Development Processes Seen Through Non-Marginalist Lenses with Considerations of Complementarities
Abstract: Marginalism has deeply shaped neoclassical concepts and analytical tools that are applied to development economics. With a static notion of efficiency defined for a state of competitive equilibrium, neoclassical economists study development in equilibrium frameworks, regarding underdevelopment as the consequence of market failures. How might one, who is not equipped with marginalist lenses, look at development processes as they unfold in history? Prior to the emergence of marginalism such observations abounded in the works of the so-called “protectionists,” where ever-evolving production complementarities figure prominently, and there were considerations of indivisibility. In the postwar era, this is present in the works of some early development economists, especially Albert Hirschman in his employment of backward and forward production linkages to characterize development processes, which are viewed as unfolding series of disequilibria. Historical sequences of events reflect path-dependence and they feedback on each other to exhibit circular and cumulative causation. One thing leads to another, or some things lead to others and so on, including institutional changes. However, the activation of linkages could encounter obstacles, with “technological strangeness” being one, in which case sequential policy intervention could be warranted. This article briefly considers differences with the neoclassical approach in generating policy recommendations.