Economic Development: Handbook of Comparative Economic Policies, vol. 4.

Almost seven years after the publication of the two-volume Handbook of Development Economics, Enzo Grilli and Dominick Salvatore provide us with a new edited handbook called Economic Development, a collection of largely empirical essays on developing country policy issues. Unlike the earlier set, this new handbook neatly reflects the on-going paradigm shift in development economics, away from the formulation of structural models that reinforce the need for government intervention, toward a neoclassical resurgence with an emphasis on market alternatives and outward orientation [2]. But similar to the earlier one, the new handbook does not devise a suitable theory of development policy, which is crucial to prevent inappropriate policy conclusions in development research.

Contributors to the Grilli and Salvatore handbook discuss the problems faced by developing countries and the policies used to overcome those problems. Because the main concern of the new handbook is to illustrate the varied development experiences, not to present development theories, most essays fall short of contributing toward a new theoretical foundation. Asked to provide a "state of the arts and facts" on economic development in a particular area, contributors range in their emphasis on the roots and analytics of development (the arts), the development record (the facts), and policy prescriptions (the lessons). I review the essays according to these categories.

Economic Development's exploration of development theory, "the arts," occurs primarily in the essays on the classical origins of development theory by Paolo Sylos Labini, and on strategies of development by James Riedel. Sylos Labini argues the need to re-evaluate the underpinnings of modern development theory by turning to the classical economists. He shows how current research on such topics as productivity growth, investment, terms of trade, inflation, and institutional reform has roots in the writings of classical economists. He suggests that development economists should have a propensity to read classical economics that exceeds zero, with an eye to the theory, in order to shed light on current controversies. That "Adam Smith is much in vogue again around the globe" is explicit in Sylos Labini's essay, and implicit in the handbook's remainder [2, 1728].

Riedel examines the progression of growth theory, including the Harrod-Domar, Solow-Swan, and endogenous growth models. He also highlights the emphasis on market imperfections and government intervention in early development theory (balanced growth, import substitution, and the two-gap model). Riedel's cross-country regressions indicate a positive relationship between openness and growth, which is consistent with results of growth accounting exercises performed by other contributors. Riedel further sets that stage with his conclusion that government should do little more than provide law and order, public goods, and a stable macroeconomic environment; industrial policies are unwise and sacrifice growth.

Most essays in Economic Development concern themselves primarily with documentation of "the facts" regarding economic development. Enzo Grilli on long-term trends in key economic indicators of developing economies, Dominick Salvatore on trade policy and performance, Ali M. El-Agraa on economic integration, and John Mellor on agriculture, each utilize a battery of descriptive statistics to record the development experience at the aggregate and sectoral level. For country and regional experiences with development we have Latin America (Vittorio Corbo), Sub-Saharan Africa (Tony Killick), North Africa (Richard Pomfret), East Asia (Colin Bradford, Jr.), and India and China (Vinod Dubey and Gene Tidrick).

These essays contain an extremely rich collection of useful micro and macroeconomic development indicators, particularly on economic growth, trade, income distribution, and poverty. The analyses clearly acknowledge the exceptional characteristics of developing economies, but overall they converge toward policy lessons based on neoclassical macroeconomic staples: market-based incentives and outward orientation. Although Mellor sees an important role for public investment in education, physical infrastructure, and institutions such as rural banking and extension services, these recommendations fit within the allowances made for government intervention by other contributors. Even in East Asia, where governments successfully combined a variety of approaches (outward orientation, strategy-led export-push growth, and technological innovation), Bradford leans away from a pure sectoral intervention strategy. Many chapters present useful reviews of current macroeconomic debates. For example, Salvatore presents a thorough discussion of alternative trade strategies, growing protectionism in industrialized countries, strategic trade policies, and foreign investment. Killick offers a convincing exposition about the contribution of political systems based on personal rule and patronage, toward the relatively dismal economic performance of Sub-Saharan Africa.

Focussing mostly on "the lessons," Paul Streeten examines the social dimensions of development, and Helen Hughes relates development policy prescriptions. Streeten reminds us that the most important objective of development policies and endeavors is to promote "a healthy, alert, vigorous, well-nourished, well-educated population," [p. 146]. Streeten's essay is less a survey of the literature than a collection of ideas and policy recommendations based on experience in the field. Streeten emphasizes that the poorest groups should be protected from having to shoulder a large burden of structural adjustment programs, with such policy recommendations as targeted subsidies, removal of price distortions, and increased efficiency of state owned enterprises. Helen Hughes provides a fitting conclusion with policy recommendations based on the empirical regularities described in the volume.

The Grilli and Salvatore handbook serves as a useful update to the earlier handbook in its reflection of the shift toward orthodox policies. However, I would not recommend this handbook to the academic seeking guidance on theoretical frameworks and analytical tools. Given the empirical focus, I would have liked to see the incorporation of financial sector development in the growth accounting exercises, and an examination of trends in gender differentials in employment and wages. The handbook will probably have its strongest impact as a graduate-level teaching tool, and as a basic reference on origins of development theory, country experiences, current macroeconomic debates, and institutional reforms, Academics and practitioners alike will benefit from the comprehensive literature reviews and the comparative descriptive statistics.

Yana van der Meulen Rodgers The College of William and Mary 

References

1. Chenery, Hollis and T. N. Srinivasan, eds. Handbook of Development Economics. Vols. 1-2. Amsterdam: North-Holland, 1988-1989.

2. Fishlow, Albert, "Review of Handbook of Development Economics." Journal of Economic Literature. December 1991, 1728-37.