GY202 lecture 4

(please don’t cite these and certainly don’t quote them directly – some of this info is already copied
and pasted from textbooks so it will be flagged as plagiarism. Try to find the original source of the
info from the reading instead).

Second world war

6 years of total war – infrastructure destroyed – countries of Europe in debt.

Racist ideas challenged – colonial troops fought alongside and mixed with Europeans.

Rise to prominence of the Soviet Union and beginnings of the Cold War.

UN established and headquartered in New York in 1945 – to promote cooperation between states.
(see Andrew Brooks book)

Political aspects – which institutions promoted neoliberal policies.

International Financial Institutions WB and IMF headquartered in Washington. Bretton Woods hotel
in new Hampshire.

The Bretton Woods institutions were set up to regulate the global economy in the aftermath of the
Second World War, concentrating initially on rebuilding Europe and Japan after the war and
therefore bolstering economic relations between Western Europe and the USA, but progressively
becoming involved in economic development in the South.

They encouraged the development of open markets with the US dollar as a de facto international
colony.

The main distinction between the two institutions is that the IMF is concerned with international
economic stability and overall policing of the global economy, and may make short-term loans in
order to overcome severe economic crisis.

The World Bank, on the other hand, has traditionally been more concerned with the longer-term
development of countries in the South, even if these roles have become increasingly blurred over
time.

IBRD – when we talk about the WB we generally mean The International Bank for Reconstruction
and Development – this is the lending arm.

Most of its funding is from private lenders – by issuing bonds on the market. Some funding from fees
from member states.

Decisions made by member states with the biggest economies getting the most say.

In the 1980s WB became more involved in broad based economic policies, as well as specific projects
such as building dams or power plants etc.

Other post-war context

So in the post war era you had both the rise of the US to global prominence and the US starting to
take an interventionist role in the global economy.
Plus states around the world becoming independent. Big debates about what those new states
would look like and – could they achieve development and how?

Modernisation

Rostow

Communist Russian parents – Walt Whitman Rostow(sky), brother named for Eugene Debs

Walt was anti-communist. Foreign policy advisor to JFK and LBJ. Called for the American invasion of
Vietnam. Supported the bay of pigs operation in Cuba. The Third World as the key battleground in
the Cold War.

Writing in 1960. Modernisation was part of development practice already but this book was
influential

Non communist manifesto – advocating that states follow the path of capitalist development at a
time when the Soviet Union was an attractive option – Cuban revolution, Vietnam war. Saw
communism as a kind of disease that would spread to newly developing countries.

The Soviet Union was also offering its own vision of modernization.

Rostow’s 5 stages of growth

Traditional society (Ethiopia – country suggestions are from Brooks)

 Modern science and technology not systematically applied

 High proportion of resources devoted to ag
 But do go through change and conflict.
 Fatalistic values – opportunities open to ones grandchildren are similar to ones self. Little
understanding of how to manipulate the environment to their advantage. People are
interested in the immediate and not concerned with the outside world. High value on
religion and the sacred and less on science and education.
 Power in the hands of the landowners. Traditional patron-client relationships.

Pre-conditions for take-off (Bangladesh)

 Agriculture advances through technology and growth in trade and driven by application of
science.
 Initially took place in Western Europe.
 Education develops as it is needed to suit the needs of a changing society
 Enterprising “men” come forward who are willing to invest and take risks. Manufacturing
starts to develop.
 Development of the nation state as pre-condition for take-off
 The idea spreads that economic progress is possible – private profit or a better life for the
children.

Take-off (Thailand)

 Manufacturing industry increases in importance – political and social institutions expand

  Economic growth and compound interest
 Resistance to economic growth is finally overcome
 New industries expand rapidly – proportion of their profits invested in new plant.
 Investors get a high return on their investment so entrepreneurs arise. 5-10% of the national
income is invested.
 Urbanisation and growing requirement for factory workers.
 Decline in birth rates following decline in death rates.

Drive to maturity (Brazil)

 Industry more diverse- tech and innovation enhanced

 Economy finds its place in the international economy – imports and exports goods
 Switch from heavy industry such as railways to producing machine tools, chemicals and
electrical equipment. Capacity to produce what it wants but becomes specialized
(dependent) on some types of manufacture by choice.

