Geography, Structural Change and Economic Development

Geography, Structural Change and Economic Development

Theory and Empirics

Edited by Neri Salvadori, Pasquale Commendatore and Massimo Tamberi

The authors in this book regard the process of economic expansion as a non-homogeneous and multifaceted phenomenon which has deeply affected human welfare, and cultural, social and political change. The book is a bridge between the theorists (Rosenstein-Rodan, Lewis, Myrdal, and Hirschmann) who in the post-war period analyzed regional inequalities, structural change and dualism, and the modern literature on economic growth. The latter has emphasized the existence of multiple equilibria, bifurcations and various types of dynamic complexity, and clarified the conditions for the emergence of phenomena such as cumulative causation, path dependence and hysteresis. These are the typical ingredients of structural change, economic development or underdevelopment.

Chapter 7: Myrdal, Growth Processes and Equilibrium Theories

Carlo Panico and Maria Olivella Rizza

Subjects: economics and finance, radical and feminist economics


Carlo Panico and Maria Olivella Rizza 7.1. INTRODUCTION It is generally recognised that Myrdal’s work on development and underdevelopment made three important contributions. He proposed a cumulative causation approach in opposition to the dominant one, which he called the stable equilibrium approach. He pointed out that analyses of development processes, which only focus on economic factors, are irrelevant and misleading because historical, institutional, social and cultural factors also matter. He disputed the existence of a body of economic thought that is ‘objective’ in the sense that it is value-free. This chapter confirms the views expressed by the literature, clarifying some aspects of Myrdal’s position that have not been sufficiently explored. Moreover, it points out the existence of a contribution to another point, which the literature has broadly overlooked,1 namely the fact that he criticised the logical consistency of the dominant theories, stating that they were based on unsatisfactory assumptions regarding the characterisation of individual preferences. These assumptions were the heritage of utilitarian moral philosophy and rationalist psychology, which at the beginning of the 20th century the other social sciences had abandoned. Myrdal himself stated that in The Political Element in the Development of Economic Theory (1930) he had focused on the subjective element of the neoclassical theory to criticise its logical consistency, that is ‘to demonstrate that certain practices of reasoning common in economics were logically defective’ (Myrdal, 1958, p. 237).2 Yet, those who assessed his contributions (see Lundberg, 1984; Reynolds, 1984; Kindleberger, 1987; Streeten, 1987, 1992; Angresano...

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