Rostow’s Stages of Development and Wallerstein’s World-Systems Theory Models of Development

Development Rostow: Ladder of Development What sectors of the economy do you see? What are the economic and social characteristics of LDCs? Where do we find MDCs and LDCs on the globe?

Rostow Model 5-stage model Traditional society Preconditions for take-off Take-off Drive to maturity High Mass Consumption Countries climb (the ladder) from one stage to another

Traditional Society Little technology No social changes Moves to next stage when other countries invest in resources or new markets appear. (Role of IMF, World Bank, WTO???) Ex: OIL! GOLD! Minerals!

Preconditions for Take-Off Commercial companies invest Plantation agriculture Garment industry Mining WHY THESE?? Moves to next stage when roads/railroads (infrastructure improves) and social and political leaders emerge.

Take-off Development of manufacturing (a country’s own companies for export) Moves to next stage with even more investment in this sector and the creation of modern social, economic, and political institutions…

Drive to Maturity Development of economy beyond manufacturing (widening base of industry and business) Moves to last stage when it can take advantage of its abilities to produce for both the export and domestic markets. Assumes a middle (consumer) class

High Mass Consumption Top of the ladder People buy a lot of stuff…. WE HAVE ARRIVED!! Key Question: How would Rostow view the IMF, World Bank and WTO?

Rostow Model Review Explain the 5-stages Traditional society Preconditions for take-off Take-off Drive to maturity High Mass Consumption

World Systems and Dependency Theory Wallerstein Core, Semi-Periphery, Periphery World Systems and Dependency Theory Wallerstein

Wallerstein Basics The world is ONE economic market with a global division of labor Three levels: Core Semi-Periphery Periphery

World Systems Theory

Present Core/Periphery Relationships Wallerstein Present Core/Periphery Relationships In Wallerstein’s theory, countries can move from one level to another.

CORE The world’s richer countries Wide range of products and services High wages Import raw materials and export manufactured goods/services Have favorable trade balances with poor countries Build up capital which is invested largely at home Invest in other core country economies Valuable trade with other core countries

PERIPHERY Poorer countries Limited products Limited technology Lower wages Dependent on core countries to purchase goods, provide capital, etc. This dependency is the root of many global problems/conflicts Supply raw materials Generally exploited by core

SEMI-PERIPHERY Transition between core and periphery Lower value-added manufactured goods for export Still have dependent relationships with cores Have peripheral countries dependent on them South Korea, Mexico, Argentina, Thailand, Malaysia are examples of Semi-Periphery countries moving up

Dependency Theory The political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas. Economic structures make poorer countries dependent on wealthier countries. Colonialism initiated dependency Little hope for economic prosperity in poorer countries. Neo-colonialism

What are the Barriers to and the Costs of Economic Development? Key Question:

Barriers to Economic Development Low Levels of Social Welfare Foreign Debt Political Instability Widespread Disease

Foreign Debt Obligations Total interest payments compared to the export of goods and services.

Widespread Disease Malaria kills 150,000 children in the global periphery each month. Tamolo, India This baby sleeps under a mosquito net distributed to villagers by UNICEF workers.

Global Distribution of Malaria Transmission Risk

Export Dependence

Export Dependence

Why do Countries experience Uneven Development within the State? Key Question:

“Development” variations in America

Development Variations

How Government Policies Affect Development Governments get involved in world markets price commodities affect whether core processes produce wealth shape laws to affect production enter international organizations that affect trade focus foreign investment in certain places support large-scale projects

Governments and Corporations can create Islands of Development Places within a region or country where foreign investment, jobs, and infrastructure are concentrated.

Corporate-created Island of Development The global oil industry has created the entire city of Port Gentile, Gabon to extract Gabon’s oil resources.

Government-created Island of Development Malaysian government built a new, ultramodern capital at Putrjaya to symbolize the country’s rapid economic growth.

Nongovernmental Organizations (NGOs) entities that operate independent of state and local governments, typically, NGOs are non-profit organizations. Each NGO has its own focus/set of goals. Somalia Microcredit program: loans given to poor people, particularly women, to encourage development of small businesses.

Wallerstein World Systems Review The world is ONE economic market with a global division of labor Explain the relationship: Core Semi-Periphery Periphery Key Question: What happens when the majority of countries move from periphery to core?.. Can they/will they?