Theory and Practice in Development Economics

This article describes the status of development economics within the broader field of the economics discipline. During the 1950s development economics prospered and had a distinct heterodox approach, but by the 1960s it faced a crisis, for it came to be recognized that the experience of developing countries did not fit the models of development that had been constructed. Moreover, many of the main policy prescriptions had clearly failed. The result was a complete reorientation of the discipline, in which “neoclassical economics,” hitherto believed irrelevant to developing countries, became central. The field started to apply, systematically, tools such as cost-benefit analysis and input-output analysis; it also became much more formalized than it was before. The result of this transformation was a much more conventional application of theory to the problem of development. Too theoretical for the practitioners and too applied for the theoreticians, development economics has often remained at the margins of the economics discipline.