Understanding Economic Development
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Understanding Economic Development

A Global Transition from Poverty to Prosperity?

Colin White

This fascinating book considers one of the most important problems in economics: the inception of modern economic development. There is at present no satisfactory explanation of the inception of modern economic development; an excessive focus on either pure theory or on unique histories limits the explanatory power. This book realises the need to integrate the two approaches, moving beyond the proximate causes of economic theory to review the role in an analytic narrative of significant ultimate causes – geography, risk environments, human capital, and institutions.
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Chapter 4: Introducing Real Time with a Narrative

Colin White


The empirical study of economic growth occupies a position that is notably uneasy. . . . it is also one of the areas in which genuine progress seems hardest to achieve. The contributions of individual papers can often appear slender. Even when the study of growth is viewed in terms of a collective endeavour, the various papers cannot easily be distilled into a consensus that would meet standards of evidence routinely applied in other fields of economics. (Durlauf, Johnson and Temple 2004) There is a need to broaden beyond a theory emphasising proximate causes. Any reasonable explanation of economic growth should consider ultimate factors, those factors which influence the contribution of proximate factors. This means moving beyond conventional neoclassical theory. The capacity of the neoclassical model to explain economic development is limited by its focus on proximate factors. There is a need to consider the full complexity of the development experience and the full range of causative factors in order to produce a persuasive explanation of modern economic development. There are five sections in this chapter. The first identifies the main weaknesses of the neoclassical model, some arising from its failure to explain the behaviour of the real world, others more fundamental – behavioural assumptions whose validity is in doubt. The second section reviews the outcome of attempts to use regression analysis to identify the determinants of economic development and in particular to test neoclassical theory. The third section explores the distinction between proximate and ultimate causation. Two sub-sections indicate the nature of proximate...

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