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4 Models of development

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4. Drive to MaturityThe drive to maturity refers to the need for the economy itself to diversify. The sectors of the economy which lead initially begin to ... – PowerPoint PPT presentation

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Title: 4 Models of development


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4 Models of development
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  • 1. The Modernization Model 1940s to 60sRostow
    stages of economic developmentbuild the
    economy2. Dependency Model (1970s). Immanuel
    Wallerstein, a leading advocate of the approach
    characterizes the world system as a set of
    mechanisms which redistributes resources from the
    periphery to the core. 3. Neoliberal or
    Counterrevolution Model (1980s)Foreign Direct
    Investment with Multinational Corporations4.
    Sustainable Development Model(1990s)
    Development providing for the needs of the
    present without diminishing future generations.

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1. The Modernization Model1940s to 60s
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  • Modernization it was believed was made possible
    by building (a) the physical infrastructure
    (transportation, energy and water systems)

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  • (b) the social institutions needed for
    capitalism, such as
  • taxes
  • banks
  • insurance

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  • a legal system.

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  • currency

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  • private property

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  • Modernization Real World Strategies
  • Stages of economic growth
  • Emphasis on economic production
  • Technology transfer (from MDCs)
  • Large-scale industrialization projects
    (government and foreign investment)
  • Trickle Down Economics (money works it way down
    to the masses)

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  • The World Bank, the International Monetary Fund
    (IMF), and other agencies were created to
    facilitate investment and technology transfer
    from rich to poor countries.

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  • All countries would pass through a set of stages
    of economic development if given enough time. The
    pathway to development was seen as the route
    followed by Western Europe and North America
    during the Industrial Revolution.

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  • Following a model proposed by the US economist
    Walter Rostow, it was argued that countries would
    progress through five stages

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Progressive stages of economic growth.
Rostow Model
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Progressive stages of economic growth.
  • Traditional Societies
  • During the first stage, the countrys economy is
    dominated by primary activities-productivity,
    technological innovation, and per capita incomes
    remain low.

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  • 2. Preconditions to take-off
  • In the second stage, preconditions for economic
    development arise, including the
    commercialization of agriculture and increased
    exploitation of raw materials

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  • 3. Take-off
  • In the third stage, foreign investment pours in,
    jumpstarting an economy that was already prepped
    for growth. An important aspect of the third
    stage is that a large proportion of foreign
    investment goes to infrastructure improvements,
    such as building roads and canals In discussing
    the take-off, Rostow's is a noted early adopter
    of the term transition, which is to describe
    the passage of a traditional to a modern economy.

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  • 4. Drive to MaturityThe drive to maturity refers
    to the need for the economy itself to diversify.
    The sectors of the economy which lead initially
    begin to level off, while other sectors begin to
    take off. This diversity leads to greatly reduced
    rates of poverty and rising standards of living,
    as the society no longer needs to sacrifice its
    comfort in order to strengthen certain sectors.

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  • 5. Age of High Mass ConsumptionHigh per capita
    incomes and high levels of mass consumption.

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  • Strength of the Modernization model
  • Over the long term, all countries are capable of
    development.
  • It has proved to works for some countries
    Singapore, Hong Kong, South Korea, Taiwan (Asian
    Dragons) the American South, Czech Republic,
    Ireland

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Weaknesses in the Modernization model
  • (Rostows Assumptions)
  • Rostows model has also been criticized for
    assuming that economies will naturally pass
    through each of the four stages consecutively.
  • Rostows model did not explicitly account for
    factors such as
  • global politics, colonialism,

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  • physical geography,

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  • war, culture, and ethnic conflict, which may
    cause countries to follow quite different
    economic trajectories.

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  • Environmentalists and others have criticized
    Rostows description of the relationship between
    development and consumption, claiming that
    development does not necessarily equal high
    consumption.

The Chinese save more
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  • For some of these critics, development may mean
    other things like increased social welfare or
    ecological sustainability.

Increased education or national parks
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  • Finally, the Rostows stages of development model
    does not account for deindustrialization.

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  • Many of the first development projects were huge
    FAILURES!
  • Examples
  • oil-fired power plants create pollution
  • automated factories cause a loss of jobs
  • combine harvesters need fuel

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  • chain saws creates deforestation and erosion

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  • infant formula replacement for breast milk
    harmed children (using unsafe water)

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  • Emphasis on economic production over human
    welfare can lead to
  • environmental degradation

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  • unlivable cities

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  • traffic
  • a poorly educated work force.

