Development theory
From Wikipedia, the free
encyclopedia
Development theory is a conglomeration or a collective vision of theories
about how desirable change in society is best achieved. Such theories draw on a
variety of social science disciplines and approaches. In this article, multiple
theories are discussed, as are recent developments with regard to these
theories. Depending on which theory that is being looked at, there are
different explanations to the process of development and their inequalities.
Contents
- 1 Modernization theory
- 1.1 Sociological and anthropological
modernization theory
- 1.2 Linear stages of growth model
- 1.3 Critics of modernization theory
- 2 Structuralism
- 3 Dependency theory
- 4 Basic needs
- 5 Neoclassical theory
- 6 Recent trends
- 7 See also
- 8 References
- 9 Further reading
Modernization
theory
Modernization theory is used to
analyze the processes in which modernization in societies take place. The
theory looks at which aspects of countries are beneficial and which constitute
obstacles for economic development. The idea is that development assistance targeted at those particular aspects can lead to
modernization of 'traditional' or 'backward' societies. Scientists from various
research disciplines have contributed to modernization theory.
Sociological
and anthropological modernization theory
The earliest principles of
modernization theory can be derived from the idea of progress, which stated
that people can develop and change their society themselves. Marquis de Condorcet was involved in the origins of this theory. This theory
also states that technological advancements and economic changes can lead to
changes in moral and cultural values. The French sociologist
Émile Durkheim stressed the interdependence of institutions in a society
and the way in which they interact with cultural and social unity. His work ‘The Division of Labor in Society’
was very influential. It described how social order is maintained in society
and ways in which primitive societies can make the transition to more advanced
societies.[1]
Other scientists who have
contributed to the development of modernization theory are: David Apter,
who did research on the political system and history of democracy; Seymour Martin Lipset, who argued that economic development leads to social
changes which tend to lead to democracy; David McClelland, who approached modernization from the psychological side
with his motivations theory; and Talcott Parsons
who used his pattern variables to compare backwardness to modernity.
Linear
stages of growth model
The linear stages of growth model is
an economic model which is heavily inspired by the Marshall Plan
which was used to revitalize Europe’s economy after World War II.
It assumes that economic growth can only be achieved by industrialization. Growth can be restricted by local institutions and social attitudes, especially if these aspects influence the savings rate
and investments. The constraints impeding economic growth are thus considered
by this model to be internal to society.[2]
According to the linear stages of
growth model, a correctly designed massive injection of capital coupled with intervention by the public sector
would ultimately lead to industrialization and economic development of a developing nation.[3]
The Rostow's
stages of growth model is the most well-known
example of the linear stages of growth model.[3]
Walt W. Rostow identified five stages through which developing countries
had to pass to reach an advanced economy status: (1) Traditional society, (2)
Preconditions for take-off, (3) Take-off, (4) Drive to maturity, (5) Age of
high mass consumption. He argued that economic development could be led by
certain strong sectors; this is in contrast to for instance Marxism
which states that sectors should develop equally. According to Rostow’s model,
a country needed to follow some rules of development to reach the take-off: (1)
The investment rate of a country needs to be increased to at least 10% of its GDP, (2) One or two manufacturing
sectors with a high rate of growth need to be established, (3) An institutional,
political and social framework has to exist or be created in order to promote
the expansion of those sectors.[4]
The Rostow model has serious flaws,
of which the most serious are: (1) The model assumes that development can be
achieved through a basic sequence of stages which are the same for all
countries, a doubtful assumption; (2) The model measures development solely by
means of the increase of GDP per capita; (3) The model focuses on
characteristics of development, but does not identify the causal factors which
lead development to occur. As such, it neglects the social structures that have to be present to foster development.[4]
Economic modernization theories such
as Rostow's stages model have been heavily inspired by the Harrod-Domar model which explains in a mathematical way the growth rate of a
country in terms of the savings rate and the productivity of capital.[5]
Heavy state involvement has often been considered necessary for successful
development in economic modernization theory; Paul Rosenstein-Rodan, Ragnar Nurkse
and Kurt Mandelbaum argued that a big push model
in infrastructure investment and planning was necessary for the stimulation of
industrialization, and that the private sector would not be able to provide the
resources for this on its own.[6]
Another influential theory of modernization is the dual-sector model by Arthur
Lewis. In this model Lewis explained how
the traditional stagnant rural sector
is gradually replaced by a growing modern and dynamic manufacturing and service economy.[7]
Because of the focus on the need for
investments in capital, the Linear Stages of Growth Models are sometimes
referred to as suffering from ‘capital fundamentalism’.[8]
Critics
of modernization theory
Modernization theory observes traditions and pre-existing institutions of
so-called "primitive" societies as obstacles to modern economic
growth. Modernization which is forced from outside upon a society might induce
violent and radical change, but according to modernization theorists it is
generally worth this side effect. Critics point to traditional societies as
being destroyed and slipping away to a modern form of poverty without ever
gaining the promised advantages of modernization.
