Development Economics Goes North by Dani Rodrik


When economists talk about global convergence, they usually mean that developing economies are growing faster than advanced economies and that the incomes of the world’s poor are reaching the levels of richer economies. The irony these days is that we are experiencing downward rather than upward convergence.

CAMBRIDGE – At the heart of development economics is the idea of ​​“productive dualism”. Economists who founded the field of development economics, such as Nobel Prize-winning Caribbean economist W. Arthur Lewis, noted that the economies of poor countries are divided between a narrow “modern” sector that uses advanced and a much larger “traditional” sector characterized by extremely low productivity.

Dualism has long been seen as the defining characteristic of developing countries, unlike developed countries, where advanced technologies and high productivity were assumed to prevail throughout the economy. This marked development economics as a distinct branch of the discipline, distinct from conventional neoclassical economics.

Development policy, on the other hand, has traditionally focused on reducing disparities in income, education, health and, more generally, life chances. Its task was to overcome productive dualism through new institutional arrangements that would alter the functioning of markets and expand access to productive opportunities.

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