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Classic Theories of Economic Development (Development as Growth and the…
Classic Theories of Economic Development
The Linear stages of Growth Model
Theories and Patterns of Structural Change
The International Dependence Revolution
Neoclassical
The Linear stages of Growth Model
Rapid, aggreagate economic growth equals development
Theory is that something that has to be backed with legit reasons to be legitimate.
Development as Growth and the Linear-Stages Theories
Before WWII, Econoimsts in the industrialized nationas had no readily available theory with which to analyze the process of economic growth in Largely agrarian societies that lacked modern economic structures.
Capital Fundamentalism: To achieve economic growth, we need massive capital injections.
Rostow's Stages-Of-Growth Model of Development
The Traditional Society
The Pre-Conditions for Takeoff into Self-Sustaining Growth
The Take-off
The Drive to Maturity
The Age of High Mass Consumption
More investments equals more growth
According to Rostow, Country's GDP should save up to 15 to 20% to get to Take-Off stage as they develop at a much faster rate than those that saved less.
The economy must save >> invest >> The economy can grow
A country may fill the savings gap through either: Foreign Aid, a voluntary resources from other country; or Private Foreign Investment, where one person from foreign countries invest on the country.
The Capital Constraint Stages: The approach to growth and development where there are massive transfers of capital and technical assistance from developed to the less developed nations.
Conditions that may be needed to convert new capital effectively into higher levels of output
Structural-Change Models
Underdevelopment is due to under-utilization of resources arising from structural or institutional factors that have their origins in both domestic and international dualism
Lewis 2 Sector Model
A theory of development in which surplus labor from the traditional agricultural sector is transferred to the modern industrial sector
Underdeveloped economy's two sectors:
Rural subsistence sector: Traditional agricultural sector with surplus labor
Urban Industrial Sector: Modern urban industrial sector which labor from the rural sector is gradually transferred.
The process of modern-sector self-sustaining growth:
1.
2.
3.
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5.
Lewis Turning point:
After all surplus rural