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DEVELOPMENT RECONSIDERED: THE AFRICAN CHALLENGE
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3. ECONOMIC MODEL + APPLICABILITY THEOREMS <====> ECONOMIC THEORY
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The agricultural transformation referred to earlier, with its four stages, constitutes a theory of development. It is a constellation of if-then propositions that link particular actions (or policies) to particular human behaviors, and ultimately to certain outcomes. If the right institutional change is introduced, and if new technology is introduced, and if markets are structured in particular ways, and if certain investments are made in rural infrastructure, then agriculture will "get moving."
Once this happens, if agriculture can be properly linked with industry, if the proper incentives are introduced to stimulate a healthy agricultural sector, and if factor markets can be improved to mobilize rural resources, then agriculture can become a "contributor to growth" in the larger economy. The full integration of agriculture into the macroeconomy will happen if there is a decline in the share of consumers' budgets spent on food, if agriculture is exposed to the same competitive pressures operating in the urban sector, and if lagging rural labor productivity can be avoided.
This theory of development is thus dependent upon the axioms from the core of economics (the model), but it is substantially augmented by a set of applicability theorems derived from the empirical conditions that were necessary to create the theory in the first instance. The theory of economic development was built up over time by the careful identification of the empirical conditions present as agriculture developed in Western Europe and North America since the mid-nineteenth century. It became a theory precisely because it contains logical if-then propositions with some empirical legitimacy.
Although the theory of economic development is grounded on the core model from economics, it is dominated by the applicability theorems that append that minimal set of axioms and postulates in the model. To say that the accepted theory of agricultural and economic development may not fit the conditions in sub-Saharan Africa says nothing about the core model at the heart of neoclassical economics. Rather, agnosticism about the theory of economic development speaks simply to the appropriateness of the set of applicability theorems that have been appended to the core model in the process of building up the currently accepted theory of development. The core neoclassical model is not a theory of development. We do not have a theory until the necessary applicability theorems have been appended to the core. Development of a theory is a continual process of selective accretion to the core tautological model.
The critical role of applicability theorems to the full articulation of a theory of development becomes obvious when the empirical conditions so vital to that complete theory--those empirical conditions underlying its essential structure--differ markedly from the new empirical reality into which the theory is to be projected. Clear explanation of cause and effect is impossible if the empirical manifestation of the reigning theory of economic development is seriously at odds with some new empirical setting. That is the problem to be addressed next.
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