Theories of Development
7.5 Explain different theories of
economic and social development.
Development data visualization
Hans Rosling's famous lectures combine enormous
quantities of public data with a sport's ...
If you haven't seen this video, it is an incredible data
visualization to explain the correlation between
income and life expectancy. He uses temporal and
spatial markers to show changes from 1810 to the
present. If you discuss it in your course, this would
help to explain the epidemiological transition.
http://www.youtube.com/watch?v=jbkSRLYSojo&fe
ature=youtu.be
Models of Development
• liberal models- believe all countries are capable of
development
• Countries are all at the same stage of economic development
but economic differences cause short term inequality
• structuralist models- global structure cannot be easily
changed
• Unequal power
• Concentration of wealth in only some areas
• Difficult for poor to improve
• Believe all countries will NOT go through the same stages of
economic development
Modernization Model
•
•
•
•
One of the most influential liberal models
Made by Walt Rostow in the 1960’s
All countries follow the 5 states of development
Stage 1
– Traditional- subsistence farming, resistance to technological change
• Stage 2
– Preconditions of Takeoff- progressive leadership moves a country towards
flexibility and openness
• Stage 3
– Takeoff- industrialization, increase in urbanization
• Stage 4
– Drive to Maturity- technology spreads, industrialization specialization,
international trade, population growth slows
• Stage 5
– High Mass Consumption- high incomes, many goods and services, majority of
workers in the service sector
Rostow’s Ladder of Development
Rostow - Stages of Growth
• The work of American Walt
W. Rostow
• Rostow is an economic
historian
• Countries can be placed in
one of five categories in
terms of its stage of growth:
A child in Sierra Leone making breakfast.
Which stage would a country like Sierra Leone
fit in?
Copyright: Dave Dyett, http://www.sxc.hu/
Rostow - Stages of Growth
1.
•
Traditional Society
Characterized by
– Depends upon primary sector activities
(subsistence farming, fishing, hunting)
– resistant to technological change
– Carries out local or regional trading
– Enjoys limited socio-economic mobility
• EX:*English colonies in North America
Village in Lesotho. 86% of the resident workforce in
Lesotho is engaged in subsistence agriculture.
Copyright: Tracy Wade, http://www.sxc.hu/
17th Century, Medieval Europe, No
Entire country is at this stage today
Rostow - Stages of Growth
2. Pre-condition for take-off:
The use of some capital equipment can
help increase productivity and generate
small surpluses which can be traded.
Copyright: Tim & Annette,
http://www.sxc.hu
• progressive leadership moves a
country towards flexibility and
openness
• improves infrastructure (roads,
electrical grid, water systems, etc)
• improved farming techniques and
shifts toward commercial ag
• Exports AG and raw materials
(international trade)
• diffuses technology more widely
• starts individual socio-economic
mobility
• EX: US in early 19th century, Nigeria
Today, and Afghanistan today
Rostow - Stages of Growth
3. Take off:
At this stage, industrial growth may
be linked to primary industries. The
level of technology required will be
low.
Copyright: Ramon Venne,
http://www.sxc.hu
• open to technological innovations
• starts industrialization and primary
sector beings to shrink
• spreads entrepreneurial mentality
• begins to urbanize
• Initiates self-sustaining growth
• Ex: US mid 19th century, Japan late
19th century, Bangladesh today
Rostow - Stages of Growth
4. Drive to Maturity:
As the economy matures, technology
plays an increasing role in developing
high value added products.
Copyright: Joao de Freitas,
http://www.sxc.hu
• Creates new industries while
strengthening existing ones
• improves energy, transportation,
and communication systems
• Sees economic growth greater
than population growth
• invests in social infrastructure
(schools, hospitals, etc.)
Ex: US late 19th century, Germany,
early 20th century, Brazil Today
Rostow - Stages of Growth
5. High mass consumption
Service industry dominates the economy –
banking, insurance, finance, marketing,
entertainment, leisure and so on.
Copyright: Elliott Tompkins,
http://www.sxc.hu
• high incomes
• Spends money on nonessential
goods (consumerism)
• Purchase of high order goods
become common
• Desires to create an egalitarian
society
• majority of workers in the
service (tertiary) sector
Ex: US early 1920’s to present,
Japan, mid-1950’s to present
Criticisms:
• Too simplistic
• Doesn’t apply to non-western or non-capitalist countries
• Necessity of a financial infrastructure to channel any savings that are
made into investment
• Will such investment yield growth? Not necessarily
• Need for other infrastructure – human resources (education), roads,
rail, communications networks
• Efficiency of use of investment – in palaces or productive activities?
• Rostow argued economies would learn from one another and reduce
the time taken to develop – has this happened?
• Encourages exploitation of LDC’s that can leave them trapped
• Everyone has the potential to develop
• Believes everyone could be high mass consumption without
considering sustainable development
• Most got to high mass consumption by exploiting ldcs
Relevance today:
• Once we called the most wealthy countries “Industrialized”
• Today, those countries are “post industrial” and no longer
manufacture things
• This suggests that there is a ladder that countries can climb
since we have a new set of “industrialized” countries
• It has helped prompt people to think about economic and
social change in a global context.
