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"The term “development planning” gained ascendancy in the period immediately after the Second World War, when decolonisation led to the emergence of a number of newly independent underdeveloped countries. War fatigue and the conflict between competing systems resulted in considerable concern with addressing the sharp differentials in levels of development and standards of living between these economies and the developed countries so as to ensure a durable peace. That paved the way for an interest in strategies that could accelerate development in the former."

"Accelerating growth required diverting a part of the meagre national income away from consumption to investment in order to raise the rate of growth. While for a time this squeeze on consumption can be moderated by relying on foreign savings (to the extent available), in the final analysis domestic savings and investment needed to be raised. Not surprisingly, the principal developmental task as formulated by Arthur Lewis and his fellow experts in a 1951 UN report (United Nations 1951) was to raise the rate of investment or the ratio of investment to national income, so as to raise the rate of growth achievable at any given level of capital-output ratio."

"Raising investment in itself was not enough. It needed to be allocated across sectors in ways that prevent other potential bottlenecks from subverting the process of development. The allocations chosen would depend on what are considered the binding constraints on development in individual countries. If, for example, the principal constraint to investment is seen as the absence or inadequate development of a capital-goods sector and there was inadequate foreign exchange to import capital goods, then the attempt at raising investment to accelerate growth would run up against a capital-goods constraint. This was the problem the Mahalanobis (1955) model applied to India sought to resolve by emphasising the need to allocate a higher share of investment to the investment-goods sector in the early stages of development, even if that meant stretching the period over which aggregate and per-capita consumption are raised to address their inadequacy."

"In most developing-country contexts, a more serious constraint on growth was the shortfall in the availability of food, which constitutes an overwhelmingly large part of the goods that make up the wage basket. Increases in output and employment result in increases in wage-goods demand that far exceed domestic supply. This necessitates imports and could again lead to balance-of-payments problems or, if imports are not resorted to, triggers food-price inflation that in multiple ways constrains growth."

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