Development Paradigms

1
Development Paradigms

• Econ 403
• Economic Development
• Prof. Carlos Benito

2
Development possibility

• Is Development possible in traditional societies?
  
• Before the 1930s
• No Development is
• Culturally Bounded
• After the 1930s
• Yes

3
What is a paradigm?

• It is a way of seeing reality shared by a the
  members of a discipline.
• A general accepted perspective providing a
  unifying explanation for a set of phenomena in
  some disciplines, for example in the social
  sciences, physics, biology, literature, and so
  forth.
• A paradigm serves to develop models for
  explaining one aspect of reality, and methods to
  test a theory and develop a fuller understanding
  of the topic.

4
Perspectives about Development-1945-1982
different ways of asking the question

• How to induce economic development?
• What are the obstacles to economic development?
• How is that economic development is not possible
  under capitalism.

5
Linear Stages of Growth

• The Question How to induce economic growth?
• Replicating the conditions of developed countries
  will make possible growth in poorer countries
• Stages of Growth according to Walt W. Rostow
• Traditional society
• Pre-conditions for take-off
• The take-off
• Drive to Maturity
• Age of high mass consumption
• Simon Kuznets Characteristics of Modern Economic
  Growth

6
Linear Stages of Growth (cont.)

• Perspective from the First World
• Transforming traditional into modern society and
  economy
• Action Item
• Investment Projects
• Project Design
• Project Evaluation
• Cost-Benefit Analysis
• Cost Effectiveness Analysis
• Project Financing
• Project Implementation
• Project Monitoring

7
Structuralism

• The Question What are the obstacles to economic
  development?
• The obstacles are traditional structures
• Center-periphery relationship in international
  trade
• Traditional land tenure systems
• Weak public school system
• Old tax system
• Others
• A Latin American Perspective
• Economist Raul Prebisch and C.E.P.A.L.

8
Structuralism (2)

• Action item
• Reforming structures
• Organizing Progressive Political and Social
  Alliances
• Establishing Economic and Social Planning
• Organizing fear trade agreements, e.g. UNCTAD
• Agrarian Reforms
• Organizing a public school system
• Organizational Development

9
Neo-Marxism

• The Question How is that economic development is
  not possible under capitalism?
• Underdeveloped countries are linked with
  developed countries, within a capitalistic world
  order
• Based on Marxs perspective Capitalist
  accumulation requires Labor exploitation
• Neo-Marxism Growth in Developed countries
  requires underdevelopment in Third World
  countries
• Economic dependence theory (Teutonio do Santos)
• Unequal development theory (Samir Amin)

10
Neo-Marxism (cont.)

• Modes of Production develop through social class
  struggles
• Modes of Production
• Primitive communities
• Slavery
• Feudalism
• Capitalism
• Socialism
• Communism
• Social class struggles are triggered within a
  mode of production when
• productive forces (technology) develop faster
  than
• social relations (institutions and culture).

11
Neo-Marxism (cont.)

• A Second World Perspective
• Action Item
• Social Revolution
• Political and Social Mobilizations
• Social Class Struggles
• Third World Countries Alliances
• Socialist Planning

12
Paradigms Summary

• Linear Stages Growth
• The Question How to induce economic growth?
• Replicating the conditions of developed countries
  will make possible growth in poorer countries
• Action Item
• Investment Projects
• Structuralism
• The Question What are the obstacles to economic
  development?
• The obstacles are traditional structures

• Action item
• Reforming structures
• Neo-Marxism
• The Question How is that economic development is
  not possible under capitalism?
• Modes of Production develop through social class
  struggles
• Action Item
• Social Revolution

13
New Perspectives

• Since 1982, the above perspectives have become
• Less doctrine oriented
• More method oriented
• We look at the synthesis under the Globalization
  Paradigm

14
Implicit Assumptions About Markets Structures,
within each Paradigm
15
Neo-Classical Accent on Market
Flexibility/Substitutions
Supply 1
Price
Supply 2
D
Quantity
16
Structuralism Accent on Rigidities
Price
Supply1
Supply2
Demand 2
Demand 1
Quantity
17
Neo-Marxism Accent on Market Segmentation
Decreasing returns to Scale
Luxuries
Necessities
Price
Price
S
S
D
D
Quantity
Quantity
Capitalists
Workers
18
Neo-Marxism Accent on Market Segmentation
increasing returns to scale
Luxuries
Necessities
Price
Price
S
S
D
D
Quantity
Quantity
Capitalists
Workers
19
Paradigms and Models
Structuralism
Center-Periphery R. Prebisch
Linear Stages of Growth
Keynesian Harrod-Domar
Dual Economy W. A. Lewis
Neo-classical Tinbergen/ Solow/Samuelson
Neo-Marxism
Imperialism Theory Rosa Luxemburg
Unequal Development S. Amin
20
Development Approaches I
Culture
Top-down
Government
space
GNP
Bottom-up
Institutions
Civil Society
21
Development Approaches II

• Top-Down Approach
• Political Actions
• Changing Agents
• International Agencies
• UNDP
• World Bank
• Regional Development Banks
• Government
• Developing country (aid recipient)
• Developed country (aiding countries)
• USAID
• Canada, UK, Germany, etc.

22
Development Approaches II

• Bottom-Up Approach
• Grass-root/Community Actions - Civil Society
• Changing Agents
• Non-governmental Organizations (NGOs)
• Municipalities

23
Development Modes

• Bureaucratic Mode
• Policy makers and government employees implement
  projects
• Reward system employment and professionalism
• Organic Mode
• A cultural-economic self-reliant group
  establishes itself within a community and through
  demonstration and educational effect induces
  change.