3.1 Classic Theories of Economic Development: Four Approaches
The classic post-World War II literature on economic development has been dominated by four major and sometimes competing strands of thought: the linear-stages-of-growth model, (2) theories and patterns of structural change. (3) the international dependence revolution, and (4) the neoclassical, free-market counterrevolution. In recent years, an eclectic approach has emerged draws on all of these classic theories
Theories of the 1950s and 1960s viewed the process of development as a all countries must series of successive stages of economic growth through which which the right pass. It was primarily an economic theory of development in a quantity and mixture of saving, investment, and foreign aid were all that was necessary to enable developing nations to proceed along an economic growth path that had historically been followed by the more developed countries. Development thus became synonymous with rapid, aggregate economic growth
This linear-stages approach was largely replaced in the 1 by two competing schools of thought. The first, which focused on theories and patterns of structural change, used modern economic theory and statistical analysis in an attempt to portray the internal process of structural change that a "typical" developing country must undergo if it is to succeed in generating and sustaining rapid economic growth. The second, the international-dependence revolution, was more radical and more political. It viewed underdevelopment in terms of international and domestic power relationships, institutional and structural economic rigidities and the resulting proliferation of dual economies and dual societies both within and among the nations of the world. Dependence theories tended to emphasize external and internal institutional and political constraints on economic development Emphasis was placed on the need for major new policies to eradicate poverty, to provide more diversified employment opportunities,and to reduce income inequalities. These and other egalitarian objectives were to be achieved within the context of a growing economy, but economic growth per se was not given the exalted status accorded to it by the linear-stages and structural-change models.
Throughout much of the 1980s and 1990s, a fourth approach prevailed. This neoclassical (sometimes called neoliberal) counterrevolution in economic thought emphasized the beneficial role of free markets, open economies, and the privatization of inefficient public enterprises. Failure to develop, according to this theory, was not due to exploitive external and internal forces as expounded by dependence theorists. Rather, it was primarily the result of too much government intervention and regulation the economy. Today's eclectic approach draws on all of these perspectives, and we will highlight the strengths and weaknesses of each