Development Economics: From the Poverty to the Wealth of Nations

Development Economics: From the Poverty to the Wealth of Nations

Development Economics: From the Poverty to the Wealth of Nations

Development Economics: From the Poverty to the Wealth of Nations


It is 1868, and Carl Erik's family faces starvation in Sweden. As their hopes fade, they must endure a journey over land and sea to reach a better life in a new country thousands of miles away.


The first edition in 1997 of this book, single authored by Yujiro Hayami, was a translation (with revisions) from a Japanese version under the title Kaihatsu Keizaigaku published by the Sobunsha Publishing Company in Tokyo in 1995, which was later translated into Chinese and published by the Social Science Documents Publishing House in Beijing. The second edition in 2001 was also first published in Japanese in 2000. In contrast, this edition jointly authored by Yujiro Hayami and Yoshihisa Godo was prepared in English for an international audience from the beginning.

This edition aims to render a perspective on the problems in developing economies in the new millennium. For this goal, most data are updated to 2000 or more recent years wherever possible, while the previous edition used 1995 as the baseline for data comparisons across countries. In particular, Chapter 2 is completely restructured with the new data set.

During the decade centring in 2000, a major change occurred in the current of development thought. At the time the second edition was prepared, international development assistance policies were still dominated by the voice of economists in the International Monetary Fund, the World Bank and the US Department of Treasury advocating the use of free markets for the development of developing economies—the so-called 'Washington Consensus.' In the less than ten years which followed, however, this view was largely replaced by the so-called 'Post-Washington Consensus' advocating greater roles for the public sector and civil society in reducing poverty. This process was outlined in Chapter 8 (Sections 8.5 and 8.6). A major factor underlying this paradigm change was the rising emphasis on poverty reduction as the direct objective of development policies, as epitomized by the United Nations' Millennium Development Goals. In the previous edition, issues concerning poverty were discussed in Chapter 7 as a part of the problem of income distribution. In this edition, however, the measurement and analysis of poverty in relation to economic development are treated more squarely, with the title of Chapter 7 changed from 'Income Distribution and Environmental Problems' to 'Income Distribution, Poverty, and Environmental Problems.'

Further, in response to comments from several instructors and students who used the previous edition as a text, two appendices are added: (B) on the Pigou theorem of equivalence between tax and subsidy in removing negative externality and (C) on the theory of agricultural land tenure choice.

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