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TOPIC 3 (2.0) DEVELOPMENT THEORIES - Coggle Diagram
TOPIC 3 (2.0) DEVELOPMENT THEORIES
1. Linear Development Theory
A. Rostow
: - also include changes development in social
and political - seen as a comprehensive analysis of development (all factors are considered)- 5 stages to explain the changes or level of development
Take-off
, with positive growth rates in particular sectors and where organised systems of production and reward replace traditional methods and norms
The
drive to maturity
, with an ongoing movement towards a diverse economy, with growth in many sectors.
Pre-take-off stage
, with the development of education and an understating of science, the application of science to technology and transport, and the emergence of entrepreneurs and a simple banking system, and hence rising savings.
The stage of
mass consumption
, where citizens enjoy high and rising consumption per head, and where rewards are spread more evenly
Traditional society,
dominated by agriculture and barter exchange, and where science and technology are not understood or exploited.
CRITICISMS
Too Western-focused:
Assumes all countries must follow the same path as Europe or the USA.
Ignores inequality:
Focuses only on economic growth, not on rich-poor gaps or social injustice.
No role for history or colonialism:
Doesn’t consider how colonization affected poor countries.
Over-simplified:
Tries to fit every country into fixed "stages" even if their situations are very different.
Assumes capitalism is best:
Believes that free-market and investment will fix everything — which is not always true.
B. Karl marx:
- Low tech and resources are not the main factors in development. - introduce 5 level of society history:
Feudal: the landlords controlled the land. Religious beliefs among landlords are strong enough to prioritize the development of the church over economic development
Capitalist: the most advanced level. FoP ownership is more of an individual (capitalist). Tend to increase wealth with the use of capital. make workers still low-paid and stay poor
Slavery: Two main classes of land researchers and workers. Workers are only given wage for life.
Injustice in capitalists derived to a socialist level. FoP is co-owned. Equal in the ownership of wealth.
Primitive: production traditionally, using traditional tools and for own use
CRITICISMS
Revolution is risky:
Promotes revolution, which can lead to violence and instability.
Unrealistic outcome:
The communist society Marx imagined hasn’t worked well in real life.
Too focused on class conflict:
Sees society mainly as a struggle between the rich and the poor.
2.Structural change theory
:Economic development happens when a country’s economy shifts from a traditional (agriculture-based) sector to a modern (industrial and service-based) sector
A. Lewis Model:
focus on the shift of underdeveloped economies from traditional agricultural production to more advanced industrial economies
The underdeveloped economies shift their reliance from rural subsistence agriculture-based production to urban or modern industrial production.
IDEAS
Modern Sector (Urban / Industry)
:
High productivity and Continuous investment and expansion
Traditional Sector (Rural / Agriculture)
: Low productivity and Surplus labor (more workers than needed)
How Development Happens:
Surplus labor is moved from the traditional to the modern sector.
Higher wages in the industrial sector attract rural workers.
Industrial growth leads to higher productivity and national income.
Eventually, the economy becomes fully modernized.
CRITICISMS
Assumes too easily that surplus labor exists in agriculture.
Ignores wage inequality and urban unemployment.
Doesn’t consider the role of technology in agriculture.
B. Ranis & Fei Model
- population still as main function in development
Similar to the Lewis Model, the structural change theory by Fei and Ranis attempts to explain the transition of underdeveloped agricultural economies with surplus labor industrialized economies.
IDEAS
Same dual-sector framework as Lewis.
Explained how surplus labor is gradually absorbed rather than instantly.
Stressed that agriculture remains important—if agriculture fails, industrial growth may suffer too.
How Development happens
Structural Transformation Process
Productivity rises in industry → wages increase → more savings → more investment.
Once surplus labor is absorbed, wages start rising significantly — this is the turning point of development.
CRITICISMS
Seen as too theoretical and less applicable to modern developing countries.
Many countries don’t follow the neat shift from agriculture to industry.
Doesn’t account for the informal sector and digital economy.
3. International Dependence Theory
:Poor countries stay poor because they are dependent on rich countries through unfair global systems (like trade, investment, and politics).
This theory criticizes capitalism and blames historical colonization and ongoing exploitation for underdevelopment.
B. AG Frank
IDEAS:
Poor countries are kept poor through unequal economic relationships (like trade imbalance and foreign investment control).
Criticized Rostow's stages and said development in one country causes underdevelopment in another
HOW
Development doesn’t happen in poor countries because they are trapped in a global capitalist system.
By rejecting dependency on rich countries (delinking), promoting local industries, and becoming economically self-reliant.
CRITICISMS
Too negative about global trade — not all foreign investment is bad.
Doesn’t explain why some poor countries (e.g., South Korea) succeeded.
C. Dos Santos
HOW
Dos Santos said underdevelopment isn’t just about trade — it includes technology, education, culture, and decision-making controlled by the rich world.
By building internal capacity (own technology, knowledge, decision-making), and reducing dependence on foreign aid, ideas, and systems.
IDEAS
Said dependence is not just economic, but also technological and cultural
Spoke about "structural dependence" — poor countries are locked into a system that benefits the global North.
.
CRITICSM
Offers few solutions to fix the problem.
May underestimate the role of internal reform and innovation.
A. Paul Baran
IDEAS:
Colonial powers and elites in poor countries drain resources for their own benefit
Development in rich countries depends on the underdevelopment of poor countries.
HOW
By removing internal elites and rejecting external control, and building an economy that serves the majority, not the elite.
CRITICISMS
Too focused on external factors, ignores local problems or corruption.
Assumes all poor countries are victims only.
TYPES OF DEPENDANCY
Trade Dependancy
Fincial Dependancy
Direct Economic Dependancy
Technology Dependancy
4. Neo Classical Theory
A. Schumpeter
:
cover factors untouched by other models
Identify the factors that encourage development economics:
Mobility current FoP and combine the new method of production
increase loan to grow the FoP in the market
Needs of Exploitation from entrepreneurs
Important point of development is just not the capital but the mobolity of FoP that apply the new method of production
Clarify the factors that caused the instability in capitals
HOW
Entrepreneurs introduce new products, methods, or markets.
These innovations cause economic disruption by replacing outdated systems.
This process creates growth, productivity, and long-term development.
IDEAS
believe that development occurs because of innovative people (entrepreneurs)
Entrepreneurs Introduce: New product, new method of production, new markets, expand the source of raw materials and reorganize the industry
Capitalists are the best system to create development despite the negative social impact
CRITICSM
Innovation doesn’t always benefit everyone – It can cause unemployment or widen inequality.
Doesn’t address underdeveloped countries – The theory assumes markets and institutions exist, which may not apply to poorer nations.
Too focused on individuals – It emphasizes entrepreneurs and ignores larger social or institutional factors (e.g., education, policy, inequality).