This work is a revision of Basu's "The Less Developed Economy: A Critique of Contemporary Theory". The new edition incorporates recent theoretical advances in its comprehensive treatment of the subject of development economics.

This new edition incorporates recent theoretical advances in its comprehensive, up-to-date treatment of the subject. It is intended primarily as a book for a one-semester graduate course, but will also be of interest to researchers in development and related disciplines, and to policy-makers.

Part 1 Preliminaries: introduction - the scenario, prospectus, economic rationality and norms, on weighing scales known to be biased, from analysis to prescription. Part 2 Macro perspectives: the vicious circle of poverty - the idea of the vicious circle, the vicious circle, industrialization and balanced growth, the o-ring theory of low productivity, manifestations of unemployment
growth and development - the Harrod-Domar legacy, the neoclassical model, endogenous growth, distribution and development, limitations
inflation and structural disequilibrium - employment policy and the inflation barrier, notes on Michal Kalechi, structural disequilibrium
foreign exchange and trade - some considerations - closed and open economies, foreign exchange constraints and growth - a two-gap model, aid and welfare - a paradoxical theorem, the terms of trade in the long run
international debt - the agenda, the background, sovereign risk and rationality, some standard models, loan pushing, debt forgiveness, buybacks and debt-equity swaps. Part 3 The dual economy: the structure of a dual economy - the Lewis model, critiques
migration - migration and urban unemployment, the Harris-Todaro model
policy issues, appendix - the monotonicity proposition
the rural-urban wage gap - the labour turnover model, extensions and critique, labour turnover and duopsony - a digression
unemployment and surplus labour - preliminary remarks, the wage-productivity model, surplus labour and the efficiency wage, surplus labour in the casual labour market, a comment on dualism, a collusive theory of unemployment. Part 4 The rural economy: stagnation in backward agriculture - a theory of stagnation, the debt trap - by chance or by design?, stagnation and tenurial laws, alternative explanations of stagnation, desiderata
tenancy and efficiency - forms of agricultural land tenure, share tenancy, screening and entrepreneurial ability, scale, productivity and tenancy
rural credit markets - the lender's risk hypothesis, monopolistic markets, market fragmentation, credit policy
interlinkage in rural markets - antecedents, potential risk and the emergence of interlinkage, partial equilibrium in an interlinked market, market equilibrium, the structure of wages and interest, the intertemporal earnings approach, response to exogenous changes, moral hazard and interlinkage, triadic interactions, appendix - the algebra of the intertemporal earnings approach. Part 5 Concluding remarks: the limits of economic analysis - on power, custom and social institutions, some comments on method, concluding remarks.