What is economic development?
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- Kerry King
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1 What is economic development? A. Overall growth B. Emphasis on consumption and income levels C. maximizing people's capabilities--that is, their ability to lead the kind of life they value. Do all of these answers depend on economic growth? Yes Most of the theories of development say so
2 Embeddedness in Three Worlds of the Welfare State Market Society Liberal Welfare State Society Society (Traditional) Economy transformed Economy Social Democratic Welfare State Conservative Welfare State
3 The Conservative (Communitarian) World of Welfare High benefits: Generous unemployment insurance, retirement pensions Unequal benefits: Unequally distributed depending on occupation and contributions Corporatist administration: Delegated to new or traditional social organizations (trade unions, industry associations) Society Economy
4 Consequences of the Conservative (communitarian) Welfare State Reinforces Traditional Gender Roles Preserves a traditional image of the family Generous benefits for the man of the family Keeps women out of the labor force (penalizes those who are out of the market) Joint taxation, no child care support, limited shopping hours, long lunch hours so men can go home Makes social distinctions Civil servants have the highest benefits
5 Has globalization changed this? What is the role of comparative advantage? Aging populations? Need for competitive investment The End
6 Liberal Theories of Economic Development Li
7 Today s Agenda Is the World Developing or Underdeveloped? The good news: Growth and aggregate improvement in human welfare indicators Liberal views on development and explanations for the growing gap A. Rostow and Stages B. Liberalism and integration into the international economy: Staples Theory (Trade) Product cycle (MNC), Institutions C. Internal Requirements for Development Move from a traditionsl to a modern society Democracy D. Summary of the Liberal position
8 The Global South: developing or underdeveloped. emerging markets or just poor countries?
9 Theory-based Terms: The words contain the theory Liberal Theory Developing countries Less Developed Countries Emerging markets Dependency theory Underdeveloped Countries Neutral? The Global South
10 Who is North and Who is South? North = World s Rich South = World s poor, or developing nations, or emerging markets (more complicated) Used to be called the Third World We can no longer lump together the countries of the south Some are growing and emerging and some are not.
11 The Good News 20 th century economic output off the charts! South Korea and China doubled productive output in 10 years Humans are, on the whole more healthy now than 100 years ago.
12 The Good News: Life expectancy and income
13 Liberal explanations for global growth Walt Rostow: the intellectual context No previous conceptual apparatus But experience with Marshall Plan But there were historical patterns of development Winning the cold war meant: Helping the Third world develop Within the liberal capitalist model
14 Stage 1: Traditional society Why no growth?
15 Stage 2: Preconditions for Growth Population growth will outpace economic growth in traditional society Stimulus needed to mobilize capital and resources Revolution and institutional restructuring Technological innovation Favorable international environment External Injection of capital
16 Stage 3: The Takeoff Productive investment must rise to 10 per cent of national income Needed: rapid accumulation of capital and productive investment Finance Stock market Trade Foreign investment aid
17 4. The Drive to Maturity Employment growth Growth in national income Rise of consumer demands Strong domestic markets
18 5. High Mass Consumption Society
19 The Importance of Capital Accumulation Capital accumulation is the name of the game So how does it happen? 1. low factor costs attract investment 2. Economic levels in the world will equalize
20 Economic development and the International Economy International interdependence will lead to economic development of ALL countries in a liberal system Trade serves as an engine of growth
21 The Staples Theory Staples are field crops or minerals Earnings finance industrial growth Canada and Australia developed this way This justifies the theory of comparative advantage Export-led growth is the way to develop
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