The Palgrave Handbook of Development Economics

This introductory chapter first traces the evolution of development economics since its birth as a branch of economics in the early post-war period. While development economics has widened its scope with a proliferation of topics and issues, analytical perspectives taken have converged narrowly to those accepting neoclassical economics as the standard toolkit for applied research. In this ‘conversion’ process, the big picture and important questions posed by the founders of development economics from a much broader perspective have often been neglected, and their central tenant that economic development should be analysed as historical processes has been often side-lined. The chapter evaluates critically the approaches adopted by mainstream literature in both development microeconomics and macroeconomics, and discusses how their perspectives have not only narrowed development policy options for many countries but also stifled the healthy advancement of development economics as a field of social science in view of the near absence of open and contested debates. Against this background and the formidable policy challenges in navigating development missions in increasingly uncertain and volatile environments under globalisation, the chapter defines the hall mark of the Handbook as: (i) a critical and pluralistic approach to the main issues of development economics; and (ii) an innovation of linking explicitly and systematically issues of economic development to multi-dimensional questions of sustainability—economic, social and political and ecological—in the context of highly globalised environments. In this light, the chapter presents the scope and objectives of the Handbook, followed by its overview with a summary of 23 chapters included.

This second overall chapter presents collective critical reflections on how globalisation has affected the course of economic development over the last four decades. We argue that despite its potential in accelerating economic growth and development through the spread and transfer of technology and the transmission of knowledge and information, globalisation as proceeded to date—corporation-led and finance-centred and largely market-driven integration process—has exposed itself to the reality that the process is unsustainable socially, economically and politically as well as ecologically, with discontents growing all around. There is urgency for us all to engage with the pivotal question how to make globalisation work for inclusive and sustainable development, and to arrest the tide of the political fallouts with grave consequences for the global community. Against this background, drawing on many insightful analyses provided by the chapter contributors to the Handbook, this chapter, as our collective narratives of the effects of globalisation on development, is organised under two themes: (i) the diverse development experiences of countries in the South under globalisation; and (ii) the growing inequality and its implications. We then proceed to discuss challenges facing us for finding a way to change the course and nature of globalisation, and indicate several pathways for making globalisation work for sustainable and inclusive development.

The chapter examines the history and evolution of development doctrine. It suggests that the selection and adoption of a development strategy depend upon three building blocks: (1) the prevailing development objectives which, in turn, are derived from the prevailing view and definition of the development process; (2) the conceptual state of the art regarding the existing body of development theories, hypotheses, models, techniques, and empirical applications; and (3) the underlying data system available to diagnose the existing situation, measure performance, and test hypotheses. Development doctrine is then defined as the body of principles and knowledge resulting from the interrelated complex of these four elements that is accepted by the Development Community at that time. This analytical framework is applied to describe the state of the art that prevailed in each of the five decades (from the 1950s to the 1990s) and in the most recent period 2000 to 2017 to highlight in a systematic fashion the changing conception of the development process. Over the last 67 years the definition of development and strategies to achieve it, progressed and broadened from the maximization of GDP in the 1950s, to employment creation and the satisfaction of basic needs in the 1970s, to structural adjustment and stabilization in the 1980s and early 1990s, to poverty reduction, followed by sustainable and shared growth that dominated the scene until recently. The evolution in the conception of development culminated with the present broad-based concept of inclusive and sustainable growth. A parallel and similar progression occurred in development theory and in the coverage, comprehensiveness and quality of data and information. While development economics has followed a time path towards more experimental, multidisciplinary and more rigorous and scientific methodology, the present emphasis on microeconomic phenomena and randomized and controlled trials may have detracted researchers from exploring fundamental “big picture” macroeconomic phenomena.

The chapter provides an overview of the structuralist approaches to economic development. It starts with a review of the contributions of the early structuralists, distinguishing between the European-US strand and the Latin American strand. Next, it describes newer structuralist approaches, that is, formal structuralist macroeconomics, CEPAL neo-structuralism, new structuralism based on technology studies, new developmentalism, and new structural economics, and the closely related approaches of development traps. Following that, it examines the main theoretical ideas of the structuralists, distinguishing between three elements. First, it explains their organizing principles of analysis, which starts with structures of systems rather than with individual units. Second, it discusses how they view the world in terms of the structure of the global economy, structural differences between development and developing countries, and different structures of different developing economies. Third, it discusses the meanings they attach to economic development, emphasizing both growth and distribution. This is followed by a discussion of policies advocated by the structuralists who, in general, take into account the specific structuralist characteristics of particular countries rather than following a one-size-fits-all approach, recommend active state intervention in a flexible manner that promotes the synergy between the state, markets, and society, and address macroeconomic and sectoral issues in addition to microeconomic ones. In terms of specific policies for the contemporary world, it discusses: trade and industrial policies, especially those that seek to develop technological capability and technological upgrading by moving into new sectors; monetary, fiscal, financial and exchange rate policies that promote economic growth and external competitiveness, dampen cycles, and avoid instability; and policies specially aimed at reducing poverty and inequality. It concludes with brief comments on the strengths and possible problems of the approaches and how the latter can be overcome.

