Development Projects Observed

by Albert O. Hirschman

First published in 1967, Development Projects Observed has been a benchmark in practical thinking about economic development. Now, this classic volume is reissued with a thoughtful new preface by the author. Albert O. Hirschman, one of the great pioneers in the field, offers a first-hand study of eleven major development projects financed by the World Bank and explores the factors that account for the success and failure of some of these efforts. Hirschman looks at the ways decisionmaking is molded, activated, or hampered by the specific nature of the project that is undertaken - a pulp and paper mill in East Pakistan, telecommunications in Ethiopia, an irrigation project in Peru, railway expansion in Nigeria, and other development undertakings. Besides the traditional cost-benefit calculations, he points to a number of historical, technological, and social categories, such as "temporal discipline in construction" and "latitude for corruption," that can have major influence on the course of a project. With the passage of time, Hirschman's wide-ranging and shrewd analysis has achieved ever greater recognition. The book also marked the publication of one of his most provocative ideas: the "principle of the hiding hand," which states that underestimating the costs or difficulties of a project can actually be a helpful stimulus as it allows people to bring their energies and creative resources more fully into play than might otherwise have been the case.

Genres: Economics

197 pages, Paperback

First published October 1, 1967

About the author

Albert Otto Hirschman was an economist and the author of several books on political economy and political ideology. His first major contribution was in the area of development economics. Here he emphasized the need for unbalanced growth. He argued that disequilibria should be encouraged to stimulate growth and help mobilize resources, because developing countries are short of decision making skills. Key to this was encouraging industries with many linkages to other firms.

His later work was in political economy and there he advanced two schemata. The first describes the three basic possible responses to decline in firms or polities (quitting, speaking up, staying quiet) in Exit, Voice, and Loyalty (1970). The second describes the basic arguments made by conservatives (perversity, futility and jeopardy) in The Rhetoric of Reaction (1991).

Reviews

[Steve · Rating 4 out of 5]

Insightful, non-technical, with lots of snobby little jokes throughout. The analysis of the trade-off of ignorance and creativity alone makes it essential reading for anyone who cares about getting people to do things (in these cases, getting countries to have modern economies). A little circumscribed, it's essentially a survey and the author doesn't really make a claim for universal findings.

[GreyAtlas · Rating 3 out of 5]

Mostly skimmed.

[Marks54 · Rating 3 out of 5]

This is a reprint of a study that Hirschman led for Brookings to evaluate about a dozen World Bank development projects. This is the third of Hirschman's books on development and they came early in his career before he moved on to more general issues of political economy. On its own, the book is well written and insightful, far above the normal fare for this sort of analysis looking at development and foreign investment. In an immediate sense the material seems dated, since these sorts of development projects fell out of favor long ago and attracting foreign investment became more important for most countries than attracting foreign aid. That is probably a good development, since it is problematic that planners in Washington could really direct resource flows to developing nations with superior insight over what the country can do for itself making use of some broader market mechanism. These sorts of projects also became less salient with the end of the Cold War.

The book is not without some real insights, however. It is an opportunity to read what a first rate social theorist does when dealing with practical matters of project design and implementation rather than taking the general perspective favored by many academics. Hirschman does not disappoint. His idea of the "Hiding Hand", for example considers the role of overconfidence in project design, with the consequent overestimation of benefits and the underestimation of project costs. The punchline is that project success is greatly aided by dealing with the stresses brought on by overselling and overshooting. This gets to issues of managerial capabilities and organizational learning that are still relevant today. To cite another example, his discussion of "trait making" versus "trait taking" speaks to the importance of understanding how a project fits into the business and societal context in which it must operate, so that sophisticated projects may actually underperform relative to other projects if they do not fit well and raise too many coordination costs. This remains a hot topic today in the evaluation of entrepreneurial ventures. Hirschman's discussions of cost and demand uncertainties is also filled with issues of transaction costs and agency problems that remain relevant for business ventures.

I have been trying to catch up on parts of Hirschman's work that I had not read ever since I read the recent wonderful biography of him. This book fits nicely intto that work and presents his work in his first area of interest but one where his contributions have not proven as lasting.

[Mbarak · Rating 3 out of 5]

While I did give the whole book a 3/5, I 'd give the first chapter a very deserving 5/5. This chapter contains Hirschman's principle of The Hiding Hand, and the book is worth a read if only for this part alone. It may be the more controversial and non-scientific part of the book but it is definitely the more original and thought provoking. In the later parts Hirschman discusses more familiar topics of development projects but still adds his own thoughts and draws alot from principles discussed in his earlier works, especially Strategy.

What also makes this book stand out from others discussing similar topics is Hirchman's prose and style which mixes great storytelling along with explanations of the various principles and analysis.

The first chapter is recommended for everyone, while the rest is only for readers interested in (development) projects.

[Spencer Willardson · Rating 5 out of 5]

This book made me think about a lot of things. Overall and excellent read. It is a must for anyone who is interested in politics, the impact and process of development, or simply good writing and interesting analysis.