AMU3630_Week_8_Part

All right.

So welcome to the second part of the lecture video

for a military 630 We're in Week eight, poverty and

development of global economic governance.

And now we are going to talk about the theories

off development.

I think there will be some familiar, familiar elements here,

especially the dependency theory.

So, dio keep that in mind.

And probably also some elements that you guys made, Remember

from other units.

Um, but yeah, let's start start off with the first

theory off development, post World War Two and that its

modernization theory well, modernization theories, the conventional liberal wisdom, the

general conventional idea about how countries develop.

And it was, um, generally solidified by an American scholar

world. Wittman Rast.

Oh, well, Rust was not just scholar.

He was also involved in John F.

Kennedy's administration in the United States.

So he was, um, you know, part of the government

for a period of time as well.

Um, didn't necessarily, uh, well, it's not really necessary.

Remembered very well as he was one of the hoax

during the Vietnam War on the American administration.

But that's besides the point on the point for us,

here is that Ross toe, um conceptualized this theory with

five linear stages off development.

This was something that he's done in his book called

The Stages Off Economic Growth, published 1960.

And I would like you toe keep in mind the

subtitle here and that's a non Communist manifesto.

And that's important because, ah, modernization theory emerges at the

time of the Cold War, where the Communist movement seems

to have bean successful in countries that were not developed

very well, countries that were poor and that was believed

by Ross Toe to be a problem, of course, and

a problem that can be addressed in a particular way.

Eso Ross still believed that there are five stages off

development for every single country in every single part of

the world.

Uh, they will be just following the same trajectory on

death. This is exemplified here in this simple break down.

So it all starts off with a traditional society where

there is limited technology static society.

Um, you know that very early stage and then the

next element is external influence, uh, interest or markets that

are triggering transition to three conditions for takeoff, where commercial

exploitations off agriculture and extractive industry take place.

So primary industry, right, primary commodities and then from there

own we have the next step installation off physical infrastructure,

emergence of political elite that leads toe take off in

terms of development.

And that's development of manufacturing sector It then move on

to the next step.

Investments in manufacturing exceeding 10% of national income.

That leads to drive toe maturity, development of wider industrial

and economic base in the country.

And that leads on to the final step.

True exploitation off comparative advantage in international trade that a

state leader achieves the level off high mass consumption.

So that was the belief of world Ross toe.

And it was understood, according to his theory, that every

single state will go through all these stages s Oh,

it doesn't matter where your country is.

It doesn't matter.

Um, what what?

What was your particular circumstance?

What matters is at which stage off this five stages

you are on dhe off course.

This is modeled on the development of the western world,

and this was the belief of Rasta that every state

will have to follow these steps.

Eso His idea was, of course, that the West was

developed. The countries in the United States, of course, Western

Europe aware, developed why countries in the Third World were

underdeveloped. And this was the way that there could achieve

their development.

Well, why would they want to achieve the development?

You would ask Rasta would say, Well, uh, they should

follow the steps because otherwise the Communists will seize control

and be able to exploit They're undeveloped condition s Oh,

of course, you guys probably see a lot of problems

with this approach, but keep in mind, this was actually

a very dominant theory at the time.

It's based, of course, on the idea that all states

will undergo a homogeneous modernization process from traditional agricultural societies

to modern industrial ones, which is problematic.

And they're also to other assumptions.

Firstly, that again, economic growth is the best indicator off

development. And second in that top down modernization would have

a trickle down effect that will trickle down through society

if it's engineered by the state.

And indeed, this theory had that element off the state

kind off being involved in initiating the steps or managing

them, and then the benefits will trickle down, uh, to

to the people.

So that's modernization theory emerged in the Cold War context.

That's important.

And it was later countered by another theory, also very

much in the same context off the Cold War.

And that's very well known to us already.

Dependency theory.

Now we talked about dependency theory when we talk about

the theories that helped to solidify, uh, provide a theoretical

background for the Third World countries to push for the

new idea off.

The global economic order would end i e.

O. But dependency theories off course.

Also very important as a theory off development because it

was, first of all, the critique off development theory, and

it developed in the global South.

As you guys know in the 19 sixties and seventies,

we kind of talked about it already.

Um, some key authors there structuralist authors, new Marxist authors

like Under Like Immanuel Wallerstein are very important here.

And of course, the main idea that you guys actually

remember is that some areas of the world are actively

underdeveloped, true and unequal and exploitative global economic system.

So while on the one hand, modernization theory advanced advocates

the state to be more and more involved in global

economy toe benefit from it, dependency theory says Well, some

states will be permanently underdeveloped because the system is unequal

and exploitative.

So the emphasis was here, of course, on the structural

problems with the third World economic within the within the

world economic system.

Yes, that's led, of course, to the proposal for N

i O in the 19 seventies.

We've talked about it in week five.

