Rachid Laajaj

The paper shows theoretically that, in a setting where skills expand what individuals can do and altruism affects the choice of actions, then skill growth and altruism together are sufficient conditions for development, defined as an increase in generated welfare. Greater skills and the resulting technological progress need not increase social welfare, because the expansion of achievable outcomes combines a positive frontier effect with an ambiguous substitution effect, potentially toward actions that are privately attractive but socially harmful. This ambiguous effect of skills on development disappears when altruism is high enough to ensure that new opportunities created by skills are used only when they raise social welfare. Incorporating technological change and institutions shows that, when endogenous to humans' decisions, they become levers that can crystallize the altruism of some into widespread and durable gains. Finally, allowing altruism to be group-specific emphasizes the need for universalism to ensure that skills contribute to development, in particular when technologies allow for externalities that reach beyond one's inner group. The framework speaks to a broad set of historical and contemporary development successes and failures, leading to the conclusion that ensuring long-term development requires selecting altruistic leaders and learning how to shift the distribution and scope of altruism at scale.