Development

1
Development

• Interdependence
• assumes mutual benefit in development
• Basic human needs
• assumes moral basis to assist
• Dependency theory
• Argues structural exploitation

2
Underdevelopment

• active on-going process
• rooted in capitalist expansion
• Not necessarily a coercive imperialism
• Client class either created or fostered
• Clients or compradores bridgeheads
• distorted development

3
Extraction Export

• Cash crops/
• mono-culture
• export-oriented infrastructure
• lack of regional links

4
External Values

• Rigid stratification
• Small middle class
• Cultural dependence.

5
Politics

• Unstable
• Repressive
• Propped up by dominant states
• High stakes anti-democratic politics
• both a middle class and civil institutions are
  required for successful democracy
• Kaplan Was Democracy Just a Moment?

6
Dependency prescription

• Call for revolution in periphery
• then disengagement or re-negotiation of ties with
  world capitalist system

7
Centre-Periphery Model
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Stages of Growth (Rostow)

• Traditional
• Pre-conditions
• Take-off
• Drive to Maturity
• High Mass Consumption

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TNCs and South

• 1Capital Transfer
• 2Foreign exchange
• 3State Budget
• 4Skills
• 5Technology Transfer
• 6Bargaining skills

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1Capital Transfer

• BUT TNCs compete with local business for local
  capital
• S.Am 85 DFI financed with local funds.
• Profits are repatriated, LDCs decapitalised.
• In the late 60s over half profits of S.Am
  subsidiaries were sent home

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2Foreign Exchange

• Alleged that import substitution saves foreign
  exchange
• BUT most factors of production are imported
  within the firm (and paid for in hard foreign
  currency)
• TNCs implant expensive values and tastes

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3State Budget

• funds for government via taxes
• BUT tax concessions often a condition for entry
• Royalties are paid on technology imported by
  subsidiary
• Transfer pricing minimizes profits declared and
  taxes paid

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4Technology Transfer

• learning how to use this technology is limited
• Patents restrict LDC use of techniques in
  production exports
• Local innovation may be stifled, pre-empted by
  TNC patents

14
5Bargaining Skills

• LDC governments develop legal and bureaucratic
  skills
• Learning curve
• Initial investment
• Regulation of local content, profit
• Build links with all economic sectors
• Take over partnership or ownership
• BUT assumes benevolent LDC state and nationalist
  political elite

15
6Strategies

• Nationalisation
• Regional organization
• Product cartels
• Inter-governmental Organizations
• Disengagement

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