Econ 303

ECONOMIC DEVELOPMENT

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 (5) Development Theories
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Chapter outline
I. Basic approached of economic development
1. The traditional approach
2. The radical approach ( political economy)
3. Growth with equity approach

II. Modernization theories of underdevelopment

1. The dualism theories
2. Economic strategy theories

III.Dependency theories
1. External trade theories
2. Imperialism theory

IV.Toward a general theory of development

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Introduction

Since the end of world war II the international community has been
motivated for improvement of living conditions in the less developing
countries ( LDCs) , the first step to achieve such goal was to identify the
causes of these countries underdevelopment and how to overcome them .

I. Basic approached of economic development

Consists of three parts traditional , radical and growth with equality…

1. The traditional approach

It argue that a society is undergoing a process of Economic development if it

is making progress in attaining the good life for individuals and the god
society for all of them, the main characteristics of good society include :-

Consumer sovereignty and power, efficiency, Stability, political freedom

The traditional approach describe the under developed country as the country
have the following issues :- or reasons
A- Having some types of constrains to growth
B- The absence of one of the key factors of growth
C- The vicious Circle
D- the slow growth of factors of production
E- Low level of equilibrium

According to this approach the main path towards development is

capitalism

Number of strategies could be applied :-

1. Laissez – faire – hands off - strategy
2. Laissez – Passer strategy
3. Planning strategy
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2- The radical approach ( political economy)

Have the following assumptions

A. People are rational beings who can can act as agroup
B. The good life means at least the ability to meet basic needs
C. Society should provide the Environment which enables people to meet their
needs.

According to this approach , the good society has four main Characteristics
A. Consumer sovereignty
B. Citizen sovereignty
C. Worker sovereignty
D.Solving the problem of inequality
 3- Growth with equity approach

This approach is based on some of the principles of traditional and the

socialist visions of the world the main foundations of this approach
are:-
1. It advocates the traditional ideas of ecological limitations to
economic growth
2. It applies the Marxist ideas of Social Equality
3. It employs the capitalist institutions from traditional approach.
 7 I. Modernization theories of underdevelopment

The modernization theories indicated that under development is mainly

related to internal Factors in the less developed countries , such factors
include
Illiteracy , traditional social attitude of the population , traditional division
of labor , the lack infrastructure
According to the modernization theories the experience of the
industrialized countries is the model for economic and social development
of the LDCs.

1. The dualism theories

Indicated that there are differences among the economic and social
structures of different sectors in a country , the mainly differ in
organization, level of devlopoment and goal structure>
A. The traditional subsistence sector
B. The modern sector of capital intensive industry
8 2. Economic strategy theories
The main argument of development strategy theorists is that
underdevelopment is the result of vicious cycles of certain factors
like:-
Low level of saving leads to lack of capital , which in turn
causes low productivity of labor, which leads to low income
then to low savings and so on.

A number of approaches are presented by Economic strategy

theories
A. Theory of balanced growth
B. Theory of unbalanced growth
C. Big – push theory
D. Development poles theory
E. Surplus labor theory
F. Harris – Todaro theory
G. Information led develpment theory
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A- Theory of balanced growth

According to this theory development can achieved through the expansion
of markets and increase of output for all sectors the balance growth has to
be achieved between sectors.

B- Theory of unbalanced growth

According to this theory the investement should not be spread evenly but
concentrated in projects in which cause additional investement like
manufacturing industries.

C- Big – push theory

This theory stresses the need for big or high investment in complexes
projects in order to obtain the benefits of external economies

D- Development poles theory

According to this theory promoting regional development centers is
expected to serve as focal point and incentive for future development.
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E- Surplus labor theory

It takes into account certain issues such as unemployment,
underemployment of resources (labor), development can achieved by trans
fare of surplus labor in the traditional sectors to the modern sectors.
Surplus labor can stimulate capital accumulation, also savings and
investment are the main drivers of development

F- Harris – Todaro theory

This theory focuses on the issue of rural to urban migration, and
unemployment problem,

G- Information led development theory

This theory focuses on creating and developing a national information
technology IT sector to rely on as an engine of growth