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    Classic Theories of Development: A Comparative Analysis

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    Anas Mahmood
    The document outlines four classic theories of economic development: 1) Linear-stages-of-growth model from the 1950s-1960s 2) Theories and patterns of structural change from the 1970s 3) International-dependence revolution from the 1970s 4) Neo-classical, free-market counterrevolution from the 1980s-1990s. It then provides more details on structural-change models, including Lewis's theory of development and Chenery's model of development patterns. Lewis's theory describes the transfer of surplus labor from the traditional to the modern sector, while Chenery identified characteristics of development like shifts from agriculture to industry and changes in consumption.

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    Classic Theories of Development: A Comparative Analysis

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    Anas Mahmood
    143 views11 pages
    The document outlines four classic theories of economic development: 1) Linear-stages-of-growth model from the 1950s-1960s 2) Theories and patterns of structural change from the 1970s 3) International-dependence revolution from the 1970s 4) Neo-classical, free-market counterrevolution from the 1980s-1990s. It then provides more details on structural-change models, including Lewis's theory of development and Chenery's model of development patterns. Lewis's theory describes the transfer of surplus labor from the traditional to the modern sector, while Chenery identified characteristics of development like shifts from agriculture to industry and changes in consumption.

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    Chapter 4

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    The document outlines four classic theories of economic development: 1) Linear-stages-of-growth model from the 1950s-1960s 2) Theories and patterns of structural change from the 1970s 3) International-dependence revolution from the 1970s 4) Neo-classical, free-market counterrevolution from the 1980s-1990s. It then provides more details on structural-change models, including Lewis's theory of development and Chenery's model of development patterns. Lewis's theory describes the transfer of surplus labor from the traditional to the modern sector, while Chenery identified characteristics of development like shifts from agriculture to industry and changes in consumption.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    143 views11 pages

    Classic Theories of Development: A Comparative Analysis

    Uploaded by

    Anas Mahmood
    The document outlines four classic theories of economic development: 1) Linear-stages-of-growth model from the 1950s-1960s 2) Theories and patterns of structural change from the 1970s 3) International-dependence revolution from the 1970s 4) Neo-classical, free-market counterrevolution from the 1980s-1990s. It then provides more details on structural-change models, including Lewis's theory of development and Chenery's model of development patterns. Lewis's theory describes the transfer of surplus labor from the traditional to the modern sector, while Chenery identified characteristics of development like shifts from agriculture to industry and changes in consumption.

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    Classic theories of Development

    A Comparative Analysis

    OUTLINE

    The Quest for Growth


    The financing gap Investment in physical and human capital Structural Adjustments New economic theory

    Four approaches to the Classic Theories of


    Development
    2

    Classic Theories of Economic Development: Four Approaches

    Literature on economic development is


    Linear-stages-of-growth model: 1950s and
    1960s

    dominated by the following four strands of thought:


    Theories and patterns of structural change: 1970s International-dependence revolution: 1970s Neo-classical, free-market counterrevolution: 1980s and 1990s
    3

    Structural-Change Models
    Structural-change theory focuses on the
    mechanism by which underdeveloped economies transform their domestic economic structures from traditional to an industrial economy Representative examples of this strand of thought are
    The Lewis theory of development Chenerys patterns of development

    Lewis Theory of Development

    Also known as the two-sector


    surplus labor model Features of the basic model:
    Economy consists of two sectorstraditional and modern Traditional sector has surplus of labor (MPL=0) Model focuses on the process of transfer of surplus labor and the growth of output in the modern sector
    5

    Lewis Theory of Development

    The process of self-sustaining

    growth and employment expansion continues in the modern sector until all of the surplus labor is absorbed

    Structural transformation of the

    economy has taken place with the growth of the modern industry

    Lewis Theory of Development: Criticisms Four of the key assumptions do not fit the realities of contemporary developing countries Reality is that:
    Capitalist profits are invested in labor saving technology Existence of capital flight Little surplus labor in rural areas Growing prevalence of urban surplus labor Tendency for industrial sector wages to rise in the face of open unemployment

    Structural Changes and Patterns of Development : Chenerys Model

    Patterns of development theorists view

    increased savings and investment as necessary but not sufficient for economic development In addition to capital accumulation, transformation of production, composition of demand, and changes in socio-economic factors are all important Chenery and colleagues examined patterns of development for developing countries at different percapita income levels
    9

    Structural Changes and Patterns of Development : Chenerys Model

    The empirical studies identified several


    characteristic features of economic development:
    Shift from agriculture to industrial production Steady accumulation of physical and human capital Change in consumer demands Increased urbanization Decline in family size Demographic transition
    10

    Structural Changes and Patterns of Development : Chenerys Model

    Differences in development among the


    countries are ascribed to:
    Domestic constraints International constraints

    To summarize, structural-change analysts

    believe that the correct mix of economic policies will generate beneficial patterns of self-sustaining growth

    11

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