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Chapter 3
Classic Theories of Economic Development
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Development as Growth and the Linear-Stages Theories
Rostow’s stages of growth The Harrod-Domar growth model Obstacles and constraints Some criticisms of the stages model
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sYS
KI
(3.1)
(3.2)
YkK (3.3)
IS (3.4)
The Harrod-Domar Model
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The Harrod-Domar Model
IKYksYS (3.5)
YksY (3.6)
k
s
Y
Y
(3.7)
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Structural-Change Models
The Lewis theory
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Figure 3.1
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Figure 3.2
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Structural-Change Models
The Lewis theory Structural change and patterns of
development Conclusions and implications
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The International-Dependence Revolution
The neoclassical dependence model The false-paradigm model The dualistic-development thesis Conclusions and implications
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The Neoclassical Counterrevolution
Challenging the statist model– Free market approach– Public choice approach– Market-friendly approach
Traditional neoclassical growth theory Conclusions and implications
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Theories of Development: Reconciling the Differences
Development economics has no universally accepted paradigm
Insights and understandings are continually evolving
Each theory has some strengths and some weaknesses
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Concepts for Review
Autarky Average product Capital-labor ratio Capital-output ratio Capital stock Center Closed economy Comprador groups
Dependence Dominance Dualism Endogenous growth False-paradigm model Free market Free-market analysis
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Concepts for Review (cont’d)
Harrod-Domar growth model
Lewis two-sector model
Marginal product Market-friendly
approach Necessary condition
Neoclassical counterrevolution
Neocolonial dependence model
New institutionalism New political economy
approach Open economy
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Concepts for Review (cont’d)
Patterns-of-development analysis
Periphery Production function Public choice theory Savings ratio Self-sustaining growth
Solow neoclassical growth model
Stages-of-growth model of development
Structural-change theory
Structural transformation
Sufficient condition
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Concepts for Review (cont’d)
Surplus labor Traditional
neoclassical growth theory
Underdevelopment
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Figure A3.1
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Figure A3.2
