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Week 12: Modernisation and Development - Coggle Diagram
Week 12: Modernisation and Development
Modernisation and Development Overview
Modernisation
- now discarded theory about society's move from traditional to modern sectors
Charicatured traditional socieites that had complex ways of being
Associated with 20th century social sciences and anthropology
Study of Western countries of non-Western societies and trying to understand them to
contain communism
Development
- different from econoomic growth, is about 'catching up'
Cold War foreign aid policies and liberal anti-communism
Forerunners and the Colonial Origins of Development
Poor Laws
After being abolished in 1830s Britain started to introduce workhouses to get their poor to earn their pay
This model was exported to the colonies and becomes a legitimating idiom of colonialism
E.g. King Leopold in Congo
Humanitarian organisations embraced this mission
Resistance to this Old Order
Critique of underdevelopment
Swadeshi in India, Boxer Rebellion in China against western influence on Chinese economic world
Russian revolution in 1917 exposes these agrarian societies that the countryside is an extremely political space
Interwar period
Interwar shift
Development of Economic Science - understanding industrialisation
Japan's further gains with industrialisation
Emergence of concept global economy that coincides with demands in the colonies for decolonisation and self-determination
New paradigm of industrialise or perish
World War II
Reshapes role of state in economic life
State becomes biggest purchaser
Partial industrialisation e.g. India
Inflation
Mid-20th century Order
Institutional Articulation of Development as well - cultivation of economic science and birth of development studies
What to do about the developing world?
Cold War and Modernisation Theory
Sir Arthur Lewis
(1915-1991)
Context
:
Born 1915 in Santa Lucia, West Indies
Studies at London School of Economics (meets Hayek and Lionel Robbins)
Laissez faire type economist
Advised various African and Caribbean governments
First:
Black member of the LSE Faculty (1938)
Black man to be a full professor at Princeton (1963)
Black Nobel in Economics (1979)
The Birth of a Workers’ Movement
(1939)
Labour movement in West Indies originates from agricultural workers (contrary to Marx ideas of industrial working class)
During Great Depression the prices of exports go down, wages are cut, unemployed labourers move from the plantations to the towns and they get together
Growing discontent and general strikes and insurrenctions across several islands
Diagnoses the root structural cause of this is the low price of exports
Solution
: create an imperial preference that increases the price of sugar from West Indies that is purchased by other countries
Low interest loans and free grants of money to make a radical attack on poverty to open up new areas and finance land settelement schemes, public education, holistic development etc.
“What claim have the West Indies to demand such sacrifices from the British people? Briefly this. It is the British who, by their action in past centuries, are responsible for the presence in these islands of the majority of their inhabitants, whose ancestors as slaves contributed millions to the wealth of Great Britain, a debt which the British have yet to repay.”
Argues for four things
:
1) Right to collective bargaining and minimum wage legislation
2) Industrial legislation for the small number of factories in West Indies
3) Progressive taxation
4) Redistribution of poverty
“Economic Development with Unlimited Supplies of Labour”
(1954)
Shortcomings with the classical model
How to increase savings rate? What happens when you introduce international trade
Similar concerns about island economies
Case study for the history of economic thought
Growth Models
Growth Models-I: Harrod Domar
(1948)
Growth rate depends on productivity of capital and rate of investment, which is in turn determined by the domestic savings rate
Capital/Labour ratio is fixed
Doesn't address FoP unrelated to savings and investment
Influence of Marx
Growth Models II: Solow Swann or Neoclassical
(1956)
Overcomes shortcomings of Domar model
Introduces labour into production process as human capital
Supply is exogenously determined
Orthodoxy of Neoclassical Synthesis
Closely related to Samuelson
Growth rate dependent on population growth rate and growth of capital per worker → in the LR capital per worker goes to zero and stops growing
Supply determines output - no scope for technological development, and ultimately, income stagnates
Growth Models-III: Endogenous Growth
Technological change made endogenous to the model
How to endogenise?
Don't assume diminishing returns to capital
Savings and investment can lead to technological change that maintains returns to capital
Is this reasonable?
Depends on what capital is
Traditionally is plant and equipment which do have diminishing returns
But also knowledge which does not
Rosenstein Rodan, Rostow, and the Modernization Theorists
CENIS (MIT)
Increasing returns to scale; others assume constant
Focus on investment goods sector rather than consumer goods
To raise investment (rather than raising savings rate) you need foreign aid to take off self-sustaining growth
Hirschman and Balanced Growth
: Challenge to Rosteinstein
Albert Hirschman (1915-2012)
Perhaps rather than pursuing agricultural growth, or raising level of investment, balanced growth should be pursued
Focus on development of both agrarian and industrial sectors
Foolish to suggest either of those sectors is ever fully development and we can always find things to improve their efficiencies — which he called ‘slack’
Strategies for Development
Export-Led Growth - smaller Southeast Asian economies
Import Substituting Industrialisation - increase in-house industrial capacity
Asia's Developmental States - few major corporate champions e.g. Korea
The 1970s as Inflection Point for Developmental Orthodoxies
Breakdown of BW: Questioning of Statist Orthodoxy
Question of whether or not the unit of the nation state is the best to pursue development or whether it is too large a unit of analysis to try to model things
When states develop do they increase inequality?
Turning over to NGOs to prevent inequality
Means Targeting and Gender ideas pursued here
Randomised Control Trials
Formented by critiques of aid
Assume smaller questions - methods of medical research
Critique: external validity issues