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Development Economics (ISE)

by Debraj Ray Princeton University Press
Pub Date:
Hbk 872 pages
AU$109.00 NZ$114.78
Product Status: In Stock Now
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The study of development in low-income countries is attracting more attention around the world than ever before. Yet until now there has been no comprehensive text that incorporates the huge strides made in the subject over the past decade. Development Economics does precisely that in a clear, rigorous, and elegant fashion. Debraj Ray, one of the most accomplished theorists in development economics today, presents in this book a synthesis of recent and older literature in the field and raises important questions that will help to set the agenda for future research. He covers such vital subjects as theories of economic growth, economic inequality, poverty and undernutrition, population growth, trade policy, and the markets for land, labor, and credit. A common point of view underlies the treatment of these subjects: that much of the development process can be understood by studying factors that impede the efficient and equitable functioning of markets. Diverse topics such as the new growth theory, moral hazard in land contracts, information-based theories of credit markets, and the macroeconomic implications of economic inequality come under this common methodological umbrella. The book takes the position that there is no single cause for economic progress, but that a combination of factors--among them the improvement of physical and human capital, the reduction of inequality, and institutions that enable the background flow of information essential to market performance--consistently favor development. Ray supports his arguments throughout with examples from around the world. The book assumes a knowledge of only introductory economics and explains sophisticated concepts in simple, direct language, keeping the use of mathematics to a minimum. Development Economics will be the definitive textbook in this subject for years to come. It will prove useful to researchers by showing intriguing connections among a wide variety of subjects that are rarely discussed together in the same book. And it will be an important resource for policy-makers, who increasingly find themselves dealing with complex issues of growth, inequality, poverty, and social welfare.

Endorsement: 'An elegant, insightful, and extremely effective textbook on development economics. It combines astute theoretical reasoning with a firm grip on empirical circumstances, including institutional possibilities and limitations. There is real originality here without sacrificing usefulness and accessibility.'--Amartya Sen, Winner of the 1998 Nobel Prize for Economics, Harvard University


