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Development theory is largely a product of post-World
War II thinking in the social sciences and international policy studies. The
key intellectual challenges for development theory are these: What are the
causes of economic transformation in human societies? And what are some of the
policies through which governments can stimulate the processes of economic
growth? These questions have been
the subject of inquiry within classical political economy for several
centuries, and interest in the determinants of growth and modernization has
been part of economic theory since its beginnings. But modern development theory took its impulse from global
developments following World War II—the needs of reconstruction of Europe
and Japan following World War II; the creation of international monetary and
trading regimes to facilitate international economic interaction; the
circumstances that followed from the dissolution of European colonies in Asia,
Africa, and Latin America; growing attention to the persistence of poverty in
the developing world; and focus in the 1990s on the phenomena of
globalization.
The
concept of development has encompassed several separate ideas in the past sixty
years: the idea of modernization of economic and social institutions, the idea
of sustained economic growth within a national economy, the idea of the
continuing improvement of the material well-being of the earth’s human
population, the idea of more extensive utilization of the world’s resources,
and the idea of the replacement of “traditional” institutions and values with
“modern” successors. Some of the
large questions that have guided development theory include these: What are the
features of society that can be characterized as “modern”? What causes a society to undergo
sustained “modernization” and sustained economic growth? What institutional features are
important causes in economic development?
What steps can governments or other major institutions take to stimulate
development? What is the
significance of the specific features of western European economic development
since 1600? Are there alternative
pathways through which “modernization,” growth, and improvement of human
well-being can occur? Are there
cultural assumptions that are made in valorizing development, growth, and
modernization over tradition, moderate consumption, and stable cultural
practices? How can we best define
the goals of development in terms of human well-being? How should considerations having to do
with equality, equity, and justice be incorporated into analysis and policy of
development?
Development
theory has taken shape through efforts in several areas of the social sciences:
economics (theories of efficient markets, trade, and income distribution);
sociology (research on concrete processes of social change in different parts
of the world); anthropology (research on the values and practices of a range of
non-Western cultures); political science (research on the institutions and
interests that drive international economic policy); history (research on the
dynamic circumstances that created modern national and international economic
institutions); and critical social science (focus on features of inequality,
power, and exploitation that have often characterized international economic institutions). Each of these strands captures
something important about the historical experience of parts of the modern
world, and yet they fall short of a full and general approach to the topic of
development. Development theory is
an expansive, eclectic, and interdisciplinary field defined by a diverse set of
questions and methods—not an exact sub-discipline within economics.
Decolonization
and the aftermath of World War II stimulated a wave of academic and policy
interest in the dynamics of economic growth and development. President Harry Truman highlighted the
crucial importance of addressing global issues of poverty and hunger in his
1949 State of the Union address, an emphasis that stimulated new United States
and international commitments in support of economic development in the
decolonized world. The 1950s
witnessed a surge of early development theory, in the hands of such authors as
Simon Kuznets, W. Arthur Lewis, and Ben Hoflitz. A central thrust of these efforts was the formulation of
economic theories of growth that, it was hoped, could help to guide policy in
the economic transformations associated with decolonization. Post-war development theory also
provided some of the intellectual foundations for the establishment of post-war
international economic institutions such as the World Bank and the
International Monetary Fund. Much
of this work presupposed the idea that there were distinct stages of economic
development (Rostow 1960), and it focused on the relationship between economic
growth and savings as the basis for capital formation. The role of trade in economic
development also played a central role in these theories. W. Arthur Lewis’s theory of the “dual
economy” was particularly prominent as a basis for attempting to understand the
economies of the previously colonial world. This model postulates an economy consisting of a
“traditional” sector (labor) and a “modern” sector (capital). Lewis postulated
that firm owners in the modern sector were profit-maximizing, whereas those in
the traditional sector were not, and that there was surplus labor in the
traditional sector. So a strategy
for growth is to induce a shift of economic activity from the traditional to
the modern sector (Lewis 1955). This
approach would increase savings and capital formation, leading to growth and
rising incomes. Other economists
such as Adelman and Chenery cast doubt on the stage theory and further broadened
the perspective by bringing distribution and welfare into the discussions (Adelman 1978), (Chenery et al. 1974).