So you guys can look, look back and try toe.

Remember what we discussed?

Uh um and important point to notice the dependency theorists

regarded development the whole concept of development as an exercising

power and the continuation off colonialism eso the way, for

example, dependency theories will look at modernization theories would be

exactly along those lines that this is kind of an

idea off, um, sort of continuation of colonialism and exercising

power, imposing certain models from outside regardless of the conditions

Like Why does everybody have to follow the Western ways

on dhe?

And in this case, of course, pointing out the unfairness,

lack of fairness off the system and exploitative manner in

which it deals with some of the states.

Eso This was the debate leading towards 19 seventies initially

development theory that set up by by a modernization theory

story with with being the key theories, UH, some well,

the United States especially, and some off the foundations some

of the institutions that were actively supporting development in various

parts of the world true the Cold War period were

actually kind of actively supporting the ideas of modernization theory.

And, you know, some experts will come on the ground

to places like, for example, Vietnam trying toe implement these

elements within the local political and economic systems.

There are.

So there's actually been quite a number of books recently

about it, about how development played out in different parts

of the world in Korea and Vietnam, especially kind off

the one that was supervised by the Americans.

And with this, the modernization theory has its at its

core. Um, it's important to know this was not a

clear highway to success.

As you would imagine.

There are lots of conflicting issues on the ground.

I want to get into that.

You can look look at those books if you're interested.

But, yeah, just keep in mind.

That's the first idea.

Modernization theory later is being countered by dependency theory in

the 19 seventies And what happens later?

Post 1980 something we're going to look at now.

So let's take a look at the next slide post.

1980. We have a bit off different reality when we

look at the developing world, right?

Because as you guys remember, we have the success off

East Asian economies.

Newly industrialized economies like Taiwan, South Korea, Singapore, Hong Kong

emerged and they're doing very well economically.

Eso the idea of the Third World kindof loses instruction,

as you guys remember from from our area discussion, um,

about the n i o on Yeah, the Third World

becomes fragmented, so there is no longer uniforms so called

Third World that needs to be developed.

Some states developed very well.

Some didn't.

Both modernization theory and dependency theory kind of lost traction

in that period of time.

They could offer only really limited explanations to what happened

and why it happened.

And that leads us to the new dichotomy.

And that's the dichotomy between two different approaches to development.

And that's new liberalism versus new status.

Um, and we will touch on it on the next

slide s Oh, These are the two approaches, Uh, that

emerged or became popular among scholars in the post 19

eighties, period.

So, off course neo liberalism that we all know very

well gained prominence with the emergence of fragment toucher in

the 19 eighties.

As you guys remember, very well focused on private property

free markets.

Free trade s because the politicization of economic activity right

idea waas let get the government out, Get the state

out of it.

Let the free market balance itself.

Um, neo liberal thinking off course emphasizes participation global economic

activity as a prerequisite for development.

So it kind of clicked links back, you know, to

some degree to the murder modernization theory already.

But modernization theory included quite a heavy involvement off the

state. While ofcourse new liberal approaches, let's get the state

out of it and get the companies get the entrepreneurs

engaged in economy activity and in international trade.

Eso Of course.

The idea was that neoliberals had had in mind with

the reasons for failure off development were internal.

There were states who had in current government policies, there

was excessive state intervention.

Basically, it was not a systemic problem.

Like dependency theorists would have.

But it was an internal problem off each particular state,

primarily corruption.

Government policies were wrong.

Too much intervention.

The solution is quite simple.

Get the state out off the way.

Eso That's one possibility, of course, very much in line

in line with the new liberal thinking.

But we should ask ourselves, Can neo liberalism explain the

success of East Asian development?

And if you guys had remember from the past in

is that you've taken including Amy one tree to five

when we talked about Japan?

Uh, not exactly, because the East Asian tigers who achieved

high level of development did not exactly follow new liberal

policies. In fact, um, this brings us to the point

for new state is, um New State is, um is

a concept based on the development of state, a state

playing a key role in shaping director and promoting the

economic development off the country.

S O markets are governed by state to advance developmental

priorities within their borders, and that's exactly what happened in

place, like Japan in the East Asian tigers as well.

A state played an important role.

It directed decisions, uh, in terms off developmental priorities which

sectors get funding and support which sectors should be focused

on, uh, which will be the most beneficial for the

state's development?

So this is the debate that has been going on

after the kind of demise off modernization theory and independent

city or neo liberalism, of course, coming with full force.

But at the same time, we have new status, this

idea that the state in the Asia actually developed not

because off more and more liberalization, but rather because the

skilful state management off the economic directing resource is to

particular industries.

Okay, guys.

So I will leave you with this for now and

do click on the next video to continue our discussion

now in terms of more practical forms off how development

can be achieved within states.

AMU3630_Week_8_Part_2

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