Economics and economic systems, especially in the developing world must be viewed in a broader perspective than that postulated by traditional economic They must be analyzed within the context of the overall social system of a country and, indeed, within an international, global context as well. By social system we mean the interdependent relationships between so-called economic and noneconomic factors. The latter include attitudes toward life, work, and authority, public and private bureaucratic, legal, and administrative structures, patterns of kinship and religion; cultural traditions; systems of land tenure; the authority and integrity of government agencies; the degree of popular participation in development decisions and activities; and the flexibility or rigidity of economic and social classes Clearly, these factors vary widely from one region of the world to another and from one culture and social setting to another. At the international level, we must also consider the organization and rules of conduct of the global economy—how they were formulated, who controls them, and who benefits most from them. This is especially true today with the spread of market economies and the rapid globalization of trade, finance, technology, and labor migration.
Throughout this book we shall discover that resolving problems to achieve development is a much more complicated task than some economists would lead as to believe. Increasing national production, raising levels of living and promoting widespread employment opportunities are all as much a function of the local history, expectations, values, incentives, attitudes and beliefs, and institutional and power structure of both the domestic and the global society as they are the direct outcomes of the manipulation of strategic economic variables such as savings investment, product and factor prices, and foreign-exchange rates. as Indonesian intellectual Soedjatmoko, former rector of the United Nations University in Tokyo has so aptly put it:
Looking back over these years, it is now clear that, in their preoccupation with growth and its stages and with the provision of capital and skills, development theorists have paid in sufficient attention to institutional and structural problems and to the power of historical, cultural, and religious forces in the development process.
Just as some social scientists occasionally make the mistake of confusing their theories with universal truths, so they also sometimes mistakenly dismiss these noneconomic variables as "nonquantifiable" and therefore of dubious importance Vet these variables often play a critical role in the success or failure of the develop ment effort.
As we shall see in Parts Two, Three, and Four, many of the failures of development policies have occurred precisely because these noneconomic variables (e.g., the role of traditional property rights in allocating resources and distributing income or the influence of religion on attitudes toward modernization and family were excluded from the analysis. Although the main focus of this book is on development economics and its usefulness in understanding problems of economic and social progress in poor nations, we will try always to be mindful of the crucial roles that values, attitudes, and institutions, both domestic and international, play in the overall development process.
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