The economic situation which exists in the developing world today, is the result of the relationship between the modern, and developing nations of the world. Modernized nations benefited from this relationship because it gave them access to natural resources. However, because of this relationship, many developing nations now suffer from severe problems. These nations are attempting to change the situation in which they struggle.
A political cartoon I have recently seen illustrated the economic relationship between the industrialized world and the developing world. It shows that the industrial nations, The United States and Europe, are located in the northern hemisphere. On the other hand most of the developing world, Central and South America and Africa, are found in the southern hemisphere. The “well fed”, well dressed individual holding the industrialized world indicates that the modernized nations of the world are prosperous, and have a high standard of living. The skinny, poorly dressed individual holding the developing world indicates that the developing nations of the world are not prosperous, and have a lower standard of living than do industrialized nations. Both individuals are supporting each other in such a way that if one is removed, the other will fall. Without resources to use, industry would not be able to maintain its existence. Likewise, without a market for their resources, or the products of industry, the developing world would not be able to maintain its existence.
Two current problems which exist in the developing world today are political instability, and rapid urbanization. Political instability causes economic problems in places such as Africa, and South America, where many governments are being overthrown. When a government is inconsistent, a tax system cannot be established and revenue can’t be collected. If a government doesn’t receive revenue, it cannot provide sanitation, or health care, and cannot build or repair roads or buildings. Also, political instability can result in the control of a nation “switching hands”. For example, frequently in Latin America, Coup d’etat occur and military dictators take control.
The second problem which exists in the developing world today is rapid urbanization. Rapid urbanization can be defined as the sudden growth in city population. It results in problems such as congested streets and poverty. For example, when people flock to city to find jobs, not all of them are able to find work, these people remain unemployed. Those who manage to find work, face long hours and low pay. With so many people there is a shortage of food, housing, and health care. Also, sanitation is poor if there is any at all, and the water is contaminated because of the sewage running through it. This is why political instability and rapid urbanization cause problems in the developing world today.
Nations within the developing sections of the world have attempted to improve their situation in many ways. For example, these developing nations want to promote economic diversity and education. Economic diversity can be defined as producing various kinds of crops and goods so that the nation is not dependent on a single export.
By promoting education, governments set up schools to train students in the skills needed in a modern industrial economy, therefore creating more skilled workers for jobs in the management field as opposed to labor. The examples of economic diversity and education are ways in which nations within the developing world have attempted to change their situations.
In conclusion, the economic situation which exists in the developing world today, is dependence on the industrialized world. They are dependent because they need a market for their resources, and the products of industry. This situation contributed to problems such as political instability, and rapid urbanization. Developing nations are attempting to change these situations through the promotion of economic diversity, and education.
Historical Context (1940s and 50s)
By the end of WW2 it had become clear that despite exposure to Capitalism many of the countries of the South had failed to develop. In this context, in the late 1940s, Modernisation Theory was developed. Modernisation theory had two major aims
It attempted to explain why poorer countries have failed to develop, focussing on what cultural and economic conditions might act as ‘barriers’ to development
It aimed to provide a non-communist solution to poverty in the developing world by suggesting that economic change (in the form of Capitalism) and the introduction of western values and culture could play a key role in bringing about modernisation.
NB – These are ‘bare bones’ revision notes – this updated post provides a much more account of modernization theory.
Why countries are underdeveloped: Cultural and economic barriers to development
Modernisation theorists argue that there are a number of cultural and economic barriers that prevent traditional societies from developing.
Cultural barriers are seen as internal to the country – it is essentially their fault for being backward. Western culture, on the other hand, is seen as having a superior culture that has allowed for it to develop.
Traditional Values –prevent economic growth and change
Modern Values – inspire change and economic growth.
Simple division of labour, less specialised job roles, individuals rely on a few dozen people in their local communities for basic needs to be met.
Complex division of labour, individuals tend to have very specialised jobs and rely on thousands of others for basic needs to be met
Religious beliefs and tradition influence day to to day life (resistance to change)
Rational decision making (cost benefit analysis and efficiency) are more important.
Stronger community and family bonds and collectivism
Weaker community and family bonds means more individual freedom.
Meritocracy –people are more motivated to innovate and change society for the better.
Economic barriers to development
These are barriers which may make developing countries unattractive to investors.
