The Relevance of the Historical School for the Study of Low-Income Countries
Development economics seems to stand at a crossroads. On the one hand, development economists have hitherto been heavily dependent on the neoclassical framework of rational choice with all its auxiliary assumptions about actors’ utilities, expectations and preferences. Even the contributions from institutional theory and early studies in behavioural economics that allow accounting for the consequences of imperfect information, positive transaction costs or limited information processing capabilities remain within the framework of rational choice theory. And with this framework, also its methodological foundations have been maintained, above all the deductive method of research and the precept of methodological individualism.