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ECO418 Chapter3

Terms in this set (4)

Explain the essential distinctions among the stages-of-growth theory of development, the structural-change models of Lewis and Chenery, and the theory of international dependence in both its neo-Marxist and false-paradigm conceptualizations. Which model do you think provides the best explanation of the situation in most developing nations? Explain your answer?
The economic development is dominated by certain theories that explain the development process of a developing nation. These theories are named as: 1. Stages of Growth Theory of Development
2. Structural changes theory of Lewis and Chenery
3. Theory of international dependence ( Neo-Marxist)
4. False paradigm conceptualization

Let us now understand the basic difference between these theories.

Stages of growth theory of development says that a developing country passes through five stages of development namely traditional society, the pre-conditions for takeoff into self sustaining growth, the take off, the drive to maturity and the age of high mass consumption.
What is meant by the term neoclassical counterrevolution? What are its principal arguments, and how valid do you think they are? Explain your answer.
The theory of 1980 was a joint effort of governments of United States, Canada Britain and West Germany. This theory favored the supply side macroeconomic policies, rational expectations theories and the privatization of public corporations of the developed nations. However, for the developing nations it called for the free and Laissez faire markets, planning at the state level and regulations by the government for various economic policies.
Given the diversity of developing countries, do you think that there could ever be a single, unified theory of development? Explain your answer?
Their process and efficacy of development is different.
1. Different level of standard of living and the labor productivity
2. Different level of economic inequality and absolute poverty
3. Different size of population
4. Different Geography
5. Different level of industrialization
6. Common history of colonial exploitation and a lot of dependence of foreign aid and markets
Is the neoclassical, free-market theory necessarily incompatible with dependence theory? How might these two approaches work together?
The dependence theories saw their rule in 1970s whereas neoclassical counterrevolution, free market theories came up in 1980s. The dependence theories visualized underdevelopment as an externally induced phenomenon whereas neoclassical revolutionists visualized under-development as an internal problem, because state corruption and inefficiency.
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