Models of Development

1. Models of Development

2. What’s a model ??? • A model is the “standard” • Serves as a basis for comparison

3. Models We’ve Studied… • Demographic Transition Model • Epidemiological Transition Model • Ravenstein’s laws of migration

4. International Trade ModelorRostow’s Development Model

5. Stage 1: Traditional Society

6. Stage 1: Traditional Society Mostly SUBSISTENCE agriculture based High investment in “NON PRODUCTIVE” activities like military and religion

7. Stage 2: Pre-Conditions for take-off: Initial Investment

8. Stage 2: Pre-Conditions for take-off: Initial Investment Limited few invest in TECHNOLOGY and INFRASTRUCTURE Examples: TRANSPORTATION, WATER SUPPLY, DAMS

9. Stage 3: Take-Off: Initial Success

10. Stage 3: Take-Off: Initial Success LIMITED # of industries become successful and competitive globally. Generally TEXTILES and FOOD production. Remainder of economy is still TRADITIONAL.

11. Stage 4: Drive to Maturity: Technology Diffuses

12. Stage 4: Drive to Maturity: Technology Diffuses Technology expands to many other businesses RAPID growth Labor becomes more SKILLED and EDUCATED.

13. Stage 5: Age of Mass Production: Shift to Consumer Good Production

14. Stage 5: Age of Mass Production: Shift to Consumer Good Production Economy shifts from heavy industry in STEEL, ENERGY, to consumer goods (CARS, REFRIGERATORS)

15. The Four Asian Dragons • Followed the historical example of JAPAN.

16. The Four Asian Dragons • South Korea • Singapore • Hong Kong • Taiwan

17. The Four Asian Dragons • South Korea • Singapore • Hong Kong • Taiwan Have focused on inexpensive clothing, toys, and electronics. Moving to other HIGH TECH products

18. Problems with Rostow?

19. Problems with Rostow? Difficult when RESOURCES are absent Markets are not endless: COMPETITION is high Based on continual growth: not necessarily SUSTAINABLE Goods and services often reproduced; wasted when competition loses Historical theory based on WESTERN Europe’s experiences. UNEVEN resource distribution – not all countries have a wealth of natural resources. Market STAGNATION- world markets are slowing particularly in MDCs b/c population is increasing SLOWLY. Requires LDCs to MARKET SHARE from other companies.

20. Self-Sufficiency Model

21. Self-Sufficiency Model Promote growth in ALL sectors, not just competitive ones. Encourage production for DOMESTIC sale. Growth should be SLOW RESTRICT competitive imports Reducing POVERTY is more important than getting rich HIGH taxes RESTRICT total number of imports and sometimes exports. Regulate IMPORTERS (licenses, rules, tariffs)

22. India

23. India LARGE bureaucracy to administer rules Actually MOVED AWAY from this recently

24. Self-Sufficiency Problems

25. Self-Sufficiency Problems Inefficient; small markets must be SUBSIDIZED Who can tell me what subsidized means? Unwieldy bureaucracy; often ABUSED

26. Financing Development

27. Financing Development Promotes ECONOMIC GROWTH

28. Financing Development Supposed to make money to repay loans but, countries have DIFFICULTY repaying loans. Further loans refused if default happens; or restrictions placed on society…Remember Greece and the EU?

29. Financing Development Supposed to make money to repay loans but, countries have DIFFICULTY repaying loans. Further loans refused if default happens; or restrictions placed on society…Remember Greece and the EU?

30. Neocolonialism • The economic control of LDCs by MDCs • IMF/World Bank are criticized for this as well as corporations owned by MDCs

31. Parallels between Rostow and the DTM...

32. Parallels between Rostow and the DTM... • Both show a country’s stages of development • More traditional/subsistence in first stage • Both follow stages and move consecutively • Both deal with affects of industrialization • Influenced by type of economic activity

33. 2001 AP Test … • Explain Rostow’s usefulness in understanding contemporary social and economic change. • A country’s role in the world economy • Colonial transportation networks • Cultural differences • Local social and class structures Use examples from the following regions Latin America, Sub-Saharan Africa and South Asia

34. AP Test… ROLE IN WORLD ECONOMY • Rostow stage equates role to shift from resource export (early stages) to rise of industrial economy and mass consumption. • Core-periphery vs Rostow • Membership in supranational organization (OPEC, NAFTA) • Labor exporting regions (Mexico)

35. AP Test… COLONIAL TRANSPORT NETWORKS • External organization to colonizer Transportation focused on ports with links to centers of resource exploitation – most important function is to link resource exploitation area to world market of local labor supply to world market. • Limits the internal growth of transportation system related to settlement pattern (urbanization) to nature of colonial transport network – no reason for colonial power to develop complete transportation network or modernize it hence neither economic diversity nor growth is encouraged.

36. AP Test … CULTURAL DIFFERENCES • Religion – Hindus may hinder development of middle class because of caste system preventing upward mobility • Language – Different languages may provide barriers to information flow and full participation in economic process

37. AP Test … CULTURAL DIFFERENCES • Political Beliefs – governments may wish to isolate their population from westernization to exert greater control over their subjects and territory • Profit motive – some populations may not move through stages because of a lack of interest in cash profit.

38. AP Test … CULTURAL DIFFERENCES • Colonial Legacy – departed colonial rulers left behind a social and economic system (neo-colonial) that concentrated the majority of wealth in the hands of a few and / or did not create a social infrastructure capable of allowing the population to engage in new forms of economic activity.

39. AP Test… CULTURAL DIFFERENCES • Gender – gender roles in cultures limit participation of entire population in economy thereby limiting growth potential. • Instability and violence / war – direct destruction of necessary population, infrastructure, wasting local wealth and discouraging investment from outside.

40. AP Test… LOCAL SOCIAL AND CLASS STRUCTURES • Class divisions – small elite group may control vast majority of wealth and have no incentive to invest in the new forms of economic activity or may prevent training of majority of population. • Lack of emergence of middle class – in countries with no middle class it is hard to have skilled labor and business people emerge who carry the economy to later stages or limited national market for locally produced products.

41. AP Test… LOCAL SOCIAL AND CLASS STRUCTURES • Gender - gender roles within a state may create regional variations in economic participation or result in population growth that retards economic development. • Ethnicity – intergroup hostility may create situations where infrastructure is destroyed, population lost, or some groups prevented economic participation thereby preventing the country from moving from one stage to another, OR a groups may refuses to participate and the may hinder the rest of the country’s population from achieving the conditions necessary for advancement.