The Analysis Of The Theories Of Economic Development After The World War II
The idea of development first came about after the World War II when Europe was in rubble and universal progress was extremely necessary. Many cities of Europe were destroyed: both economically and infra-structurally. It was reported that some places were on the edge of experiencing famine and due to the war affects, railways, roads and other infrastructure facilities were totally broken (Editors, 2009). So, George C Marshall proposed a plan to fund Europe so that it can rebuilt its economy (Editors, 2009).
Decolonization was taking place simultaneously, and, it was now the white man’s burden to take care of the decolonized countries and make sure they get help in the form of aid, in order to develop themselves. This period between 1950s and 1960s was said to be one of the greatest eras in the development of the entire world, because the idea of development was seen through the lens of theories, ideologies and strategies. Even the third world economies flourished and this was due to the three major approaches to development, which were introduced during this time; development economics, modernization theory and dependency theory (Haslam, Schafer, & Beaudet, 2016).
Lewis and Rodan presented the theory of development economics: the reason behind introducing this theory was to make sure that the poor and recently decolonized countries should get their fair share of capital. This theory was completely based on the idea of injecting capital (Haslam, Schafer, & Beaudet, 2016). One successful example of this theory is the Marshall Plan which helped Europe rebuilt its economy. Moreover, the Keynesian economic system was looked upon as a way to success: the state controls in capitalist economies and completely takes over when market falls.
This theory was taken as the ultimate way to success, because state was generating profit, people were employed and industries tend to work day and night to make the most out of it. Disequilibria was considered the best path for higher growth in “stagnant” economies, because they had to sacrifice something in pursuit of development (Haslam, Schafer, & Beaudet, 2016). However, this could not have been the best way to success, because just injecting investment was not enough for development.
Rostow’s idea of traditional society reaching modernization included five steps. These five steps ensured that the society is well developed, and contradicted the idea of development economics. Rostow argued that injection of capital was not the key factor for development: culture and politics also played an important role for development (Haslam, Schafer, & Beaudet, 2016). The first stage to development was the traditional society, where agriculture was very common, however, only agriculture could not lead to development because productivity was very low due to labor-based work.
To compete with the growing market, a country must have to take in count the pre-conditions to take-off: this included industrial revolution, thus making sure that everything gets commercialized, even agriculture so we can make the most out of it. Even by the name of it, we can conclude that the economy is preparing to take off just like a jet gets fueled up before taking off. When you’re finally taken off, this is the time of economic growth: sustained economic growth, input by the industries into the economic system of the country, and the infrastructure starts to flourish as well due to the boom in economy.
However, this take-off stage is there for a very long period of time to set up ground for the next stage that is the drive to maturity: once, the basics are correctly installed into the system, it is now time to attract investors so that will lead to the drive to maturity which will lead to social, economic and political development. Once, all of this is settled: the internal problems are all sorted out, the economy is now ready for the high-mass consumption stage, which is said to be the last stage of development by Rostow and today’s West and North belongs to. In this stage, the country is all set to enter the international market with profit generating goods and service (which was first restricted to agriculture only) (Oliver, 2005).
According to the lecture we had on this I assume that this theory showed first world as a model to the third world and also helped third world understand the advantage of globalization. Although, it is a one-way road, and once you are on this road there is no reverting back even if you’re unable to cope up. Even with this approach the third world never even became the part of the race of development and stayed the way they are due to its dependency on the first world.
Modernization theory claims of global development was not achieved. By 1960s the third world countries stayed where they were and the first world countries flourished even though, the third world countries were following the idea of modernization. I think we need to understand the idea that both the first and third world cannot develop the same way because of their political and economical background. Their structure was completely different due to the recent era of colonization.
Although, colonization was over now, but, the first world was still feeding upon the third world by selling them expensive manufactured goods and buying cheap raw material from them. In order to develop the periphery needs to stop trading expensive luxury goods and start producing their own manufactured goods, and, place trade barriers instead of opting for free trade. (Halperin, 2013).
Similarities and Differences
All these theories are inclined towards the development. However, with different approaches they hall have one main purpose that is to develop the underdeveloped. They all agree upon the segregation of first and third world which is created due to the difference in economic state, and, for the betterment of a country, the basic thing it needs initially is capital, that is one primary thing that all the theories agree upon, however, it is not the only thing.
Moreover, these theories also agree upon the idea of following: the under-developed must follow the path of the developed in order to succeed. ("Modernization Theory and Dependency Theory", 2018). It is worthy to bring up the idea that these theories are ethnocentric in a way because they do not think of an alternative way of development, they just consider the fact that there is only one path to development (Which are stated in the theories) and a country cannot develop alternatively ("Modernization Theory and Dependency Theory", 2018).
The difference between these theories is the consideration of relationship between the developed and underdeveloped world. The modernization theory states the relationship as equal: globalization will help both developed and under developed. On the other hand, the dependence theory states that this relation is an un-equal relationship, in other words it is complete exploitation of the third world ("Modernization Theory and Dependency Theory", 2018).
In my opinion all these theories are not really useful for the third world because these theories, mostly focus on the idea of comparison between the first and third world, whereas, I think, there is no as such comparison between the two. You cannot judge a fish’s ability by asking it to climb a tree. Therefore, the developing countries need to think of theories themselves, without comparing to the third world, instead, comparing themselves to economies which are a bit better than them in economy.
