Notes for a Course in Development Economics

Open a book — any book —on the economics of developing countries, and it will begin with the usual litany of woes. Developing countries, notwithstanding the enormous strides they have made in the last few decades, display fundamental economic inadequacies in a wide range of indicators. Levels of physical capital per person are small. Nutrition levels are low. Other indicators of human capital such as education — both at the primary and seconday levels — are well below developed-country benchmarks. So are access to sanitation, safe water and housing. Population growth rates are high, and so are infant mortality rates. One could expand this list indefinitely. Notice that some of these indicators — infant mortality or life expectancy, for instance — may be regarded as defining features of underdevelopment, so in this respect the list above may be viewed, not as a statement of correlations, but as a definition of what we mean by development (or the lack of it). But other indicators, such as low quantities of physical capital per capita, or population growth rates, are at least one step removed. These features don’t define underdevelopment. For instance, it is unclear whether low fertility rates are intrinsically a feature of economic welfare or development. Surely, many families in rich countries may take great pleasure in having a large number of offspring. Likewise, large holdings of physical capital may well have an instrumental value to play in the development process, but surely the mere existence of such holdings does not constitute a defining characteristic of economic welfare. And indeed, that is how it should be. We do not make a list of the features that go hand in hand with underdevelopment simply to define the term. We do so because — implictly or explicitly — we are looking for explanations. Why are underdeveloped countries underdeveloped?1 It is easy enough to point to these inadequacies in terms of physical and human capital, but the extra step to branding these as causes of underdevelopment is perilously close, and we should avoid taking that step. Low levels of capital, or low levels of education, are just as much symptoms of development as causes, and to the extent that they intertwine with and accompany the development process (or the lack of it), we cannot rely on these observations as explanations. Perhaps the word “underdeveloped” does not constitute politically correct usuage, so that several publications — those by well-known international organizations chief among them — use the somewhat more hopeful and placatory present continuous “developing”. I won’t be using such niceties in this article, because it should be clear — or at least it is clear in my mind — that economic underdevelopment pins no derogatory social label on those who live in, or come from, such societies.