Concepts of Development

Chapter 26

What are some of the terms used to describe levels of development?

Developed/developing/underdeveloped LDC/MDC/NIC North/South (vs. East/West) First/Second/Third/Fourth World Transition economies Emerging economies

What is the distribution of MDCs and LDCs in the world? (The Brandt Line)

How is development measured?

Economic indicators of development-GNP/GDP, Per capita income, value added, employment structure etc. Social indicators of development-education, literacy, health, welfare (PQLI) Demographic indicators of development-life expectancy, infant mortality, rate of natural increase, birth rate, doubling time

Positive correlation:

Example: countries with higher literacy rates also have higher percentage of employment in tertiary economic activities

Negative correlation

Example: Countries with high GDPs have low infant mortality rates.

Characteristics of Developing Countries

Lower levels of living and productivity

Per capita GDP

Purchasing Power Parity

Cycle of Poverty

Reversing the Cycle Of Poverty

Characteristics of Developing Countries

Lower levels of human capital

% of population considered literate

Student-Teacher ratio (primary level)

Literacy rate of women

Health Indicators: Caloric Intake as a percent of daily requirements

Health Indicators: Persons per Physician

Life expectancy at birth not just correlated with per capita income

Human Development Index = ( life

expectancy at birth, GDP per capita, indices of schooling & literacy)

Characteristics of developing countries

Higher levels of inequality and absolute poverty

Gini coefficient

% below the poverty line

Characteristics of developing countries

Higher population growth rates

Fertility Rate

Characteristics of developing countries

Larger rural populations

but rapid rural-to-urban migration

Characteristics of developing countries

Lower levels of industrialization and manufactured exports

China factory

World exports per capita

% of labor force in agriculture

Characteristics of developing countries

Adverse geography

Characteristics of developing countries

Underdeveloped financial and other markets --banks --stock markets --domestic markets

Characteristics of developing countries

Lingering colonial impacts --economies based on resource extraction --monoculture --continued economic dependence --weak governmental institutions --continued ethnic strife

Theories Regarding Development

Liberal Models (Modernization Theory /Stages of Growth)
Structuralist Models (Dependency Theory)

World-Systems Theory Wallerstein

Cores/peripheries/semi-peripheries

Modernization Theory Liberal model

Holds that LDCs can develop economically if they follow a Western path.

 Liberal school of economics-Adam Smith in 1776 published Wealth of Nations in which he advocated the abolition of government intervention in economic matters. This was liberal in the sense of no controls.

Every country can be positioned at one of these stages. Rostow viewed capitalism to be the proper type of production system for this development sequence.

This theory has its critics.

What assumptions lie behind liberal models of development?

that all countries will go through the same steps in developing. that economic disparities are the result of short-term inefficiencies.

Economic liberalism prevailed in the 1800s and early 1900s.

Main points of neoliberalism today:
1. The rule of the market 2. Cutting public expenditures for social services 3. Deregulation 4. Privatization 5. Individual responsibility for well-being within society

Dependency Theory (Structuralist model)

Argues that the poor / periphery countries remain this way due to colonialism, in which terms of trade were unequal, labor remained unskilled and low-paid, and profit was extracted from colonies (Circular and cumulative causation.) Development of core countries is dependent on the underdevelopment of periphery countries Imports tend to be high-value goods from the core Criticism of dependency theory sweeping treatment of all peripheral territory

World Systems Theory: dynamic capitalist relations, hegemonic power

How does the core-periphery model and World Systems Theory apply to development issues?
The world has core, semi periphery, and periphery areas. Individual countries need to be viewed in the context of their place within the world economic system.

What is sustainable development?

Partnerships Conservation Renewable resources Loans to women and microcredit (such as the Grameen Village Bank in Bangladesh).