ABSTRACT
History matters in understanding present patterns of development and underdevelopment across countries. Not only does the history of institutions matter for present day's development performance, but the history of ideas does too. The history of thought in development economics tells why particular interpretations of underdevelopment were proposed and how they translated into policies that may still affect development outcomes. Mercantilism dominated economic thought for the pursuit of development in the long period from 1500 to 1750. Mercantilist trade also consisted in exploration and colonialism, profits from the slave trade, and the plunder of metals in India and Latin America, leading to the accumulation of capital that could subsequently be invested in the industrial revolution. As the Western experience came to an end, and Britain dominated the world economy, ruling the seas and capitalizing through free trade on its large industrial advance, there was a remarkable period of 35 years of peace and prosperity.