Age of mass consumption (US from the 1960s)

 Middle class can indulge in consumer goods and fast food – ie not just subsistence – the
automobile changes lives and expectations.
 More people employed in skilled manufacture or in offices
 Society can invest in social welfare.
 People engage in leisure activities – no longer a need to strive for more.
 People potentially choose larger families instead of more stuff – post-war baby boom in the
US

General aspects

A teleological model – as discussed in lecture 1 – and linear

Assumes that all states will go through the same stages – eg agricultural societies now look like
Europe in the 17th century. All existing countries are like earlier stages of the European past.
Countries should be actively encouraged to go through these stages and reach the European level of
development.

Deterministic – driven by economic growth and increased technology – investment is the key factor
in take-off - although development isn’t simply equated with economic growth (Peet and Hartwick)

Relationships between richer and poorer states – some can provide the impetus for others to grow –
preconditions for take-off are usually provided by contact with other states. Diffusionist – ideas and
values and investment diffuse from one part of the world to another. This has geographical
implications – diffusion from the cities to the periphery.

Strong emphasis on the social values of people in different parts of the world. If societies are not
developing it is due to sectors within that society who are blocking or resisting development. Middle
class entrepreneurs are change agents.

Industrialisation and economic growth is internal to societies ie., ‘external’ factors like climate or
global influences knowingly ignored

Very influential on development projects in the 1950s and 1960s – esp those involving infrastructure
such as big dams and training/ education to create a local elite.
The BRICS

Arguably fits with understandings of a rising Africa, BRICS, MINTS etc. Seem to have played out in
some places – eg South Korea.

Brazil, Russia, India, China, and South Africa ranked among the world's fastest-growing emerging
market economies for years, thanks to low labor costs, favorable demographics and abundant
natural resources at a time of a global commodities boom.

Questions about whether economic power would lead to political power.

Obviously these face issues of political authoritarianism and exploitation – but are they nevertheless
developing?

Beyond Rostow

Variations on dualism - Either traditional or modern economy; could not be both

All represent a fairly uncompromising view that traditional societies can and should change and
become modern.

Critiques of modernization

This last part about consumerism criticized by environmentalists – where does that food come from
and where does waste go? Is industrial agriculture best for the planet or people? Opportunities for
mass consumption are linked with exploitation in other places.

Emphasis on growth – can we have unlimited growth on a finite planet?

Also conceals inequalities within countries – eg South Africa.

States can decline as well as progress – can cut spending on welfare.

There are different routes to being prosperous and happy – not everyone has the same
understanding of what this looks like. Cultural and historical differences in how societies change.

Latin American structuralism

Why called structuralism? Structuralism refers to underlying structures that need to be changed to
allow development – ie structural disadvantage of Latin American countries.

This formed the basis for economic dependency theory

Criticised universalist claims of classical and neoclassical economics – that the same laws apply
everywhere

Raul Prebisch, 1st secretary-general of UNCTAD (United Nations Conference on Trade and
Development): divided the world into centre of economic power (Europe, USA) and periphery (Latin
America, Africa and Asia)

Comparative advantage theories are wrong - primary exports and terms of trade work to the
advantage of the industrialized nations and the disadvantage of the periphery
Therefore countries in the periphery should industrialise with support from the state like
protectionism and Import Substitution - replace import of consumer goods with domestic
production. They should limit their involvement in the global system. So note that the theory has
practical/policy outcomes.

Dependency

Third Worldists – the Cuban Revolution of 1959 – showed the possibilities of a socialist revolution for
many; 1964 military coup in Brazil - led to a policy of opening up to foreign capital - many Brazilian
academics were exiled and began to criticize Brazil’s model of development

Chile (ECLA/Prebisch), Brazil (Cardoso, Faletto, Furtado), Africa (Samir Amin)

Andre Gunder Frank - most important voice (in English) of the Dependency School - the
‘development of underdevelopment’

A direct challenge to modernization theories – why hadn’t modernisation worked (everywhere)?

Can’t just look at the historical experience of the richer countries and apply this universally –
different historical experiences.

Countries have their own histories – they are not the same as European countries at an earlier stage
of their own development.

Furthermore, European development has already altered the context in which other parts of the
world might develop.

Turns modernization on its head – contact with wealthier states is negative, not positive.
“Underdevelopment” is a product of past and continuing relations with the more developed parts of
the world – system established in Latin America after colonial contact – but emphasis on
neocolonialism not just the colonial past. Places like Chile and 19th century Japan seem to have
actually benefited from being relatively isolated from Europe.

Under-development is not caused by the maintenance of archaic institutions.

