Development Flashcards
(61 cards)
Gershenkron, Alexander. 1966. “Economic Backwardness in Historical Perspective.” Pp. 1-30 in his Economic Backwardness in Historical Perspective. Cambridge, MA: Harvard University Press.
Modernization Theory
**A version of Modernization Theory. Patterns of industrialization vary according to economic backwardness. The more backward a country, the more rapidly it could develop, and it did not necessarily have to blindly emulate earlier developers. With backwardness comes adversity, but also opportunities.
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Given the country is ready to industrialize, the more backward a country is…
1. the greater will be the overall pace of industrial growth;
2. the greater will be the reliance on technological borrowing and financial assistance from abroad;
3. the greater will be the role of institutional agencies e.g. industrial banks, the state
Evans, Peter B. 2004. “Development as Institutional Change: The Pitfalls of Monocropping and the Potentials of Deliberation,” Studies in Comparative International Development, 38:30-52
Modernization Theory
Prior literature acknowledges the importance of institutions in development but idealizes and overstates the applicability of Anglo-American versions. Evans argues for “deliberative development,” which relies on popular discussion and exchange in local context.
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* Evans rejects “institutional monocropping” = the idea that a specific blueprint of idealized Anglo-American institutions → leads to development (“one best way” thinking), across local cultures, nation’s development level, or global position.
e.g. institutions: central bank systems, public hospitals, pensions
Appeal: conception of control, ease of management
Why failed: actual power and practice makes formal structures ineffective
* Advocates for local input and experimentation: popular deliberation to set goals and allocate collective goods.
Why? Better development for countries, and institutional diversity is more resilient for everyone/global political economy than global uniformity (e.g. biologically diverse ecologies).
* “Deliberative Development Hypothesis**” = institutions that enable public deliberation on collective goods and democratic exchange among ordinary citizens (invest and deliver those goods) to increase development.
Portes, Alejandro. 1997. “Neoliberalism and the Sociology of Development,” Population and Development Review, 23:229-60.
Modernization Theory
Neoliberal policies failed in Latin America because the assumptions of self-interest and an unrestricted pursuit of gain don’t match historical local context. Analysis requires econ soc concepts: embeddedness of economic action in social structures and role of class and networks in guiding strategies.
- Why did Latin America’s implementation of neoliberal policies fail even though it worked for “Asian tigers”? (contrary to predictions by modernization, dependency, and world systems theory). **Portes says to move beyond modernization vs dependency, and pay attention to domestic order using econ soc ideas. **
- Implementation didn’t take into account a number of local contingencies/historical context: Type of state apparatus, and its relation to class structure of civil society; Size and composition of population; Density of social networks
- local, contingent factors determine variations in outcomes of implementing neo-liberal policy package in different national contexts
- Soc of dev is well-suited to analyze political, demographic, and social conditions limiting application of the models, especially drawing on econ soc concepts (embeddedness). Soc counterbalances the assumption of dominant paradigm (unrestricted market competition) and has predicted the current evolution of the global economy.
Whyte, Martin K. 2009. “Paradoxes of China’s Economic Boom,” Annual Review of Sociology, 35: 371-92.
Modernization Theory
**China defied much wisdom of dev studies, which shows that there is no single recipe for successful development. Policies and institutions must be tailored to history and context.
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China’s extraordinary economic success post-1978 was unexpected given that it was a “case study” for econ dev failures. Communist bureaucrat-run nation with a poor centrally planned economy.
Four paradoxes: (China defies all of them)
1. China’s traditional culture and institutions as obstacles to development
2. the necessity of big bang comprehensive reforms to transform a centrally planned economy into a market economy
3. the perils of state-directed economic development (dual transition from state management to markets & from autocracy to democracy)
4. the necessity of getting the institutions right in order to foster development, particularly by establishing secure private property rights
**Point: China’s case defies assertions in existing literature. China’s case was unique (many historical contingencies), so China’s case isn’t applicable elsewhere either. Rather than copy the “best practice” used elsewhere, it’s more useful to analyze the current resources and capabilities of a nation and create strategies accordingly.
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**Frank, Andre Gunder. 1972. “The Development of Underdevelopment.” ** Pp. 3-18 in Dependence and Underdevelopment, ed. By James Crockroft, A. Frank, and Dale Johnson. Garden City, NY: Anchor Books.
