Development economics & the Global South
Development economics and the Global South: growth theory, structural transformation, debt, aid, and the institutional debate shaping the developing world.
From growth models to capabilities
Development economics studies why some economies converge on prosperity while others stall. The post-1945 canon begins with the Harrod-Domar model (Roy Harrod 1939, Evsey Domar 1946), which made the savings rate and the capital-output ratio the levers of growth, justifying aid-financed investment to fill a 'savings gap'. Robert Solow's 1956 neoclassical model added diminishing returns to capital and made technological progress the residual driver of long-run growth, predicting conditional convergence. W. Arthur Lewis (1954, Nobel 1979) modelled the dual economy: surplus labour transfers from a low-productivity traditional sector to a modern capitalist sector, financing industrialization until the 'Lewis turning point'.
Against these, dependency theory (Raul Prebisch and Hans Singer, the Prebisch-Singer hypothesis of 1950 on declining terms of trade for primary exporters; Andre Gunder Frank's 'development of underdevelopment', 1966) argued the global economy structurally subordinates the periphery to the core. Prebisch, as first Secretary-General of UNCTAD (1964), drove import-substitution industrialization (ISI) across Latin America and South Asia.
The capabilities turn and the empirical revolution
Amartya Sen (Nobel 1998) reframed development as the expansion of freedoms and capabilities, not merely income, underpinning the UNDP Human Development Index (1990), designed with Mahbub ul Haq. The 2000s brought a methodological shift: Abhijit Banerjee, Esther Duflo and Michael Kremer (Nobel 2019) used randomized controlled trials to evaluate microcredit, deworming, and conditional cash transfers (Mexico's PROGRESA/Oportunidades, 1997). Daron Acemoglu, Simon Johnson and James Robinson (Nobel 2024; Why Nations Fail, 2012) argued institutions, specifically inclusive versus extractive ones, are the deep cause of divergence, against the geography and culture hypotheses.
The 'Global South' as a category
The term derives from the Brandt Line (Brandt Commission, 1980) dividing a rich North from a poorer South. It overlaps with the G77 (founded 1964), now 134 states, and the Non-Aligned Movement (1961). The category is contested: it groups China and Chad, oil-rich Gulf states and least-developed countries. The MDGs (2000-2015) and successor SDGs (Agenda 2030) operationalize development targets. Critics note the East Asian 'tigers' escaped through export-oriented industrialization and developmental states, not ISI, complicating any single prescription. The Washington Consensus (John Williamson, 1989), ten policy reforms favouring liberalization and fiscal discipline, dominated structural adjustment until its credibility collapsed after the 1997 Asian financial crisis and Argentina's 2001 default.
