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  Daniel Little, University of Michigan-Dearborn

Development theory is largely a product of post-World War II thinking in the social sciences and international policy studies. The key intellectual challenges for development theory are these: What are the causes of economic transformation in human societies? And what are some of the policies through which governments can stimulate the processes of economic growth?  These questions have been the subject of inquiry within classical political economy for several centuries, and interest in the determinants of growth and modernization has been part of economic theory since its beginnings.  But modern development theory took its impulse from global developments following World War II—the needs of reconstruction of Europe and Japan following World War II; the creation of international monetary and trading regimes to facilitate international economic interaction; the circumstances that followed from the dissolution of European colonies in Asia, Africa, and Latin America; growing attention to the persistence of poverty in the developing world; and focus in the 1990s on the phenomena of globalization. 

            The concept of development has encompassed several separate ideas in the past sixty years: the idea of modernization of economic and social institutions, the idea of sustained economic growth within a national economy, the idea of the continuing improvement of the material well-being of the earth’s human population, the idea of more extensive utilization of the world’s resources, and the idea of the replacement of “traditional” institutions and values with “modern” successors.  Some of the large questions that have guided development theory include these: What are the features of society that can be characterized as “modern”?   What causes a society to undergo sustained “modernization” and sustained economic growth?  What institutional features are important causes in economic development?  What steps can governments or other major institutions take to stimulate development?  What is the significance of the specific features of western European economic development since 1600?  Are there alternative pathways through which “modernization,” growth, and improvement of human well-being can occur?  Are there cultural assumptions that are made in valorizing development, growth, and modernization over tradition, moderate consumption, and stable cultural practices?  How can we best define the goals of development in terms of human well-being?  How should considerations having to do with equality, equity, and justice be incorporated into analysis and policy of development?

            Development theory has taken shape through efforts in several areas of the social sciences: economics (theories of efficient markets, trade, and income distribution); sociology (research on concrete processes of social change in different parts of the world); anthropology (research on the values and practices of a range of non-Western cultures); political science (research on the institutions and interests that drive international economic policy); history (research on the dynamic circumstances that created modern national and international economic institutions); and critical social science (focus on features of inequality, power, and exploitation that have often characterized international economic institutions).  Each of these strands captures something important about the historical experience of parts of the modern world, and yet they fall short of a full and general approach to the topic of development.  Development theory is an expansive, eclectic, and interdisciplinary field defined by a diverse set of questions and methods—not an exact sub-discipline within economics.

            Decolonization and the aftermath of World War II stimulated a wave of academic and policy interest in the dynamics of economic growth and development.  President Harry Truman highlighted the crucial importance of addressing global issues of poverty and hunger in his 1949 State of the Union address, an emphasis that stimulated new United States and international commitments in support of economic development in the decolonized world.  The 1950s witnessed a surge of early development theory, in the hands of such authors as Simon Kuznets, W. Arthur Lewis, and Ben Hoflitz.  A central thrust of these efforts was the formulation of economic theories of growth that, it was hoped, could help to guide policy in the economic transformations associated with decolonization.  Post-war development theory also provided some of the intellectual foundations for the establishment of post-war international economic institutions such as the World Bank and the International Monetary Fund.  Much of this work presupposed the idea that there were distinct stages of economic development (Rostow 1960), and it focused on the relationship between economic growth and savings as the basis for capital formation.  The role of trade in economic development also played a central role in these theories.  W. Arthur Lewis’s theory of the “dual economy” was particularly prominent as a basis for attempting to understand the economies of the previously colonial world.  This model postulates an economy consisting of a “traditional” sector (labor) and a “modern” sector (capital). Lewis postulated that firm owners in the modern sector were profit-maximizing, whereas those in the traditional sector were not, and that there was surplus labor in the traditional sector.  So a strategy for growth is to induce a shift of economic activity from the traditional to the modern sector (Lewis 1955).  This approach would increase savings and capital formation, leading to growth and rising incomes.  Other economists such as Adelman and Chenery cast doubt on the stage theory and further broadened the perspective by bringing distribution and welfare into the discussions (Adelman 1978), (Chenery et al. 1974). 

            There has been emphasis since the 1960s—sometimes waxing, sometimes waning—on the crucial importance of alleviating poverty in the developing world.  Throughout much of its history the World Bank has expressed its adherence to the priority of poverty alleviation (World Bank 1990), (World Bank 2001).  The United Nations Millenium Goals place poverty alleviation at the center of the development agenda for the coming fifty years (UN Millennium Project 2005).  But even placing a sincere priority on poverty alleviation, there is a wide range of disagreement over the steps that should be taken to achieve this goal.

