The macroeconomics of developing countries: A post-Keynesian perspective

Post-Keynesian economists describe Keynes's writing as a body of work that provides us with valuable insight into how mature market economies function. In apparent agreement, the consensus in development economics is that less developed countries (LDCs) are inherently non-Keynesian. We take issue with these statements and in this dissertation, address the question of the degree to which Keynesian principles apply to developing countries.; To address this question, we discuss the factors that make Keynes's theory different from classical/neoclassical theory. A concept referred to as indefinite preferences is developed from the observation that people are ignorant about what decisions would be rational for them in the future. It is our contention that indefinite preferences are at root the key feature that separates Keynesian theory from classical/neoclassical economics. And since indefinite preferences are common to all individuals from economies at all stages of development, it means that, not only do they distinguish Keynes's work from the orthodox theories, but they also make LDCs inherently Keynesian.; In Keynesian analysis there are certain features that are identified as the manifestations of the uncertainty so central to Keynes's theory. And these originate from the indefinite preferences that we have mentioned before. But although they are clearly visible in MDCs, they are largely absent in LDCs. We argue, however, that even though many of the features are absent in LDCs, this does nothing more than necessitate certain minor modifications, or slight changes in emphasis, before Post Keynesian theory can be applied to the study of economic development.; This dissertation concludes with a chapter on policy. The main argument is that the central message of Keynes's work, either in its original form or as applied to the analysis of economically less developed countries is that the state, with suitable disciplinary regulations, can act as a stabilizing force in the investment process through intervention. Outside of this stabilizing function, however, it is agreed that the market system should be relied on as much as possible.