Table Of ContentOther books by A.P. Thirlwall
Inflation, Saving and Growth in Developing Economies
Regional Growth and Unemployment in the United Kingdom (with R. Dixon)
Financing Economic Development
Balance-of-Payments Theory and the United Kingdom Experience (Fourth Edition with H. Gibson)
Nicholas Kaldor
UK Industrialisation and Deindustrialisation (Third Edition with S. Bazen)
The Performance and Prospects of the Pacific Island Economies in the World Economy
Economic Growth and the Balance-of-Payments Constraint (with J. McCombie)
The Economics of Growth and Development: Selected Essays, vol. 1
Macroeconomic Issues from a Keynesian Perspective: Selected Essays, vol. 2
The Euro and ‘Regional’ Divergence in Europe
The Nature of Economic Growth: An Alternative Framework for Understanding the Performance of Nations
Trade, the Balance of Payments and Exchange Rate Policy in Developing Countries
Essays on Balance of Payments Constrained Growth: Theory and Evidence (with J. McCombie)
Trade Liberalisation and the Poverty of Nations (with P. Pacheco-López)
Economic Growth in an Open Developing Economy: The Role of Structure and Demand
Essays on Keynesian and Kaldorian Economics
Edited works
Keynes and International Monetary Relations
Keynes and Laissez-Faire
Keynes and the Bloomsbury Group (with D. Crabtree)
Keynes as a Policy Adviser
Keynes and Economic Development
Keynes and the Role of the State (with D. Crabtree)
European Factor Mobility: Trends and Consequences (with I. Gordon)
The Essential Kaldor (with F. Targetti)
Further Essays in Economic Theory and Policy, vol. 9, Collected Economic Papers of N. Kaldor (with F. Targetti)
Causes of Growth and Stagnation in the World Economy (the Mattioli Lectures of N. Kaldor with F. Targetti)
Economic Dynamics, Trade and Growth: Essays on Harrodian Themes (with G. Rampa and L. Stella)
Other books by Penélope Pacheco-López
Trade Liberalisation and the Poverty of Nations (with A.P. Thirlwall)
Strategic Directions on Industrial Policy in Mongolia
Greenland Faroe
(Den) Islands
(Den)
Iceland
United Kingdom
Isle of Man
Canada Ireland
Netherlands
Belgium
Luxembourg
France
Switzerland
Monaco
United States Spain
Bermuda Portugal
Andorra
Morocco
Mexico Cay(UmKa)n Is. The Bahamas WSeashtaerran Algeria
JamaicaHaiti Cape Verde Mauritania Mali
Guatemala Senegal Burkina
El Salvador The Gambia Faso
HonNdiucraarsaCgousataP Raincaama ColombVieanezuela GuyaSnuariFnraemnch Guiana GuiSneiearG-rBau isLiLnseieaboauenreia Togo
Kiribati Ecuador Côte d’IvoGirheana Benin
Peru Equatorial Guinea
Samoa French Polynesia Brazil
American
Samoa (US) Bolivia
FFiijjii Tonga
Chile Paraguay
Puerto Rico (US)
Antigua and Uruguay
Barbuda
Dominican Argentina
Republic Guardeloupe (Fr)
US Virgin Dominica
Islands (US) Sant dK iNttsevis Martinique (Fr)
Aruba Netherlands St Lucia
(Neth) Antilles (Neth) Barbados
Grenada St Vincent and
the Grenadines
Trinidad
Venezuela and Tobago
The world by income group (GNI/US$):
Source: International Bank for Reconstruction and Development, the World Bank Low Income < $1025
Lower-middle Income $1026–$4035
Upper-middle Income $4036–$12,475
High Income > $12,476
No data
Income group classified according
to the 2015 GNI per capita, calculated
using the World Bank Atlas method.
