In Pursuit of a New Paradigm (Presidential Address)

Abstract

After 40 years of its birth, development economics has come to be widely accepted - without universal acclaim. In sharp contrast to some pessimistic evaluations of the subject, the academic community has granted it the right to a separate existence. But the recognition has not come easy. From the first full-length evaluation of the discipline by Chenery (1965), in which he looks at it as a variation on the classical theme of comparative advantage, to Stem's (1989) sympathetic review of the contributions that the discipline has made to the state of economic knowledge, development economics has experienced many a vicissitude - both the laurels of glory and the "arrows of outrageous fortune". But, finally, it has become an industry in its own right, of which not only social profitability but also 'private' profitability appears to be strictly positive: the publishing industry continues to patronize it and publish full-length books on the subject. Four decades of development experience, the production of massive cross-country and time-series data about a large number of development variables, the construction of large macro-economic models and fast-running computers, and the application of mathematical methods, have all combined to lay the foundations of a theoretically rigorous and policy-relevant development paradigm, which is gradually replacing the old one. All this is good news for development economists, who can now afford not only bread but also some butter for their daily parsnips .