Development and Dependency | Sociology Optional for UPSC (Notes) PDF Download

There are many theories of development and dependency. These theories have strengths and weaknesses. One shortcoming of all of them is that they frequently give short to the role of women in economic development. By putting the theories together, however, we should be able to answer a key question facing the 85 percent of the world’s population living outside high-income countries: how can they move up in the world economy?

Market-oriented Theories of Development :

The most influential theories of global inequality advanced by British and American economists and sociologists were market-oriented theories. These theories assume that the best possible economic consequences will result if individuals are free-uninhibited by any form of government constraint-to make their own economic decisions.

Unrestricted capitalism, if it is allowed to develop fully, is said to be the avenue to economic growth. Government bureaucracy should not dictate which goods to produce, what prices to charge or how much workers should be paid. According to market-oriented theorists, governmental direction of the economics of low-income countries results in blockages to economic development. In this view, local governments should get out of the way of development.

Modernization theory :W.W. Rostow:

• Modernization theory argues that low income societies can develop economically only if they give up their traditional ways and adopt modern economic institutions, technologies and cultural values that emphasize savings and productive investment.
• One of the most influential early proponents of such theories was W.W. Rostow, an economic adviser to former US President John F. Kennedy, whose ideas helped shape US foreign policy towards Latin America during the 1960s. Rostow’s explanation is one version of a market-oriented approach, termed ‘modernization theory’.
• According to Rostow, the traditional cultural values and social institutions of low-income countries impede their economic effectiveness. For example, many people in low-income countries, in Rostow’s view, lack a strong work ethic; they would sooner consume today than invest for the future. Large families are also seen as partly responsible for ‘economic backwardness’, since a breadwinner with many mounts to feed can hardly be expected to save money for investment purposes.
• But to modernization theorists, the problems in low-income countries run even deeper. ……The cultures of such countries, according to the theory, tend to support ‘fatalism’ – a value system that views hardship and suffering as the unavoidable plight of life. Acceptance of one’s lot in life thus discourages people from working hard and being thrifty in order to overcome their fate. In this view, then, a country’s poverty is due largely to the cultural failings of the people themselves.
•  Such failings are reinforced by government politics that set wages and control prices and generally interfere in the operation of the economy. …….How can low-income countries break out of their poverty? Rostow viewed economic growth as going through several stages, which he likened to the journey of an aero plane:
  • The traditional stage : This is the stage just described. It is characterized by low rates of savings, the supposed lack of a work ethic, and the so-called fatalistic value system. The aero plane is not yet off the ground.
  • Take off to economic growth : The traditional stage, Rostow argued, can give way to a second one: economic take-off. This occurs when poor countries begin to jettison their traditional values and institutions and start to save and invest money for the future. The role of wealthy countries, like the United States, is to facilitate this growth. They can do this by financing birth control programmes or providing low-cost loans for electrification, road and airport construction, and starting new industries.
  • Drive to technological maturity: According to Rostow, with the help of money and advice from highincome countries, the aeroplane of economic growth would taxi down the runway, pick up speed and become airborne. The country would then approach technological maturity. In the aeronautical metaphor, the plane would slowly climb to cruising altitude, improving its technology, reinvesting its recently acquired wealth in new industries and adopting the institutions and values of the high-income countries.
  • High-mass consumption : Finally, the country would reach the phase of high mass consumption. Now people are able to enjoy the fruits of their labour by achieving a high standard of living. The aeroplane (country) cruises along on automatic pilot, having entered the ranks of high-income countries.

Rostow’s ideas remain influential today……. Indeed, perhaps the prevailing view among economists today, neo-liberalism, argues that free-market forces, achieved by minimizing governmental restrictions on business, provide the only route to economic growth. Neo-liberalism holds that global free trade will enable all countries of the world to prosper; eliminating governmental regulation is seen as necessary for economic growth to occur. Neo-liberal economists therefore call for an end to restrictions on trade and often challenge minimum wage and other labour, laws, as well as environmental restrictions on business.