Structuralism
Structuralism is a development
theory which focuses on structural aspects which impede the economic growth of
developing countries. The unit of analysis is the transformation of a country’s economy from, mainly,
a subsistence agriculture to a modern, urbanized manufacturing and service economy.
Policy prescriptions resulting from structuralist thinking include major government intervention in the economy to fuel the industrial sector, known as import substitution industrialization (ISI). This structural transformation of the developing
country is pursued in order to create an economy which in the end enjoys
self-sustaining growth. This can only be reached by ending the reliance of the
underdeveloped country on exports of primary goods
(agricultural and mining products), and pursuing inward-oriented development by
shielding the domestic economy from that of the developed economies. Trade with
advanced economies is minimized through the erection of all kinds of trade
barriers and an overvaluation of the domestic exchange rate; in this way the
production of domestic substitutes of formerly imported industrial products is
encouraged. The logic of the strategy rests on the infant
industry argument, which states that young industries
initially do not have the economies of scale and experience to be able to
compete with foreign competitors and thus need to be protected until they are
able to compete in the free market.[9]
The Prebisch–Singer
hypothesis states that over time the terms of trade
for commodities deteriorate compared to those for manufactured goods, because the income
elasticity of demand of manufactured goods is greater
than that of primary products. If true, this would also support the ISI
strategy.
Structuralists argue that the only
way Third World countries can develop is through action by the state. Third
world countries have to push industrialization and have to reduce their
dependency on trade with the First World,
and trade among themselves.
The roots of structuralism lie in South America,
and particularly Chile. In 1950, Raul Prebisch
went to Chile to become the first director of the Economic Commission for Latin America. In Chile, he cooperated with Celso Furtado,
Anibal Pinto,
Osvaldo Sunkel, and Dudley Seers,
who all became influential structuralists.
Dependency
theory
Dependency theory is essentially a
follow up to structuralist thinking, and shares many of its core ideas. Whereas
structuralists did not consider that development would be possible at all
unless a strategy of delinking and rigorous ISI was pursued, dependency thinking
could allow development with external links with the developed parts of the
globe. However, this kind of development is considered to be "dependent
development", i.e., it does not have an internal domestic dynamic in the
developing country and thus remains highly vulnerable to the economic vagaries
of the world market. Dependency thinking starts from the notion that resources
flow from the ‘periphery’ of poor and underdeveloped
states to a ‘core’ of wealthy countries, which leads to accumulation of
wealth in the rich states at the expense of the poor states. Contrary to modernization theory, dependency theory states that not all societies progress
through similar stages of development. Periphery states have unique features, structures and
institutions of their own and are considered weaker with regards to the world market economy,
while the developed nations have never been in this colonized position in the
past. Dependency theorists argue that underdeveloped countries remain
economically vulnerable unless they reduce their connections to the world
market.[10][11]
Dependency theory states that poor
nations provide natural resources and cheap labor
for developed nations, without which the developed nations could not have the standard of living which they enjoy. When underdeveloped countries try to
remove the Core's influence, the developed countries hinder their attempts to
keep control. This means that poverty
of developing nations is not the result of the disintegration of these
countries in the world system, but because of the way in which they are integrated into
this system.
In addition to its structuralist
roots, dependency theory has much overlap with Neo-Marxism
and World Systems Theory, which is also reflected in the work of Immanuel Wallerstein, a famous dependency theorist. Wallerstein rejects the
notion of a Third World, claiming that there is only one world which is
connected by economic relations (World Systems Theory). He argues that this system inherently leads to a division
of the world in core, semi-periphery
and periphery. One of the results of expansion of the world-system is the
commodification of things, like natural resources, labor and human relationships.[12][13]
Basic
needs
The basic needs model was introduced
by the International Labour Organization
in 1976, mainly in reaction to prevalent modernization- and
structuralism-inspired development approaches, which were not achieving
satisfactory results in terms of poverty alleviation and combating inequality
in developing countries. It tried to define an absolute minimum of resources
necessary for long-term physical well-being.
The poverty line which follows from this, is the amount of income needed to
satisfy those basic needs. The approach has been applied in the sphere of
development assistance, to determine what a society needs for subsistence, and
for poor population groups to rise above the poverty line. Basic needs theory
does not focus on investing in economically productive activities. Basic needs
can be used as an indicator of the absolute minimum an individual needs to
survive.
Proponents of basic needs have
argued that elimination of absolute poverty is a good way to make people active in society so that they
can provide labor more easily and act as consumers and savers.[14]
There have been also many critics of the basic needs approach. It would lack
theoretical rigour, practical precision, be in conflict with growth promotion policies, and run the risk of leaving developing countries in
permanent.
Neoclassical
theory
Neoclassical development theory has
it origins in its predecessor: classical economics. Classical economics was developed in the 18th and 19th
centuries and dealt with the value of products and on which production factors
it depends. Early contributors to this theory are Adam Smith
and David Ricardo. Classical economists argued – as do the neoclassical ones
– in favor of the free market, and against government intervention in those markets. The 'invisible hand'
of Adam Smith makes sure that free trade
will ultimately benefit all of society. John Maynard Keynes was a very influential classical economist as well, having
written his General Theory of Employment, Interest, and Money in 1936.
