Half a Century of Development Economics: A Review Based on the Handbook of Development Economics

The Handbook of Development Economics provides an unmatched perspective on the past half century of research in the field. This article reviews some of the significant findings of the Handbook and identifies areas of development economics not covered there. It describes the evolution of the field, beginning with the postwar Indian Congress consensus, which emphasized state planning. That paradigm was complemented in the 1970s by the dual economy paradigm and the work of the Latin American structuralists. As the costs of protectionism came to be recognized, many economies adopted an outward orientation with respect to both trade and foreign investment. This outward orientation later formed part of a new consensus on macroeconomic management, sometimes referred to as the Washington consensus. This consensus— more accurately dubbed the One World consensus— is now widely accepted throughout the world, as developing and industrial countries alike have embraced its emphasis on fiscal discipline, tax reform, outward orientation, privatization of state enterprises, deregulation, and the safeguarding of property rights. Despite SO years of research, large gaps in the understanding of development remain. Adopting Sen's framework of beings and doings and focusing on collective action and the roles played by individuals may help to fill some of these gaps.