Norway
Sweden Finland Estonia Russian Federation
Latvia
Denmark Lithuania
Germany Belarus
Ukraine Kazakhstan
Moldova Mongolia
Georgia Azerbaijan Uzbekistan KRyregpy.z Dem. People’s
LMibaylGtaareeceLeRIbCAsearyrpanap.eob rToulnufsrkJeoSyrydraiAanrImraeqnia IKrauTnBwuarahkimtraQeinanAtiafsgrtahnaniPsTtaaaknjiiksitsatnan NepalBhutan P.LDCa.ohRin.a Rep.R Koeofp rK.e ooarfea Japan
Egypt Saudi United Arab
Arabia Emirates India Myanmar Vietnam
Niger Oman N. Mariana Islands (US)
Chad Sudan Eritrea Rep. of Yemen Bangladesh Thailand Philippines
Nigeria Cambodia Guam (US)(Federated States of
CAefrnictaranl Ethiopia Sri Lanka MalaysiaBrunei Micronesia Marshall Islands
CameroonRepublic Uganda Somalia Maldives Palau
GabonCongoDoef mC.o Rngeop. Kenya RwBaunrudnadi Singapore Papua Kiribati
Tanzania ComorosSeychelles Indonesia New Guinea Solomon Islands
Angola Zambia
Mayotte Fiji
Vanuatu
Namibia Zimbabwe Malawi Mauritius
Botswana Madagascar
Reunion (Fr) Australia
Mozambique New Caledonia (Fr)
South
Africa Swaziland
Lesotho
Germany Poland
Czech Republic
Slovak RepublicUkraine New Zealand
Austria
Hungary
Slovenia Romania
Croatia
SSaann Bosnia and
MMaarriinnoo Herzegovina
Serbia
Montenegro
Bulgaria
Italy FYR
Macedonia
Albania
Greece
This is a Blank Page
ECONOMICS OF
DEVELOPMENT
THEORY AND
EVIDENCE
TENTH EDITION
A.P. Thirlwall
Professor of Applied Economics, University of Kent, UK
Penélope Pacheco-López
Consultant to Development Agencies
BLOOMSBURY ACADEMIC
Bloomsbury Publishing Plc
50 Bedford Square, London, WC1B 3DP, UK
1385 Broadway, New York, NY 10018, USA
29 Earlsfort Terrace, Dublin 2, Ireland
BLOOMSBURY, BLOOMSBURY ACADEMIC and the Diana logo
are trademarks of Bloomsbury Publishing Plc
First edition 1972
Second edition 1978
Third edition 1983
Fourth edition 1989
Fifth edition 1994
Sixth edition 1999
Seventh edition 2003
Eight edition 2006
Ninth edition 2011
Tenth edition 2017
Reprinted by Bloomsbury Academic, 2022
Copyright © A.P. Thirlwall 1972, 1978, 1983, 1989, 1994, 1999, 2003, 2006, 2011
© A.P. Thirlwall and P. Pacheco-López 2017
A.P. Thirlwall and Penélope Pacheco-López have asserted their right under the Copyright,
Designs and Patents Act, 1988, to be identified as Authors of this work.
For legal purposes the Acknowledgements on pp. xxxv-xxxvii constitute
an extension of this copyright page.
All rights reserved. No part of this publication may be reproduced or
transmitted in any form or by any means, electronic or mechanical,
including photocopying, recording, or any information storage or retrieval
system, without prior permission in writing from the publishers.
Bloomsbury Publishing Plc does not have any control over, or responsibility for,
any third-party websites referred to or in this book. All internet addresses given
in this book were correct at the time of going to press. The author and publisher
regret any inconvenience caused if addresses have changed or sites have
ceased to exist, but can accept no responsibility for any such changes.
A catalogue record for this book is available from the British Library.
A catalogue record for this book is available from the Library of Congress.
ISBN: PB: 978-1-1375-7794-8
ePDF: 978-1-1375-7795-5
ePub: 978-1-3503-0613-4
Printed and bound in Great Britain
To find out more about our authors and books visit
www.bloomsbury.com and sign up for our newsletters.
To Oliver
from
Mum and Dad
This is a Blank Page
A PERSONAL MESSAGE FROM THE
AUTHORS
The economic and social development of poor countries and redu-
cing divisions in the world economy between rich and poor are two of
the greatest challenges facing mankind. Vast differences in income and
wealth between countries and peoples are not only morally indefensible
but also pose a grave threat to peace and stability in the world.
John Maynard Keynes, the great English economist, once described
what drew him to economics; he said, it was ‘its intellectual rigour com-
bined with its potentiality for good’. He treated the subject of econom-
ics as a moral science, the purpose of which is to understand economic
behaviour and thereby be able design policies to make the world a
(Courtesy of Spencer
Scott of the University of more civilized place in which to live. It is this ‘potentiality for good’ that
Kent photographic unit) attracts so many of today’s top economists to development economics.
We have written this textbook on the economics of development so
that students can apply their knowledge of economics to the plight of
poor developing countries in the hope that they will better understand
the divided world in which we live and think about issues of develop-
ment in whatever capacity they may subsequently work.
We have been teaching and practising development economics for
many years and have encountered thousands of students in different parts
of the world and from different countries, many of whom have gone on to
work in the development field – as employees in international institutions
and nongovernmental organizations concerned with economic and social
development, or as teachers and researchers in poor countries. If new generations of students study-
ing development economics are inspired to do the same, this volume will have achieved its purpose.
We hope you will enjoy the book, and that when you reach the end, you will feel that the study of the
economics of development has enriched your experience as an economist and as a citizen of the world.
Wherever you live, we wish you good luck in your studies.
Anthony Thirlwall and Penélope Pacheco-López
