Explaining Success and Failure in Development 1

Since 1950, there has been considerable diversity in developing country experiences. Some countries and some regions have experienced rapid growth and catch up, others have fallen behind. At a global level there is an increasing inequality of per capita incomes. However, within the framework of increasing inequality, some countries have experienced accelerated catch up. The speed of catch up in the successful countries is more rapid than in previous historical periods. This paper analyses the sources of success and failure in economic development in the post-war period. It applies a framework of proximate, intermediate and ultimate causality. Proximate factors refer to the directly quantifiable economic sources of growth, intermediate factors refer to demand and policies, ultimate sources refer to the deeper historical, cultural, geographic and institutional sources of development. Monocausal explanations of success and failure are rejected. However, amongst the various sources of growth, the paper places special emphasis on developing countries’ ability to tap into global knowledge flows. There is not a single example of successful catch up since 1868 which did not involve tapping into international technology. The extent to which countries can profit from international technology flows depends on their absorptive capacities, technological capabilities and systems of innovation.