            Several important frameworks of thought have been important in the past several decades of thinking in development theory. Neo-liberal development theory reflects the folk wisdom of neo-classical economic and political theory.  Now described as the “Washington Consensus,” this approach to development postulates that modern economic development requires free markets, effective systems of law, and highly limited powers of government (Lal 1985).  The slogan of “Getting the Prices Right” was a rule of thumb for economic institutional reform in countries receiving advice and assistance from international institutions (Timmer 1986), (Bates 1981).  This school of thought places great importance on free trade within the international economic system (Bhagwati 1969).  Neo-liberal structural adjustment reforms in the 1980s, enforced through International Monetary Fund and World Bank policies, pushed third-world governments towards harsh domestic reforms (currency devaluation, reduction of programs aimed at the poor, elimination of subsidies for rural development, liberalization of trade practices).  Critics have argued that these structural adjustment policies have had the effect of further impoverishing the poorest of many developing societies (Rodrik 1997), (Stiglitz 2002).

Critical of the neo-liberal consensus is an influential group of development theorists who emphasize the centrality of human well-being in development theorizing and the crucial role that public policies and expenditures play in successful efforts to improve the well-being of the poor in developing societies.  Amartya Sen, Martha Nussbaum, and others argue for placing a nuanced theory of human development grounded in capabilities and functionings at the center of development policy (Sen 1999), (Nussbaum 2000).  And they argue for the crucial role that public policy has in creating the human welfare infrastructure that is essential for the successful alleviation of destitution: public health, nutrition, free education, and democratic freedoms (Drèze and Sen 1989).  On this view, the narrow conception of the role of the state associated with the neo-liberal approach almost inevitably implies further degradation of the conditions of life of the least-well-off in the developing world.  A concrete achievement of this approach is the creation and maintenance of the Human Development Index by the United Nations Development Programme (United Nations Development Programme 2000). This index is designed to provide a measure of economic development that goes beyond measuring growth of per-capita income, and instead focuses on measures that are correlated with quality of life: health, longevity, and educational attainment, for example. Another such measure is the “Physical Quality of Life Index” (Morris 1979).

            There have been critical voices within development theory throughout its history. Post-war theories of colonialism emphasize the extractive role that the system of colonial control represented, with a flow of natural resources from periphery to metropole.  Dependency theory is the view that the world economy since 1945 has been constructed around a set of institutions that systematically disadvantage the South for the benefit of the North, by structuring production and trade in such a way as to limit economic growth in the third world (Frank 1967).  The South is integrated into the “modern world system,” but on terms that systemically work to the disadvantage of the countries and peoples of the periphery (Wallerstein 1974).  The Brandt report (Independent Commission on International Development Issues 1980) focused attention on the relations between the wealthy North and the impoverished South.  This approach emphasizes structural inequalities, systemic institutional disadvantages, patterns of unequal exchange, and resulting uneven development.  A different line of critical thought emerges from cultural critics of modernization.  Arturo Escobar is a central voice in this body of criticism (Escobar 1995).  This perspective offers a critique of the discourse and presuppositions of development thinking in the West: the presumed primacy of Western values, the unquestioned importance of consumerism, the teleology associated with the concept of “modernization”, and other ways in which the values and assumptions of development theory reflect unquestioned ethnocentrism and universalism.

            The concept of development incorporates several debatable assumptions.  First, it has a tendency towards Eurocentricism.  The paradigm of development incorporated in much development theorizing is the experience of western Europe during the Industrial Revolution.  Non-European societies that undergo “development” (Japan, Taiwan, Argentina) are frequently categorized in terms of a baseline comparison to the western European experience.  Historical research in the past twenty years casts doubt on this single-track theory.  Asian economic development in the seventeenth century and the twentieth century gives substantial evidence of the availability of alternative pathways of development, and there is considerable institutional variation within regions of western Europe itself (Wong 1997), (Sabel and Zeitlin 1997).

            Second, the concept of development is burdened with an implicit teleology.  The word implies a progressive transformation from “less developed” to “more developed”; it implies the creation of more complex, sophisticated, and humanly adequate systems out of simpler and less adequate systems.  (Rostow’s concept of “stages of growth” capture this assumption precisely; (Rostow 1960)).  Historians have long since abandoned the idea that history has directionality, and have demonstrated the many false starts, wrong turns, reversals, and stalls that all societies have experienced.  History is not a road to somewhere.

            Third, the concept of development brings with it an idealized set of assumptions in the background about what a “developed” society ought to include: consumerism, democracy, markets for everything, individualism, impersonal legal systems, large complex societies, and a high material standard of living.  This is a social ideal that is deeply embedded in development theory and that can be legitimately questioned.  The values that are associated with western consumer culture represent one possible framework of human values—but only one such framework (Escobar 1995).  And in fact, it may be that the constraints of longterm environmental sustainability make this complex of values doubly questionable.

            Finally, development theory has been forced to confront the contradictions between economic growth and environmental sustainability.  Resource depletion, destruction of forests and wetlands, urban sprawl, air and water pollution, and global climate change resulting from CO2 emissions all call into doubt the feasibility of permanent economic growth (United Nations Environment Programme 2002).  Prudent multi-generational planning for the future of the planet will require more consistency between the needs of consumption and the needs of environmental sustainability.



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———. 2001. World Development Report 2000/2001 : Attacking Poverty. Oxford: Oxford University Press.


 Daniel Little

University of Michigan-Dearborn


Word count: 1974 (excluding references)

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