Chapter 1: Introduction

Chapter 2: Economic Development: Overview

2.1. Introduction

2.2. Income and growth

2.2.2. Historical experience

2.2.1. Measurement issues

2.3. Income distribution in developing countries

2.4. The many faces of underdevelopment

2.4.1. Human development

2.4.2. An index of human development

2.4.3. Per capita income and human development

2.5. Some structural features

2.5.1. Demographic characteristics

2.5.2. Occupational and production structure

2.5.3. Rapid rural--urban migration

2.5.4. International trade

2.6. Summary


Chapter 3: Economic Growth

3.1. Introduction

3.2. Modern economic growth: Basic features

3.3. Theories of economic growth

3.3.1. The Harrod--Domar model

3.3.2. Beyond Harrod--Domar: Other considerations

3.3.3. The Solow model

3.4. Technical progress

3.5. Convergence?

3.5.1. Introduction

3.5.2. Unconditional convergence

3.5.3. Level convergence: Evidence or lack thereof

3.5.4. Unconditional convergence: A summation

3.5.5. Conditional convergence

3.5.6. Reexamining the data

3.6. Summary


3.A.1. The Harrod--Domar equations

3.A.2. Production functions and per capita magnitudes


Chapter 4: The New Growth Theories

4.1. Introduction

4.2. Human capital and growth

4.3. Another look at conditional convergence

4.4. Technical progress again

4.4.1. Introduction

4.4.2. Technological progress and human decisions

4.4.3. A model of deliberate technical progress

4.4.4. Externalities, technical progress, and growth

4.4.5. Total factor productivity

4.5. Total factor productivity and the East Asian miracle

4.6. Summary

Appendix: Human capital and growth


Chapter 5: History, Expectations, and Development

5.1. Introduction

5.2. Complementarities

5.2.1. Introduction: QWERTY

5.2.2. Coordination failure

5.2.3. Linkages and policy

5.2.4. History versus expectations

5.3. Increasing returns

5.3.1. Introduction

5.3.2. Increasing returns and entry into markets

5.3.3. Increasing returns and market size: Interaction

5.4. Competition, multiplicity, and international trade

5.5. Other roles for history

5.5.1. Social norms

5.5.2. The status quo

5.6. Summary


Chapter 6: Economic Inequality

6.1. Introduction

6.2. What is economic inequality?

6.2.1. The context

6.2.2. Economic inequality: Preliminary observations

6.3. Measuring economic inequality

6.3.1. Introduction

6.3.2. Four criteria for inequality measurement

6.3.3. The Lorenz curve

6.3.4. Complete measures of inequality

6.4. Summary


Chapter 7: Inequality and Development: Interconnections

7.1. Introduction

7.2. Inequality, income, and growth

7.2.1. The Inverted-U hypothesis

7.2.2. Testing the inverted-U hypothesis

7.2.3. Income and inequality: Uneven and compensatory changes

7.2.4. Inequality, savings, income, and growth

7.2.5. Inequality, political redistribution, and growth

7.2.6. Inequality and growth: Evidence

7.2.7. Inequality and demand composition

7.2.8. Inequality, capital markets, and development

7.2.9. Inequality and development: Human capital

7.3. Summary

Appendix: Multiple steady states with imperfect capital markets

Chapter 8: Poverty and Undernutrition

8.1. Introduction

8.2. Poverty: First principles

8.2.1. Conceptual issues

8.2.2. Poverty measures

8.3. Poverty: Empirical observations

8.3.1. Demographic features

8.3.2. Rural and urban poverty

8.3.3. Assets

8.3.4. Nutrition

8.4. The functional impact of poverty

8.4.1. Poverty, credit, and insurance

8.4.2. Poverty, nutrition, and labor markets

8.4.3. Poverty and the household

8.5. Summary

Appendix: More on poverty measures


Chapter 9: Population Growth and Economic Development

9.1. Introduction

9.2. Population: Some basic concepts

9.2.1. Birth and death rates

9.2.2. Age distributions

9.3. From economic development to population growth

9.3.1. The demographic transition

9.3.2. Historical trends in developed and developing countries

9.3.3. The adjustment of birth rates

9.3.4. Is fertility too high?

9.4. From population growth to economic development

9.4.1. Some negative effects

9.4.2. Some positive effects

9.5. Summary


Chapter 10: Rural and Urban

10.1. Overview

10.1.1. The structural viewpoint

10.1.2. Formal and informal urban sectors

10.1.3. Agriculture

10.1.4. The ICRISAT villages

10.2. Rural--urban interaction

10.2.1. Two fundamental resource flows

10.2.2. The Lewis model

10.3. Rural--urban migration

10.3.1. Introduction

10.3.2. The basic model

10.3.3. Floors on formal wages and the Harris--Todaro equilibrium

10.3.4. Government policy

10.3.5. Comments and extensions

10.4. Summary


