INTRODUCTION
Since the end of World War II, we have been experiencing a worldwide struggle for the improvement of living conditions in the so-called developing countries. At the beginning, there was little query as to the causes of underdevelopment; the newly independent countries as well as United Nations bodies and industrialized countries tried to promote development by applying measures like the introduction of know-how through the assignment of experts, the expansion of education, the development of infrastructure, etc., i.e., they followed the example of the industrialized countries. In the course of time it became obvious that this was more or less a treatment of symptoms instead of causes, and the gap gradually widened between the developed and less developed countries of this world.
During the early period of development efforts there was little discussion on the historical causes and the real nature of underdevelopment. Theoretical considerations at this time of "cold war" explained the situation of underdevelopment and the path for development from the viewpoint of western or socialist metropoles. Only in more recent times has the viewpoint of developing countries gained momentum in development theory. This has great practical implications: development theory offers the justification for policies. The answer to the question "What is development?" determines which strategies, policies, projects, what type of industry, or what organization of agriculture should be considered to be in line with development goals or detrimental to these. Different positions in development policy are based on differences in underlying development theories.
, the theories are organized according to their basic conception of the causes of underdevelopment.
1. MODERNIZATION THEORIES
(BACKWARDNESS THEORIES)
According to modernization theories, internal factors in the countries, such as illiteracy, traditional agrarian structure, the traditional attitude of the population, the low division of labour, the lack of communication and infrastructure, etc., are responsible for underdevelopment. Differences in structure and historical origin are considered of little importance; international dependencies are not taken into account.
Consequently, a change of these endogenous factors is the strategy for development. The industrialized countries are the model for economy and society, and this model will be reached sooner or later. There is a continuum between the least and the most developed country and each country has its position on this line. The difference as compared to the industrialized countries is the degree of backwardness which has to be made up for. Suitable measures are the modernization of the production apparatus, capital aid, transfer of know-how, so that the developing countries can reach the stage
of industrialized countries as soon as possible. Development is seen as an increase of production and efficiency and measured primarily by comparing the per capita income.
.1 DUALISM THEORIES
Dualism theories assume a split of economic and social structures of different sectors so that they differ in organization, level of development, and goal structures. Usually, the concept of economic dualism (BOEKE 1) differentiates between two sectors of economy:
• the traditional subsistence sector consists of small-scale agricul
ture, handicraft and petty trade, has a high degree of labour
intensity but low capital intensity and little division of labour;
• the modern sector of capital-intensive industry and plantation
agriculture produces for the world market with a capital-intensive
mode of production with a high division of labour.
Development in dualism concepts is the suppression of the traditional sector by concentrating on and expanding the modern sector. In time, it is assumed that the trickle down effects will reduce and abolish dualism. In this line of thinking, the main problem is capital formation because its degree determines the scope and speed of expansion of the modern sector. In general, agriculture has to provide the resources, labour as well as capital, for expanding the modern sector.
1.2 STRATEGY THEORIES
Underdevelopment from the viewpoint of these theories is the result of vicious circles of factors. One example is based on the fact of low real income in developing countries which is the result of low labour productivity. This low labour productivity, in turn, is a consequence of capital shortage which is a result of the population's low saving ability. As the saving rate is determined by the low real income, the circle is closed.
. Their main emphasis is on capital formation and investment (investment theories) and, by and large, they prescribe action for overcoming underdevelop-ment while they contribute little towards explaining the causes of underdevelopment.
1.2.1 Theory of Balanced Growth
(NURSKE 20)
This theory sees the main obstacles to development in the narrow market and, thus, in the limited market opportunities. Under these circumstances, only a bundle of complementary investments realized at the same time has the chance of creating mutual demand. The theory refers to Say's theorem and requests investments in such sectors which have a high relation between supply, purchasing power, and demand as in consumer goods industry, food production, etc.
Development is seen here as expansion of market and an increase of production including agriculture. The possibility of structural hindrances is not included in the line of thinking, as are market dependencies. The emphasis is on capital investment, not on the ways and means of achieving capital formation. It is assumed that, in a traditional society, there is ability and willingness for rational investment decisions along the requirements of the theory. As this will most likely be limited to small sectors of the society, it is not unlikely that this approach will lead to super-imposing a modern sector on the traditional economy, i.e., to economic dualism.
