At the end of this topic, student will be able to:
i. Analyse different theories of economic growth.
ii. Explain basic characteristics of developing nations.
iii. Know the reason why economic growth can not lead to economic
development.
3.1 ROSTOW STAGES OF GROWTH
W. Rostow divided the phases of development into 5 evolutionary stages which
are:
i) Primitive stage ii) Pre-condition to development (iii) take off to development
(iv) drive to maturity v) High mass consumption.
i) Primitive stage: According to him this stage maked the beginning of
traditional business such as blacksmith, farming, subsistence market
economy, among others. The technology adopted at this stage was simple
and the size of the market was relatively smaller.
ii) Pre-condition to development: This deals with the breakdown of
tradition and cultural rigidities that could militate against development
e.g. ethnic war, intolerance, superstition, human sacrifices etc. This stage
imply that for development to be achieved there must be exchange of ideas, inter ethnic marriage, sharing of asset particularly land, exchange of
goods and services, mobilization of resources from areas of surpluses to
areas of shortages.
iii) Take off to Development: This is the stage where infrastructures such as
effective and efficient communication system; transportation system,
health facilities, portable water supply, among others are laid down,
couple with high investment value which must range between 10% and
15% of national income.
iv) Drive to maturity: Here development has become internalized. This
implies that some investment activities in a country have become
improved thereby generating high level of return.
v) High mass consumption: This stage encourages large scale production
facilitated by improvement in the level of nation‘s technology. It involves
allocation of huge amount of money for a nations research institutes to
develop her technological resource base as a means of meeting up the
primary needs of the society and international demands.
CRITISMS OF THE W. ROSTOW THEORY OF DEVELOPMENT
i) Traditional society is not an essential requirements for development, for
instance countries such as US, Canada, New Zealand etc were born free of
traditional societies and they derived pre-condition from Britain a country
already developed,.
ii) He only observed successful countries that passed through development
stages. For example Nigeria performed well in the first three stages of
development enunciated by Rostow between 1970s and late 19890s but
unable to move to the last two stages of development largely due to
a) Enormous income inequality distribution
b) Mismanagement on the part of government officials
c) Adoption of more cultural technology
d) Poor maintenance of infrastructures, among others
Self Assessment Exercises
i. Critically examine the W. Rostow growth theory
ii. Examine the criticism of the theory.
3.2 THE INTERNATIONAL DEPENDENCE REVOLUTION
During the 1970s, international-dependence models gained increasing support,
especially among developing- country intellectuals, as a result of growing
disenchantment with both the stages and structural- change models. while this
theory to a large degree went out of favour during the 1980s and 1990s, version
of it have enjoyed a resurgence in the early years of the twenty- first century, as
some of it view have been adopted, albeit in modified form, by theorist and
leaders of the ant globalization movement. Essentially, international dependence models review developing countries as beset by institutional,
politics, and economic rigidities, both domestic and international, and caught up
in a dependence and dominance relationship with rich countries. With this
general approach are three major streams of thought: the neo-colonial
dependence models, the false -paradigm models, and the dualistic-development
thesis.
THE NEOCOLONIAL DEPENDENCE MODELS
The first major stream, which we call the Neo colonial dependence models, is an
indirect outgrowth of Marxist thinking. it attribute the existence and continuance
of underdevelopment primarily to the historical evolution of a highly unequal
international capitalist system of rich country - poor country relationships.
whether because rich nations are intentionally exploitative or unintentionally
neglectful, the coexistence of rich and poor nations in an international system
dominated by such unequal power relationship between the centre (the developed
countries) and the periphery (the LDCs) renders attempts by poor nations to be
self-reliant and independent difficult and sometimes even impossible. Certain
groups in the developing countries (including landlords, entrepreneur, military
rulers, merchants, salaried public officials, and trade union leaders) who enjoy
high incomes, social status and political power constitute a small elite ruling
class whose principal interest, knowingly or not, is in the perpetuation of the
international capitalist system of inequality and conformity in which they are
rewarded. Directly and indirectly, they serve (are dominated by) and are
rewarded by (are dependent on) international special- interest power groups,
including multinational corporations, national bilateral - aid agencies, and
multilateral assistance organizations like the world bank or international
monetary fund (IMF), which are tied by allegiance or funding to the wealthy
capitalist countries.