Lack of infrastructure
Lack of technology
Lack of skills in the work force
Lack of capital in the country
See the next sheet for details of modernisation theory
Modernisation Theory 2: How countries should develop
Rostow believed that an initial injection of aid from the west in the form of training, education, economic investment etc. would be enough to jolt a society into economic growth overcoming these cultural barriers.
Rostow suggested that development should be seen as an evolutionary process in which countries progress up 5 stages of a development ladder
Rostow’s five stage model of development
Stage 1 – Traditional societies whose economies are dominated by subsistence farming. Such societies have little wealth to invest and have limited access to modern industry and technology. Rostow argued that at this stage there are cultural barriers to development (see sheet 6)
Stage 2 – The preconditions for take off – the stage in which western aid packages brings western values, practises and expertise into the society. This can take the form of:
Science and technology – to improve agriculture
Infrastructure – improving roads and cities communications
Industry – western companies establishing factories
These provide the conditions for investment, attracting more companies into the country.
Stage 3 – Take off stage –The society experiences economic growth as new modern practices become the norm. Profits are reinvested in infrastructure etc. and a new entrepreneurial class emerges and urbanised that is willing to invest further and take risks. The country now moves beyond subsistence economy and starts exporting goods to other countries
This generates more wealth which then trickles down to the population as a whole who are then able to become consumers of new products produced by new industries there and from abroad.
Stage 4- the drive to maturity.
More economic growth and investment in education, media and birth control. The population start to realise new opportunities opening up and strive to make the most of their lives.
Stage 5 The age of high mass consumption. This is where economic growth and production are at Western levels.
Variations on Rostow’s 5 stage model
Different theorists stress the importance of different types of assistance or interventions that could jolt countries out their traditional ways and bring about change.
Hoselitz – education is most important as it should speed up the introduction of Western values such as universalism, individualism, competition and achievement measured by examinations. This was seen as a way of breaking the link between family and children.
Inkeles – media – Important to diffuse ideas non traditional such as family planning and democracy
Hoselitz – urbanisation. The theory here is that if populations are packed more closely together new ideas are more likely to spread than amongst diffuse rural populations
Criticisms of Modernisation Theory
The Asian Tiger economies combined elements of traditional culture with Western Capitalism to experience some of the most rapid economic growth of the past 2 decades.
Ignores the ‘crisis of modernism’ in both the developed and developing worlds. Many developed countries have huge inequalities and the greater the level of inequality the greater the degree of other problems: High crime rates, suicide rates, health problems, drug abuse.
Ethnocentric interpretations tend to exclude contributions from thinkers in the developing world. This is a one size fits all model, and is not culture specific.
The model assumes that countries need the help of outside forces. The central role is on experts and money coming in from the outside, parachuted in, and this downgrades the role of local knowledge and initiatives. This approach can be seen as demeaning and dehumanising for local populations. Galeano (1992) argues that minds become colonised with the idea that they are dependent on outside forces. They train you to be paralysed and then sell you crutches. There are alternative models of development: See sheet no…
Corruption (Kleptocracy) prevents aid of any kind doing good, Much aid is siphoned off by corrupt elites and government officials rather than getting to the projects it was earmarked for. This means that aid creates more inequality and enables elites to maintain power
There are ecological limits to growth. Many modernisation projects such mining and forestry have lead to the destruction of environment.
Social damage – Some development projects such as dams have lead to local populations being removed forcibly from their home lands with little or no compensation being paid.
Some Marxist theorists argue that aid and development is not really about helping the developing world at all. It is really about changing societies just enough so they are easier to exploit, making western companies and countries richer, opening them up to exploit cheap natural resources and cheap labour. Joseph Stiglitz notes that those countries that followed alternative models of development ignoring western advice are now competing with the west, China and India are two examples.
Global Development Revision Notes
If you like this sort of thing, then you might like my Global Development Revision Notes –
53 Pages of revision notes covering the following topics within global development:
- Defining and measuring development
- Theories of development (Modernisation Theory etc)
- Aid, trade and development
- The role of organisations in development (TNCs etc)
- Industrialisation, urbanisation and development
- Employment, education and health as aspects of development
- Gender and development
- War, conflict and development
- Population growth and consumption
- The environment and sustainable development
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