The Evolution of Development Policy

Abstract

For the contemporary less developed countries (LDCs) the post-war years 1950–85 represented a unique period of attempted transition from colonial agrarianism towards what Professor Kuznets referred to as the epoch of modern economic growth, emulating the long-run historical experience of the now developed countries. To the LDCs, this transition represented an extremely growth-conscious period¹ during which macroeconomic policy instruments (the money supply, the interest rate, the foreign exchange rate, domestic taxes, import and export duties) were used to promote growth. As a result, their imperfect markets, focused on colonial objectives, were penetrated by the political forces of nationalism, reflecting a ‘political will’ (i.e., a political culture) dedicated to growth promotion by political force and contrasting rather sharply with the post-war policy aim of the developed countries.² The purpose of this chapter is to investigate the evolution of policy during this transition in mixed LDC economies.³