Transcript Theories of econ dev

Economic Development
Division of Economic Activities
• Primary Sector (ag)–
• Secondary Sector (industry) • Tertiary Sector (services)• Quaternary Sector (serviceresearch/development)
Comparative Economic Sectors
-CIA World Factbook, 2010 Estimates
Country
Primary
Secondary
Tertiary
England
.5%
23.7%
75.8%
Russia
5.4%
37.1%
57.5%
China
12.5%
47.3%
40.3%
Mexico
3.8%
25.9%
70.2%
Nigeria
26.9%
48.7%
24.4%
Iran
11.6%
42.4%
46%
Economic Indicators of
Development
•
•
•
•
•
GDP
Types of Jobs
Worker Productivity
Access to Raw Materials
Availability of consumer goods
• **Usually economic development
coincides with social development** WHY
Self-Sufficiency Model
(Balanced Growth Approach)
• Money (investment) should be spread
equally amongst all sectors and regions of a
country
• Promoted by setting barriers that limit
imports from other places…Taxes, quotas
Self-Sufficiency
PRO
• Its fair
• Incomes in rural areas
keep pace with incomes
in cities
• Reducing poverty more
important than
individual wealth
CON
• Protects inefficient
businesses
• Large bureaucracy
• Local businesses don’t
compete in world
market
Modernization Theory- Rostow
“Economic prosperity is open to all countries”
Traditional Stage –
Families, tradition,
subsistence farmers,
lives similar to
ancestors
Rostow
Take-Off Stage –
Producing goods to sell
Industrial revolution
Urbanization increases
Greater individualismwillingness to take
risks, desire for ‘things’
becoming consumers
Rostow
Drive to technological
maturity –
Focus on obtaining
higher standard of
living
Poverty reduced, cities
grow, population
slows- kids are more
expensive to raise
International trade
Rostow
High Mass
ConsumptionLuxury items…now
‘necessities’
high incomes
Majority of workers in
the service industry
Rostow
“Modernization” = “Westernization”
Tradition is the greatest barrier to economic
development
Rostow
Pro
- High income helps
poorer countries
- Control population
growth
- Increase food
production
- Take advantage of
industrialized
technology
- Foreign aid
Con
- Justifies capitalist
system…development
of stratified society?
- Harder for poor to get
ahead
- Suggests poor
countries are to blame
for their plight.
Dependency Theory- Wallerstein
Capitalist World Economy – 3 types of nations
1) Core Countries – rich nations take raw materials
channel wealth to NA, Eur. Aus., Japan
2) Countries of the Periphery – low income, drawn in
by colonial exploitation, support with inexpensive
labor large markets
3) Countries of the semi periphery- in between- exert
more power than periphery but less than core.
Wallerstein
Pro
- No country is in
isolation…pro??
Con
- Responsibility for poverty
on rich nations
- Industrialized nations
block development by
exploiting poorer nations
- Culture that discourages
economic growth not
taken into consideration
Compare and contrast
1. How are the theories similar?
2. How are the theories different?
3. Which one do you tend to think would
work best?....or which parts of each do
you agree with?
Key Issues
• Why do less developed countries face
obstacles to economic development?
What are those obsticles?