11/10/2021

Development in
our Changing World

Instructor: dr. Frank van der Wouden

GEOG1012 – 1st semester 2021-2022

not only economically, but socially and inequality

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Why do we care?
Development is at the core of lot of social science research

“Upgrading” of human lives

Not only in an economic sense, but in general well being

But the processes we have discussed might shape winners and losers

How can we promote development for those left behind?

Content – part 1
•What is development?
•Main indicators
•Human Development Index
• Track development over time
•Alternative Development Indices
•Thinking about Development
•Key take-aways

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Content – part 2
•Development Theory
•Major strands of development theory
•Modernization (“Stages”) Theory
•Dependency Theory
•Neo-Liberal (“Market-based”) Theory
•Development State Models
•Key take-aways

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Significant Reductions in Global Poverty & Hunger

• Global extreme poverty rate ($2/day) estimated ~ 11% in 2015
• This is a decline of 35% since 1990
• Global under-5 mortality rate halved between 1990 & 2015
• Maternal mortality declined by 45% over same time
• Access to basic services & education increasing in most of the
developing world
• But there are still plenty of problems…

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triumph after the school, come up institutional change

high life expectancy and human development correlated

deforestation no choice

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Thinking about
“Development”
from an
Economics Perspective

Thinking about “Development” from Three Economics Perspectives

• Traditional (neoclassical) economics is largely concerned with the efficient

allocation of scarce resources. Models of rational economic agents, complete
information, perfect markets
power relation-social political process, account politics

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Thinking about “Development” from Three Economics Perspectives

• Traditional (neoclassical) economics is largely concerned with the efficient

allocation of scarce resources. Models of rational economic agents, complete
information, perfect markets

• Political economy extends these arguments to consider the social and political
processes through which power become concentrated within groups. Thus,
politics & economics are combined to understand economic change

Thinking about “Development” from Three Economics Perspectives

• Traditional (neoclassical) economics is largely concerned with the efficient

allocation of scarce resources. Models of rational economic agents, complete
information, perfect markets

• Political economy extends these arguments to consider the social and political
processes through which power become concentrated within groups. Thus,
politics & economics are combined to understand economic change

• Development economics is broader still, concerned with social, political and

economic concepts, but also how the interactions between these are influenced
by institutions – by the “rules of the game”.

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Less developed economies are characterized by:

• imperfect markets,

• where producers & consumers have very limited information,

• the rules of the game are unclear,

• where there is a much greater role of government influence,

for good or bad,

• where external pressures are strong

Development & Values

• Recognize that when we talk about development, the elimination

of poverty, universal education, freedom from persecution, the
rule of law & democracy, we are making value judgements

• As we move from (or compare!) advanced developed economies

to the developing economies of the world, it is important to
understand that we cannot so easily separate economic
relationships from social, political and cultural values

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Development & Values

• These complex interactions complicate our understanding of growth

& development

• It also highlights the fact that development is more than simply

economic growth & rising incomes

• Does it also mean protecting cultures, environments & ways of life?

• What about multi-dimensional measures of well-being?
• Who decides what is important?

What is Development?

• +75 years ago, the United Nations Charter pledged to:

• free future generations from war
• to protect basic human rights
• encourage social progress to better standards of life & freedoms

• At the start of the new millennium, that pledge renewed in the

form of the Millennium Development Goals:
• a series of targets to be met by 2015…
• promoting the reduction of poverty
• extension of human rights around the world

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What is Development?

• Human development is about:

• freedom
• building human capabilities
• allowing people to lead the kinds of lives of their own choosing

• U.N. recognizes that those capabilities are restricted by:

• poverty
• ill-health
• discrimination
• disenfranchisement (being deprived of a right)

Main Indicators of Development:

The Human Development Index

• The Human Development Index (HDI) is a summary

measure of a country’s level of development

• The HDI is based on 3 key variables:

• Health (Life Expectancy at Birth)
• Knowledge (Years of Schooling – mean & expected)
• Income/standard of living (GDP per capita)

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good news: everyone is improving in average, developing grows faster

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Other Indicators of Development

• GENDER DEVELOPMENT INDEX

• HDI adjusted for gender inequality

• GENDER EMPOWERMENT INDEX

• A measure of gender equality in economic power & political representation

• HUMAN POVERTY INDEX

• Measure of poverty

Thinking about Development

• Development is about “life chances”, about having freedom of
choice to live lives that have value

• This means developing peoples’ abilities & creating

environments within which those abilities can be effectively
utilized

• For example, we can educate young women, but if they are

denied access to the labor market or control of their own
reproductive health, then in what way do they have real
choices?

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Thinking about Development

• But how do we develop countries?

• Building or creating development is difficult

• Causality – Do countries:
• develop because they are rich and have the money to finance
change?
• … have to develop before they can become rich?

