Development - Development Theories & Models Growth...

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Development Theories & Models
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The study of political economy is chiefly concerned with two broad issues: The distribution of wealth Economic growth Both issues figure prominently in discussions of development Key concerns—How to ensure that growth is sustainable & that the benefits are as widely shared as possible
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The Primacy of Growth Economic growth is essential for lifting people out of poverty E.g., GDP growth decreases infant mortality Half a million less children die in 1990 if Africa’s growth rate in the 1980s is just 1.5% higher Redistribution is pointless if the economic pie is extremely small
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After Colonialism Development did not become a pressing global concern until after World War II Colonial empires were dismantled Former colonies gained their independence The Cold War increases the significance of development
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Convergence? According to neoclassical economic theory, underdevelopment should not persist Theory of convergence Declining marginal productivity of capital Factor price-equalization Capital should flow from capital-rich countries to capital- poor countries where it can earn a higher return Newly-industrializing countries (NICs) should be the rule, not the exception
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Convergence? Has convergence occurred? Liberals: it is occurring for those countries that have followed the right policies Pro-growth policies Free trade Openness to foreign investment Privatization & deregulation
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Convergence? The ratio of per capita GDP between richest & poorest countries increased by a factor of five Bottom line—a majority of the world’s people continue to live in poverty
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Two Paradigms Theories of development typically fall into one of two broad paradigms The modernization paradigm sees underdevelopment as the product of countries’ internal deficiencies For the dependency paradigm , the causes of underdevelopment are external The result of a country’s position in an international division of labor that is intrinsically unequal
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Two Paradigms The chief concern for modernization theorists is identifying the determinants of, The primary concern for dependency theorists is explaining the persistence of inequality among nations
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The Communist Challenge Communism offered a potentially attractive model for developing countries, promising two things: The prospect of rapid industrialization in one or two generations (convergence) An egalitarian redistribution of wealth
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The Modernization Paradigm Rich Western countries, especially the US, recognize the threat posed by communism It undermines their influence in the “Third World” The modernization paradigm becomes the preferred theoretical framework for understanding development for developed countries (DCs)
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This note was uploaded on 10/04/2011 for the course INTL 3200 taught by Professor Wilson during the Fall '08 term at University of Georgia Athens.

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Development - Development Theories & Models Growth...

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