Ideas and Theories of Development
Progress comes from the proper implementation of good ideas or theories. The highly
developed countries encourage their peoples to produce fruitful ideas - and they are well-paid
for such ideas. Unfortunately, in our own country, good ideas are ignored by the government.
Hence, Filipino scientists offer their inventions to foreigners who are willing to pay them well.
Foreigners develop said inventions into commercial purposes.
During the ancient times, economic ideas were based on the Holy Scriptures and code of
laws. Justice, mercy and charity were further propagated by the Church scholars during the
medieval times. However, with the growth of trade, the accumulation of wealth has become
important. To the mercantilists, wealth came from favorable foreign trade. To the Physiocrats
who believed in the rule of nature, wealth emanated from the land. On the other hand, Adam
Smith, the leader of the classical economists, claimed that real wealth could be created through
industrial production. However, there were those who disagreed with the classical economic
ideas, like Friedrich List, a German professor of economics. He said that the progress of a nation
is great not in proportion to the accumulation of wealth, but in proportion to the development
of productive resources such as natural resources, science, arts, government laws, education,
peace and order, morality, and the harmonious relationship of the various industries and
occupations.
A leading theory in economic development is the innovation theory. The author, Joseph
Schumpeter, has stressed the role of the innovator as the key to economic development. The
innovator is the leader or entrepreneur who has the vision and courage to handle old system
and be able to transform theory into practice.
Some Economic Growth Models
Economic models show the relationship of inputs and outputs. These are expressed in
the form of graphs, tables, mathematics or words. Economic models can be simple or
sophisticated. Most of these models are formulated by the Western countries, especially the
United States. However, their effective applications depend on local conditions like climate,
natural resources, manpower, culture, attitudes, and values. Unfortunately, there has been a
tendency among the less developed countries to copy such foreign economic models in the
hope of accelerating their economic development. More often than not they have bitterly
experienced failures. Western economic models are only effective in their highly developed
regions because these are suitable to their particular needs and conditions which are
completely different from those in the less developed countries.
Here are some of the more popular growth models:
Ricardian model. The key factor is land. This means agriculture is the first priority in the
attainment of economic growth. This model appears to be appropriate to poor countries who
depend mostly on the land for their livelihood. The author of said model is David Ricardo, a
prominent classical economist
Harrod-Domar model. This was developed by Sir Harrod of England and Professor Domar of
America. The key factor is physical capital like machines, buildings, equipment, and so forth.
Based on this model, the input is capital, and its efficiency is determined by the number of
output it can produce
Kaldor model. According to Nicholas Kaldor, the author of the model, the key factor is
technology which is embodied in physical capital. Japan is the best example which has achieved
phenomenal economic growth through technology. Until now, it emphasizes research and
technology in its economic programs.