How Countries Become Rich and Reduce Poverty: A Review of Heterodox Explanations of Economic Development

Abstract

For the sake of less developed countries, it is time to adjust the discussion of international development assistance on poverty reduction. This article attempts to do so by reviewing new and old literature explaining why some countries are rich and others are poor. History has repeatedly shown that building up capabilities in manufacturing and improving the productivity of agriculture are the keys to wealth creation and long-term sustained poverty reduction. Furthermore, industrialisation and increased agricultural productivity are interdependent processes. Discussion about ending world poverty needs to be shifted back to consideration of economic transformation and the role foreign aid can reasonably play in achieving these objectives. © The Author 2012. Development Policy Review © 2012 Overseas Development Institute.