HOW RICH COUNTRIES GOT RICH: DYNAMIC MODEL OF ECONOMIC DEVELOPMENT

During last decades policy prescription for backward economy was one size fits all policy of getting prices and institutions right. Evidence suggests that while improvement has been made majority of poor countries are still struggling with economic backwardness after implementation of market oriented reforms and good governance best practices. Aim of this research is to develop evidence based model of development strategy which can be readily used by backward economy. Main question the research sought to answer is which economic policies have contributed repeatedly to successful economic transformations over space and time. Historical examination of transformations from backward into advanced economy has been carried out to answer the research question. Main result of this research is three by four policy matrix of development strategy. Rows of the matrix represent three stages of economic development: low, middle and high income economies; Columns of the matrix represent four development strategy domains: agricultural, manufacturing, international trade and monetary strategies. Policy matrix of development strategy is practical guide for low and middle income economies to coordinate economic policy under each development strategy domain for achieving transformation into advanced economy.