Challenges to the development of the South have continued to remain formidable. Some of them have indeed become even more serious with the deterioration of the global environment for development. All the major regions in the world—the East, the West and the South—are facing a combination of economic, political, social and ethnic crises. Postwar optimism has given way to despair. The prophets of gloom and doom are riding high. The optimists are in retreat. There is even a danger that people may forget the outstanding achievements of the South as a whole since the 1950s.(Patel, 1992).

Economic theory does not appear to help much in meeting the current challenges. In some ways, it continues to be dominated by the same spirit which had earned for it the uncharitable title of the dismal science. Its ancestry includes Malthus with the spectra of population, Ricardo with diminishing returns; Mill with his stationary state; Marx with growing class conflicts; Jevons with the exhaustion of natural resources; Schumpeter with his ephemeral entreprenurial spirit; and Keynes with the declining marginal efficiency of capital.