Chapter 11: Markets in Agriculture: An Introduction

11.1. Introduction

11.2. Some examples

11.3. Land, labor, capital, and credit

11.3.1. Land and labor

11.3.2. Capital and credit

Chapter 12: Land

12.1. Introduction

12.2. Ownership and tenancy

12.3. Land rental contracts

12.3.1. Contractual forms

12.3.2. Contracts and incentives

12.3.3. Risk, tenancy, and sharecropping

12.3.4. Tenancy forms: Other considerations

12.3.5. Land contracts, eviction, and use rights

12.4. Land ownership

12.4.1. A brief history of land inequality

12.4.2. Land size and productivity: Concepts

12.4.3. Land size and productivity: Empirical evidence

12.4.4. Land sales

12.4.5. Land reform

12.5. Summary

Appendix 1: Principal--agent theory and its applications

12.A.1. Risk, moral hazard, and the agency problem

12.A.2. Tenancy contracts revisited

Appendix 2: Screening and sharecropping


Chapter 13: Labor

13.1. Introduction

13.2. Labor categories

13.3. A familiar model

13.4. Poverty, nutrition, and labor markets

13.4.1. The basic model

13.4.2. Nutrition, time, and casual labor markets

13.4.3. A model of nutritional status

13.5. Permanent labor markets

13.5.1. Types of permanent labor

13.5.2. Why study permanent labor?

13.5.3. Permanent labor: Nonmonitored tasks

13.5.4. Permanent labor: casual tasks

13.6. Summary


Chapter 14: Credit

14.1. Introduction

14.1.1. The limits to credit and insurance

14.1.2. Sources of demand for credit and insurance

14.2. Rural credit markets

14.2.1. Who provides rural credit?

14.2.2. Some characteristics of rural credit markets

14.3. Theories of informal credit markets

14.3.1. Lender's monopoly

14.3.2. The lender's risk hypothesis

14.3.3. Default and fixed-capital loans

14.3.4. Default and collateral

14.3.5. Default and credit rationing

14.3.6. Informational asymmetries and credit rationing

14.3.7. Default and enforcement

14.4. Interlinked transactions

14.4.1. Hidden interest

14.4.2. Interlinkages and information

14.4.3. Interlinkages and enforcement

14.4.4. Interlinkages and creation of efficient surplus

14.5. Alternative credit policies

14.5.1. Vertical formal--informal links

14.5.2. Microfinance

14.6. Summary


Chapter 15: Insurance

15.1. Basic concepts

15.2. The perfect insurance model

15.2.1. Theory

15.2.2. Testing the theory

15.3. Limits to insurance: Information

15.3.1. Limited information about the final outcome

15.3.2. Limited information about what led to the outcome

15.4. Limits to insurance: Enforcement

15.4.1. Enforcement-based limits to perfect insurance

15.4.2. Enforcement and imperfect insurance

15.5. Summary

Chapter 16: International Trade

16.1. World trading patterns

16.2. Comparative advantage

16.3. Sources of comparative advantage

16.3.1. Technology

16.3.2. Factor endowments

16.3.3. Preferences

16.3.4. Economies of scale

16.4. Summary


Chapter 17: Trade Policy

17.1. Gains from trade?

17.1.1. Overall gains and distributive effects

17.1.2. Overall losses from trade?

17.2. Trade policy: Import substitution

17.2.1. Basic concepts

17.2.2. More detail

17.3. Export promotion

17.3.1. Basic concepts

17.3.2. Effect on the exchange rate

17.3.3. The instruments of export promotion: More detail

17.4. The move away from import substitution

17.4.1. Introduction

17.4.2. The eighties crisis

17.4.3. Structural adjustment

17.5. Summary

Appendix: The International Monetary Fund and the World Bank

Chapter 18: Multilateral Approaches to Trade Policy

18.1. Introduction

18.2. Restricted trade

18.2.1. Second-best arguments for protection

18.2.2. Protectionist tendencies

18.2.3. Explaining protectionist tendencies

18.3. Issues in trade liberalization

18.3.1. Introduction

18.3.2. Regional agreements: Basic theory

18.3.3. Regional agreements among dissimilar countries

18.3.4. Regional agreements among similar countries

18.3.5. Multilateralism and regionalism

18.4. Summary

Appendix 1: Elementary Game Theory

A1.1. Introduction

A1.2. Basic concepts

A1.3. Nash equilibrium

A1.4. Games over time

Appendix 2: Elementary Statistical Methods

A2.1. Introduction

A2.2. Summary statistics

A2.3. Regression



"An elegant, insightful, and extremely effective textbook on development economics. It combines astute theoretical reasoning with a firm grip on empirical circumstances, including institutional possibilities and limitations. There is real originality here without sacrificing usefulness and accessibility."'Amartya Sen, Winner of the 1998 Nobel Prize for Economics, Harvard University
Debraj Ray is Professor of Economics at Boston University.