This chapter addresses the theoretical and practical relationship between public economics and development economics from a critical perspective. The state has always been central to economic thought and theory as the leading collective actor in the process of structural transformation. Accelerated by the impact of the global financial crisis on both ideas and policy, over the past two decades a new approach has begun to displace the conventional orthodoxy of public choice theory, deregulation and fiscal minimalism. The emerging analytical approach is based on the integration of modern theories of market failure, income inequality and endogenous growth on the one hand, with the recent practice of emerging market economies in managing structural change, welfare provision and integration to the world economy on the other. This Chapter therefore aims to contribute to this overdue revision of the conceptual place of public economics in development economics. Section 2 explores the recent shift towards proactive management of structural change, reduced inequality and resilience to external shocks; while Sect. 3 addresses the way in which the public sector mobilizes the resources necessary to undertake these tasks. Sections 4 and 5 analyse the fiscal transformation caused by economic globalization, the opening of capital markets and the determination of corporate tax rates by international competition. Section 6 concludes by sketching the implications of the analysis in this chapter for the design and implementation of public economic policy in developing countries. The underlying theme of this chapter is thus the renewed need for an active ‘developmental’ state to control sufficient fiscal resources to ensure economic sustainability and social cohesion while mitigating the uncertainty caused by the global economy.

Development is not the search for an optimal static macro-equilibrium but it derives from the art of creating, if not miracles, at least virtuous circles in which social values, organizations, institutions and technological systems co-evolve. Development modes are therefore built upon the discovery of possible institutional arrangements that fulfil two conditions: the viability of the accumulation process and a political legitimacy around an implicit or explicit institutionalized compromise. The survey of economic history reveals a limited number of these modes: import substitution development, export-led, foreign direct investment-led and finally based upon low wage and poor welfare. Contemporary China explores a genuine development mode built upon the acute competition between a myriad of local corporatism under the aegis of a party-State. Most of these modes rely upon the resilience of an open world economy. Its stability is not guaranteed given the obstacles to the defense of global public goods and to the creation of new Commons. Last but not least, the merits of an anthropogenetic model based on education, health and culture should not be underestimated.

This chapter describes how economic development is viewed from the perspective of modern evolutionary economics. It lays out the basic conceptual view of economic activity and economic change provided by evolutionary economic theory, the central role played by technologies and their evolution in economic dynamics, and the key role of institutions in forging the evolutionary processes at work. At the same time, institutions themselves evolve. A central argument is that an adequate economic framework for analyzing long run economic change must recognize the rich set of institutions involved—not just firms, households, and markets, but also a wide range of private not-for profit and public organizations and structures—and also that the varied roles of government cannot be understood simply as responses to “market failure”. The proposition is developed that the key driving forces involved in development are the co-evolution of technologies and institutions.

This chapter provides critical reflections from a gender lens on the economic development theories and the policy debates around the development trajectories undertaken by developing countries in the early eighties. It demonstrates that the pre-eminent theories of economic development are overwhelmingly androcentric or male-centered, in terms of the values they assert and the underlying premises upon which the theories are built. Since these models serve as framework for policymaking and analyses, their predictions and policy prescriptions also reflect male-centered predilections and biases. The chapter then introduces the gender dimensions of economic development processes, which have been largely neglected in economic models and theories. It highlights the contributions of gender scholars and feminist economists to the analysis of economic development and to contemporary policy debates around globalization and market liberalization. Finally, it presents a forward-looking agenda towards the development of a feminist theory of sustainable development. Such a development framework not only incorporates non-market activities and women’s experiences in its description of economic processes but also captures the underlying power relations including gender relations that underlie production, consumption and distributive processes. It also depicts the interdependence between human systems and ecological systems and the importance of accounting for the different impacts and outcomes for women and men.