Dependency Theory :

• The dependency theorists argue that the poverty of low-income countries stems from their exploitation by wealthy countries and the multinational corporation as that are based in wealthy countries. In their view, global capitalism locked their countries into a downward spiral of exploitation and poverty.
• During the 1960,s a number of theorists questioned market-oriented explanations of global inequality such as modernization theory. Many of these critics were sociologists and economists from the lowincome countries of Latin America and Africa, who drew on Marxist ideas to reject the idea that their countries’ economic underdevelopment was due to their own cultural or institutional faults. 
• According to dependency theories, the exploitation began with colonialism, a politicaleconomic system under which powerful countries established, for their own profit, rule over weaker peoples or countries. Powerful nations have colonized other countries usually to procure the raw materials needed for their factories and to control markers for the products manufactured in those factories.
• Although colonialism typically involved European countries establishing colonies in North and South America, Africa and Asia, some Asian countries (such as Japan) had colonies as well. Even though colonialism ended throughout most of the world after the Second World War, the exploitation did not: transnational corporations continued to reap enormous profits from their branches in low income countries.
• According to dependency theory, these global companies, often with the support of the powerful banks and governments of rich countries, established factories in poor countries, using cheap labour and raw materials to maximize production costs without governmental interference.
• Low-income countries are thus seen not as underdeveloped, but rather as mis-developed (Frank; Emmanuel). With the exception of a handful of local politicians and business people who serve the interest of the foreign corporations, people fall into poverty. Peasants are forced to choose between starvation and working at near-starvation wages on foreign-controlled plantations and in foreign-controlled mines and factories. Since dependency theorists believe that such exploitation has kept their countries from achieving economic growth, they typically call for revolutionary changes that would push foreign corporations out of their countries altogether (Frank Parkin).
• Dependency theorists point of many examples; the role of the CIA in overthrowing the Marxist governments of Guatemala in 1954 and Chile in 1973 and in undermining support for the leftist government in Nicaragua in the 1980s…….. In the view of dependency theory, global economic inequality is thus backed up by force: economic elites in poor countries, backed by their counterparts in wealthy ones, sue police and military power to keep the local population under control.
• Brazilian sociologist Enrique Fernando Cardoso, once a prominent dependency theorist, argued more than twenty-five years ago that some degree of dependent development was nonetheless possible-that under certain circumstances, poor countries can still develop economically, although only in ways shaped by their reliance on the wealthier countries (Cardoso). IN particular, the governments of these countries could play a key role in steering a course between dependency and development.

World System Theory : Immanuel Wallerstein

• During the last quarter of a century, sociologists have increasingly seen the world as a single (although often conflict-ridden) economic system. 
• Although dependency theories hold that individual countries are economically tied to one another world-systems theory, which is strongly influenced by dependency theory, argues that the world capitalist economic system is not merely a collection of independent countries engaged in diplomatic and economic relations with one another, but must instead be understood as a single unit. 
• The world-system approach is most closely identified with the work of Immanuel Wallerstein and his colleagues. Wallerstein showed that capitalism has long existed as a global economic system, beginning with the extension of markets and trade in Europe in the fifteenth and sixteenth centuries. 
• The world system is seen as comprising four overlapping elements (Chase-Dunn):
  • A world market for goods and labour;
  • The division of the population into different economic classes, particularly capitalists and workers;
  • An international system of formal and informal political relations among the most powerful countries, whose competition with one another helps shape the world economy; and
  • The carving up of the world into three unequal economic zones, with the wealthier zones exploiting the poorer ones.

Evaluating theories of development

Each of the four sets of theories of global inequality just discussed has its strengths and weaknesses. Together they enable us to better understand the causes and cures for global inequality.

• Market-oriented theories commend the adoption of modern capitalist institutions of promote economic development, as the recent example of East Asia attests.
• Dependency theories address the market-oriented theories neglect in considering poor countries’ ties with wealthy countries by focusing on how wealthy nations have economically exploited poor ones.
• World-system theory sought to overcome the shortcomings of dependency theories by analyzing the world economy as a whole.
• State-centred theories stress the governmental role in fostering economic growth. They thus offer a useful alternative to both the prevailing market-oriented theories, with their emphasis on states as economic hindrances, and dependency theories, which view states as allies of global business elites in exploiting poor countries.