9.04 ECONOMIC DEVELOPMENT MODELS

Dependency Theory

A theory that states economic growth in richer countries does not necessarily help, and often actually hinders, economic development in poorer, dependent countries

Pros of Rostow's Theory

Accurately describes some countries' experiences Rostow's theory offers a valid model for economic development as it really did happen in parts of the developed world. Most geographers agree that Rostow created a useful description of the development process in the countries he studied.

Walt Whitman Rostow

American economist who served as political adviser to presidents Kennedy and Johnson; Rostow proposed the modernization model to help explain the stages of a country's development from the primary economic sector to the quaternary and quinary sectors. (He was a liberal development theorist) Rostow published a book called Stages of Economic Growth in 1960 in which he attempted to use a modernization model to explain the process by which countries achieve highly developed industrial economies using examples from history. According to Rostow, economies developed through a focus on specific economic activities in which that country had a comparative advantage.

Immanuel Wallerstein

American social scientist and world systems analyst who proposed a theory that helps explain world development in spatial terms

Semi-periphery

Countries that serve as a buffer between core and periphery. These countries, which are usually in the midst of developing stronger core-like economics, play a crucial role in buffering economic relations between the core and the periphery and helping shift resources from periphery to core countries through trade. Today, the semi-periphery may be considered to include the BRIC countries along with Mexico, Iran, South Africa, and Indonesia.

Periphery

Poorly developed countries with low-cost unskilled or low-skilled labor and natural resources used by core countries. According to world-systems theory, these countries thus became a source of labor and raw materials for core countries to use to build their own wealth. Over time, the gap between core and periphery countries grew. The wide majority of the world's countries today experience low levels of economic development and may be considered part of the periphery.

liberal development theorists

Economic geographers who believe that all countries can achieve high levels of economic development

structural theorists

Economic geographers who believe that underdeveloped countries are locked into a state of low development through an unequal global economic structure , the global economy fosters continued inequality

Core

Highly developed countries that control much of the globe's wealth. These countries control a disproportionate amount of global wealth and focus on economic activities that generate wealth rather than those that process resources. The origins of this economic core can be traced back to the 16th century, when Western European countries began adopting early forms of capitalism and developing new technology. Core countries are those typically considered highly developed: the United States, Canada, Australia, Japan, and the countries of Western Europe..

World Systems Theory

Theory developed by Wallerstein that examines the interconnected global economic system and divides it among highly developed core countries, poorly developed periphery countries, and buffering semi-periphery countries. Wallerstein's world-systems analysis argues that the economic development of countries does not just follow an internal path, but rather that it also hinges on external events and forces shaping a larger but related global system. Wallerstein divided the countries of the world into three categories and argued that membership in these categories was fluid over time.

modernization model

stage economic development model proposed by Walt Whitman Rostow that argues for the development of countries along consistent lines to high levels of development; also called the ladder of development or the takeoff model

Rostow's Ladder of Development (Theory)

1. Economies in Rostow's first stage of development are focused on meeting basic needs. People living in a country in this stage typically produce goods for their own use rather than for trade. Rostow identified medieval Europe as a historical example of this stage of development. 2. Economies in Rostow's second stage of development were engaging in the first efforts at technological development needed to launch industrial development. Rostow argued that Great Britain was the first country to fully attain this stage of development in the years leading up to the first Industrial Revolution. 3. As economies enter Rostow's third stage, a small number of economic activities experience great industrial growth and the amount of national capital invested in various economic activities increases. Shifts in labor patterns begin to take place as workers begin leaving agricultural jobs for new positions in factories. According to Rostow, this stage happened in the late 18th century in Great Britain and the mid-19th century in the United States. 4. Rostow's fourth stage of development is marked by the growth and diffusion of industry and technology throughout a country's economy, rather than just in a few core industries. As this increasingly diversified economy becomes industrialized, it allows for greater overall investment and higher levels of productivity. Rostow estimated that a country required about 60 years to transition to maturity from the time of its takeoff. 5. The top stage of Rostow's ladder of development includes highly developed economies. In this stage, tertiary economic activities replace secondary manufacturing activities as the dominant economic sector, and much of the workforce resides in urban areas where they spend a great deal of money on consumer goods and services. At the time of writing, Rostow identified Western Europe, the United States, and Japan as members of this relatively elite club.

Cons of Rostow's Theory

1. Euro- and U.S.-centric Rostow based his theories on the historical industrial development of Western Europe and the United States more or less exclusively. Critics argue that Rostow's model is not very helpful for examining the potential development of African, Asian, or Latin American countries. 2. Ignores negative historical forces Because of the Western focus of Rostow's model, it does not account for the unique challenges facing countries that have only become independent in recent decades after spending a great deal of time under colonial rule. Many countries in Africa, for example, have struggled to build economies and stable political structures after gaining independence from European powers. 3. Puts countries in a bubble Rostow's model traces industrial development at the national level and disregards the economic and geographical connections among countries within a region. Critics note that studying development in isolation does not make sense. Former Soviet countries in Eastern Europe, for example, have benefitted economically from joining the European Union—but Rostow's development model disregards the influence of this membership. 4. Has a narrow view of development Critics question whether Rostow's model of industrial development with economic development is an accurate one in the modern world. With most new growth taking place not in heavy industries but in the tertiary sector, it seems possible that countries could follow a pattern of development unlike that modeled in Rostow's ladder. India, for example, has enjoyed great economic development on the basis of its growing service sector without establishing the kinds of heavy industries that helped propel Western Europe and the United States to the top of Rostow's model.