Neoclassical development theory
became influential towards the end of the 1970s, fired by the election of Margaret Thatcher in the UK and Ronald Reagan
in the USA. Also, the World Bank shifted from its Basic Needs approach to a neoclassical
approach in 1980. From the beginning of the 1980s, neoclassical development
theory really began to roll out.
Structural
adjustment
One of the implications of the
neoclassical development theory for developing countries were the Structural Adjustment
Programmes (SAPs) which the World Bank and the
International
Monetary Fund wanted them to adapt. Important
aspects of those SAPs include:
- Fiscal austerity (reduction in government spending)
- Privatization (which should both raise money for governments and
improve efficiency and financial performance of the firms involved)
- Trade liberalization,
currency devaluation
and the abolition of marketing boards (to maximize the static comparative advantage
the developing country has on the global market)
- Retrenchment of the government and deregulation (in order to stimulate the free market)
These measures are more or less
reflected by the themes which were identified by the Institute of International
Economics which were believed to be necessary for the recovery of Latin America
from the economic
and financial crises of the 1980s.
These themes are known as the Washington consensus, a termed coined in 1989 by the economist John
Williamson.
Recent
trends
Post-development
theory
Postdevelopment theory is a school of thought which questions the idea of national economic development altogether. According to postdevelopment scholars, the goal
of improving living standards leans on arbitrary claims as to the desirability and
possibility of that goal. Postdevelopment theory arose in the 1980s and 1990s.
According to postdevelopment
theorists, the idea of development is just a 'mental structure' (Wolfgang Sachs)
which has resulted in an hierarchy
of developed and underdeveloped nations, of which the underdeveloped nations desire to be like developed nations.[15]
Development thinking has been dominated by the West and is very ethnocentric,
according to Sachs. The Western lifestyle may neither be a realistic nor a
desirable goal for the world's population, postdevelopment theorists argue.
Development is being seen as a loss of a country's own culture, people's
perception of themselves and modes of life. According to Majid Rahnema,
another leading postdevelopment scholar, things like notions of poverty are
very culturally embedded and can differ a lot among cultures. The institutes
which voice the concern over underdevelopment are very Western-oriented, and
postdevelopment calls for a broader cultural involvement in development
thinking.
Postdevelopment proposes a vision of
society
which removes itself from the ideas which currently dominate it. According to Arturo Escobar,
postdevelopment is interested instead in local culture and knowledge, a
critical view against established sciences and the promotion of local grassroots
movements. Also, postdevelopment argues for structural change in order to reach solidarity,
reciprocity, and a larger involvement of traditional knowledge.
Sustainable
development
Sustainable development is
development that meets the needs of the present without compromising the
ability of future generations to meet their own needs. (Brundtland Commission) There exist more definitions of sustainable development,
but they have in common that they all have to do with the carrying capacity of the earth and its natural systems
and the challenges faced by humanity. Sustainable development can be broken up
into environmental
sustainability, economic sustainability and sociopolitical
sustainability. The book 'Limits to Growth', commissioned by the Club of Rome,
gave huge momentum to the thinking about sustainability.[16]
Global warming issues are also problems which are emphasized by the
sustainable development movement. This led to the 1997 Kyoto Accord,
with the plan to cap greenhouse-gas emissions.
Opponents of the implications of
sustainable development often point to the environmental Kuznets curve.
The idea behind this curve is that, as an economy grows, it shifts towards more
capital
and knowledge-intensive production.
This means that as an economy grows, its pollution output increases, but only
until it reaches a particular threshold where production becomes less
resource-intensive and more sustainable. This means that a pro-growth, not an
anti-growth policy is needed to solve the environmental problem. But the
evidence for the environmental Kuznets
curve is quite weak. Also, empirically spoken, people tend to consume more
products when their income increases. Maybe those products have been produced
in a more environmentally friendly way, but on the whole the higher consumption
negates this effect. There are people like Julian Simon
however who argue that future technological developments will resolve future
problems.
Human
development theory
Human development theory is a theory
which uses ideas from different origins, such as ecology,
sustainable development, feminism and welfare economics. It wants to avoid normative politics and is focused on how social capital
and instructional capital can be deployed to optimize the overall value of human capital
in an economy.
Amartya Sen and Mahbub ul Haq
are the most well-known human development theorists. The work of Sen is focused
on capabilities: what people can do and be. It is these capabilities,
rather than the income or goods that they receive (as in the Basic Needs
approach), that determine their well being. This core idea also underlies the
construction of the Human Development Index, a human-focused measure of development
pioneered by the UNDP in its Human Development Reports. The economic side of
Sen's work can best be categorized under welfare economics, which evaluates the effects of economic policies on the well-being
of peoples. Sen wrote the influential book 'Development as freedom' which added an important ethical
side to development economics [17]
See
also
- Development (disambiguation)
- Ecological modernization
theory
- Economic development
- International development
- World-systems theory
Comments
Post a Comment