In addition, it is believed that the economic changes in third world countries
depend on industrial activities of the advanced countries. Basically the
interaction between the less developed countries and the developed countries
exist in terms of laws deliberately set up by the colonial imperialist to render the
third world countries highly import, technological, economical, political and
culturally dependent. In this wise, the survival of the less developed countries
since the colonial era to date is still largely tied to the control of the developed
countries of the world.
Weisskoof (1992) contends that the relationship between countries such as USA,
Britain, France etc and Nigeria, Gambia etc has impoverished the latter and
according to him, he articulated the effect of such relationship as follows:
a) Factor bias effect 2) capital flight syndrome 3) International demonstration
effect and 5) Brain drain effect.
The False Paradigm Model
A second and less radical international dependence approach to development,
which we might call the false - paradigm models, attributes underdevelopment to faulty and inappropriate advice provided by well- meaning but often
uninformed, biased, and ethnocentric international "expert" advisers from
developed- country assistance agencies and multinational donor organizations.
These experts are said to offer complex but ultimately misleading models of
development that often leads to inappropriate or incorrect policies. Because of
institution factors such as the central and remarkably resilient role of traditional
social structure (tribe, caste, class, etc.) the higher unequal ownership of land and
other property right, the disproportionate controls by local elites over domestic
and international financial assets, and the very unequal access to credit, these
policies, based as they often are on main street, neo classical (or perhaps Lewis�type surplus-labour or Chenery type structural change) models, in many cases
merely serve the vested interest of existing power groups, both domestic and
international.
In addition, according to this argument, leading intellectuals, trade unionist,
high-level government economist, and other civil servants all get their training in
developed country institution where there are unwittingly served an unhealthy
dose of alien concept and elegant but in applicable theoretical models, having
little or no useful of knowledge to enable them to come to grips in an effective
way with real development problem , they often tend to become unknowing or
reluctant apologists for the existing system of elitist policies and institutional
structures. In university economics courses, for example, this typically entails he
perpetuation of teaching of many "irrelevant" western concepts and models,
while in government policy discussions, too much emphasis is placed on
attempts to measure capital-output ratios, to increase savings and investment
ratios, to privatize and deregulate the economy, or to maximize GDP growth
rates. As a result, proponents argue that desirable institutional and structural
reforms, many of which we have discussed, are neglected or give only cursory
attention.
The Dualistic - Development Thesis
Implicit in structural- change theories and explicit in international - dependence
theories is the notion of a world of dual societies, of rich nations and poor
nations and, in the developing countries, pocket of wealth within broad areas of
poverty. Dualism is a concept widely discussed in development economic. It
represents the existence and persistence of substantial and even increasing
divergences between rich and poor nations and rich and poor people on various
levels. Specifically, the concept of dualism embraces four key arguments.
1. Different set of conditions, of which some are "superior" and others
"inferior," can coexist in a given space. Examples of this element of
dualism includes Lewis's notion of the coexistence of Modern and
traditional methods of production in urban and rural sectors: the
coexistence of wealthy, highly educated elites with masses of illiterate
poor people; and the dependence notion of the coexistence of powerful
and wealthy industrialized nations with weak, impoverished peasant
societies in the international economy.
2. This coexistence is chronic and not merely transitional. it is not due to a
temporary phenomenon, in which case time could eliminate the discrepancy between superior and inferior elements. In other words, the
international coexistence of wealth and poverty is not simply a historical
phenomenon that will be rectified in time. Although both the stage-of -
growth theory and the structural- change models implicitly make such an
assumption, to proponents of the dualistic development thesis, the facts of
growing international inequalities seems to refute it.
