Myths and Realities in Development: Prescriptions for Policy

  • Alasdair I. MacBean
  • V. N. Balasubramanyam
Part of the Trade Policy Research Centre book series (TPRC)


Both the theory and the practice of development policies have bent and swayed to the dictates of fashion since the early 1950s. Often a basically reasonable idea has been pushed to absurd extremes. The accumulation of capital is a necessary part of the development process but without able managers and skilled workers injections of capital are of little avail. Despite this obvious objection stressed repeatedly by economists such as Peter T. Bauer, Sir Alec Cairncross and Jacob Viner, the central core of development literature continued to treat capital as the only scarce factor. So long as the flied marginal capital/output ratio models remained within the confines of academic journals little harm would have been done, but countless development plans were built upon such naive models and they remained implicit in a great deal of official thinking on development, including policy documents of the United Nations. Aid requirements were solemnly predicted on the basis of savings gap and foreign exchange gap models which once again assumed fixed capital/output ratios in addition to fixed savings and import coefficients. Aid donors actively encouraged these exercises.


Foreign Exchange Foreign Firm Industrial Nation Domestic Saving Manufacture Export 
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  1. 1.
    See W. Paddock and E. Paddock, We Don’t Know How: an Independent Audit of What They Call Success in Foreign Assistance ( Ames: Iowa State University Press, 1973 ) pp. 211–4.Google Scholar
  2. 4.
    G. C. Zaidan, ‘Population Growth and Economic Development’, Finance and Development, No. 1, 1969.Google Scholar

Copyright information

© Alasdair I. MacBean, V. N. Balasubramanyam and the Trade Policy Research Centre 1978

Authors and Affiliations

  • Alasdair I. MacBean
    • 1
  • V. N. Balasubramanyam
    • 1
  1. 1.University of LancasterUK

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