THEORIES OF DEVELOPMENT

Theory defined Statement or statements arrived at through reasoned argument based on facts with the purpose of explaining phenomena or events. Devpt theory:theories formulated since WWII about devpt in the 3 rd World ( Desai 2009)

Introduction The need for devpt theory for new and backward countries after WW II The Marshall Plan and western Europe Cold War and ideological rivalry

Classical/Traditional devpt theories (Todaro & Smith,2003)

Modernisation theory Period: 1950s – 1960s Characteristics(Hettne,1995) Evolutionary perspective Observable differences btn rich and poor i.e. gaps as underdevpt Devpt meant bridging the gaps thru an imitative process

Cont’d Meaning of modernisation in the 1950s and 1960s: What happened in W.Europe and N.America from 17 th -19 th century Complete transformation of life thru eco.devpt

Concept of modernisation(Thomas,2000) An attribute of history or a vision of being in a desirable society A specific historical transition process of social change as societies are transformed over long periods A certain devpt policy in the Third World i.e deliberate efforts by govts NGOs etc aimed at improvement

Approaches of Modernisation theory(Todaro & Smith,2003) 1.Linear stages of economic growth Rostow’s stages of eco. Growth Harrod-Domar growth model

Approaches cont’d 2.Structural change models 2 Sector surplus labour model by A.Lewis 1950s,1960s,1970s Structural change and patterns of devpt empirical research by H.Chenery

Rostow’s Stages of economic growth 1.The stages Traditional society Pre-conditions for take-off Take-off The drive to maturity High mass consumption

Harrod-Domar growth model Rate of growth of GNP is determined jointly by Ntnl savings ratio and the Ntnl capital - output ratio. Countries that saved 15 – 20% of their GNPs could grow at a much faster rate and growth would be self sustaining

Cont’d Low level of new capital formation in most poor countries was the main obstacle to devpt. The capital constraint approach to growth/devpt became a rationale for justifying capital and technical assistance from the North to the South

Cont’d Summary of stages of economic growth: The right quantity and mixture of savings, investment and foreign aid were necessary to enable Third World nations to register economic growth.

Cont’d and end 1.Criticisms 2.What lessons can we draw for Africa and Tanzania?

The Lewis structural change model Focus: How to transform economies based on subsistence agric to modern, urban based manufacturing and service economies Essence Assumptions Criticisms

Dependency theory of underdevpt Introduction Dissatisfaction with the Modernisation theory in the late 60s Some criticisms mainly by Latin Americans Stavenhagen (1966)

Dependency theory cont’d Intro cont’d Lack of automatic effects due to industrialisation Simultaneous generation of u/devpt and devpt Dualistic economies as a product of capitalism Eurocentrism and paternalistic attitude to non- European culture

Cont’d Origins Marxism and Structuralism 1950s Neo-Marxism- Paul Baran Raul Prebisch and Celso Furtado ECLA

Cont’d Great depression and the Brazilian economy – Furtado Non-economic factors Internal-external dynamics

Cont’d Essence of L.A.structuralism Centre-periphery model analysis Industrialisation by import substitution Planning and state intervention Regional integration Economic nationalism

Dependency theses/arguments Intl division of labour as the main obstacle Surplus transfer from periphery to centre Devpt in the centre and u/devpt in the periphery.Existence of central and peripheral capitalism Way out: disassociation from world trade to cut off links of surplus extraction

2 Strands of Dependency Theory Development of underdevelopment A.G. Frank; W. Rodney Dependent development

Devpt of underdevpt theses Disputed that devpt occurs thru a succession of stages. Today’s developed countries were never underdeveloped; Present developed countries achieved that stage at the expense of present underdeveloped countries;

Cont’d Underdevpt is a result of forced integration of the Third World into the capitalist world economy Metropole – satellite relations are also reflected in each Third World country

Dependent development theses Capitalist devpt is possible within dependent situations Foreign investment is shifting from raw materials to industrial sectors; There are joint ventures involving local private capital, state capital and foreign capital

Contribution of Dependency school Euro-centric devpt theories challenged Caused self criticism among modernisation theorists Stimulated dependence analysis in other Third World areas Emergence of NIEO First devpt theory from the Third World

Critique Library search What lessons can we learn from the Dependency theory?