The Political Economy of Development,
Post-colonial Analysis and “Bad Samaritans”
Fernando López

As explained by Laporta et al., institutions are important, but the policies, laws, norms, new rules and methods to guarantee their fulfillment are fundamental when it comes to defining countries’ economic results and health. And a large portion of the differences in revenue between countries can be explained by the “social inheritance” in terms of education, healthcare, infrastructure and collective allocations (Sen, 2000).

Recent history shows that what works best is a combination of “orthodox elements with local heresies” (Rodrik, 2006). The “idiosyncratic” triumph of the Asian model was built on an enormous expenditure of political energy and financial resources and not on a historical or cultural legacy. Kore offers a paradigmatic case of a “heretic” economic policy and notable economic performance between the 1970s and the 1997 financial crisis. The Korean “developmental state” did not follow the Western proposal of making the most of its natural comparative advantages, linked to the export of raw materials, but instead laid the foundations for new comparative advantages (Chang and Evans, 2007: 233-237). Its strong economic performance owed to a powerful bureaucracy that promoted macroeconomic stability and productive efficiency, to a particular relationship between the state and industry in carry out a “national project of transformation,” and to the implementation of redistributive mechanisms to reduce insecurity generated by the rapid structural changes and cyclical influences. In contrast, the implementation of the programs of the “impious trinity” (hard currency, small government, private enterprise, free trade, and attraction of foreign investment) undermined the transformation project (Chang, 2004).

Chang appeals to reason and history to stop the bad Samaritans from acting for selfish reasons, and encourages them to act out of enlightened self-interest instead. But Chang’s optimism does not show signs of prospering. Almost a century after Keynes’ accurate epitaph to the laissez-faire approach and despite the continuing evidence borne out by events, “libertarian” economists remain faithful to their precepts (North, 2007: 177).


This paper has tackled the most relevant aspects of the “new orthodoxy” in relation to economic development. The “political economy of development,” linked to new institutionalism of “rational choice”, is supported by “narratives” on the birth and evolution of the Western world, to explain the emergence of the modern nation state by analyzing the role of violence as a source of prosperity (wellbeing) and institutional quality, based on its public or private provision. On the basis of this methodology and drawing a parallel between the under-developed world and Hobbes’ unsafe society, this article focuses on the causes that have prevented contemporary third-world economies from following the developmental paths taken by modern states.

The institutional approach has broadened to include the study of colonization, taking two approaches: one through the “political economy of conquest” and the other through the “political economy of economic failure.” The former maintains that the types of colonization determined the various political, economic and social institutions and that these would explain the differences in rates of growth; the latter, that the large size of the indigenous populations and abundant precious metals explain the emergence of drastic economic and political inequality that would erect a decisive barrier to economic development.

The political economy of development delves into the historic origin of the state and its evolution, based on a rational model of individual behavior that extends back to people from the past, and offers a distorted view of pre-modern states because it projects onto them nineteenth and twentieth-century conditions. Its interpretation of the path followed by states achieving independence in the mid-twentieth century is if anything more anachronistic, with a repeated use of possible-world [semantics] for counterfactuals.