Key take-aways
• Development seems to go in the right direction, but long way to go
• Development is not only economics, but consists of social, cultural and
political elements
• HDI Index tracks development across three measures:
• Health (life expectancy)
• Knowledge (mean & expected schooling)
• Quality of life (Income)
• Large differences across nations (and regions & groups of people?)
• Other measures exist that focus on specific elements → i.e. gender or
poverty

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Content – part 2
•Development Theory
•Major strands of development theory
•Modernization (“Stages”) Theory
•Dependency Theory
•Neo-Liberal (“Market-based”) Theory
•Development State Models
•Key take-aways

HUMAN DEVELOPMENT INDEX, 2015

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competitive adven
-mass production

ORIGINS OF THE MODERNIZATION MODEL

• Rostow’s “linear stages of growth model”

• Eurocentric:
• Originates in the economic growth history of European nations.
• European experience:
• shifting resources from agriculture to manufacturing and into ever
more sophisticated industry was the path to development

• ‘If less developed, poorer, regions of the world follow this same
path, growth & development would surely result!’

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ORIGINS OF THE MODERNIZATION MODEL

• Posits the history of the West as an ideal that should be imitated.

• Less developed countries are seen as little more than “backward”

versions of the Global North

• Less developed countries are not seen as unique entities with

their own distinctive mix of social, political, cultural institutions

THE MODERNIZATION MODEL

• Core argument:
• developing economies have to generate capital through saving
• use savings to fuel greater investment in the economy
• investment seen as necessary to fuel the transition from A to M and further technological
upgrading.

• This model ignores the difficulties:

• of shifting cultures in emerging economies
• of changing institutions
• embracing the capitalist market system.

• Such changes are costly and difficult. It took Europe a few hundred years to manage
this transition!

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CRITICISMS TO THE MODERNIZATION MODEL

• Necessary conditions (investments to upgrade) are not always sufficient conditions

• More saving & investment might stimulate growth

• But growth alone might not eliminate poverty & generate development for all →
inequality

• Political change and inclusive institutions (those that promote the social good) are critical but
ignored

• Modernization model focuses:

• on the internal characteristics of countries
• not on the external political & economic circumstances that all nations find themselves
operating within

• (Development for emerging economies is much more difficult with more advanced nations as
competitors.)

THE STRUCTURAL-DEPENDENCY MODEL

• In the 1960s, several development scholars, particularly from

Latin America, began to question the modernization framework

• They argued that the development of the “core-countries” of

the Global North was dependent upon the under-development
of the “peripheral-countries” of the Global South

• The North exploits the South.

careful with institution change, power relation, who is benefiting from it

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THE STRUCTURAL-DEPENDENCY MODEL

• Dependency theory:
• unequal development of the world economy is a direct result of colonialism
• the rapid growth of Europe and North-America was achieved by systematic exploitation of under-developed
regions
• Poverty and lack of development in the Global South are the spatial manifestation of
the capitalist market system
• This system is largely controlled by the rich and politically powerful developed
countries of the world
• They designed it to their advantage

• Thus, under-development is not simply a stage that countries have to move through
but rather it is an active process, produced and controlled to channel profits to the
Global North

STRUCTURAL-DEPENDENCY MODEL

CORE
1. Core dominates periphery politically & economically
2. No matter the internal conditions in the periphery, it cannot
escape the external conditions of domination

PERIPHERY
CORE

Import-substitution strategy
1. Periphery erects trade barriers to limit the influence of the Core
2. Then replaces imported goods with goods made domestically
3. These import substitutes fuel local economic development in the PERIPHERY
periphery

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THE STRUCTURAL-DEPENDENCY MODEL

• Dependency theory focuses on external not internal causes of poverty and the lack of
development
• Poverty in the less-developed world is actively created by the very market processes
that allow the developed countries of the world to prosper
• International trade and prices are dominated by the rich nations of the world
• The structure of global markets is set to benefit those nations at the expense of the
rest of the world
• (Prebisch & Singer argue “terms-of-trade” stacked against developing economies)

• (Note: for modernization theory, trade and markets eliminate poverty, while for
dependency theory they promote and sustain poverty)

THE STRUCTURAL-DEPENDENCY MODEL

• The main solutions for many of the structural-dependency theorists was to:
• abandon trade
• erect trade barriers
• replace imports with domestic products

• This is the policy of import-substitution that was practiced widely throughout much of
Latin America in the 1960s and 1970s

• This policy failed – largely because the developing economies did not have markets
that were well-developed enough to sustain local industry

• Example: Computer usage in industry Brazil → 1990: 90% vs. 1 to 5%

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CRITICISISM OF THE STRUCTURAL-DEPENDENCY MODEL

• Assumes that developing economies are merely passive & that they are incapable of
change

• The success of several rapidly growing Asian economies suggested that growth &
development were possible in the post-colonial era

• (Note that successful East-Asian development occurred later than the

experimentation with import-substitution in Latin America)
• At this time global markets provided new possibilities for emerging economies to exploit.

• (Also, nation-state played a much more active role in the East-Asian developing
countries)
• Does this challenge the notion, perhaps, that the market alone will drive growth and development?