1.2.2 Theory of Unbalanced Growth
(HIRSCHMAN 9)
Contrary to the theory of balanced growth, in Hirschman's opinion, the real bottleneck is not the shortage of capital, but lack of entrepreneurial abilities. Potential entrepreneurs are hindered in their decision-making by institutional factors: either group considerations play a -great role and hinder the potential entrepreneur, or entrepreneurs aim at personal gains at the cost of others and are thus equally detrimental to development. In view of the lack of enterpreneurial abilities there is a need for a mechanism of incentive and pressure which will automatically result in the required decisions. According to Hirschman, not a balanced growth should be aimed at, but rather existing imbalances— whose symptoms are profit and losses—must be maintained. Investments should not be spread evenly but concentrated in such projects in which they cause additional investments because of their backward and forward linkages without being too demanding on entrepreneurial abilities. Manufacturing industries and import substitutions are relevant examples. These first investments initiate further investments which are made by less qualified entrepreneurs. Thus, the strategy overcomes the bottleneck of entrepreneurial ability. The theory gives no hints as to how the attitude of entrepreneurs and their institutional influence will be changed in time.
1.2.3 Theory of Stages of Growth
(ROSTOW 27)
This theory tries to explain the long-term processes of economic development from the point of view of economic history by describing five ideal types of stages through which all societies pass:
The 'traditional society' has more than 75 per cent of the population engaged in food production, and political power is in the hands of landowners or of a central authority supported by the army and the civil servants.
The 'transitional stage' creates the preconditions for take-off by bringing about radical changes in the non-industrial sectors. Export of raw material gains momentum; a new class of businessmen emerges; and the idea of economic progress coming from outside spreads through the elite.
The 'take-off stage' brings a sharp increase in the rate of investment in the per capita output. This stage of industrial revolution is accompanied by radical changes in the production techniques. Expansion takes place in a small group of leading sectors at first and, on the social side, is accompanied by the domination of the modern section of society over the traditional one.
The 'drive to maturity* brings a spread of growth from the leading to the other sectors and a broader application of modern technology followed by necessary changes in the society at large.
The 'stage of high mass consumption' can be reached after attaining a certain level of national income and formulating an economic policy giving priority to increased private consumption.
1.2.4 'Big-push' Theory
(ROSENSTEIN-RODAN 26)
This theory is an investment theory which stresses the conditions of take-off. The argumentation is quite similar to the balanced growth theory but emphasis is put on the need for a big push. The investments should be of a relatively high minimum in order to reap the benefits of external economies. Only investments in big complexes will result in social benefits exceeding social costs. High priority is given to infrastruc-tural development and industry, and this emphasis will lead to governmental development planning and influence.
1.2.5 Theory of Development Poles
(RERROUX 22)
The promotion of regional development centres will serve as focal point and incentive for further development. Such a regional concentration helps to reap the benefits of technological external economies and makes the growth centre attractive to entrepreneurs, thus initiating further development. This theory is a sort of 'regional unbalanced growth theory' which uses temporary regional imbalances to initiate development. Little attention is given to the process which is necessary to ensure a spread or linkage from the centres to the hinterland without which the poles may transform the economy of the region into a dual economy.
1.3 SOCIAL-PSYCHOLOGICAL THEORIES
In the dualism and (economic) strategy theories discussed so far, underdevelopment and development are explained by economic factors alone while individual or group values and motivations are neglected. The social-psychological theories consider these very factors as main determinants of underdevelopment and development. Thus, they add a new component to the discussion. Because they reduce the causes to aspects of one discipline, like economic theories, they are partial explanations as well.
1.3.1 Sociological Explanation of Socioeconomic Change
One of the earliest and widely discussed concept is WEBER's (32) treatise "Protestant Ethics and the Spirit of Capitalism" in which he combines Psychological & Sociological variables with economic development. Because of its determination of the value systems of societies, he put primary importance on religion. According to
Weber, the Protestant religion was a precondition for capitalistic development for two reasons: Protestant ethics led to an ascetic life style which, instead of advocating affluence, reinvested the proceeds. As well, it is the basis of rationalism and goal achievement behaviour. While a value system which motivates economic development can hardly be limited to Protestantism Weber's stress on values and the resulting motivation influenced later thought.
