4.1 Theories of economic development: modernization, dependency, and world-systems

Economic development theories shape our understanding of global inequality. Modernization theory sees progress as linear, with Western nations as the model. Dependency theory argues that rich countries exploit poor ones, perpetuating underdevelopment.

World-systems theory expands on this, dividing the world into core, semi-peripheral, and peripheral regions. It views development as interconnected within a global capitalist system, challenging the idea of universal progress and highlighting historical inequalities.

Modernization Theory: Assumptions and Arguments

Stages of Economic Growth

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• Societies progress through stages from traditional to modern industrial economies
  • Theory emerged in 1950s and 1960s as Western model for development
  • Assumes linear path of development for all societies
  • Views Western industrialized nations as model for "modern" society
• Emphasizes internal factors within countries as primary drivers of development
  • Downplays role of external influences or historical context
• Promotes key processes for modernizing societies
  • Industrialization transforms economic structures
  • Urbanization shifts population to cities
  • Spread of education increases human capital

Cultural and Institutional Change

• Traditional cultural values and social structures viewed as obstacles to economic growth
  • Advocates adoption of Western values and institutions
  • Assumes Western approaches inherently superior for development
• Encourages technological adoption from industrialized nations
  • Transfer of industrial technologies and practices
  • Implementation of modern agricultural techniques
• Assumes changes will lead to economic growth and improved living standards
  • Rising GDP per capita
  • Better health outcomes and life expectancy

Criticisms and Limitations

• Ethnocentric perspective privileging Western models of development
  • Ignores diverse pathways to economic growth (East Asian developmental states)
• Oversimplifies complex development processes
  • Fails to account for unique historical and cultural contexts
• Disregards role of external factors in shaping economic outcomes
  • Impact of colonialism on economic structures
  • Influence of global trade patterns and power dynamics

Dependency Theory: Propositions and Criticisms

Core-Periphery Model

• Emerged in 1960s as critique of modernization theory
• Focuses on external factors and historical relationships between developed and developing countries
• Argues global economic structures perpetuate inequality
  • Wealthy "core" nations exploit poorer "peripheral" nations
  • Unequal trade relationships benefit core at expense of periphery
  • Resource extraction from periphery to core
• Proposes underdevelopment as condition created by historical expansion of capitalism and colonialism
  • Not a natural or original state
  • Result of deliberate economic and political processes

Economic Surplus Transfer

• Emphasizes transfer of economic surplus from peripheral to core nations
  • Limits ability of developing countries to accumulate capital
  • Hinders sustainable growth in periphery
• Identifies mechanisms of surplus extraction
  • Unfavorable terms of trade for raw materials vs manufactured goods
  • Profit repatriation by multinational corporations
  • Debt repayments to core nation banks and institutions

Critiques of Dependency Theory

• Oversimplifies complex global economic relationships
  • Binary core-periphery model may be too reductive
• Fails to account for successful development of some formerly peripheral nations
  • Rapid industrialization of East Asian "Tiger" economies (South Korea, Taiwan)
• Potentially discourages foreign investment and trade
  • Some argue these are necessary for economic growth in developing countries
• May promote isolationist policies that limit economic opportunities
  • Import substitution industrialization with mixed results (Latin America)

World-Systems Theory: Tenets and Implications

Tripartite Global Structure

• Developed by Immanuel Wallerstein, expanding on dependency theory
• Proposes tripartite division of global economy
  • Core regions (industrialized nations)
  • Semi-peripheral regions (emerging economies)
  • Peripheral regions (least developed countries)
• Argues capitalist world-system emerged in 16th century as primary unit of social analysis
  • Focuses on system rather than individual nation-states
• Emphasizes historical processes shaping global inequalities
  • Colonialism created extractive economic relationships
  • Imperialism established political and economic dominance
  • Expansion of capitalist markets integrated regions unequally

Role of Semi-Peripheral States

• Semi-peripheral states play crucial role in stabilizing world-system
  • Mediate between core and peripheral regions
  • Provide opportunities for upward mobility within system
• Examples of semi-peripheral states
  • Brazil as regional power in South America
  • India as emerging global economic player
• Serve as buffer between exploitative core and exploited periphery
  • May exploit periphery while being exploited by core

Interconnected Development Processes

• Development and underdevelopment seen as interconnected within global capitalist system
  • Challenges notion of linear progress proposed by modernization theory
• Suggests possibility of mobility within system
  • Countries can move between peripheral, semi-peripheral, and core status
  • Examples: China's economic rise, deindustrialization in parts of Global North
• Critiques of world-systems theory
  • May be too deterministic in its view of global structures
  • Might not adequately account for agency of individual nations
  • Questions about potential for significant change within global system

Modernization vs Dependency vs World-Systems Theories

Focus and Scope

• Modernization theory emphasizes internal factors and linear progress
  • Focuses on domestic cultural and institutional changes
  • Assumes universal path to development
• Dependency and world-systems theories prioritize external factors and historical global relationships
  • Analyze impact of international economic structures
  • Consider long-term historical processes in shaping development
• World-systems theory provides most comprehensive global perspective
  • Examines entire capitalist world-system over centuries
  • Includes semi-peripheral category for more nuanced analysis

Strengths and Weaknesses

• Modernization theory influential in shaping development policies
  • Promoted by international institutions (World Bank, IMF)
  • Critics argue it oversimplifies complex development processes
• Dependency theory highlights exploitative economic relationships
  • Brings attention to structural inequalities in global economy
  • May overlook potential benefits of international economic engagement
• World-systems theory offers insights on historical evolution of global economy
  • Provides framework for understanding long-term economic trends
  • Broad historical scope may limit applicability to specific policy issues

Policy Implications

• Modernization theory advocates adopting Western models
  • Encourages investment in education, infrastructure, and technology transfer
  • Promotes market liberalization and integration into global economy
• Dependency theory suggests delinking from global economy
  • Proposes import substitution industrialization and protectionist policies
  • Emphasizes self-reliance and South-South cooperation
• World-systems theory emphasizes understanding position within global system
  • Suggests strategies based on country's core, semi-peripheral, or peripheral status
  • Promotes policies to improve relative position in world-system hierarchy