Theories of Economic Development Environmental Determinism and Possibilism Modernization Theory – W.W. Rostow World Systems Theory – Immanuel Wallerstein Theoretical attempts to explain disparities in development

Resource Endowment and Environmental Determinism Resource endowment suggests that development is dependent on the resources (natural and human) the country has to exploit. European development was helped by reserves of coal, iron ore, fertile soil, temperate climate, and low frequency and low intensity of natural hazards Jared Diamond’s Guns, Germs, and Steel narrative

Possibilism A response to environmental determinism Natural environment simply limits the amount of choices available to people The choices society makes depend on what members need and availability of technology Ideas, ingenuity, and advances in technology can push the boundaries of what is “environmentally possible” Human will is too powerful to be determined by environment, especially in the highly interconnected 21st century

W.W. Rostow – Modernization Theory

Modernization Theory Other Characteristics of Theory: Linear progression Happened first in Britain Suggests that all countries that want their economies to grow should study the same stages Favors individualism; wealth as personal virtue; traditional culture can hold you back Similar to Demographic Transition Model – focus is on Western Europe and North America Closed system

Modernization Model Applied Could have strong argument for these countries going through Rostow’s stages of model: Western European countries and the United States Japan, Hong Kong, Taiwan, South Korea, Singapore Brazil, urban pockets of India China

Criticism of Modernization Theory Criticism of theory and model: - model is simply a justification for capitalist systems to exploit non-capitalist ones Modernization simply has not occurred in many poor countries. Rich nations can block the path to development for poor countries. Poor countries developing from a point of weakness. Model suggests that causes of poverty lie entirely in the poor societies themselves.

Immanuel Wallerstein – World Systems Theory Open system One global market with a global division of labor Although the world has 150 + countries, almost everything takes place within the context of the world economy. In other words, every country fits into the global economy somehow, to their benefit or to their detriment World economy has a three tier structure: Core, Semi-periphery, and Periphery

World Systems Theory Core and Periphery – not just places but sites where particular processes take place Core processes – higher levels of education, higher salaries, more technology; core processes that generate more wealth in the world economy Peripheral processes – lower levels of education, lower salaries, less sophisticated technology; peripheral processes associated with a more marginal position in the world economy The development of the core is a result of its exploitation of the periphery

World Systems Theory “Core” countries – rich nations that fuel world economy by taking raw materials from around the world and channeling wealth to North America, Europe, Australia, and Japan through multinational corporations that operate worldwide “Peripheral” countries – poor nations drawn into the world economy by colonial exploitation, and they continue to support rich ones today by providing inexpensive labor and a large market for industrial products “Semiperipheral” countries – remaining countries that are somewhere in between. They exert more power than peripheral countries, but are dominated to some degree by the core countries.

World Systems Theory and Colonialism European Colonialism – lasted from 1500s – 1970s CE 500 years of exploitation of the human and natural resources of Africa, Asia, and the Americas. (Accompanied with slavery in many cases and racism in all cases) Even though colonization ended, economic arrangements are still in place Historic direct domination of rich over poor via colonialism Current direct or indirect domination of rich over poor, sometimes called neo-colonialism Colonialism created the economic structures that caused colonies to become dependent on the rich

Territorial divisions

© 2012 John Wiley & Sons, Inc. All rights reserved. Figure 8.8 Dominant Colonial Infl uences, 1550–1950. The map shows the dominant European or Japanese colonial infl uence in each country over the four centuries. © H. J. de Blij , John W i ley & Sons. © 2012 John Wiley & Sons, Inc. All rights reserved.

World Systems Theory Applied Could have strong argument for applying WST to these situations: Previous colonies still using same currency as colonizers – French Franc, then the Euro for 14 countries in West Africa “Dollarization” in Latin America Capitalist production and moving production quickly from one place to another around the globe to enhance profits – textile industry is a classic good example Areas of raw material extraction with infrastructure solely meant for extracting the raw material and little else: Cocoa in West African countries, Timber in Gabon, Oil in Angola, Diamonds and rare ores in the DRC, natural gas in Papua New Guinea, Farmland leasing in Ethiopia by China . . . .

Criticism of World Systems Theory Theory treats wealth as a zero-sum game. No one gets richer without others getting poorer No developed country “blocks” another from success Does not acknowledge the long history of rich countries supporting poorer ones Ignores cultural factors that discourage economic growth Wealth can be squandered by country’s leaders, i.e. corruption and/or lack of rule of law