UNDERSTANDING THE MECHANISMS OF ECONOMIC DEVELOPMENT

I argue that progress in understanding economic development (as in other branches of economics)must come from the investigation of mechanisms; the associated empirical analysis can usefully employa wide range of experimental and non-experimental methods. I discuss three different areas of research:the life-cycle saving hypothesis and its implication that economic growth drives higher rates of nationalsaving, the theory of speculative commodity storage and its implications for the time-series behaviorof commodity prices, and the relationship between economic growth and nutritional improvement.None of these projects has yet been entirely successful in offering a coherent account of the evidence,but all illustrate a process of trial and error, in which although mechanisms are often rejected, unlikelytheoretical propositions are sometimes surprisingly verified, while in all cases there is a process oflearning about and subsequently modifying our understanding of the underlying mechanisms...