NEOLIBERAL (MARKET-LED) DEVELOPMENT

• Crises of early-1980s prompted significant change in the management of development

• Developed nations take a more active role in development

• This role was directed through market mechanisms rather than through aid

• Market-based (neo-liberal) solutions to problems of:

• poverty
• slow-growth
• lack of development

• Standard policies were:

• save & invest more
• have fewer children
• shift resources to more efficient uses
• remove trade barriers
• embrace free trade & markets

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NEOLIBERAL (MARKET-LED) DEVELOPMENT

• The IMF & World Bank became the primary institutions that provided loans to
developing countries

• U.S. dominated these organizations

• This is a period of development we often refer to as the “Washington Consensus”

• The IMF & World Bank demanded reforms (structural adjustment) as a condition of
loans:
• State austerity & limits on state spending
• Opening markets to goods & capital
• Privatizing state-owned assets
• Export-led development model

RATE OF GROWTH GDP PER CAPITA, 1960-2000

GROWTH RATE GDP PER CAPITA

KOR
GNQ
BWA
.06

TWN
ROUMLT
JPN
THA CYP
CHN SGP
.04

EGY IRL
PRT
GRC HKG
ESP
ARG
PAN
BRA
CPVZWE ISR ITA
INDTUNMYS TUR AUT
FIN
DEU
MAR PER MUS CHL
DOM FRA
BEL SWENLD LUX
.02

BRB DNK
ISL GBR
LSO
MRT
MOZ
IDN
PRY
PAK AUS USA
CAN CHE NOR
COL
PHL ECU CRI MEX NZL
BFA
NPL GTM
ETH
GNB
MLI JOR ZAF
BOL URYIRN
TCD
UGA
MWI
TZA HND
CMR FJI
SYR
NAM
RWA
TGO
GMB
BEN GAB TTO
BDIBGD
KEN
0

COMCIVGHA JAM
SLV
MDGSEN
ZMB VEN
COG
NGA
CAF
NER GIN
-.02

COD

0 5000 10000 15000 20000 25000

GDP PER CAPITA 1960

roggdppc Fitted values

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POST-WASHINGTON CONSENSUS
• One size fits all model of development seen as incapable of alleviating global
poverty and raising development by the late-1990s

• IMF & World Bank increasingly criticized for the model of structural adjustment
• eroding the core of less-developed economies – especially their capacity to grow foodstuffs to
feed their own populations
• (IMF provides loans while demanding open markets, markets open and global agri-business
exports, lowering food prices & eroding domestic food production. Then prices begin to rise &
food security issues become critical)

• Neoliberal, market-based, policies generating some winners, but also many losers
• This, perhaps, generates instability / insecurity

THE DEVELOPMENT STATE

• Through the 1970s and 80s several East Asian economies experienced rapid growth &
development

• Japan first, followed by the newly industrializing economies of:

• Hong Kong
• South Korea
• Singapore
• Taiwan

• What had these countries in common? An active government

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THE DEVELOPMENT STATE

• Growth in these economies was closely regulated by a very active state that:
• Raised capital to finance growth & development
• Managed growth in key industries
• Regulated capital & labor markets (managing prices!)
• Protected emerging sectors (infant industries) by halting import competition & subsidizing exports
• Pushed an export-led model of industrialization (produce for export markets to grow industries
until they become competitive)

THE DEVELOPMENT STATE

• Growth in these economies was closely regulated by a very active state that:
• Raised capital to finance growth & development
• Managed growth in key industries
• Regulated capital & labor markets (managing prices!)
• Protected emerging sectors (infant industries) by halting import competition & subsidizing exports
• Pushed an export-led model of industrialization (produce for export markets to grow industries
until they become competitive)

• These emerging economies did not experience rapid early growth because they were
so competitive - they were massively subsidized by the state - they became
competitive through growth!

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THE DEVELOPMENT STATE

• Growth in East Asian economies is seen by some as a celebration that development is

possible

• Sometimes wrongly interpreted as market-driven

• Strong role of the state (rather than the market) controls development

• Importance of governance regimes & institutions

• Interests in “mixed development regime” that recognizes that economies are

different and that there are roles for the nation-state & the market

Key take-aways
• History of development is complex
• Variety of different models/theories of development
• Each give rise to different policy options
• Limited success of purely market-based policies
• Important role of the state in directing development
• Role of cultural/institutional change along with political & economic
shifts:
• Access to finance (not hot capital)
• Access to education
• Access to technology
• Fighting diversion/corruption
• Gender, land ownership, etc

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MAIN THEORY AUTHOR(S) KEY ARGUMENT PROBLEMS

Modernization Rostow Capital investment Shift from agriculture to Eurocentric
manufacturing
Ignores structure of world
Development occurs in stages based on internal economy & external relations
conditions

Dependency Andre Frank, Developed, core countries exploit those of the less Developing country markets not
developed periphery in an inter-linked core- well-developed enough to
Raul Prebisch periphery world system maintain economies

Development leads to under-development Undermined by experience of East

Asian developing economies
Import-substitution

Neo-Liberalism Deepak Lal, Developing countries should remove state Focus on growth did not alleviate
intervention in the economy poverty
Bela Balassa
Embrace markets Not much convergence in growth
either
Open economies
Developing economies weakened
in some cases

Development State Amsden, Strong state role in directing growth & Mixed results
development
Leftwich
Infant industry protection & export-led
industrialization

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