R E. Lucas Jr, On the mechanics of economic development of sharp increases in growth rates. The four East Asian"miracles'of South Korea, Taiwan, Hong Kong and Singapore are the most familiar: for the 1960-80 period, per capita income in these economies grew at rates of 7.0, 6.5 6.8 and 7.5, respectively, compared to much lower rates in the 1950,'s and earlier. 3.4 Between the 60s and the 70s, Indonesia's gDP growth increased from 3.9 to 7. 5; Syria's from 4.6 to 10.0 I do not see how one can look at figures like these without seeing them as representing possibilities. Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia's or Egypts? ly? If not, what is it abo ture of India that makes it o? The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else This is what we need a theory of economic development for: to provide some kind of fr ork for organizing facts like the dging which represent opportunities and which necessities. But the term theory'is used in so many different ways, even within economics, that if i do not clarify what I mean by it early on, the gap between what I think I am saying and what you think you are hearing will grow too wide for us to have a serious discussion I prefer to use the term theory'in a very narrow sense, to refer to an explicit dynamic system, something that can be put on a computer and run This is what I mean by the'mechanics'of economic development-the construction of a mechanical, artificial world, populated by the interacting robots that economics typically studies, that is capable of exhibiting behavior the gross features of which resemble those of the actual world that I have just described My lectures will be occupied with one such construction, and it will take some work: It is easy to set out models of economic growth based on reasonable- looking axioms that predict the cessation of growth in a few decades, or that predict the rapid convergence of the living standards of different economies to a common level, or that otherwise produce logically possible outcomes that bear no resemblance to the outcomes produced by actual economic systems On the other hand, there is no doubt that there must be mechanics other than the ones i will describe that would fit the facts about as well as mine. this is why I have titled the lectures 'On the Mechanics. 'rather than simply'The of Economic Development. At some point, then, the study of development will need to involve working out the implications of competing theories for data other than those they were constructed to fit, and testing these implications against observation. But this is getting far ahead of th 3The World Bank no longer transmits data for Taiwan. The figure 6.5 in the text is from Harberger(1984, table 1, p. 9) 4According to Heston and Summers( 1984), Taiwans per-capita GDP growth rate in the 1950s was 3. 6. South Korea's was 1.7 from 1953 to 1960