1. Road to Development

2. Balanced Growth through Self-Sufficiency
A country should spread investment as equally as possible across all sectors of its economy and in all regions.
Incomes in rural areas keep pace with urban incomes
Businesses remain independent of foreign corporations
Limit imports through tariffs and quotas

3. Different Routes to Success

4. India followed this policy
Made imports difficult
Discouraged Indian businesses from exporting
Could not convert Indian money into other currencies
Encouraged production of consumer goods for Indian citizens
Provided subsidies for struggling companies

5. Problems
Inefficiency: without true competition, companies have little incentive to improve techniques, technology, products, etc
Large Bureaucracy: needed to administer the controls – complex and corrupt

6. Rostow’s Development (Modernization)Model
through International trade
A country can develop economically by concentrating scarce resources on expansion of its distinctive local resources
Developed by W.W. Rostow (1950s)

7. Rostow - Stages of Growth
Traditional Society
Characterised by
subsistence economy – output not traded or recorded
high levels of agriculture and labor intensive agriculture
Wealth allocated to nonproductive activities (religious, military
Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture.
Copyright: Tracy Wade,

8. Rostow - Stages of Growth
2. Pre-conditions:
An elite group initiates development
Investments in technology and infrastructure
Commercialization of agriculture
The use of some capital equipment can help increase productivity and generate small surpluses which can be traded.
Copyright: Tim & Annette,

9. Rostow - Stages of Growth
3. Take off:
Increasing industrialization in limited areas (food or textiles)
Foreign investment increases
Infrastructure improvements
Some regional growth
Economy still dominated by traditional practices
At this stage, industrial growth may be linked to primary industries. The level of technology required will be low.
Copyright: Ramon Venne,

10. Rostow - Stages of Growth
4. Drive to Maturity:
Develops broad manufacturing and commercial base
Industry more diversified
Increase in levels of technology utilized
As the economy matures, technology plays an increasing role in developing high value added products.
Copyright: Joao de Freitas,

11. Rostow - Stages of Growth
5. High mass consumption
High output levels
Mass consumption of consumer durables
High proportion of employment in service sector
Service industry dominates the economy – banking, insurance, finance, marketing, entertainment, leisure and so on.
Copyright: Elliott Tompkins,

12. USA Path to Development
Stage 5: early 20th century
Stage 4: late 19th century
Stage 3: middle of 19th century
Stage 2: first half of 19th century
Stage 1: prior to independence

14. Criticisms
Assumes LDCs will achieve each level of development before advancing
Uneven resource distribution (Zambia’s one commodity market of copper developed trouble when world copper price fell)
Market Stagnation – MDCs market are saturated, need to increase sales in LDCs
Increased dependence on MDCs – when concentrating resources in a “takeoff” industry, then buy necessities from MDCs

15. Criticisms Does not account for
Global politics
Colonialism
Physical geography
War
Culture
Ethnic conflict
Deindustrialization
Cannot compare Nepal (stage 1) to Denmark (stage 5) to Saudi Arabia
Development does not necessarily lead to high consumption, can mean social welfare

16. Possible 6th stage – Postindustrial
Service replaces industry
Information replaces energy as key resource

17. International Trade Approach
Some countries have switched from self-sufficiency approach to international trade
according to the World Bank – international trade countries have seen 4% growth, self-sufficiency countries 1%
LDCs are exporting more manufactured goods rather than agriculture or mining goods

18. International Trade Approach
World Trade Organization (1995) works to reduce barriers to international trade by
Negotiate reductions in trade restrictions, such as quotas & tariffs
Enforces trade agreements
WTO has been criticized for being undemocratic (favor large corps over poor nations) and for threatening sovereignty

19. International Trade Approach
Foreign Direct Investment (FDI) – investment made by a foreign company in the economy of another country
Only 1/3 went from a MDC to a LDC (only 10% went to African nations)
Transnational Corporations are major sources of FDI

20. Models of Development Liberal Models by definition Rostow’s Model
All countries are capable of development
All countries follow the same model of development
For countries that have developed in modern times – only China has followed THE model of development
Economic disparities are a result of short term inefficiencies in local or regional market forces

21. Models of Development Structuralist Models Dependency Theory
Regional disparities are a structural feature of the global economy
Neo-Colonialism
Things have come to be organized or structured in a certain way and cannot be changed easily
Old method of industrializing is no longer possible because other factors have changed

22. Dependency Theory Structuralist alternative to Rostow’s model
Political and economic relationships between countries and regions control and limit the economic development of less affluent regions
Dependency helps sustain the prosperity of the dominant regions and the poverty of the lesser regions

23. Dependency Theory
Little hope for economic prosperity in regions and countries that have traditionally been dominated by external power (colonialism)
Based on generalizations that pay little attention to regional differences in culture, politics, and society

24. World-Systems Theory Immanuel Wallerstein Divide world into Core
Semi-periphery
Periphery

25. Three Tier Structure Core Periphery Semi-periphery
Processes that incorporate higher levels of education, higher salaries, and more technology
* Generate more wealth in the world economy
Periphery
Processes that incorporate lower levels of education, lower salaries, and less technology
* Generate less wealth in the world economy
Semi-periphery
Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery.
* Serves as a buffer between core and periphery

26. Core Periphery Model Core Regions
High levels of socioeconomic prosperity
Dominant players in global economic game
Anglo America HDI .94
Japan and the South Pacific HDI .93
Western Europe HDI .92

27. Core Periphery Model Periphery Poor regions Dependent on the core
Do not have much control over their own affairs

29. Periphery Regions Latin America HDI .78 East Asia HDI .72
Southeast Asia HDI .71
Middle East HDI .66
South Asia HDI .58
Sub Saharan Africa HDI .47

30. Core Periphery Model Semi Periphery
Regions that exert more power than periphery regions but are
Dominated to some degree by the core

31. Development Indicators
Economic: GNP, PPP, per capita energy consumption
Noneconomic: HDI, gender equity, calorie intake

32. Four Dragons Aka Four Tigers or Gang of Four
S. Korea, Singapore, Taiwan, and Hong Kong
Lacked natural resources
Strongly influenced by Japan’s success
Concentrated on handful of manufactured goods
Low labor costs
Sell to MDCs

33. Millennium Development Goals
Adopted by world leaders in the year 2000 and set to be achieved by 2015, the Millennium Development Goals (MDGs) provide concrete, numerical benchmarks for tackling extreme poverty in its many dimensions. The MDGs also provide a framework for the entire international community to work together towards a common end – making sure that human development reaches everyone, everywhere. If these goals are achieved, world poverty will be cut by half, tens of millions of lives will be saved, and billions more people will have the opportunity to benefit from the global economy.

34. Millennium Development Goals
The eight MDGs break down into 21 quantifiable targets that are measured by 60 indicators.
Goal 1: Eradicate extreme poverty and hunger
Goal 2: Achieve universal primary education
Goal 3: Promote gender equality and empower women
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Goal 6: Combat HIV/AIDS, malaria and other diseases
Goal 7: Ensure environmental sustainability
Goal 8: Develop a Global Partnership for Development