Structuralist Theory
• Holds that difficult-to-change, large scale
economic arrangements shape what is
possible for a country’s development
Structural Change
• Structural change models focus on the
different productivity levels of economies
• Process of structural change determines the
rate of development
Structural Change
• Less developed nations –
– tend to be dominated by primary industries
– low value added (the difference between the sale price
and the production cost of a product is the value added
per unit),
– difficult to generate wealth and thus sources of investment
• More developed nations –
– diverse economies,
– high value added,
– high levels of investment
Employment Changes by Sector
Fig. 9-3: Percentage employment in the primary, secondary, and tertiary
sectors of MDCs has changed dramatically, but change has been
Models of Development
• Dependency Theory is another
Structuralist Model
• Political & economic
relationships between countries
& regions limit the development
possibilities of the poorer areas
(poor dependent on wealthier
countries)
• colonialism made countries
dependent on imperial powers
(the country that ruled them)
• Dependency theory sees little
hope for economic prosperity in
some traditional parts of the
world
Sugar being loaded in Cebu,
Philippines
Coffee Plantation
Global Economic Disparities
• Much of the disparity existed as Colonialism
was established by European nations.
• The Industrial Revolution increased the need
for raw materials and markets for finished
goods.
• Neo-colonialism refers to the economic and
cultural dominance of the core over the
former colonial nations instead of political
control
– Current Trade relationships and flow of
resources and capital mimic Colonial
times.
– Difference is that current power
structure lies in global corporations
(economic control) vs. nationalistic
empires (political control).
Commodity Dependence
• a country as dependent on commodities (ag,
minerals, etc) when these account for more than
60% of its total exports in value terms. In LDC’s
the average is 80%
• Reducing dependence on commodities through
vertical and horizontal diversification remains
the surest way to avoid the vulnerability of
producing countries to changes in commodity
prices. Only diversification of exports and the
economy can lead to sustainable development
Commodity Dependence
Backwash Effects
• When economic development
within a country occurs not all
regions of a country or region will
benefit equally; in fact some
regions may be negatively affected
by another region’s development
– Colonization
Pros and Cons
• Pros
• Not all countries can
develop in a particular
order
• Differences in culture
politics and society also
contribute to
development – this
theory shows that!
• Criticisms
• little hope for countries
that were controlled by
external powers
• but some of these
countries’ economies
have improved
World-Systems Theory
• Core- regions that have achieved high levels of
socioeconomic prosperity and are dominant players in
the global economy– Set up technology and require high education
– Bring money to the core through high wages and benefits
• Periphery- poor regions that are dependent on the
Core (and often Semi-Periphery) and do not have as
much control over their own affairs
– Requires lower education, lower technology, and lower
wages
• Semi-Periphery- more powerful than the peripheral
regions but still dominated by the Core
• This model focuses on economic relationships
• Core uses periphery for cheap labor, cheap production, and
profits in the core mainly
• Does not assume socioeconomic change will occur at the
same time
• Example: Japan became industrialized and developed a strong
economy, but this does not mean it will happen the same way
for Sudan)
Core and Periphery in World Economy
Fig. 9-22: This north polar projection of the world shows that most of the
MDCs are in a core area north of 30° N latitude. The LDCs are
mostly on the periphery of this map.
Eventual Outcome of the WorldSystems theory
• Evolution towards multiple cores that
exchange goods, services, and resources
More and Less Developed Regions
Fig. 9-8: The less developed regions include Latin America, Sub-Saharan
Africa, Middle East, South Asia, East Asia, and Southeast Asia.
Brandt Report
• 1980 report that created a map showing the relative wealth of the
countries north of the line compared to the countries south of the
line
– It suggest that Northern countries are wealthier than southern countries due
to their successful trade in manufactured goods, whereas the countries
South of the divide suffer poverty due to their trade in intermediate goods,
where the export incomes are low.
North-South Gap-most countries in the Core are above 30 degrees latitude
more countries are clustered in an inner core, while less developed countries are
relegated to a periphery or outer ring.
20% of the World’s population controls 85% of the wealth
Poorest 20% lives in the Southern Hemisphere
Kuznet’s Curve
• hypothesis that as a country
develops, there is a natural
cycle of economic inequality
driven by market forces
which at first increases
inequality, and then
decreases it after a certain
average income is attained
• Kuznet’s curve related to
development and air
pollution
– As a country’s economy
industrializes, pollution will
increase but as the
population gets wealthier
pollution will eventually
decline
Conditions in the Periphery
• High birth rates, moderate death rates and low life
expectancy
• High infant mortality rates-large population under age 15
yrs.
• Poor health care & shortage of doctors-disease is common
• Poor sanitation and lack of fresh, clean water
• Poor nutrition and protein deficiency
• Low per capita income with many women & children doing
hard manual labor
• High illiteracy rate with low levels of education
• Great disparity between rich & poor, small middle class
• Urban areas overcrowded, lack of services, rapid urban
migration
• Subsistence farming on small landholdings
1. Which country is the only semi peripheral
nation-state in Africa?
A.Libya
B. Angola
C. Gabon
D.South Africa
E. Kenya
2. Based upon Wallerstein’s World Systems
Theory, which of the following countries best
fits the description of a peripheral country?
A.Brazil
B. Mali
C. Japan
D.Germany
E. China
1. Which country is the only semi peripheral
nation-state in Africa?
A.Libya
B. Angola
C. Gabon
D.South Africa
E. Kenya
2. Based upon Wallerstein’s World Systems
Theory, which of the following countries best
fits the description of a peripheral country?
A.Brazil
B. Mali
C. Japan
D.Germany
E. China