Book contents
- Frontmatter
- Contents
- Preface to the Fifth Edition
- Abbreviations and Measures
- Part One. Principles and Concepts of Development
- 1 How the Other Two-Thirds Live
- 2 What Is Economic Development?
- 3 Economic Development in Historical Perspective
- 4 Characteristics and Institutions of Developing Countries
- 5 Theories of Economic Development
- Part Two. Poverty Alleviation and Income Distribution
- Part Three. Factors of Growth
- Part Four. The Macroeconomics and International Economics of Development
- Part Five. Development Strategies
- Glossary
- Bibliography
- Index
- Endpapers
5 - Theories of Economic Development
from Part One. - Principles and Concepts of Development
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Preface to the Fifth Edition
- Abbreviations and Measures
- Part One. Principles and Concepts of Development
- 1 How the Other Two-Thirds Live
- 2 What Is Economic Development?
- 3 Economic Development in Historical Perspective
- 4 Characteristics and Institutions of Developing Countries
- 5 Theories of Economic Development
- Part Two. Poverty Alleviation and Income Distribution
- Part Three. Factors of Growth
- Part Four. The Macroeconomics and International Economics of Development
- Part Five. Development Strategies
- Glossary
- Bibliography
- Index
- Endpapers
Summary
To many people, a theory is a contention that is impractical or has no factual support. Someone who says that free migration to the United States may be all right in theory, but not in practice, implies that despite the merit of the idea, it would be impractical. Likewise, the statement that the idea of lower wealth taxes in India stimulating economic growth is just a theory indicates an unverified hypothesis.
For the economist, however, a theory is a systematic explanation of interrelationships among economic variables, and its purpose is to explain causal relationships among these variables. Usually a theory is used not only to understand the world better but also to provide a basis for policy. Theorists cannot consider all the factors influencing economic growth in a single theory. They must determine which variables are crucial and which are irrelevant. However, reality is so complicated that a simple model may omit critical variables in the real world. And although complex mathematical models can handle a large number of variables, they have not been very successful in explaining economic development in less developed countries (LDCs).
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- Economic Development , pp. 119 - 160Publisher: Cambridge University PressPrint publication year: 2012
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