For more than five decades, professionals working in the sub-discipline of development economics have had a field day debating what "developing countries" must do to become "developed". Conjuring esoteric jargon and unrealistic mathematical models that pretend to have extraordinary precision, they have managed to dazzle their political masters and acquire enormous influence on the decisions that affect our daily lives.

In the meantime, countries of the third world continue rapidly to lose ground on the issues that really matter: the well being of their citizens and the productivity of their resources. These countries have now accumulated twice as many poor people as they had when development economists arrived on the scene. And lost half of their trees.

The advice of economists, always delivered with great confidence and force of conviction, has, over the years, taken national economies through cycles and swings no less extreme and ephemeral than those through which fashion designers take the garment business. And probably with equal oversimplification and no better basis. By now, economists have gradually covered all possible shades of policy and ideology, just as couturiers sooner or later range through all colours of the rainbow.

When centralised planning was found to be leading nowhere, the marketplace became the dogma. We got neither the equity and distribution promised in the first case nor the efficiency and production that were promised in the second. In fact, we now have the worst of both the worlds.

After decades of failure with import substitution as a doctrine, export promotion and global trade became the religion. Both turned out to be pathways for growing sales of unprofitable primary commodities, deteriorating terms of trade and deepening technological dependency.

Ardent preaching in favour of Keynsian expansion was followed by a call for ruthless structural adjustment and reduction of national deficits. Either way, the losers were the poor and the environment. One could have hoped that, as self-proclaimed "scientists", economists might notice the non-performance of their simplistic prescriptions and devote themselves to designing more responsive instruments of policy – but all they seem to come up with is one form of fundamentalism or another. And the pendulum of fashion in theories continues to swing and consultants continue to make a good living. In the meanwhile, the poor get poorer and the trees continue to disappear.

No matter which doctrine is currently in fashion or how simplistic its prescriptions are, however, many of the underlying assumptions – mostly derived from neo-classical economic theory – are even more simplistic. "Economies of scale" are justified by ignoring many of the costs associated with bigness: technological, managerial, environmental, social and intergenerational. "Comparative advantage" calculations leave out the true, full costs of energy, transportation, and economic vulnerability. Even the smallest discount rates used in benefit-cost analyses short-change the interests of future generations.

And then there is the problem of phoney quantification. Despite frequent assertions to the contrary, credibility of economic theory rests on quantification. What cannot be quantified gets quickly lost. That is a major reason why GNP is a widely used measure of national wealth creation but not the less numerical human development indicators, much less intangibles such as self-reliance, well-being or happiness.

For all these reasons, we have the paradox of a world in which growing investment in education goes with growing numbers of illiterates; growing investment in industry actually decreates jobs, and where fabulous, unprecedented wealth co-exists with the highest levels of poverty and environmental destruction recorded in history.

There have, of course, been a few voices of sanity in the wilderness of academic economics. Some even provided the profession with credible and meaningful alternative visions. Fritz Schumacher highlighted its deficiencies with respect to the choice and design of technologies. Kenneth Boulding, Herman Daly, Hazel Henderson were among the early ones to see that contemporary economics was unable to deal properly with environmental or resource depletion issues. Mahboob ul Haq and Amartya Sen brought in the issues of poverty and distribution of wealth and concluded that the highest priority for national development must be given to the education of children, nutrition security and primary health. For these contributions, such economists certainly deserve the highest recognition.

But we also need to see more impact of these contributions on actual policy and action on the ground. Even more important than broad societal recognition is the need for development economists, as a community, to extend their horizons to bring the issues of technology, environment and governance directly into the design of their economic policy prescriptions.

If education is, for example, to make a genuine difference in the life of the nation, it will need not only a much larger financial investment, but also a totally different structure in terms of content and delivery. Financial allocations from a central government or dictats from a monolithic curriculum development agency cannot meaningfully educate the children of a large country like ours. Only parents and communities have the commitment needed to ensure good education for their children and they must be put in charge of their teachers, budgets and schools.

The time is ripe, thanks to Professor Sen, to put education at the top of the national government’s agenda. But to produce results, it must be placed directly under the control of each local government. q