Notes on Early Development Economics’ Story and Its Relation to Sraffa’s Contribution

Abstract

Development economics is a fairly new branch of economics that came to the fore in the 1940s and 1950s. A common view shared by the pioneers of this new branch (including, for example, Hirschman, Lewis, Nurkse and Rosenstein-Rodan) was that orthodox neo-classical economics was not suitable for analysing the economies of the so-called ‘underdeveloped’ countries. In their view, specific features of these countries — such as the lack of appropriate institutions, incomplete or absent markets, pervasive underemployment, externalities and the necessity to focus on dynamic rather than static problems — made it impossible to analyse underdevelopment within the framework of traditional economic analysis. Thanks to the particular conditions, both historical and geopolitical, of the post-war years and the space opened up by Keynesian economics, the new ideas and policies soon became the core of a new branch of the economic discipline.