Growth has accelerated in a wide range of developing countries over the last couple of decades, resulting in an extraordinary period of convergence with the advanced economies. We analyze this experience from the lens of structural change—the reallocation of labor from low- to high-productivity sectors. Patterns of structural change differ greatly in the recent growth experience. In contrast to the East Asian experience, none of the recent growth accelerations in Latin America, Africa or South Asia was driven by rapid industrialization. Beyond that, we document that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. The African experience is particularly intriguing, as growth-enhancing structural change appears to have come typically at the expense of declining labor productivity growth in the more modern sectors of the economy. We explain this anomaly by arguing that the forces that promoted structural change in Africa originated on the demand side, through either external transfers or increase in agricultural incomes. In contrast to Asia, structural change was the result of increased demand for goods and services produced in the modern sectors of the economy rather than productivity improvements in these sectors.

This chapter deals with income inequality in developing countries. It gives a historical overview on how income inequality has been addressed in developing countries and discusses contemporary issues of income inequality, especially in the context of growing globalization. Globalization and especially financialization and to a certain extent skills based technical change, have been important exogenous drivers of inequality. These drivers have in various cases strengthened existing patterns of inequality through a stubbornly high wealth inequality and through intergenerational transfers of inequality due to skewed access to higher-level education. The adverse effect of financial and trade globalization, on income inequality during the past three decades have been exacerbated by national policies that had a negative impact on income distribution. Monetary policies that emphasized price stability over growth, labour market policies that weakened bargaining position of labour vis-à-vis employers, and fiscal policies that prioritized fiscal consolidation at the expense of benefits and progressive taxation, all contributed to increasing income inequality. However, national policies, including a strengthening of institutions to deal with inequality can play an important role on reducing income inequality. Several countries have managed to use fiscal policies to mitigate a high primary income inequality down to lower levels of secondary and tertiary inequality. Additionally, the right mix of macroeconomic, fiscal, labour market and social policies (policy coherence) can reverse the rising trend in income inequality.

In the 1960s and 1970s, academic and policy debates on agrarian issues often spun around the distribution of land, with some arguing that neither rural development nor poverty reduction was possible without asset redistribution. While resting on defensible theoretical foundations, the argument for large-scale redistribution gave way to microfinance and other less radical interventions intended to allow low wealth households to do more with their existing, modest asset endowments. While also resting on defensible theoretical foundations, this “lend, don’t redistribute wealth” perspective coincided with a shift of development economics away from big picture theorizing towards an impact evaluation economics focused on reliable identification of microfinance and other singular interventions. Interestingly, despite the promise of microfinance to substitute for asset redistribution, impact evaluation economics found it to have at best modest effects on the class positions and living standards of poor households. In a perhaps ironic twist, a new generation of programs built around the transfer of tangible assets has shown much more promise in terms of changing household economic strategies and placing them on trajectories of sustained economic advance. While sharing some similarities with older perspectives on asset redistribution, these new approaches reflect new learning on both the psychology of poverty and the economics of asset accumulation by poor households.

Institutions were at the foundation of development economics, when it was first established as a separate branch of economics. Indeed, one important impetus behind the emergence of development economics was the recognition that developing countries have socio-economic institutions that are different from the ones that exist in the industrialised countries. The chapter provides a long term analytical perspective on the theory of institutions in economic development—from old institutionalism to new institutional economies—and critically assess todays’ mainstream view on institutions and economic development. Specifically, we engage with four main analytical issues, that is, (i) the definition of institutions, (ii) the conceptualisation of the role of institutions, (iii) the theory of the relationship between institutions and economic development, and (iv) the theory of economic development. Building on this critical review, the chapter then highlights the importance of focusing on the variety of types, forms and functions that institutions have taken historically, and even more critically on their collective nature. In this respect, we build on Abramovitz’s concept of social capability understood as “tenacious societal characteristics” embedded in productive organisations, as well as a variety of political, commercial, industrial and financial institutions. The chapter develops the idea of social capability by analysing and providing historical examples of six specific types of institutions and their role—forms and functions—in the industrialisation process. The institutional taxonomy includes six types of institutions: (i) institutions of production, (ii) institutions of productive capabilities development, (iii) institutions of corporate governance, (iv) institutions of industrial financing, (v) institutions of industrial change and restructuring and (vi) institutions of macroeconomic management for industrialisation. The chapter concludes by emphasising the importance of developing productive capabilities, not just at the individual or the firm level but also at the sectoral and social level, in the process of economic development, and especially industrialisation.

