesian multipliers as complementary input to unemployed labor, has also been the subject of considerable debate regarding its existence and nature in developing countries.