Lecture 9

Modernization Theory

Tasneem Nabila Islam, Lecturer, School of Business, CUB

Modernization Theory
Modernization theory refers to a body of theory that became prominent in the 1950s and 1960s in relation to
understanding issues of economic and social development and in creating policies that would assist economic
and social transitions in poorer countries.
It originated from the ideas of German sociologist Max Weber (1864–1920), which provided the basis for the
modernization paradigm developed by Harvard sociologist Talcott Parsons (1902–1979). The theory looks at the
internal factors of a country while assuming that "traditional" countries can be brought to development in the
same manner more developed countries have been.
Today, the concept of modernization is understood in three different meanings: 1) as the internal development of
Western Europe and North America relating to the European New Era; 2) as a process by which countries that
do not belong to the first group of countries, aim to catch up with them; 3) as processes of evolutionary
development of the most modernized societies (Western Europe and North America), i.e. modernization as a
permanent process, carried out through reform and innovation, which today means a transition to a
postindustrial society. Historians link modernization to the processes of urbanization and industrialization and
the spread of education.

Tasneem Nabila Islam, Lecturer, School of Business, CUB 2

Globalization and Modernization
Globalization can be defined as the integration of economic, political and social cultures. It is argued that
globalization is related to the spreading of modernization across borders.
Global trade has grown continuously since the European discovery of new continents in the Early modern period;
it increased particularly as a result of the Industrial Revolution and the mid-20th century adoption of the shipping
container.
Annual trans-border tourist arrivals rose to 456 million by 1990 and almost tripled since, reaching a total of over
1.2 billion in 2016. Communication is another major area that has grown due to modernization. Communication
industries have enabled capitalism to spread throughout the world. Telephone, television broadcasts, news
services and online service providers have played a crucial part in globalization.
With the many apparent positive attributes to globalization there are also negative consequences. The dominant,
neoliberal model of globalization often increases disparities between a society's rich and its poor. In major cities
of developing countries there exist pockets where technologies of the modernized world, computers, cell phones
and satellite television, exist alongside stark poverty.

Tasneem Nabila Islam, Lecturer, School of Business, CUB

Globalization and Modernization
Two macro factors underlie the trend toward greater globalization. The first is the decline in barriers to the free
flow of goods, services, and capital that has occurred since the end of World War II. The second factor is
technological change, particularly the dramatic developments in recent decades in communication, information
processing, and transportation technologies.

Declining Trade and Investment Barriers

Many of the barriers to international trade took the form of high tariffs on imports of manufactured goods. The
typical aim of such tariffs was to protect domestic industries from foreign competition. One consequence,
however, was "beggar thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers
against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.
Having learned from this experience, the advanced industrial nations of the West committed themselves after
World War II to removing barriers to the free flow of goods, services, and capital between nations. This goal was
enshrined in the General Agreement on Tariffs and Trade. Under the umbrella of GATT, eight rounds of
negotiations among member states worked to lower barriers to the free flow of goods and services.

Tasneem Nabila Islam, Lecturer, School of Business, CUB

Globalization and Modernization
The Role of Technological Change
The lowering of trade barriers made globalization of markets and production a theoretical possibility.
Technological change has made it a tangible reality. Since the end of World War II, the world has seen major
advances in communication, information processing, and transportation technology, including the explosive
emergence of the Internet and World Wide Web. Telecommunications is creating a global audience.
Transportation is creating a global village. From Buenos Aires to Boston, and from Birmingham to Beijing,
ordinary people are wearing blue jeans, and they're listening to iPods as they commute to work.

Tasneem Nabila Islam, Lecturer, School of Business, CUB

 Stages of Modernization

Tasneem Nabila Islam, Lecturer, School of Business, CUB 6

Regional Development Models
Modernization theories have also informed analyses of regional development. These theories examine the
emergence of the modes of economic and social life and economic and social organization that first appeared in
Europe and were subsequently extended to other parts of the world. In extreme cases all areas are considered to
occupy different positions on the same development path.
A post-World War II example is afforded by the stages of (neo-American) economic growth identified by Rostow:
1. traditional society;
2. the preconditions for take-off;
3. take-off;
4. the drive to maturity; and
5. the age of high mass consumption.
All of these accounts suggest that less developed areas simply find themselves at an earlier stage along a single
development path already charted by the most developed capitalist economies in the world.

Tasneem Nabila Islam, Lecturer, School of Business, CUB 7

 Regional Development Models
An influential East Asian variant of modernization theory was the flying geese paradigm. This model is centered on the idea
that East Asian catch-up involved the emergence of a dominant growth center (Japan) which subsequently acted as the leader
of a hierarchical group of followers that included in the second tier, the Asian Tiger Economies and in the third tier Malaysia,
Thailand, Indonesia, and other members of the Association of Southeast Asian Nations (ASEAN), and finally China and
Vietnam (which is also an ASEAN Member State).
Drawing on dynamic versions of trade theory, the idea was that the emerging economies in East Asia pursued one after
another, a sequence of industrial evolutions.
The first involved a product cycle sequence involving successively the import of modern manufactures, domestic production,
export, and finally re-imports once production was moved offshore. The second involved an industrial sequence involving a
movement from lower to higher value-added activities and a succession of industries (textiles, chemicals, iron and steel,
motor vehicles, and electronic products). The third sequence was inter-national rather than intra-national and involved the
transfer of products and industries from countries that were more advanced to countries occupying lower positions in the
hierarchy.

Tasneem Nabila Islam, Lecturer, School of Business, CUB

 The End

Tasneem Nabila Islam, Lecturer, School of Business, CUB 9