There
has been emphasis since the 1960s—sometimes waxing, sometimes
waning—on the crucial importance of alleviating poverty in the developing
world. Throughout much of its
history the World Bank has expressed its adherence to the priority of poverty
alleviation (World Bank 1990), (World Bank 2001). The
United Nations Millenium Goals place poverty alleviation at the center of the
development agenda for the coming fifty years (UN Millennium Project 2005). But
even placing a sincere priority on poverty alleviation, there is a wide range
of disagreement over the steps that should be taken to achieve this goal.
Several
important frameworks of thought have been important in the past several decades
of thinking in development theory. Neo-liberal development theory reflects the
folk wisdom of neo-classical economic and political theory. Now described as the “Washington
Consensus,” this approach to development postulates that modern economic
development requires free markets, effective systems of law, and highly limited
powers of government (Lal 1985). The
slogan of “Getting the Prices Right” was a rule of thumb for economic
institutional reform in countries receiving advice and assistance from
international institutions (Timmer 1986), (Bates 1981). This
school of thought places great importance on free trade within the
international economic system (Bhagwati 1969).
Neo-liberal structural adjustment reforms in the 1980s, enforced through
International Monetary Fund and World Bank policies, pushed third-world
governments towards harsh domestic reforms (currency devaluation, reduction of
programs aimed at the poor, elimination of subsidies for rural development,
liberalization of trade practices).
Critics have argued that these structural adjustment policies have had
the effect of further impoverishing the poorest of many developing societies (Rodrik 1997), (Stiglitz 2002).
Critical of the neo-liberal consensus is an
influential group of development theorists who emphasize the centrality of
human well-being in development theorizing and the crucial role that public
policies and expenditures play in successful efforts to improve the well-being
of the poor in developing societies.
Amartya Sen, Martha Nussbaum, and others argue for placing a nuanced
theory of human development grounded in capabilities and functionings at the
center of development policy (Sen 1999), (Nussbaum 2000). And
they argue for the crucial role that public policy has in creating the human
welfare infrastructure that is essential for the successful alleviation of
destitution: public health, nutrition, free education, and democratic freedoms (Drèze and Sen 1989). On this
view, the narrow conception of the role of the state associated with the
neo-liberal approach almost inevitably implies further degradation of the
conditions of life of the least-well-off in the developing world. A concrete achievement of this approach
is the creation and maintenance of the Human Development Index by the United
Nations Development Programme (United Nations Development Programme 2000). This index is designed to provide a measure of
economic development that goes beyond measuring growth of per-capita income,
and instead focuses on measures that are correlated with quality of life:
health, longevity, and educational attainment, for example. Another such
measure is the “Physical Quality of Life Index” (Morris 1979).
There
have been critical voices within development theory throughout its history.
Post-war theories of colonialism emphasize the extractive role that the system
of colonial control represented, with a flow of natural resources from
periphery to metropole. Dependency
theory is the view that the world economy since 1945 has been constructed
around a set of institutions that systematically disadvantage the South for the
benefit of the North, by structuring production and trade in such a way as to
limit economic growth in the third world (Frank 1967). The
South is integrated into the “modern world system,” but on terms that
systemically work to the disadvantage of the countries and peoples of the
periphery (Wallerstein 1974). The
Brandt report (Independent Commission on International Development
Issues 1980) focused attention on the relations between the wealthy North and the
impoverished South. This approach
emphasizes structural inequalities, systemic institutional disadvantages,
patterns of unequal exchange, and resulting uneven development. A different line of critical thought
emerges from cultural critics of modernization. Arturo Escobar is a central voice in this body of criticism (Escobar 1995). This
perspective offers a critique of the discourse and presuppositions of
development thinking in the West: the presumed primacy of Western values, the
unquestioned importance of consumerism, the teleology associated with the
concept of “modernization”, and other ways in which the values and assumptions
of development theory reflect unquestioned ethnocentrism and universalism.
The
concept of development incorporates several debatable assumptions. First, it has a tendency towards
Eurocentricism. The paradigm of
development incorporated in much development theorizing is the experience of
western Europe during the Industrial Revolution. Non-European societies that undergo “development” (Japan,
Taiwan, Argentina) are frequently categorized in terms of a baseline comparison
to the western European experience.
