Development economics was founded in Britain during, and shortly after, World War II. Its founding economists doubted the usefulness of neoclassical economics, with its presumptions of smoothly operating markets, and saw the state as being key to the development process. Here the seminal work was by Paul Rosenstein-Rodan. He argued that industrialization of the “international depressed areas,” like eastern and south- eastern Europe, was in the general interest of the world as a whole. It was the way to achieve a more equal distribution of income between different areas of the world by raising incomes in depressed areas at a higher rate than in the rich areas. Rosenstein-Rodan found there to be an “agrarian excess population” amounting to 25% of the population that was totally or partly unemployed—a “waste of labor.” This waste could be solved either by transporting workers toward capital (emigration) or bringing capital toward labor (industrialization). Since emigration and resettlement would present special difficulties, industrialization was necessary. This could occur under a Russian model that aimed at self-sufficiency without international investment, and involved all aspects of industry, heavy industry, machine industries, as well as light industry, with the final result being a national economy built like a vertical industrial concern. But this approach entails disadvantages in that it could only proceed slowly, because capital had to be supplied internally at the expense of the standard of living and consumption, and implied heavy and unnecessary sacrifice. The alternative model of industrialization would fit eastern and southeastern Europe into the world economy, preserving the advantages of the international division of labor, and would therefore, in the end, produce more wealth for everybody. It would be based on substantial international investment or capital lending. The first task was to provide for training and the “skilling” of a million new industrial workers a year, a huge task requiring the setting up of a planning board within an “Eastern European Industrial Trust” rather than relying on private entrepreneurship—half the capital would come from domestic sources and half from creditor countries. It would involve large-scale planned industrialization, paying workers more than they previously earned in natura (in the rural areas), creating its own additional market and gaining external economies of scale (that is, lower costs of production due to many firms producing in an area). But even a bold, optimistic program of industrialization could not solve the whole problem of surplus population within a decade after the ending of the war—at best 70–80% of the unemployed workers could be employed, and emigration would still have to supplement industrialization (Rosenstein-Rodan 1943). Rosenstein-Rodan’s thesis was seen as applicable to the problems of many Third World countries and came to be known as the “big push” theory, implying the need for a coordinated expansion and the intervention of the state in development planning. The basic idea was that investment was restricted by the small size of the market in poor regions, but a number of projects begun simultaneously in different industries might provide markets for one another. So, there was a need for a broad attack to get an economy out of its vicious cycle of poverty: “A wave of new investments in different branches of production can economically succeed, enlarge the total market and so break the bonds of the stationary equilibrium of underdevelopment” (Nurkse 1953: 15). This was also known as “balanced growth,” in the sense that a whole set of complementary investments would be made.