This book provides an evaluation of the intellectual development of Gunnar Myrdal, emphasizing his methodology, his beliefs about economics and the role of economists in modern society. It explains how Gunnar Myrdal became an institutional economist and how this perspective influenced his contribution to economic development and attempts to close the gap between rich and poor countries. The main argument of the book is that economists, despite being trained in the orthodox neoclassical tradition, can develop an alternative conception that is more relevant and appropriate for analysis and policy making in developing and transition economies. Much of the discussion focuses on the evolution of Gunnar Myrdal's intellectual development and his contributions to transformation issues in an historical context. Specific issues discussed include political and social problems and transformation policy for Central and Eastern Europe. The Political Economy of Gunnar Myrdal will be welcomed by academics and students researching in the fields of the history of economic thought, comparative economics and economic development.