The correlations between literacy and development are universally recognized, though not always fully understood. Since the individual is the locus of all learning as well as the agent of all developmental actions, psychological approaches to the study of the relationship between literacy and development should be promising. The essential question in the psychology of development is: What type and quality of human psyche is relatively more amenable to generating and sustaining development, at both personal and societal levels? The essential question in the psychology of literacy is: What effect, if any, does literacy learning have on the psyche of the new literate? At the intersection of these two research and theory traditions lies another question: What is the role of literacy in development? Formulated in practical terms, we can ask: At this historical time, during International Literacy Year, 1990, is development in the Third World possible without the universalization of literacy in the region? A model of literacy for development based on the concept of symbolic transformation of experience is the first step toward designing research questions on literacy and development as multi-level and multi-dimensional processes. Contains 19 references. (MSE) (Adjunct ERIC Clearinghouse on Literacy Education)