3. Not only do the degrees of superiority of inferiority fail to show any signs
of diminishing, but they even have an inherent tendency to increase. For
example, the productive gap between workers in developed countries and
their counterparts in most LDCs seems to widen with each passing year.
4. The interrelations between the superior and inferior elements are such that
the existence of the superior elements does little or nothing to pull up the
inferior element, let alone ―trickle down" to it. In fact it may actually
serve to push it down- to "develop its underdevelopment"
Self Assessment Exercises
i. evaluate the classical international dependence model
ii. Examine the criticism of the theories.
3.3 DEVELOPMENTAL OBJECTIVES.
The development objectives popularly pursued by most countries are:
Growth in income: The growth in income will be desirable if it ranges
between 67 per cent than the national income will double, at 10 per cent,
the average income will double, but this is not sustainable.
Equitable distribution of income: The income generated should be
equitably distributed to every region, sector, classes, etc. This should aim
at bridging the gap between the poor and the rich. Otherwise, there will be
deepening poverty which may cause violence, unrest, conflict, civil war,
etc.
Employment promotion: There must be provision of jobs for the skilled,
semi-skilled and unskilled labour to reduce the incidence of social menace
(e. g. armed robbery) in the society.
Self reliance: There must be improvement in. balance of payment (BOP),
external economy, food, security, reduction in stock of external debt. This
also extend to strategic needs such as energy, security, defence, etc. (to
protect territorial integrity).
Price stability: There should be negligible inflation. No price fluctuation.
The prices of goods and services should be stable over a period of time.
Balanced development: There must be balance in the nation, in the
sectorial units, there must be balance. Not necessarily at the same rate but
it should meet the need for development requirement. There should be
regional balance to reduce rural- urban migration.
Environmental preservation and maintenance ecological balance:
This implies that residential environment must be free of oil spillage, air
pollution, etc. The drainage system must also be efficient to prevent flooding of
water.
Self Assessment Exercises
i. what are developmental objectives.
4.0 CONCLUSION
This unit conclude that there cannot be development without growth and that
presence of growth itself does not guarantee development. Whatever their
ideological differences, the advocates of the neo-colonial-dependence, false -
paradigm, and dualism models reject the exclusive emphasis on traditional
neoclassical economic theories design to accelerate the growth of GDP as the
principal index of development. They question the validity of Lewis - type two
sectors models of modernization and industrialization in light of their
questionable assumption and recent- developing-word history. They further
reject the claims made by Chenery and others that there exist well -defined
empirical patterns of development that should be pursued by most poor countries
on the periphery of the world economy. Instead, dependence, false-paradigm,
and dualism theorist place more emphasis on international power imbalances and
on needed fundamental economic, political, and institutional reforms, both
domestic and worldwide. In extreme cases, they call for the outright
expropriation of privately owned assets in the expectation that public asset
ownership and control will be a more effective means to help eradicate absolute
poverty, provide expanded employment opportunities, lessen income
inequalities, and raise the level of living (including health, education, and
cultural enrichment) of the masses. Although a few radical neo-Marxists would
even go so far as to stay that economic growth and structural change do not
matter, the majority of thoughtful observers recognize that the most effective
way to deal with these diverse social problems is to accelerate the pace of
economic growth through domestic and international reforms accompanied by a
judicious mixture of both public and private economic activity.
5.0 SUMMARY
The unit explored the some growth theories, that is Rostow stages of growth and
international dependence theories and finally looked at the other major
developmental objectives.
6.0 TUTOR MARKED ASSIGNMENT
i. Discuss W. Rostow's stages of growth
ii. What are the developmental objective(s) that is (are) crucial to the
development of Nigerian economy
iii. Discuss linear stages of growth theory, which of the stages is Nigeria now?
iv. Comment on dependence development thesis.
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