Human development is a development paradigm that puts people at the center of development—as its principle end and means. Human development is built on the theoretical concepts of capabilities originated by Amartya Sen and Martha Nussbaum, which provides a normative framework for assessment of individual well-being, social outcomes and public policies. In systematically and consistently applying the capability approach in empirical evaluation of development progress, and in the analysis of policy alternatives, the human development paradigm challenges standard prescriptions in a broad range of areas including social, macroeconomic, political, environmental and cultural arenas. It is often misinterpreted as an agenda for social welfare programs and social investments. The rich and complex concept of human development is imprisoned in its reductionist measurement tool, the Human Development Index that only includes education, income, and a decent standard of living. This chapter provides an overview of the capability approach and human development paradigm and situates them within development economics, thought and practice, highlighting its contrasts with conventional thinking, and complementarities with human rights and feminist economics. It argues that the capability approach and human development paradigm have had enormous reach and influence in development thought and practice. It has strengthened complementary approaches that are also motivated by human freedom and flourishing, notably human rights and feminist economics. All these paradigms have led to the rise of a ‘people centered’ approach to development as a discourse, and the consensus on poverty as a principle objective of development as reflected in the Sustainable Development Goals. However, the concepts of capabilities and human development have only been partially reflected in these discourses about policy agendas given the misrepresentation of human development as an agenda for meeting basic needs.

The chapter traces the evolution of the academic and policy debates on the ‘aid-debt-growth’ nexus, and evaluates the extent to which these debates conducted in macroeconomic terms reveal dynamic interactions in the aid-debt-growth triad and their effects on development. Throughout the chapter, we endeavour to bring ‘aid’ and ‘debt’ literature together to highlight the importance of an integrated treatment of developmental effects of aid and debt in developing countries which have access to concessional windows as part of aid packages. We show that (a) despite abundant micro-level evidences that aid’s contribution to development is context specific, an answer to the question on whether “aid works” has been sought through an investigation of macroeconomic relationships, often with cross-country regression analyses; and (b) how research outputs have been selectively used to rationalise donors’ positions prevailed at times with profound implications for development outcomes of ‘recipient’ countries. It argues that policy conditionality attached to aid and debt relief as practiced through Washington and post-Washington consensus has created an unproductive environment for nurturing mutual trusts necessary for building institutional foundations and technical capacity for making governments truly accountable to domestic stakeholders in policy making and governance. It calls for an overhaul of ‘conditionality’, so that it is based on adherence to universally accepted codes of conduct and norms to basic human rights and governments’ efforts to achieve collectively agreed targets such as the SDGs. It should be acknowledged that successful development depends on long-term processes of institutional development, to which all parties could contribute as an equal partner through development cooperation. The chapter further presents the ways forward to make debt sustainable and aid work for development by designing efficient aid and debt contracts and move away from the austerity-dominated management of debt crisis to the investment-centred management for preventing debt crises from emerging.

Labour market regulation is a controversial area of public policy in both developed and developing countries. Mainstream economic analysis traditionally portrays legal interventions providing for minimum wages, unemployment insurance and (often only a modicum of) employment protection as ‘luxuries’ developing countries cannot afford. After decades of de-regulatory advice, international financial institutions have recently come to a less extreme position. But any such concessions to labour regulation are based on concerns for social stability or for short-term support to aggregate demand, while regulation continues to be viewed as harmful to economic efficiency in the long run. In this chapter, we take a deeper look at the impact of labour institutions on economic development in two ways. First, we propose a macroeconomic model of a balance-of-payments constrained “small” developing country open to trade and foreign capital. This helps us clarify the importance of a dynamic view of economic efficiency, as opposed to the static view embedded in mainstream policy advice. Secondly, we discuss the political economy of labour regulation. We argue that labour institutions promote economic development through positive effects on aggregate demand, labour productivity and technology.

