This publication titled Handbook of Development Economics, volume 4takes stock of some of the newer trends and their implications for research in the field and our understanding of economic development. First, the micro-economic orientation of the field is increasingly evident, and is reflected here. Economic behavior is traced from the individual to family and in some cases to the local schools or communities and labor markets. Because most people in poor countries continue to work in agriculture, the focus is often on the family farm and includes household production. A second emerging feature of the field is an interest in explaining how institutions develop and operate in low-income countries, or political economy. A third change in the field is the vast improvement in data, primarily in the form of household surveys and censuses combined with local community modules which facilitate the identification of causal effects from outside of the household, in terms of environmental factors, relative prices, local policies and facilities, in which the response of individuals, families, and communities to policies may be heterogeneous. A variety of econometric methods have become commonplace, relying on improved panel and community data which allow the introduction of fixed effects and provide more credible instruments for program treatment when randomized designs are not feasible, and have arguably attenuated or eliminated some of the more obvious sources of estimation bias. A fourth development is the alternative strategies adopted to evaluate the effects of policy initiatives, including the selection of who participates in the policy programs from among those who are eligible to participate.
