The logic of economic development: a definition and model for investment

Abstract

Despite significant public resources devoted to promoting innovation and entrepreneurship, there is little agreement about how to measure outcomes toward achieving the larger objectives of economic development. This paper starts by defining economic development and then considers the role of government, arguing that public policy should focus on building capacities that are beyond the ability of the market to provide. This shifts the debate toward a neutral role of government as a builder of capacities that enable economic agents, individuals, firms, or communities to realize their potential.