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In this part of the lecture I have argued that a number of works in development economics written during the 1950s contained, more or less explicitly and more or less self-consciously, a theory in which strategic complementarity played a key role in development: external economies arose from a circular relationship in which the decision to invest in large-scale production depended on the size of the market, and the size of the market depended on the decision to invest. Whatever the practical relevance of this theory, it made perfectly good logical sense. Yet this development theory was subsequently abandoned, to such an extent that classic papers in the field began to seem, as the physicist Wolfgang Pauli used to say, "not even wrong" — simply incomprehensible. (en) |
