‘How does development happen?’ looks at how our understanding of how development happens has evolved. It first considers the evolution of post-war development theory that was strongly influenced by classical writings on political economy. It then outlines Modernization Theory of the 1950s and 1960s, followed by planning for economic development and Dependency Theory. By the late 1970s and early 1980s a range of factors led to the pendulum swinging sharply to the right, away from a statist approach to development, with neo-classical market-led development. In the 1990s, the growing recognition that markets alone cannot deliver development engendered a rich debate on the role of the state and market.