1963-2013 - 50 years of Research for Social Change

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Back | Programme Area: Special Events (2000 - 2009)

Challenges of Economic Development (Draft)

In recent times, the world has experienced important changes, both ideologically and in relation to the economic environment.
These changes have posed serious challenges to the analysis of economic development and to its policies proposals.
Some previously well settled conceptions have completely fallen apart. Historical evidences and empirical investigations
made conceptions previously considered opposite to one another go to the same side of debates. Many ideas were placed
upside down.

Four theoretical developments have been quite important in promoting such changes in conceptions and in the analysis of
economic development:
1.- the New Growth Theory, which reached conclusions on economic development that were reasonably different from those obtained from traditional Neoclassical Growth Theory.
2.- the idea of Rent Seeking.
3.- the idea of the role of clustering on efficiency.
4.- the new conceptions on social capital.

This paper summarises the major consequences of these theoretical developments to the ideas about economic development and the
proper strategies to its promotion. The major hypothesis is that the best path to economic development, which all these notions
point to, is in fact a combination of some recipes stressed by Structuralists and by Liberals in the early stages of economic

The paper is organised as follows: the next four sections present overviews of all these theoretical developments.
Section 6 proposes a general framework that helps to understand the relationship among these individual contributions.
It also indicates the individual contributions of each of these developments in this framework. Section 7 briefly summarises
some consequences of these theoretical contributions to development policies and presents the major conclusions.

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