1. Development Prospects
Bright Outlook
Smith:
Virtuous circle of growth
Schumpeter
Creative destruction
Triumphalism
Washington Consensus
Market Fundamentalism
North, Wallis, Weingast
Limited Access ? Open Access
Dim Outlook
Ricardo
Diminishing Marx
Returns Contradictions
Declining Profit
Lenin
Free Trade Imperialism
Vicious Circles
Myrdal Prebisch
Cumulative Primary Goods
Causation Trap
Poverty Trap ISI
Rajan: Rent Preservation
Polanyi: Unnatural Market

2. Gunnar Myrdal Cumulative Causation
Conventional Equilibrium Approach
“Harmony of Interests”
Laissez – faire
Free Trade
Myrdal’s Critique of Equilibrium Approach
The “other things” that are assumed to remain equal – particularly social and political relations – change with economic outcomes.
They change in ways that lead to divergence, not equilibrium.
Thems that gots gits.

3. Gunnar Myrdal Cumulative Causation
“Spread Effects”
Peripheral regions supply the dynamic center
“Backwash Effects”
Dynamic regions suck the best resources from the backwater
Free trade and free migration hurt the periphery
Thems that gots gits.

4. Raul Prebisch – Hans Singer UNECLA
Primary goods trap
Development  increased demand for manufactured goods
Demands for primary goods are income inelastic
Primary goods prices fall relative to manufactured goods prices over time
Terms of trade move against primary good exporters
Prescription:
Import Substitution Industrialization (ISI)

5. Washington consensus – Market Fundamentalism:
Mantra of the 1990s:
Washington consensus – Market Fundamentalism:
1. Fiscal policy discipline
2. Redirect public spending away from subsidies/toward pro-growth, pro-poor services (education, health, infrastructure)
3. Tax reform: broaden tax base/ moderate marginal tax rates
4. Market determined interest rates: positive (but moderate) real rates
5. Competitive exchange rates: neither fixed nor free-floating
6. Liberalize trade
7. Facilitate foreign direct investment
8. Privatize state enterprises
9. Deregulate… except oversight of financial institutions
10. Assure legal security for property rights.

6. Hernando de Soto:
The test is, can the system work for the majority of the people?
…this is capitalism's testing moment. This has happened before. In Latin America, we found that in at least five opportunities, all our countries since the 1820s [have] actually tried to follow the U.S. model or the Western model. We've privatized railways and we have lowered our tariffs to zero and we've opened ourselves up to foreign investment, and five times we've had to go back because it made sense for a very small [group] of people at the top of the pyramid, but for the majority it didn't work.
So our thesis is, basically, the reason it doesn't work for the majority is because the system can only work with property rights. Markets and capitalism are about trading property rights. It's about building capital or loans on property rights. What we've forgotten, because we've never examined the poor, we've sort of thought that the poor were a cultural problem, is that the poor don't have property rights. They have things, but not the rights.
And when you don't have the rights…

7. Karl Polanyi The Great Transformation
Market Economy is Historically Rare
Laissez Faire is Unnatural
Enforced by Strong, Oppressive State
Resistance to Market is Natural
Reaction to Liberalism … Welfare State
Social Protection vs “Self – Regulating” Market