This Chapter presents the evolution of analysis and policy with regard to technology and innovation in the post-World War II period. It starts with a review of analytical issues and notes that (1) technology is created, and requires resources and focused and dedicated effort. The driving force for technological innovation and for productivity growth in capitalism has been the quest by capitalists for producer rents; (2) technology is malleable and the direction of technological progress is induced by a series of environmental factors as well as by the unfolding imperatives of the technology itself. The chapter documents the evolution of innovation and technology policy and its associated analytical discussion during the phase of import substituting industrialisation, beginning in the 1950s and ending around the end of the 1970s. This was a period in which low and middle income countries were heavily dependent on technologies imported from the high income economies, many of which were inappropriate to operating environments in low and middle income environments. Import substitution was complemented, and then succeeded by outward-oriented growth strategies from the early 1970s. This transition was associated with the growth of human and technological capabilities in many low and middle income economies. From the mid-1980s, a rapidly growing proportion of global trade occurred within Global Value Chains, which now dominate global trade and this helped to shape the direction of technological progress.

However, since the millennium, growth trajectories have faltered globally. Productivity growth has declined in the advanced economies and is static in many low and middle income economies. At the same time, the dominant growth trajectories have run into a crisis of sustainability. Not only is economic growth uneven and unstable, but its environmental and social character threaten its sustainability and the survival of life on earth. This has posed new challenges for the organisation and path of innovation, giving rise to growing attempts to foster more inclusive patterns of innovation.

This chapter explores the implications for sustainable economic development of two important global trends: the increasing link between ecological scarcity and poverty in developing countries, and the growing calls to respect the “sustainability” and resilience of the Earth’s remaining ecosystems. The chapter provides an overview of current economic thinking on sustainability, which is captured in the capital approach to sustainable economic development. In recent years, this approach has been extended to incorporate ecosystems—or ecological capital—as an important yet unique form of economic wealth. But ecosystems are subject to irreversible conversion, and are prone to collapse. Thus, there are concerns that sustainability must encompass limits on the exploitation or irrevocable loss of this essential ecological capital, and a growing scientific literature suggests that there are “planetary boundaries” to the expansion of economic activity and populations. In addition, the economic consequences of ecological decline are not distributed equally across all individuals. Poor people in the rural areas of developing countries are disproportionately affected by the increasing scarcity of ecosystems and their vital goods and services. The chapter therefore explores the policy challenges posed by these two inter-related problems—ecological scarcity and poverty, and ecological sustainability and planetary boundaries. Overcoming these challenges not only is an important strategy for economic development and poverty alleviation but also represents an important a necessary form of intergenerational resource transfer for global sustainability. Finally, the chapter discusses options for dealing with this global market failure through compensating developing countries for conserving ecosystems and biodiversity, international payments for ecosystems services, and new international environmental agreements.

The object of this chapter is to analyse the implications and consequences of globalization for development situated in its historical perspective. There have been many waves of globalization in the world economy during the second millennium, so that a long-term historical retrospective is essential to set the stage. But the focus is on the two recent more recent eras of globalization that began life in the late nineteenth and twentieth centuries. It sketches a picture of the earlier era from 1870 to 1914 and outlines the contours of the present era which started circa 1980 and continues. A comparison reveals that the parallels, similarities and differences between these two epochs of globalization are striking. The implications and consequences for development also suggest significant similarities. This chapter analyses the unequal outcomes in development during the first epoch which brought it to an abrupt end. It then examines outcomes in development during the second epoch to explore the underlying factors and highlight the emerging problems. It is argued that, for people who lived in times of globalization, at every juncture, the process seemed unstoppable. Yet, history suggests that globalization has always been a fragile process. In fact, it has come to an abrupt or unexpected end many times in the past. Indeed, the process has also been reversible. The underlying reasons have been embedded in the consequences of the process of globalization, ranging from the spread of disease or pandemics to economic strains or political conflict between winners and losers whether countries or people. Of course, the backlash has taken different forms at different times. It would seem that the present era of globalization is also under stress. The problems and challenges that have surfaced are largely attributable to its economic and political consequences. It is clearly not the end of geography. It is also not the end of history.

Financial markets have, increasingly, taken the center of development objectives. This has been a major factor in the fast rise of financial activity, with finance taking the lead in economic globalization.

There is increasing consensus that different aspects of a globalized economy have different effects on growth, investment and jobs. While there is agreement that trade has net positive effects on growth and jobs (though there are important issues about how trade liberalization is performed, degree of contribution to growth, and distribution of gains and losses), there is increasing evidence that, in contrast, capital account liberalization and unfettered capital flows, especially short-term and reversible ones, may have negative effects on growth, jobs and income distribution. Furthermore, the view emerged that excessive liberalization of the capital account, without regulation, may undermine rather than support trade growth.

