Development TheorySara Hsu

What is Development Theory?

Seeks to explain how and why countries develop

Series of stages or product of factors General categories of theories: Convergent and nonconvergent, latter

incl:• theories that emphasize multiple equilibria• theories of aspiration gaps• theories of history dependence• theories of institutions

Development Theory in China, India and Japan

China, India and Japan utilized theories of marketization and trade liberalization in different ways

Japan Used industrialization theory as

embodied in the theories of Walt Whitman Rostow and W. Arthur Lewis

Used as a prime basis for the theory of Ranis and Fei (1961)

Used as the prime exception for Moulder (1977)’s dependency theory

Japan & “Flying Geese” First theory to attempt to explain

Japanese development was the “flying geese” theory

Akamatsu’s (1962): economic development took place on a global scale, with Western Europe as a lead goose, Japan as a lead goose on a regional scale

Seven stages of economic development

“Flying Geese” Stages 1. Asian countries traded Asian products for Western European

industrial products. 2. occurred when Asian handicrafts industry was destroyed by

increased amounts of Western European manufactured products entering the area

3. Western European techniques and capital flowed into Asia to support large scale production of raw materials for export to Europe, in exchange for consumer goods.

4. Western European capital flowed into Asia to support production, this time of processed raw materials.

5. Asian domestic capital was used to generate raw materials. Capital was imported from Western Europe to produce consumer goods

6. manufactured goods were produced by domestic Asian industries. Capital goods were imported from Western Europe.

7. the Asian country was able to export manufactured consumer products, and to produce some capital goods itself.

Rostow’s Theory of Development

Laid out five stages of development through which each economy must pass: • the traditional society• the preconditions for take-off• the take-off• the drive to maturity• the age of high mass-consumption

Lewis-Ranis-Fei Model Two sectors: 1) traditional agricultural sector

with disguised unemployment and 2) capitalist industrial sector that consumes surplus food produced by agricultural sector.

Surplus labor moves from agriculture to industry

First phase: labor perfectly elastic Second phase: no disguised unemployment;

commercialization of agriculture

Moulder’s Dependency Theory

Japan was exception Japan’s development was due to its

ability to shield itself from colonialism Other non-Western societies became

colonized by Western powers, stunting their development

China: Deng Xiaoping Theory

Incorporated Marxism and Mao Zedong Thought

Marxism: basis for developing society Mao Zedong Thought: building of

Communist Party “Keeping up appearances” of

continuity

Other Influences in China David Ricardo’s Theory of

Comparative Advantage China’s “grand international cycle”

theory: because developed countries moved away from labor-intensive production, China should focus on labor intensive production to support the upward movement of developed countries’ economies

Beijing Consensus

India under Neoliberal Theory

Prompted to reform under Neoliberal Theory by IMF

Applied selectively and gradually Criticized by some for being focused

on growth rather than well-being

Other Theories Influenced by Asia

East Asian Developmental State

Bottom Line Development theory has been

influenced by and has influenced development in Asia.

Development theories applicable to India include Neoliberal theory.

Those applicable to China include Deng Xiaoping theory, comparative advantage.

Those applicable to Japan include “flying geese,” stages of growth, migration theory.

Did You Know? Although currently the Washington

Consensus policies of privatization and deregulation are less in vogue, from the 1940s to the 1960s, it was generally accepted that the state would play a large role in the industrialization process.

Fin Questions?