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  • the creation of a permanent underclass
  • crime
  • many other social problems.

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  • These problems affect everyone in the society and
    can undermine the economic strength of the
    country.

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Why do some teachers switch from teaching at
private schools to public schools? Why do some
teachers stay at private schools?
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Why is it good that the government runs the
schools?
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What is the problem with a countrys electricity
(water, natural gas etc.) being privately owned
by a corporation?
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What is the problem with the government running
the countrys airlines (gas stations, telephone,
etc)?
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2. Dependency Model (1970s). Sees low development
levels as being a result of the LDCs economic
dependency on the MDCs.
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  • Developed by Immanuel Wallerstein

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  • The world is connected by a "world-economy" or
    world system with a core-and a periphery.

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  • The core is the developed, industrialized,
    democratic part of the world
  • Wealthy
  • Powerful
  • U.S., Europe, Japan, Australia

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  • and the periphery is the underdeveloped raw
    materials-exporting, poor part of the world.
    Dependent upon Core countries for
  • Military Equipment
  • Technology
  • Investment
  • News and Entertainment
  • Education

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  • Resources are extracted from the periphery and
    flow towards the states at the center in order to
    sustain their economic growth and wealth.

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  • A central concept is that the poverty of the
    countries in the periphery is the result of the
    manner of their integration of the "world
    system", a view to be contrasted with that of
    free market economists, who argue that such
    states are progressing on a path to full
    integration.

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  • This theory is based on the Marxist analysis of
    inequalities within the world system, dependency
    argues that underdevelopment of the Global South
    is a direct result of the development in the
    Global North.

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Is Taiwan in the core? Why or why not
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  • It is claimed that this situation of dependence
    began when many of the LEDCs were colonized, and
    continues today because the MEDCs (through
    transnational corporations) force them to produce
    unprofitable primary products.

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  • Single product primary exportsCuba (74 of
    whose exports are sugar), Zambia (85 copper) ,
    Iraq (98 oil), bananas in Central America,
    coffee in Brazil, and Kenya, copper in Chile,
    cocoa in Ghana and the Ivory Coast, palm oil in
    West Africa, rubber in Malaysia and Sumatra
    sugar in the Caribbean islands, tea in Sri Lanka

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palm oil in West Africa rubber in Malaysia and
Sumatra sugar in the Caribbean islands tea in
Sri Lanka tin in Bolivia bauxite in Guyana and
Surinam. Dont need to study these for the test
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  • The Dependency school believes this system has
    createdNeocolonialism When a previously
    colonized country has become politically
    independent but remains economically dependent on
    exporting the same commodities (raw materials and
    foodstuffs)

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According to Dependency theorist one of the
biggest culprits to the current system is the
Multinational corporation (MNC) or transnational
corporation (TNC) a corporation or enterprise
that manages production or delivers services in
more than one country.
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  • Criticisms of multinational corporations
  • Their goal is profit not development

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  • eliminate domestic firms

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  • undermine the worlds environment
  • perpetuate world poverty through low wages
  • export jobs from MDCs

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Dependency real world strategies.
  • Invest and improve human welfare (education,
  • health, food, water, and shelter needs).
  • redistribute capital in more even manner
    (socialism)
  • a bottom-up strategy

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  • import substitution an LDC tries to develop its
    own industries instead of importing manufactured
    goods from the MDCs

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  • nationalization To convert from private to
    governmental ownership and control (natural
    resources)

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  • high import tariffs (to protect infant home-grown
    industries)
  • Self sufficiency (economic independence)

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  • Strength of the Dependency school of thought
  • does not assume that socioeconomic change will
    occur in the same way in all places.
  • acknowledges change in the less developed world
    is linked to the economic activities of the
    developed world.
  • shows that the world functions as a single
    entity.

77
Weaknesses of the Dependency school of thought
  • has very little hope for economic prosperity in
    regions and countries that have traditionally
    been dominated by external powers.

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  • The long-term ramifications of investing heavily
    in human welfare at the expense of economic
    production are an inability to pay for the human
    welfare benefits the country desires to provide.

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  • Without a strong economic engine, the country
    could fall behind in infrastructure development.
  • The country will lag in technology (health and
    manufacturing).

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  • Remaining a highly agricultural society increases
    the likelihood of higher population growth.
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