Chapter 3 Alternative approaches to development economics

This chapter presents a discussion on alternative approaches to development economics and focuses on the three major approaches that can be classified as neoclassical, Marxist, and structuralist-institutionalist. The chapter focuses on a few, highly selective, areas of enquiry with a brief, impressionistic, comparative assessment of some major contributions in each area. The chapter discusses five such distinct, but not entirely unrelated areas: (1) theory of the household; (2) institutions and resource allocation; (3) income distribution and growth; (4) trade and development; and (5) economic policy and the state. While these five involve some of the core issues of development economics and may represent a fair cross-section of some of the active disputes. Some of the neo-neoclassical models now fully recognize the crucial dependence of efficiency of resource allocation on asset ownership structures and property relations. Similarly, some of these non-Walrasian models have given up on market-clearing factor prices and explored the microeconomics of equilibria with involuntary unemployment and rationing. Similar bridge building between the alternative approaches has been attempted by rational-choice Marxists in tracing the micro foundations of class analysis in postulates of individual behavior and in general in using the techniques of game theory in understanding social interaction and historical change in situations of interest conflicts.