Classic Theories of Economic Development: Four Approaches

Linear Stages Theory

- viewed the process of development as a series of successive stages of
economic growth. A mixture of saving, investment and foreign aid was
necessary for economic development.
Rowstow's 5 stages of growth
1) traditional society - common society
2) pre conditions for take off - saving, investment and foreign aid
3) the take off - development through these given conditions
4) drive to maturity - further the development
5) age of high mass consumption - make new room for development
IF THERE'S A LACK OF ADEQUATE INVESTMENT; THE FINANCIAL
GAP EXISTS.
The Harrod- Domar Growth Model
Strategy for development: mobilization of saving and generation of
investments = acceleration of economic growth = more room for
development

Structural-Change Models
Structural-change theory focuses on the mechanism by which
underdeveloped economies transform their domestic economic structures
from traditional to an industrial economy
Lewis Theory of Development

The process of self-sustaining growth and employment expansion

continues in the modern sector until all of the surplus labor is absorbed
=wants to absorb all unused laborers in a certain field through their
employment to various jobs, thus exhibiting their economic usefulness.
why cant it be used in developing countries?
Reality is that:
Capitalist profits are invested in labor saving technology
Existence of capital flight
Little surplus labor in rural areas
Growing prevalence of urban surplus labor
Tendency for industrial sector wages to rise in the face of open
unemployment
Chenery's model
Differences in development among the countries are ascribed to:
Domestic constraints
International constraints
To summarize, structural-change analysts believe that the correct mix of
economic policies will generate beneficial patterns of self-sustaining growth

The International Dependence Revolution (IDR)

The IDR models argue that developing countries are up in a dependence
and dominance relationship with rich countries
they place emphasis on international power balances and on fundamental
reforms world-wide.
Three models:

Neocolonial Dependence Model

Dahil sa colonial na mga bansa dati na sumakop sa kanila, naging
underdeveloped ang mga bansa naging kolonya at yumaman ang bansang
nanakop, nakabase ang development ng bansa sa history nito.
kung ang kolonyalismo ay ang pagsakop sa ng isang bansa para makuha
ang likas na yaman nito, ang neokolonyalismo ay ang pagsakop sa
ekonomiya ng bansa at ang pagiging dependent ng bansang mahirap sa
bansang mayaman.
False Paradigm Model
Pagbibigay ng mga mayayaman na bansa ng advice sa pagdevelop ng
mga mahihinang bansa na pwede lang i applika sa kanilang sariling bansa,
kaya't lalong di umunlad ang bansang mahihirap dahil sa maling advice.
The Dualistic- Development Thesis
Dualism represents the existence and persistence of increasing
divergences between rich and poor nations and rich and poor
peoples at all levels.
The concept embraces four key arguments:
1. Superior and inferior conditions can coexist in a given space at
given time
2. The coexistence is chronic and not transitional
3. The degrees of the conditions have an inherent tendency to
increase
4. Superior conditions serve to develop under development