Capital, institutions and values will not just diffuse from one to the other.

Under-development goes alongside the development of the capitalist system. Manufacturing was
destroyed by foreign competition and states became more involved in production for export –
balance of payment problems ensued.

Former centres of export production – Bolivia (silver) and Bengal (cotton) that were then abandoned
are particularly affected by low levels of development.

The same core-periphery relationships or metropolis-satellite relationships exist at different spatial

scales. A chain of constellations of metropoles and satellites (Frank). Contact with the colonial power
establishes a polarization between more developed ports and urban areas and rural hinterlands.

Core countries often formed alliances with the elites of the South.

Samir Amin’s dependency

French/Egyptian communist – association with Monthly Review journal.

Critical of some interpretations of Marxism – ie teleological ones

But still thought Marxism could be extended to look at global unequal exchange.

Critical of notion that the rest of the world can follow a model of European development – Europe as
the measure against which all other parts of the world compare themselves – also of European
claims to cultural unity or superiority.

The most well known of Amin’s ideas is ‘delinking’

Amin argues that the specific conditions that allowed for the advancement of capitalism in Western
Europe in the 19th century are not possible to reproduce elsewhere. So, he proposed a new model
of industrialisation shaped by the renewal of non-capitalist forms of peasant agriculture, which he
thought would imply delinking from the imperatives of globalised capitalism.

It is important to note that delinking is often widely misunderstood to mean autarky, or a system of
self-sufficiency and limited trade. But this is a misrepresentation. Delinking does not require cutting
all ties to the rest of the global economy, but rather the refusal to submit national-development
strategies to the imperatives of globalisation. It aims to compel a political economy suited to its
needs, rather than simply going along with having to unilaterally adjust to the needs of the global
system.

Critique of dependency theory

Too economic determinist? Lack of emphasis on geopolitics or other factors including disease and
natural disasters.

Not much emphasis on internal class relations. Misunderstands Marxism by applying it to countries.
(see Chant and McIlwane)

Like modernization, it also applies a singular grand theory to all parts of the world (how applicable to
the East Asian “tiger” economies?)

Contemporary trends – interest in drinking Brazilian fair trade coffee rather than synthetic coffee –
eco-tourism and remittances.

World Systems theory

World systems theory was developed during the mid-1970s to mid-1980s, at a time when a number
of East Asian countries were experiencing rapid economic growth and spearheading an
unprecedented departure from the classical dependency vision.

The main proponent of world systems was Immanuel Wallerstein who developed the theory within
broadly Marxist terms (see Wallerstein, 2004). The main difference between world systems and
dependency theory was that underdevelopment was attributed to the global operation of
capitalism, rather than the two-way interactions between poor countries and their former
colonisers.

World systems also incorporated the idea of dynamism: at different times certain regions rise and
fall in terms of their development potential according to economic cycles called ‘Kondratieff waves’

In general terms the world system is viewed as inherently unequal, with variations in the economic
potential of countries and regions depending on capital accumulation. For the poorest, least
industrialised, parts of the world, such as sub-Saharan Africa, the prospects for advancement looked
(and still look) bleak.

However, rather than a simple core– periphery divide, world systems proposed an additional
category termed the ‘semi-periphery’, which, during the 1970s, housed the likes of fastgrowing NICs
in Latin America and Southeast Asia, such as Brazil, Argentina, South Korea, Hong Kong and
Singapore. In these there was considerable scope for development, as well as the possibility of
joining the core, as evidenced in the recent accession of Mexico and Korea to the OECD. (Chant and
McIlwane)

What is theory?

There was some confusion last year. Some students were arguing that dependency theory causes
states to remain in poverty – but it’s not the theory that causes poverty.

Actually dependency theorists are people who are trying to understand things and improve lives in
the Global South – that’s why I show you Samir Amin and get you to look at his life - the theory is a
way of understanding what is going on.

Key takeaways

Development is a contested arena – what it means, who defines it, what is the problem and what is
the solution, who needs to be developed, who is to do the developing – there are different theories
and perspectives on all of these questions

Theory and practice – development is an industry and what money gets spent on is influenced by the
understandings of the people making the decisions.

Development is often treated as a technocratic exercise – just need to show up with some food or
some mosquito nets (and money) and measure success based on whether health or life expectancy
improves - but it is not value-neutral.

Often treated as if there are no political perspectives involved when actually it is a highly political
endeavour – see Ferguson, anti-politics machine.