The purpose of the proposed research project is to incorporate the role of economic shrinking into the understanding of the process of economic development in the developing world since the 1950s. The aim is to put forth empirically grounded theoretical generalizations that will enable us to understand how the least developed countries can develop resilience to shrinking and as such, contribute to our knowledge of how economic development can be sustained in the poorer parts of the world. To fulfill the aims, the project considers two overriding research questions derived from preliminary scrutiny of long-term macro data:

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• What is the impact of economic shrinking on the catch-up performance of developing countries?

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• How and to what extent do a country’s social capabilities affect its resilience to economic shrinking?

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To answer the research questions, the project will fill the knowledge gaps on three interrelated themes. It will set out first to establish the different empirical growth/shrinking patterns of the last seven decades among the developing countries, and second, to assess the role that economic shrinking has played in these processes over time. Third, constituting the core part of the project, it will analyse these different shrinking experiences from a framework of social capabilities, which for our purposes are interpreted as (i) broad-based inclusion of the population in the market, (ii) transformation of economic structures, (iii) social stability, (iv) accountability, and the (v) autonomy of the state.