Economic growth & development in retrospect

Economic theories of development and the historical processes surrounding them are reciprocally interconnected. It suggests reading the evolution of the studies of development in the context of the evolution of the politico-economic conflict between a handful of core countries of North America and Western Europe, on the one hand, and a large group of peripheral countries. Such conflict is always about the extraction and appropriation of income and wealth of the producing classes of the global South by the capitalist class of the global North through unequal trade, finance, foreign investment, and ownership of Third-World assets. On the basis of these positions, this chapter retraces the historical and political genesis of development economics. Particular emphasis is given to the failure of the New International Economic Order (NIEO) project and the ascendency of the ‘Washington Consensus’, which became the hegemonic model of international development starting in the early 1980s. It shows that the orthodox development policy prescriptions that became dominant among academics, policy makers, and leading development institutions over the past 35 years were derived from basic principles in neoclassical economics. It argues that the colonization of development economics by mainstream economic theory reflects the interests of dominant interests over specific policy problems in the Western World.