Development Theories

Introduction

• Development theories show differing views of development and how to achieve it.
• Development theories help understanding of the development process.
• Economists consider the world as a single group of countries, not the "Third World".
• Key development theories include modernization vs. dependency (1950-1980s), neo-liberalism vs. neo-statism (1980s-), and post-development (1990s-).
• Neo-liberalism and neo-statism aim to explain the divergence in the trajectories of developing economies.

Modernization Theory

• Development is a process of 'catching up', like a country's economic progress through stages from traditional society to modernity.
• Development is viewed optimistically but not automatic, requiring effective management.
• Development is seen as economic growth.
• Conditions and structures within countries are causes of under-development
• Western values and practices are considered suited to development, spreading capitalist values and westernizing local elites.
• Savings increase from 5% to 10%, with the North providing expertise.
• Economic and political development are needed to establish liberal democracy.

Rostow (1960): Stages of Economic Growth

• Created a non-communist manifesto.
• Traditional society features an agrarian economy, hierarchical social structures, and low technology.
• Pre-conditions for take-off include transformation in agriculture, infrastructure development, trade expansion, and creating a national state.
• Take-off requires higher productivity in industry/agriculture than population growth and leading industries.
• Drive to maturity is when industrial growth becomes self-sustaining, with tech development and global integration.
• High mass consumption society means higher incomes and consumption beyond basic needs, increased welfare services, and emphasis on manufacturing.

Modernization Theory: Key Criticisms

• A linear model implying guaranteed progress, which is untrue due to factors like communicable diseases and financial crises.
• Rostow stated that “stages-of-economic growth are arbitrary and designed to highlight uniformities and uniqueness of each nation's experience”.
• It is Euro-centric, with stages not happening in the same sequence as in Europe.
• Downplays international conditions preventing development in the South.
• Overlooks colonialism's role, which manipulated economic progress in colonies for agricultural and mineral resources in metropolitan countries.
• It homogenizes societies and underestimates how conditions affect development trajectories.

Dependency Theory

• Grounded in conditions of the developing world.
• It originated in Latin America in the 1960s as an alternative to modernization theory.
• The Economic Commission for Latin America (ECLA) played a role.
• Development should consider conditions of different developing countries instead of following European models.
• It emphasizes structural conditions.
• International capitalism increases inequality because the North determines the terms of trade and causes dependence of the South.
• Lack of development in the South is related to colonialism and neo-colonialism, which encourages specialization in one commodity.
• Commodity export competition declines in export prices.

Dependency Theory: Key Figures

• Raul Prebisch: Argued neoclassical economics does not exist in the real world, and advanced countries kept technological progress to themselves.
• André Gunder Frank: Argued capitalism generates economic development for a few and under-development for many, linking underdevelopment to development elsewhere.
• Wallerstein (World Systems Theory): the global economy comprises core, semi-periphery, and periphery states, with major asymmetries and economic competition.

How to End Dependency

• Disconnect from the world to achieve autonomy vis-à-vis the international economy
• The state drives the economy through trade protectionist policies, infrastructural support, and subsidies to industries, supporting domestic investment over foreign direct investment through import substitution industrialization.
• Politically integrate the new/expanding working classes with social reform/employment generation.
• The economic track record was mixed; LA manufacturing increased annually by 6.3% in the 1960s, but industries struggled to flourish.
• Foreign companies still managed to set up local companies
• MNC power/investment emerged as neo-colonial dependency.
• Local markets were too small for manufacturing exports.
• The Role of agriculture was undermined.
• Import Substitution Industrialization (ISI) was abandoned after the debt crisis in the early 1980s.

Dependency Theory: Key Criticisms

• Dependency may be over-stated, or even the existence questioned.
• Internal causes of under-development are underplayed, overlooking political factors such as inefficient bureaucracies and corrupted local elites.
• Dependency theorists assert that some local elites betrayed their people and are rewarded for perpetuating dependency.
• The role of the state became too big.

Neo-Liberalism

• Development orthodoxy in the 1980s.
• Neo-liberalism is a 'counter-revolution'
• Promoted by the rise of right-wing governments in the UK and USA.
• Based on the Berg report (WB, 1981) discussing failures of development in Africa due to inappropriate state-dominated policies.
• Economists linked to World Bank/IMF promoted the Washington Consensus and structural adjustment.
• The 'East Asian miracle' was a key influence.

Neo-Liberalism: Role for State and Market

• Minimal role for the state
• Aims to ‘depoliticize’ economic activity, casting elites and politicians as rent-seeking villains.
• Views market failures as the result of excess government regulation.
• Major role for the market
• Promotes export-oriented development strategies linked to employment, growth, and poverty reduction.
• Supports privatization, deregulation, fiscal austerity, and financial liberalization.

