There are two major forms of structural-change theory: W. Lewis' two-sector surplus model, which views agrarian societies as consisting of large amounts of surplus labor which can be utilized to spur the development of an urbanized industrial sector, and Hollis Chenery's patterns of development approach, which holds that different countries become wealthy via different trajectories.

The offers that appear in this table are from partnerships from which Investopedia receives compensation. The aim of many conventional approaches to development has been to increase the size of the economy (economic growth) in order to increase the output of products and services. However, these measures are criticized as not measuring economic growth well enough, especially in countries where there is much economic activity that is not part of measured financial transactions (such as housekeeping and self-homebuilding), or where funding is not available for accurate measurements to be made publicly available for other economists to use in their studies (including private and institutional fraud, in some countries).

[39], Violent conflict and economic development are deeply intertwined. George Mavrotas and Anthony Shorrocks (eds, 2007), Arno Tausch (1993; in collaboration with Fred Prager). [42] However, successful recovery depends on the quality of legal system and the protection of private property. [8] Such theories proved influential in the United States, with much higher American average tariff rates on manufactured products between 1824 and the WWII period than most other countries,[9] Nationalist policies, including protectionism, were pursued by American politician Henry Clay, and later by Abraham Lincoln, under the influence of economist Henry Charles Carey. [33] Finally, more recent research would propose that ethno-linguistic fractionalization is indeed negatively correlated with economic growth while more polarized societies exhibit greater public consumption, lower levels of investment and more frequent civil wars.

It was a dominant economic theory practiced in Europe from the 16th to the 18th centuries.

[27] In his research Pool used the "size of the largest native-language community as a percentage of the population" as his measure of linguistic diversity. Like political absolutism and absolute monarchies, mercantilism promoted government regulation by prohibiting colonies from transacting with other nations. List's 1841 Das Nationale System der Politischen Ökonomie (translated into English as The National System of Political Economy), which emphasized stages of growth. Its focus is not only on methods of promoting economic development, economic growth and structural change but also on improving the potential for the mass of the population, for example, through health, education and workplace conditions, whether through public or private channels. It is debated whether ethnicity should be defined by culture, language, or religion.

For example, scholasticism, the dominant school of thought during medieval feudalism, emphasized reconciliation with Christian theology and ethics, rather than development. The most important and significant aspect of development economic is the realization that economic development strategies to be applied are not to be found in predefined formulas, but differ according to the political, economic, and social factors affecting any given economy. The World’s Largest Oil Reserves By Country, Top Cotton Producing Countries In The World.

It is also about improving citizens’ health, education, and workplace conditions. They also include international trade, globalization, sustainable development, the effects of epidemics, such as HIV, and the impact of catastrophes on economic and human development. [12] The key authors are Paul Rosenstein-Rodan,[13] Kurt Mandelbaum,[14] Ragnar Nurkse,[15] and Sir Hans Wolfgang Singer. The linear stages of growth model was used to revitalize the European economy after World War II. [43] Investment is more productive in countries with higher quality institutions. Everything You Need to Know About Macroeconomics. Much discussion among researchers centers around defining and measuring two key but related variables: ethnicity and diversity. [4], First gaining prominence with the rise of several conservative governments in the developed world during the 1980s, neoclassical theories represent a radical shift away from International Dependence Theories. Development economics also includes topics such as third world debt, and the functions of such organisations as the International Monetary Fund and World Bank. The two-sector surplus model, which was developed in the 1950s, has been further criticized for its underlying assumption that predominantly agrarian societies suffer from a surplus of labor.

They focus on a policy that is isolationist so that the industries within a nation are able to grow without the threat of competition from established companies in other countries. [29] Nonetheless, Mauro points out that ethno-linguistic fractionalization is positively correlated with corruption, which in turn is negatively correlated with economic growth. One measure used is the Genuine Progress Indicator, which relates strongly to theories of distributive justice. "Economic Development: A Semantic History,", CS1 maint: multiple names: authors list (, Paul Bairoch, "Economics and World History: Myths and Paradoxes," (1995: University of Chicago Press, Chicago) p. 33, Paul Bairoch, "Economics and World History: Myths and Paradoxes," (1995: University of Chicago Press, Chicago) p. 40, Rosenstein-Rodan, P. "Problems of Industrialization in Eastern and South Eastern Europe.". Traditional welfare economics had focused on incomes as the main measure of well-being until his ground-breaking work in the 1980's which showed that that poverty involved a wider range of deprivations in health, education and living standards which … Economic growth [21] Many such economists are interested in ways of promoting stable and sustainable growth in poor countries and areas, by promoting domestic self-reliance and education in some of the lowest income countries in the world.
Besides, it examines areas that can be improved such as infrastructure, education, health and technology that is critical to positive economic growth through empowerment of the population. This approach still advocates free markets but recognizes that there are many imperfections in the markets of many developing nations and thus argues that some government intervention is an effective means of fixing such imperfections.[4]. Development economics makes use of economic theory, econometric methods, political science, and demographics in its approaches. Development economics studies the transformation of emerging nations into more prosperous nations. Actual knowledge about what creates growth is largely unproven; however recent advances in econometrics and more accurate measurements in many countries is creating new knowledge by compensating for the effects of variables to determine probable causes out of merely correlational statistics. Neoclassical theories argue that governments should not intervene in the economy; in other words, these theories are claiming that an unobstructed free market is the best means of inducing rapid and successful development. Actual empirical studies have shown that such labor surpluses are only seasonal and drawing such labor to urban areas can result in a collapse of the agricultural sector.

These climates outside the tropic zones, described as "temperate-near," hold roughly a quarter of the world's population and produce more than half of the world's GNP, yet account for only 8.4% of the world's inhabited area. No doubt, it brings higher material welfare by increasing national output of goods and services on one hand and on the other hand it pollutes the environment badly by overuse and misuse of natural resources. A significant difference from mercantilism was the de-emphasis on colonies, in favor of a focus on domestic production. These theories view developing countries as being economically and politically dependent on more powerful, developed countries that have an interest in maintaining their dominant position. [4] Also unlike many other fields of economics, there is no consensus on what students should know. Critics of earlier development theories, mentioned above, point out that "ethnicity" and ethnic conflict cannot be treated as exogenous variables.
"The Rise of the Network Society". The theory promoted augmenting state power by lowering exposure to rival national powers. The names most associated with 19th-century economic nationalism are the first United States Secretary of the Treasury Alexander Hamilton, the German-American Friedrich List, and the American economist Henry Clay.

[24] The ELF index is a measure of the probability that two randomly chosen individuals belong to different ethno-linguistic groups.