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Models of Development There are two broad models of economic development; –Liberal Models based on the assumption that all countries pass through the same.

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Presentation on theme: "Models of Development There are two broad models of economic development; –Liberal Models based on the assumption that all countries pass through the same."— Presentation transcript:

1 Models of Development There are two broad models of economic development; –Liberal Models based on the assumption that all countries pass through the same stages of economic development and disparity is the result of short term inefficiencies –The Liberal Model assumes that all nations are capable of the same level of economic development

2 Development Models Modernization Model Walt Rostow’s model assumes all countries follow a similar path to development or modernization, advancing through five stages of development, climbing a ladder of development. - traditional - preconditions of takeoff - takeoff - drive to maturity - high mass consumption

3 Models of Development Walt Rostow created this liberal model of development in the 1960s 1.First Stage-Traditional 1.Subsistence farms-limited technology 2.Rigid social structure 3.Resistance to change-transition triggered by external influence 2.Second Stage-Preconditions for Take-Off 1.Progressive Leadership-commercial exploitation of agriculture & extractive industries 2.Greater flexibility-installation of infrastructure-roads, railways, etc. 3.Greater openness to new technology 4.Greater Diversity of products produced

4 Models of Development 3.Third Stage-Take Off 1.Experiences industrial growth 2.Urbanization 3.Industrialization, technology & mass production 4.Drive to Maturity 1.Diffusion of technology 2.Industrial specialization 3.International trade 4.Modernization at the core 5.Population growth is reduced 5.Fifth Stage-Final Stage 1.Mass consumption-widespread production of goods & services 2.High incomes 3.Majority of workforce in service sector

5 Rostow’s Ladder of Development

6 Models of Development Structuralist Model this is the alternate to the Liberal Model that states disparities are inevitable due to structural features of the global economy. These disparities can not be easily changed-it is misleading to assume that all areas will go through the same economic process of development

7 Models of Development Dependency Theory is another Structuralist Model Political & economic relationships between countries & regions limit the development of the less well off areas Colonial dependencies are still in place from long ago. Dependency theory sees little hope for economic prosperity in some traditional parts of the world

8 Dependency Theory The political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas. -- Economic structures make poorer countries dependent on wealthier countries. -- Little hope for economic prosperity in poorer countries.

9 A Changing World Until 1980s there were 3 Blocs –First World-The Capitalist West-the most advanced states-democratic & capitalist –Second World-The Communist East of the Soviet Union & its Eastern European Satellites, Red China, N. Korea & Vietnam –Third World-non aligned states with mixed economies and state control-now an obsolete term

10 Three Tier Structure Core Processes that incorporate higher levels of education, higher salaries, and more technology * Generate more wealth in the world economy Semi-periphery Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery. * Serves as a buffer between core and periphery Periphery Processes that incorporate lower levels of education, lower salaries, and less technology * Generate less wealth in the world economy

11 Atlantic bumper fish are a crucial food source in Senegal and elsewhere in Africa where 200 million people depend on the sea for food. World Wide 1 billion people depend on fish for protein-many are poor By 2015 Developing countries share of world fish production is projected to be 81%-problem-balance the need for revenue and food.

12 Commodity Chain Dolomite stone from Jerusalem covers a fireplace in Beacon Hill, Boston, Massachusetts. Series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market.

13 Barriers to Economic Development Low Levels of Social Welfare –Trafficking-bullied into poor working conditions –High birth rates, Low life expectancy, large number of dependents –Lack of proper health care –Poor water supply & sanitation –Widespread Disease vectored diseases-spread by a host –Malaria-kills 150,000 children each month Political Instability-military dictatorships, corruption, revolution Foreign Debt –World Bank or International Monetary Fund –Structural adjustment loans-economic reform required

14 Foreign Debt Obligations Total interest payments compared to the export of goods and services.

15 How Government Policies Affect Development Governments –get involved in world markets –price commodities –affect whether core processes produce wealth –shape laws to affect production –enter international organizations that affect trade –focus foreign investment in certain places –support large-scale projects

16 Governments & Corporations can create Islands of Development Places within a region or country where foreign investment, jobs, and infrastructure are concentrated.

17 Dubai has mushroomed from a near-empty desert to eight lanes of traffic between a mile of skyscrapers on Dubai’s Sheikh Zayed Road. Dubai boasts more tourists than all of India

18 Corporate-created Island of Development The global oil industry has created the entire city of Port Gentile, Gabon to extract Gabon’s oil resources.

19 Nongovernmental Organizations (NGOs) Nongovernmental Organizations (NGOs) entities that operate independent of state and local governments, typically, NGOs are non-profit organizations. Each NGO has its own focus/set of goals. Microcredit program: loans given to poor people, particularly women, to encourage development of small businesses.

20 The End

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