LDC→ MDC?Theories of Development

How can LDCs develop? Models of DevelopmentWhat is the developed world?

● 40 years ago - places populated with people of European ancestry; Japan

● Today - Distinctions between MDC and LDC is blurred:○ oil-rich Middle East○ collapse of Soviet Union○ newly industrializing East Asia

● General North/South pattern still exists

How can LDCs develop? Models of DevelopmentHistory of ideas:

Modernization (Rostow)

Dependency (includes World Systems Theory)

Neoliberal Counter-revolution

Sustainable Development

How can LDCs develop? Models of DevelopmentRostow’s Modernization Model / Stages of Development● 1940s-1960s (post WWII, decolonization)

● classic “developed - developing - underdeveloped” ladder of development

● assumes that all countries follow a similar path (European) and learn from each other

● Identified 5 stages

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 1: Traditional

Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture.

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 1: Traditional

Economy subsistence:● output not traded or recorded● barter system● limited production● >75% in primary sector

Society hierarchical

Political Power regionally based in the hands of landowners

Values resistant to change; focus on old traditions

(U.S. before independence)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 2 - Preconditions for Takeoff

The use of some capital equipment can help increase productivity and generate small surpluses which can be traded.

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 2: Preconditions of takeoff

Economy -- surplus of agriculture and capital-- expansion of trade and manufacturing-- necessity of external funding-- some growth in savings and investment

Society beginnings of a commercial class with some urbanization

Political Power centralized national government

Values rising spirit of progress and openness

(U.S. - early 1800s)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 3: Takeoff

At this stage, industrial growth may be linked to primary industries. The level of technology required will be low. (image: diamond mine in Lesotho)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 3: Takeoff

Economy -- rapid expansion of industry--surge of technology--commercial agriculture--number employed in agriculture declines

Society --increasingly dominant entrepreneurial class--some regional growth

Political Power powerful groups encourage modernization

Values increased investment of capital for profit

(U.S. - 1850s)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 4: Drive to maturity

As the economy matures, technology plays an increasing role in developing high value added products.(Image: Automotive plant using industrial robotics technology.)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 4: Drive to maturity

Economy -- technology extends to all sectors--labor-saving devices are made--growth becomes self-sustaining / wealth generation enables further investment

Society --urbanization--increased in skilled and professional workers

Political Power industrial leaders are highly influential

Values --emphasis on technology--expectation of progress

(U.S. - late 1800s)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 5: Age of Mass Consumption

Service industry dominates the economy -- banking, insurance, finance, marketing, entertainment, leisure and so on.

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentStage 5: Age of Mass Consumption

Economy --high output levels--more use and production of durable goods--service sector dominates (>50%)

Society --new middle class--shift to the suburbs--population growth stabilizes

Political Power --social welfare-more resources for military and security

Values --increased acquisition of consumer goods

(U.S. early 1900s - present)

How can LDCs develop? Models of DevelopmentRostow’s Modernization Model / Stages of Developmentbased on economic structural change:

● investment● substitution of capital for labor● technology transfer● large-scale industrialization projects

(LDCs should follow model of economically powerful countries / European countries in order to develop.)

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentExample: Four Asian Dragons(South Korea, Singapore, Taiwan, Hong Kong)

● former colonies or occupied territories● development by producing manufactured goods

with low labor costs

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentExample: Petroleum-rich Arabian peninsula(Saudi Arabia, Kuwait, Bahrain, Oman, UAE)● 1970s - petroleum prices high● overnight transformation

Models of DevelopmentRostow’s Modernization Model / Stages of DevelopmentCriticisms:● does not consider geographic differences● Western bias / assumptions of “progress”● requires infrastructure● does not consider global scale / effects of other

countries (global market, competition for resources)

● increased dependence on MDCs

Models of DevelopmentRostow’s Model and Your PINGWhich stage of the Modernization Model fits your PING? Use the statistics you gathered to make a hypothesis.

What other statistics do you need in order to confirm your hypothesis?

Models of Development

What other explanations of development are there?

Do all countries follow the same “modernization” path that Rostow predicts?

Models of DevelopmentDependency School of ThoughtEXPLANATION:● 1970s:

○ reality - few LDC’s progressing linearly from stage to stage as Rostow predicted

○ concerns with human welfare

● LDCs are limited by economic and political relationships with MDCs.

● International “division of labor”● inevitable result of capitalist drive?