1.3.2 Theory of Social Change
(HAGEN 8)
Following McClelland's concept that a level of development is correlated with achievement motivation, Hagen tried to explain why this achievement motivation varies between societies and their classes and strata. He argues that in traditional societies the status of individuals is fixed. Children learn to act according to established norms, and deviations (initiative !) are punished. If by external influences a new group gains power, the status of the old elite is challenged and weakened. The insecurity and frustration leads to changed behaviour which has consequences on the family structure. Children tend to become dissatisfied with the society and readily accept new values. In time, they become innovative personalities. If these persons become dominant groups in the society, this causes economic development. Similar phenomena may happen as far as the changing situation of marginal groups or minorities is concerned.
2. DEPENDENCE THEORIES
According to dependence theories, the cause of underdevelopment is the dependence on industrialized countries while internal factors of developing countries are considered irrelevant or seen as symptoms and consequences of dependence. The development of industrialized countries and the underdevelopment of developing countries are parts of one historical process. Developing countries are dependent countries. The economic and political interests of industrialized countries determine their development or underdevelopment. The goals are superimposed. Underdevelopment is not backwardness but intentional downward development.
Dependence theories concentrate on explanations of the genesis of underdevelopment and pay little attention to strategies for overcoming this situation. Implicit development here means liberation, end of structural dependence, and independence.
2.1 EXTERNAL TRADE THEORIES
The structure of supply and demand in industrialized and developing countries is such that industrialized countries are able to reap the benefits from international trade. This transfer of resources makes development impossible, and these unequal trade relations are seen as the reasons for underdevelopment.
2.1.1 Theories of Circular Deterioration of Terms of Trade
(PREBISCH24)
The structure of supply and demand is such that industrialized countries offer industrial products and buy raw products and the developing industries do the reverse. According to Engel's law, the demand for raw materials tends to be inelastic while the demand for industrialized goods is elastic. The technological progress in the production of industrialized goods not only makes it possible for industrial countries to increase their incomes and thus the standard of living, but, because of the elastic demand on the world market, also to enforce higher prices. The situation in developing countries is the opposite: technological progress in primary production results in lower prices because of the inelastic demand. This mechanism leads to deteriorating exchange relations between industrialized and developing countries (and, as well, between the industrialized and the agricultural sector in developing countries). MYINTs (18) and RAO's (25) 'theory of partial pauperization' and PERROUX's (23) 'theory of dominating economy* argue along very similar lines.
2.2 IMPERIALISM THEORY
The imperialism theory explains the domination of underdeveloped areas by industrialized countries as the consequence of different economic and technological levels and unequal power potential resulting from a different economic growth. The consequence of the development of industrial capitalistic societies is a pressure for expansion which may lead to military or political acquisition (colonies) or to maintaining economic dependence (developing countries). Different theories have their own explanation of the reason for the pressure for expansion but it is always seen as the result of the inability to cope internally with the consequences of permanent technological innovation and their effects on the society.
3 TOWARDS A GENERAL THEORY OF DEVELOPMENT
All the theories discussed in the last chapter are only partial theories. They explain certain aspects but do not fully explain the cause of underdevelopment. The explanation is more adequate for certain historical situations and specific conditions of production while they are less relevant for others. They offer a strategy for overcoming the prevailing situation and initiating development which may be suitable under certain economic and social conditions but are not applicable to others. A general theory of development is still lacking.
Drawing up such a general theory is indeed a difficult task; it would have to include
• an explanation of underdevelopment for different countries;
• an explanation of the development process of industrialized coun
tries; and
• a strategy for overcoming underdevelopment in developing coun
tries.
As well, it would have to include
• all relevant disciplines and their interdependence;
• the different levels at which development takes place, from the
local to the international level;
• the processes and relations between the different sectors and strata
of society and economy; and
• the international dimensions of the development process.
It is widely agreed that preservation of human dignity and fulfilment of basic needs are the foremost duties of every society. While there is wide agreement on this goal, differences of opinion exist on the question of the degree to which these basics should be supplied and, as well, how they should be supplied. These differences allow for different paths of development.
From the common denominator "basic needs," one can deduct five basic goals of development:
• economic growth to secure food and other requirements for the
population;
• social justice to reduce inequality;
• employment as means of earning an income but, as well, because of
its ethical and social value;
• participation as political involvement and social sharing;
• independence as freedom from external domination.
While individual societies may have different opinions on the priorities of these goals, in the absence of a general theory of development; one can use the criterion of fulfilment of these goals as a yardstick in development. Development is then understood as a simultaneous progress towards these five goals.
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