Revisiting nurkse-furtado’s debate in the 1950s

Abstract

The majority of Development Theory economists share several common and crucial elements. However, some points command a much more limited consensus. Against this backdrop, we perform a critical review of Nurkse-Furtado´s debate in the 1950s. They both agree on the trade-off between investment and luxury consumption. However, they diverge as to whether an external constraint to growth exists or not. Furtado emphasizes that the latter can only be overcome by industrialization, which demands some level of protectionism. The paper also explores a new theoretical approach for this debate following the effective demand principle and also discusses the alleged controversy between two development models: export-oriented vs import substitution.