Historical research in the past twenty years casts doubt on this single-track
theory. Asian economic development
in the seventeenth century and the twentieth century gives substantial evidence
of the availability of alternative pathways of development, and there is
considerable institutional variation within regions of western Europe itself (Wong 1997), (Sabel and Zeitlin 1997).
Second,
the concept of development is burdened with an implicit teleology. The word implies a progressive
transformation from “less developed” to “more developed”; it implies the
creation of more complex, sophisticated, and humanly adequate systems out of
simpler and less adequate systems.
(Rostow’s concept of “stages of growth” capture this assumption
precisely; (Rostow 1960)).
Historians have long since abandoned the idea that history has
directionality, and have demonstrated the many false starts, wrong turns,
reversals, and stalls that all societies have experienced. History is not a road to somewhere.
Third,
the concept of development brings with it an idealized set of assumptions in
the background about what a “developed” society ought to include: consumerism,
democracy, markets for everything, individualism, impersonal legal systems,
large complex societies, and a high material standard of living. This is a social ideal that is deeply
embedded in development theory and that can be legitimately questioned. The values that are associated with
western consumer culture represent one possible framework of human
values—but only one such framework (Escobar 1995). And in
fact, it may be that the constraints of longterm environmental sustainability
make this complex of values doubly questionable.
Finally,
development theory has been forced to confront the contradictions between
economic growth and environmental sustainability. Resource depletion, destruction of forests and wetlands,
urban sprawl, air and water pollution, and global climate change resulting from
CO2 emissions all call into doubt the feasibility of permanent
economic growth (United Nations Environment Programme 2002). Prudent
multi-generational planning for the future of the planet will require more
consistency between the needs of consumption and the needs of environmental
sustainability.
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Irma. 1978. Redistribution Before Growth--A Strategy for Developing
Countries. The Hague: Martinus Nijhof.
Bates, Robert H. 1981. Markets and states in tropical Africa : the
political basis of agricultural policies, California
series on social choice and political economy.
Berkeley: University of California Press.
Bhagwati, Jagdish N. 1969. Trade, tariffs and growth: essays in
international economics. London,: Weidenfeld
& Nicolson.
Chenery, Hollis, Montek S. Ahluwalia, C.L.G. Bell, John H. Duloy, and
Richard Jolly. 1974. Redistribution with Growth. Oxford: Oxford University Press.
Drèze, Jean, and Amartya Kumar Sen. 1989. Hunger and public action. Oxford: Clarendon Press.
Escobar, Arturo. 1995. Encountering development : the making and unmaking
of the Third World, Princeton
studies in culture/power/history.
Princeton, N.J.: Princeton University Press.
Frank, Andre Gunder. 1967. Capitalism and underdevelopment in Latin
America; historical studies of Chile and Brazil. New York: Monthly Review Press.
Independent Commission on International Development Issues. 1980. North-South,
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Nussbaum, Martha Craven. 2000. Women and human development : the
capabilities approach. Cambridge, U.K. ;
New York: Cambridge University Press.
Rodrik, Dani. 1997. Has globalization gone too far? Washington, D.C.: Institute of International
Economics.
Rostow, W. W. 1960. The stages of economic growth, a non-Communist
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le capitalisme moderne. Cambridge [England]
; New York: Maison des sciences de l'homme ; Cambridge University Press.
Sen, Amartya Kumar. 1999. Development as freedom. 1st. ed. New York: Knopf.
Stiglitz, Joseph E. 2002. Globalization and its discontents. 1st ed. New York: W.W. Norton.
Timmer, C. Peter. 1986. Getting prices right : the scope and limits of
agricultural price policy, Cornell
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Century. New York.
Wong, R. Bin. 1997. China Transformed: Historical Change and the Limits
of European Experience. Ithaca, New York:
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———. 2001. World Development Report 2000/2001 :
Attacking Poverty. Oxford: Oxford
University Press.
Daniel Little
University of Michigan-Dearborn
Word count: 1974 (excluding references)
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