1. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 3 Classic Theories of Economic Development

2. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-2 Development as Growth and the Linear-Stages Theories n Rostows stages of growth n The Harrod-Domar growth model n Obstacles and constraints n Some criticisms of the stages model

3. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-3 (3.1) (3.2) (3.3) (3.4) The Harrod-Domar Model

4. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-4 The Harrod-Domar Model (3.5) (3.6) (3.7)

5. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-5 Structural-Change Models n The Lewis theory

6. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-6 Figure 3.1

7. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-7 Figure 3.2

8. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-8 Structural-Change Models n The Lewis theory n Structural change and patterns of development n Conclusions and implications

9. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-9 The International-Dependence Revolution n The neoclassical dependence model n The false-paradigm model n The dualistic-development thesis n Conclusions and implications

10. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-10 The Neoclassical Counterrevolution n Challenging the statist model –Free market approach –Public choice approach –Market-friendly approach n Traditional neoclassical growth theory n Conclusions and implications

11. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-11 Theories of Development: Reconciling the Differences n Development economics has no universally accepted paradigm n Insights and understandings are continually evolving n Each theory has some strengths and some weaknesses

12. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-12 Concepts for Review n Autarky n Average product n Capital-labor ratio n Capital-output ratio n Capital stock n Center n Closed economy n Comprador groups n Dependence n Dominance n Dualism n Endogenous growth n False-paradigm model n Free market n Free-market analysis

13. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-13 Concepts for Review (contd) n Harrod-Domar growth model n Lewis two-sector model n Marginal product n Market-friendly approach n Necessary condition n Neoclassical counterrevolution n Neocolonial dependence model n New institutionalism n New political economy approach n Open economy

14. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-14 Concepts for Review (contd) n Patterns-of- development analysis n Periphery n Production function n Public choice theory n Savings ratio n Self-sustaining growth n Solow neoclassical growth model n Stages-of-growth model of development n Structural-change theory n Structural transformation n Sufficient condition

15. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-15 Concepts for Review (contd) n Surplus labor n Traditional neoclassical growth theory n Underdevelopment

16. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-16 Figure A3.1

17. Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 3-17 Figure A3.2