Development Theory: First World Perspectives

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Development Theory First World Perspectives

• Rural and Regional Development Spring 2000

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Explaining Different Levels of Development

• Introduction
• Evolution of Development Theory
• A. Classical Economics
• 20th Century Approaches to Development
• A. Modernization Theory
• B. The Marginalist School
• C. Dualism and Core-Periphery/Imperialism
• D. Neoliberalism and Sustainable Development
• Development Theories in Practice
• (the World Bank and IMF)

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I. Introduction to Development Theory

• Explaining global patterns of development
• Socio-economic indicators
• Institutional and structural inequalities
• History of under/development
• Contemporary implications
• World Bank, International Monetary Fund (IMF),
• US Agency for International Development (USAID)

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First World Perspectives on Development

• Geographically rooted experiences
• European and American-based theories
• Attempting to modernize the world according to
  Western experience (diffusion)

• Basic Assumptions
• Attempt to eliminate geographic differences in
  development
• 3rd world should follow the knowledge and
  practice of 1st world
• Problems in 3rd world due to economic issues,
  e.g. poverty, and cultural inferiority

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II. Evolution of Diffusionist Theory

• Pre-Industrial Europe
• Mercantilism (16th-18th C.)
• Monetary wealth from trade
• Positive monetary trade balance
• Shift with agricultural advances

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Classical Economics and Development

• Industrial Revolution
• Focus on production as economic base of society
• Adam Smith
• The Wealth of Nations
• Thomas Malthus
• Population growth and resource limitations

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Classical Economists (cont.)

• Ricardo
• Growth with industrialization
• More surplus devoted to exploiting resources,
  greater inefficiency
• Trade and specialization support growth

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Marxian economics and international development

• Capitalist Mode of Production
• MOP - production relations (technology, means of
  prod.) and social relations (owners of means of
  prod. and labor)
• Development of stages of economic formation

• Capitalist accumulation
• Labor value and corporate profits
• Geographic expansion and technological
  improvements
• Inherent contradictions with overaccumulation and
  crisis

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Modes of Production(with particular production
and social relations)
communism
socialism
capitalism
feudalism
Slavery
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III. 20th Century Development Theories

• What are some of the differences in the 19th and
  20th centuries that would affect international
  development?
• Mass production, technology, increased global
  trade, divisions of labor

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A. Modernization theorists

• Walt Rostow
• A Non-Communist Manifesto (1960)
• Development from backward to advanced level

• Stages of development
• Traditional
• Pre-conditions for takeoff
• Takeoff
• Drive to maturity
• Age of high mass consumption
• Beyond mass comsumption

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Modernization Theorists (cont.)

• Parsons structural-functional theory of society
• Structure of society formed pattern variables in
  which decisions are made
• Individual decisions consistent with needs of
  society
• Modern societies have greater divisions of labor
  and more competitive capitalist system of
  production

• Critiques of modernization theory
• Lack of explanation of how first world societies
  experience initial change
• Based on historical observation without adequate
  integration of current conditions

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B. The Marginalist School (neoclassical
economics)

• Shift from focus on production in unlimited
  quantities to restrictions and limitations on
  production
• price (value) of a good based on marginal utility
  or availability of good
• Scarcity drives price up, abundance drives price
  down
• Focus on exchange versus production

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B. The Marginalist School (cont.)

• Assumptions concerning economic growth
• 1. Economic production represented by production
  function
• - factors of production (labor, capital, and
  technological knowledge
• 2. Land and labor fully employed
• 3. Wages linked to increased output of goods
  from additional labor input
• 4. Greater availability of production factor,
  the lower its price

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Marginalist School and international development

• Open/free market forces in world economy
• Comparative advantage
• (specialization where production factors most
  abundant)
• E.g. Kenyan tea and British ships

• International labor mobility to equalize wage
  rates
• Free capitalist competition
• 3rd World poverty
• (? population growth, lack of education and
  technical know-how, lack of domestic savings)

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C. Dualism (Core-Periphery)

• Modern and traditional sectors in society
• Capitalist production with modern technologies
• Subsistence wages and surplus of labor
  (inefficient)
• Geographic applications in 1st and 3rd world
  regions
• Cumulative causation (backwash effect)
• Capitalism via imperialism necessary
• improves economic welfare

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D. Neoliberalism

• Revival of marginalist and modernization theory
• Growing influence of World Bank and IMF
• Debt relief and structural adjustment programs
• Diffusionist, but recognizes more than one path
  to development
• Supports public sector and public-private
  enterprises

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and Sustainable Development

• Gro Brundtland
• Our Common Future (1987)
• development which meets the needs of the present
  without compromising the ability of future
  generations to meet their own needs
• - environmental and social concerns

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Summary of 1st World Development Theories

• Introduction
• Diffusionist views with 1st world as model of
  development
• Evolution of Development Theory
• Classical economics
• Unlimited production and free trade
• Capitalist MOP

• III. 20th Century Approaches to Development
• A.Modernization Theory
• B.The Marginalist School
• C. Dualism and Core-Periphery/Imperialism
• D. Neoliberalism and Sustainable Development
• IV. Development Theories in Practice
• - the World Bank and IMF