Neo-Liberalism: Key Criticisms

• Failed to understand the complexity of development; resembling a return to modernization theory.
• Favored foreign capital over domestic capital and financial capital over productive capital.
• Failed to understand that many producers in the South are not ready to compete with their counterparts in the North.
• Blamed Third World governments for the 'lost decade' of development and attacked Third World countries' industrialization efforts.
• Misunderstood the role of the 'developmental state': markets are 'governed' rather than 'free'.
• May have generated a number of 'global public bads'.

Case Study: East Asia Miracle

• Supporting views (World Bank, 1993): High economic growth and improvements in living standards link neoliberalism to development.
• Consisted of different waves, including Japan, Hong Kong, Singapore, Taiwan, and South Korea; followed by Indonesia, Thailand, Malaysia, China, and Vietnam.
• Key successes are land reform, open economies for FDI and trade, a limited role of the state in the economy and investment in human capital (education).
• Critical views: No single model but a range of policies exist
• This developmental state stresses a role for culture (ethical responsibility, education, self-cultivation).
• Faced persistence of poverty and inequality; repression of labor, and the 1997 Asian Crisis.

Post-Development

• Emerged in the 1980s, which became prominent in the 1990s.
• It was marked by a crisis in post-1945 development theories and the rise of post-modern thought.
• It sees development as a discourse.
• US President Harry Truman's program of development is seen as a false promise of prosperity which contains humanitarian purposes and geopolitical motives such as poverty of ‘underdeveloped’ areas as a threat, and maintaining a world divided between exploiters and exploited in the ex-colonies.

Post-Development: Key Principles

• Hegemonic development theories function as a dominant discourse.
• These theories facilitate the reproduction of the colonial representational system, and seek to transplant Western norms and solutions into non-Western environments.
• Such hegemonies contribute to increased poverty, debt, and exploitation and establish economical superiority by discarding alternative approaches and disciplinary perspectives.
• Argues for alternatives to development
• Importance of grassroots movements and communities reclaiming their lives in different spheres: such as reclaiming politics, economy, and knowledge.
• Advocates ‘thinking/acting locally' through self-organizing knowledge production and modern-popular forms of knowledge.
• Social movements are a potential for a new era, engaging in participatory politics, autonomy, and pluralism.
• It points to the limits of Eurocentrism and relations of power involved in development discourse/practice.
• Explores resistance and alternatives of those unwilling to be classified/governed in the name of ‘development’.

Post-Development: Key Theorists

• Sachs (1992) in The Development Dictionary: A Guide to Knowledge as Power suggests that because of new definitions, "development became a shapeless amoeba-like word" and possess a function allowing any intervention to be sanctified in the name of a higher evolutionary goal.
• Escobar (1995) in Encountering Development: The Making and Unmaking of the Third World identified abnormalities associated with Third World to justify intervention
• Ferguson (1994) in The Anti-Politics Machine. 'Development', Depoliticization and Bureaucratic Power in Lesotho argues development depoliticizes questions of inequality, presenting projects as technocratic/apolitical, but they fail by neglecting political-economic causes of poverty.

Post-Development: Key Criticisms

• Proposed a romanticized vision of non-Western societies, while neglecting domination/exploitation within these movements/communities.
• It assumed that people in these communities were disinterested in accumulation/Westernization, thus projecting a romantic image of the "noble savage".
• Presented 'development' as monolithic, failing to acknowledge its heterogeneity.
• Ignored the achievements of modernity/"development", progress achieved being based on progress that the critics diffusion of Western models of society across the globe.
• Attributed high value to tradition/cultural identity, leading to cultural relativism; also lacking concrete policy recommendations.

Colonialism and Post-Colonialism

• Colonialism is a system of settling/occupying a territory with some people ruling over others, an idea of domination and control by one nation over another.
• Involved European faith in cultural differences/superiority, with colonial powers using ideologies of racism to justify interventions in the name of development.
• Development/maintenance of industrial capitalism was made possible by violent processes of dispossession/extraction.
• Neo-colonialism is a system where the economies of formally independent countries remain subject to external control.
• Critical political economists argue that earlier European colonialism was coercive/violent, and neo-colonialism relies on the coercive role of the market.
• The dyamic nature of these classifications is why critical race theorists talk about “racialization" and "racialized" peoples.

Consequences of Colonialism

• European colonization imagined new country borders along trade routes, disregarding traditional settings, with destruction of existing systems, and implementation of slavery/forced labor.
• Colonial administrations were established during both direct (by France) and indirect rule (by Britain).
• Colonialism transformed societies in a key manner: the idea of progress provided justification for the destruction of 'primitive societies'.
• Colonial powers created arbitrary local divisions, and slave trade from Africa to the Americas generated diasporas/global displacements.
• World War II, Africa's self-determination, and freedom from colonial rule forced re-examination of European colonial experience
• Colonialism promised economic development.
• Colonialism promised economic development by transforming indigenous economies into the modern European kind.
• Businesses served the empire (Cecil Rhodes' British South Africa Co./English East India Co. control of Bengal, Hudson Bay Company)
• Created structurally-dependent and vulnerable economies export-oriented based on primary commodities for complex economies in Europe