Wednesday, February 9, 2011

The Birth of Modern Development Economics

This is sure to be a controversial statement and commentators may rightly point to much earleir work by Rostow and Lewis, for example, but if I were to point to one paper that ushered in the era of modern development economics it would be Harris and Todaro's "Migration, Unemployment and Development: A Two-Sector Analysis.”

To me this paper was important for two reasons: one, it was the first time a paper used the tools of modern neoclassical economics but pointed to a particular stylized fact about developing countries and followed through on that observation to its conclusion to show how a particular distortion can arise in a developing country; two, it was published in the top journal of economics.  This second part is no small beer as development economics has always struggled to be seen as important in the profession.  [Yes, this last statement is remarkable considering how much is at stake - but there you are]

Anyway, I mention this because the American Economic Review arguably the top journal in our profession (and inarguably among the top three) has turned 100 years old and has identified the top 20 articles of its history.  To my surprise Harris and Todaro are one.

Here is the list and a brief description of each.  They are all big deals, including Krugman's seminal paper on increasing returns and trade, Dixit and Stiglitz's paper on monopolistic competition and product variety that, in part, provided the framework for Krugman, Milton Friedman's paper on monetary policy and Anne Krueger's paper on rent seeking that set the table for much work on corruption.

Also in there is Kuznets' paper on income inequality which is still the starting point for all measures of inequality and is used in development economics all the time.

The list is an interesting primer for students of economics on some the the foundational work of the modern discipline.

1 comment:

ericfruits said...

Deaton and Muellbauer should also get the prize for the worst possible name for a system of equations. The timing could not have been worse.