This is the Cato Daily Podcast for Monday, November 2nd, 2009. I'm Caleb Brown.

A developed economy is one with the wide range of available products, services, and institutions needed to support wealth creation.

But getting economies from here to there is a vexing task.

Economist Peter Bower's work has been key to raising the intellectual power of development economics.

The Cato Institute Vice President Jim Dorne is co-editor of the new book Peter Bauer and

the economics of prosperity.

In this book really, Peter Bauer's vision of economic development was a classical

liberal vision in the sense that what he saw his economic development was not simply

a increase in GDP or gross domestic product per capita.

What he saw was it was an increase in the range of choices open to people.

And I like that definition because that focuses on institutions

that are needed to limit government and to increase the range of choices

through mutually beneficial exchanges through trade.

So Bauer was a big proponent of free trade.

And when he was writing in the post warrior, the early post warrior, a lot of people

thought that trade was not that good for development. They thought that development

depended upon central planning, that development depended upon

lots of capital per worker and depended upon foreign aid.

Bauer argued against all those viewpoints. So he was in the really a strict minority on that issue, but now his views have been vindicated to a large extent. Not too many people think that foreign aid is the way to development anymore.

Nor do they think that institutions are unimportant or foreign trade is unimportant.

In fact, the emphasis now is on property

rights, institutions, rule of law, limited government. So Bauer also put a lot of

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