Economists concerned with maximizing growth and employment are increasingly concerned with the macroeconomic instability and harm that financial capital flows and ensuing currency crises pose as well as distortions, for example via instability of exchange rates, that deter growth and exports value-added.

This chapter looks at the evolution of these ideas and the empirical evidence. It examines recent debates around capital account liberalization. The 2012 “institutional view” of the IMF is examined, which favors capital account regulations, and their contradiction with WTO and, especially bilateral trade deals. It calls for an aggiornamento of WTO and bilateral trade provisions. Focusing the analysis in emerging economies, this chapter examines why financial capital flows tend to be intrinsically pro-cyclical, overshooting in the boom and the bust. It discusses implications of structural heterogeneity among different economic agents which in combination with real macroeconomic instability, is regressive and depresses development, owing to negative effects on capital formation, quality of exports and jobs.

The last 70 years have seen important changes in the volume, direction and nature of international trade. In the era of managed globalization, established at the end of the World War II, the global economy became progressively more integrated and trade accounted for continuously rising shares of world output, albeit with international rules and norms designed to allow governments the time and space to manage their integration in line with a broad set of national policy goals. Things changed as capital became more mobile, governments relinquished policy space and the governance of international markets was increasingly left to large multinational firms. This chapter examines the relationship between trade, industrialization and economic development in such a hyperglobalized world economy. It discusses critically conventional trade models and their empirical support and presents a careful examination of more heterodox perspectives. The chapter further analyses the pros and cons of foreign direct investment (FDI) and participation in global value chains (GVCs), with particular attention to the obstacles to diversification and upgrading in these chains and the unequal economic relations that they generate. In this context, it stresses the ongoing importance for developing countries of manufacturing activities, including for export, even in an era of rising services and calls for a pragmatic policy approach and for an active developmental state able to set priorities, manage unavoidable trade-offs, and deal with distributional challenges and conflicts of interest that could hinder a desirable pattern of integration.

This chapter presents newly derived estimates of net migration flows by origin and destination spanning the four decades between 1960 and 2010. These estimates support the proposition that the economic development process itself tends to stimulate migration. Thus, low-income countries, where the development process is lagging behind, are the least likely sources of international migrants, whereas countries where the development process is more advanced, including both middle-income and certain high-income countries, are more likely to be important sources of international migrants. The estimates also corroborate the growing importance of “south-to-north” migration and show that migration among developed countries, far from ceasing, has been on the rise. This chapter then describes the most influential economic theories guiding research on international migration and development, and reviews research on the linkages between the selectivity of international migration and wages, and on the impact of remittances on developing countries. In receiving countries of the developed world, most of which have been increasingly selecting migrants on the basis of skills, the impact of recent migration on wages has tended to be small and largely beneficial. Because skilled persons seek high absolute wages, rich countries attract them, often to the detriment of countries of origin, particularly developing countries with small populations where the stock of skilled persons was small to start with. The boom in global remittances associated with high emigration from middle-income to high-income countries has been contributing to improve the livelihoods of millions of people. The studies reviewed show that remittances not only ensure a satisfactory level of consumption for their recipients and their families, but are also used to improve agricultural productivity or to invest in small or micro-enterprises. In several contexts, remittances increase the school enrollment of children in households with migrants abroad. More generally, remittances boost household incomes and reduce poverty.

Underprovision of global public goods (GPGs) such as climate change, mitigation, financial stability, global health or cyber security, today threatens development in the North and in the South and, thereby, also global—economic, social and environmental—sustainability. This chapter shows that myriad corrective actions by state and nonstate actors are underway. However, the sum of those actions often does not add up to what is required to resolve global challenges. Provision gaps arise, persist and exacerbate, even in policy fields in which existential risks exist. While many factors come into play, including psychological, behavioral, organizational and macro-economic and geopolitical ones, an important one, which, moreover, could be corrected directly, is the current lack of a systematic theory and practice of global public policy. The chapter suggests an agenda for future research and debate aimed at constructing the building blocks of a new branch of public policy that offers well-founded advice on how to combine individual state and nonstate actor interests, including national sovereignty concerns, while meeting the adequate provision requirements of global public goods. New thinking along the lines could offer analytical lenses through which to look at current policymaking realities, better understand the impediments and facilitators of GPG provision and, perhaps, spark willingness among policymakers to choose new policy paths—realizing that those actually lead to enhanced interdependence management, development and global sustainability. By implication, a major responsibility for fostering governance for global sustainability rests with social-science scholars.