Development Economics today: Insights from Hirschman and Furtado

The widespread failure of market-oriented policies to produce sustained growth and generalized welfare increases in Latin America has led to a renewed interest in the development theories that flourished in the post-WWI era. They were largely set aside after the 1960s, with the exception of developments in Latin America. While many aspects of those writings are still relevant today the international economy changed substantially. Globalization has been at times interpreted as the end of the core-periphery distinction. While this is debatable, policy prescriptions and objectives of the 1950s and 1960s are not necessarily applicable today. The paper begins to address the general question: what remains vital and relevant today of “high development theory”? In which way can those ideas be updated and brought back to the current debate on development? The paper follows two main directions of investigation. It examines Hirschman assessment of balanced and unbalanced growth in light of the recent theories of structural change and transformational growth. Notoriously those arise from a criticism of steady growth models and highlight how structural unbalances play a fundamental role in development. Interestingly Hirschman had no notion of “dependency” and his analysis remains rooted in the concept of backwardness. The second direction of investigation concerns the Latin American views, and especially those of Furtado and Marini, which appear open to the investigation of the process of long-run growth of demand – linked to consumption patterns evolution and new markets – that is also an central aspect of the process of transformational growth.