Economic development

Economic development goals[edit]

The development of a country has been associated with different concepts but generally encompasses economic growth through higher productivity,^[13] political systems that represent as accurately as possible the preferences of its citizens,^[14][15] The extension of rights to all social groups and the opportunities to get them^[16] and the proper functionality of institutions and organizations that can attend more technically and logistically complex tasks (i.e. raise taxes and deliver public services).^[17][18] These processes describe the State's capabilities to manage its economy, polity, society and public administration.^[19] Generally, economic development policies attempt to solve issues in these topics.


With this in mind, economic development is typically associated with improvements in a variety of areas or indicators (such as literacy rates, life expectancy, and poverty rates), that may be causes of economic development rather than consequences of specific economic development programs. For example, health and education improvements have been closely related to economic growth, but the causality with economic development may not be obvious. In any case, it is important to not expect that particular economic development programs be able to fix many problems at once as that would be establishing unsurmountable goals for them that are highly unlikely they can achieved. Any development policy should set limited goals and a gradual approach to avoid falling victim to something Prittchet, Woolcock and Andrews call 'premature load bearing'.^[19]


Many times the economic development goals of specific countries cannot be reached because they lack the State's capabilities to do so. For example, if a nation has little capacity to carry out basic functions like security and policing or core service delivery it is unlikely that a program that wants to foster a free-trade zone (special economic zones) or distribute vaccinations to vulnerable populations can accomplish their goals. This has been something overlooked by multiple international organizations, aid programs and even participating governments who attempt to carry out 'best practices' from other places in a carbon-copy manner with little success. This isomorphic mimicry –adopting organizational forms that have been successful elsewhere but that only hide institutional dysfunction without solving it on the home country –can contribute to getting countries stuck in 'capability traps' where the country does not advance in its development goals.^[19] An example of this can be seen through some of the criticisms of foreign aid and its success rate at helping countries develop.


Beyond the incentive compatibility problems that can happen to foreign aid donations –that foreign aid granting countries continue to give it to countries with little results of economic growth^[20] but with corrupt leaders that are aligned with the granting countries' geopolitical interests and agenda^[21] –there are problems of fiscal fragility associated to receiving an important amount of government revenues through foreign aid. Governments that can raise a significant amount of revenue from this source are less accountable to their citizens (they are more autonomous) as they have less pressure to legitimately use those resources.^[22] Just as it has been documented for countries with an abundant supply of natural resources such as oil,^[23] countries whose government budget consists largely of foreign aid donations and not regular taxes are less likely to have incentives to develop effective public institutions.^[22] This in turn can undermine the country's efforts to develop.