Models of DevelopmentDependency School of ThoughtEXPLANATION:Poor countries face different obstacles than Western states of Rostow’s model, will not “modernize” in same way

Models of DevelopmentDependency School of Thoughtcolonial origins

Models of DevelopmentDependency School of Thought

colonial origins

Models of DevelopmentDependency School of ThoughtCore-Periphery / World Systems Theory (Wallerstein)coreperipherysemi-periphery

Models of DevelopmentDependency School of ThoughtCore-Periphery / World Systems Theory (Wallerstein)core processes● generate wealth in a place for people

within that place○ require higher levels of education○ sophisticated technology○ higher wages, benefits

core regions● high socioeconomic prosperity● dominate world economy

Models of DevelopmentDependency School of ThoughtCore-Periphery / World Systems Theory (Wallerstein)peripheral processes● generate little wealth for people within

that place ○ lower levels of education○ lower salaries○ less technology

peripheral regions● poor● dependent on core

Models of DevelopmentDependency School of ThoughtCore-Periphery / World Systems Theory (Wallerstein)semiperiphery ● both core and

peripheral processes● exploited by /

influenced by core● exploits periphery

Models of DevelopmentDependency School of ThoughtCore-Periphery / World Systems Theory (Wallerstein)Applicable at scales beyond the state (country)● within a region● within a state (country)● in a local area

Models of DevelopmentDependency School of ThoughtNeocolonialism● Economy of LDCs controlled by MDCs.

● Global economy - this is difficult to overcome○ unequal distribution of resources○ unequal relations between places

Models of DevelopmentDependency School of ThoughtCore-Periphery / World Systems Theory (Wallerstein)Major differences from Modernization Model:

● sensitive to geographic context; does not assume that socioeconomic change will occur the same way in all places

● equal wealth not possible in capitalist global economy

● makes power relations between places explicit

Models of DevelopmentDependency School of ThoughtCriticisms:● Offers causes but no solutions● Little hope for prosperity in LDCs● Little attention to geographic differences

REVIEWWhat is development?How is it measured?How did Rostow explain development?How do Dependency Theorists explain development?How did Wallerstein explain development?

What are the key differences between the Modernization and Dependency schools of thought?

Models of DevelopmentNeoliberalismOrigin post WWII - Decolonization wave → ● International bank loans to new countries● Formation of International Monetary Fund (IMF) and

World Bank

1980s - End of Cold War → ● international community used loans to discourage

state-owned industries, encourage free trade

Models of DevelopmentNeoliberalismTheory● Government intervention into markets is

inefficient and undesirable.

● Protectionism* and state-owned industries perpetuate dependency.

*protectionismimposing high tariffs on foreign goods to protect home grown industries

Models of DevelopmentNeoliberalismStrategies to achieve development

Loans → better infrastructure → more businesses → more taxes to repay loan

Structural adjustment loans have conditions attached to guide how the money should be used.

Models of DevelopmentNeoliberalismStrategies to achieve developmentTwo major lenders for international loans:

● International Monetary Fund (IMF)● World Bank

○ International Bank for Reconstruction and Development (IBRD)

○ International Development Association (IDA)

Models of DevelopmentNeoliberalism Strategies to achieve developmentStructural Adjustment Loan Examples: (“strings” / conditions attached to loans)● sell government-owned industries to the private sector● free trade● allow own currency to devalue to make exports

attractive● health and education investment● government reforms● require better fiscal management● the type of projects allowed

Models of DevelopmentNeoliberalismResults -● Private ownership of services and businesses● Economic globalization● Corporations control regions and states

Models of DevelopmentNeoliberalism Criticisms:● Infrastructure projects that are expensive failures.● Large debts that can’t be repaid.

Models of DevelopmentNeoliberalism

Models of DevelopmentNeoliberalismExample: China

Mao Zedong● leader of 1949 Communist Revolution● “Great Leap Forward” (1958)

● agricultural communes● state owned factories (“backyard”

industry)Result: 20 million starve by 1962

Models of DevelopmentNeoliberalismExample: China● Mao’s successor: Deng Xiaoping

Capitalist reforms:● farmers can sell surplus ● encourages foreign investment● competition between state-owned factories

Result: 2nd highest GDP in world after US, GDP per capita = $5,400

Models of DevelopmentSustainable DevelopmentTheory: Progress should not come at the expense of future generations.Concerned with:● climate● biodiversity● forests● pollution● resources

Models of DevelopmentSustainable DevelopmentRequires New Indicators??

Ideas?

Models of DevelopmentSustainable DevelopmentStrategies to achieve development

Appropriate Technology

● looms● efficient stoves● clay-pot water filters● composting systems● bicycle rickshaws● paper strips for disease

testing

Not Appropriate

● oil-fired power plants● infant formula● chain saws● combine harvesters

Models of DevelopmentSustainable DevelopmentStrategies to achieve developmentFair Trade

● protect workers - rights, safety, wages● protect producers - cooperatives for loans● international standards

largest organization in North America:Ten Thousand Villages