fely econ dev chapter 5

fely econ dev chapter 5 - Chapter 4: Classic Theories of...

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Chapter 4: Classic Theories of Economic The overall aim of the chapter is to provide a historical overview of the classic development theories put forth in the past 50 or so years that there has been a development economics field of study. The key features of each theory are presented, along with a discussion of the major contributions and limitations of each theory. It is
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emphasized that while the theories are often competing in nature, each offers valuable insight into the development process. The comparative case study at the end of this section of the text also emphasizes this idea. The theories discussed are:
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Rostow's theory. The Harrod-Domar model. The Lewis model. Chenery's patterns of development. Dependency theory. Neoclassical theory.
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The linear stages of growth  models share  the  central role of  savings and capital formation as  their basic theme. The two  examples given are W.W.  Rostow's theory and the Harrod- Domar model. The text finds this  approach limited since the  structural and 
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institutional conditions necessary to effectively utilize savings are often lacking, and the possibilities of development are often conditioned on international factors beyond an LDC's influence.
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Structural change models stress the  transformation from a traditional,  agricultural economy to a modern,  industrial  economy. The Lewis model  is carefully developed and analyzed  as the key theoretical illustration of  this approach. Though important for  attracting attention to linkages  between traditional agriculture and  modern industry, it is
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criticized for assuming that real  urban wages will not rise and that  migration and modern sector  employment grow proportionately  (with urban full employment).  Chenery's findings of the patterns  of development are presented as  an illustration of an empirical  approach,
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criticized for assuming that real urban  wages will not rise and that  migration   and modern sector employment grow  proportionately (with  urban  full  employment). Chenery's findings of  the patterns of development are  presented as an illustration of an  empirical approach,
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and include the shift in production from agriculture to industry and services, the accumulation of physical and human capital, the shift to nonfood consumption and investment, urbanization, and the growth of trade as a share of GNP. The text cautions that country variations are large.
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Three variants of the international dependence models of the 1970's are explained. The neocolonial dependence school emphasizes the unequal power relationships between the developed and less developed countries and blames underdevelopment on conscious or unconscious developed country exploitation, which is perpetuated by a small elite ruling class within the less developed countries.
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Arguments that underdevelopment is fostered by well-meant but inappropriate advice from aid agencies and other Western trained economists is termed the false paradigm model.
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fely econ dev chapter 5 - Chapter 4: Classic Theories of...

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