Dependency Theory
** ‘underdevelopment … is the necessary product of four centuries of capitalism itself’.**
- Rejects modernization theory
- Coins “dependency theory”: Nation-states are related in a global system. They are structured unequally/power asymmetries where core/developed countries suck primary resources, economic surplus out of periphery countries
- Underdeveloped nations are side effects of capitalist markets
- Underdeveloped countries are not developed because of their historical and contemporary relationships with developed countries
- Historical relationships = developed nations exploited the underdeveloped nations’ resources, left them without infrastructure
Barrett, Richard and Martin Whyte. 1982. “Dependency Theory and Taiwan: Analysis of a Deviant Case,” American Journal of Sociology, 87:1056-89.
Dependency Theory
**The Taiwan case defies dependency theory’s predicted negative effects that foreign economic dependence uniformly leads to economic stagnation and rising inequality. Taiwan’s success is not applicable to other countries (that are resource-rich, labor-poor)
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Taiwan is a deviant case:
* Foreign investment → led to rapid growth and reduction of inequality
* Historical and institutional factors as mechanisms:
* Nature of Japanese Colonialism for 50 yrs
* Emphasis on Labor intensive industries
* Absence of entrenched bourgeoisie
Implications for dependency theory:
* Context matters for impact of dependency → on growth and inequality
* Type of dependency have diff consequences for capital formation and class relations. (e.g., forms of economic penetration can range from investment vs. aid vs. trade. Taiwan had lots of aid but little investment. Also, investment in which industries)
* Governments are not automatically pawns of economic elites and multinational corporations. (Taiwan’s strong govt kept strong over econ interests)
* Global economy not zero-sum: core countries developing fast doesn’t mean peripheral countries can’t too.
* Dependency theory assumes zero-sum competition in which foreign interests always win out.
* You don’t need to concentrate on capital-intensive industries to maximize growth → can concentrate on light labor-intensive industries
Firebaugh, Glenn. 1992. “The Growth Effects of Foreign and Domestic Investment,” American Journal of Sociology, 98:105-30.
Dependency Theory
**Firebaugh challenges prior dependency theory studies through a reanalysis of the data shows that foreign investment spurs growth, not reduces it.
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Critique: prior lit made measurement error of controlling flow (new investment) and assumed negative coefficient for stock means “dependency effects” that stunt growth. But Investment rate = flow/stock, so greater stock means lower investment, so negative coefficient means beneficial investment.
Point: flow vs. stock
* Different sources of capital investment have different impact: From host country perspective = when comparing, homegrown capital outperforms imported capital
* But foreign capital still beneficial in short and long term for poor countries
* The capital dependency tradition that has recently dominated cross-national research in sociology is based on an error
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Firebaugh, Glenn and Frank Beck. 1994. “Does Economic Growth Benefit the Masses? Growth, Dependence, and Welfare in the Third World,” American Sociological Review, 59:631-53.
Dependency Theory
** Contrary to dependency theory’s view that economic growth of underdeveloped countries benefits rich countries (due to foreign dependence), authors empirically find that underdeveloped countries benefit from economic growth more than they are harmed by dependence effects.
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- Critique: dependency theory overstates the negative effects of dependence (effects of dependence > effects of economic growth) on foreign investment and aid for poor countries. “Economic growth in Third World benefits only the rich”
- Empirical finding from 62 underdeveloped countries across two decades:
- Other measures of national welfare (using diff specifications and models) show that the economic growth effect is large and significant for underdeveloped countries, and dependence effects are hard to find.
- Point: even after controlling for dependence (e.g. investment dependence, export dependence, schooling), economic growth is proven to increase welfare in poor countries, not just benefiting rich countries as predicted. Sociologists should move on from dependency theory, esp. the fixation on foreign dependence over economic growth
Alderson, Arthur and François Nielsen. 1999. “Income Inequality, Development, and Dependence: A Reconsideration,” American Sociological Review, 64:606-31.
Dependency Theory
**Motivated by Firebaugh’s claim that foreign investment increases growth, authors empirically find that relative dependence on foreign investment (net investment considering inflow & outflow) is associated with greater inequality. **
- Link: Motivated by Firebaugh (1992) critique and find that the stock of foreign direct investment has an effect on inequality through mechanisms not identified by him.
- Critique: prior lit has focused only on foreign investment inflows, without outflows
Empirical findings from regression of cross-national dataset:
* Foreign capital penetration does NOT in itself generate inequality, as Firebaugh claimed.
* A country’s net foreign investment position (= balance between inflow and outflow) DOES generate inequality, net of region differences (Tsai’s regional diff argument)
* Finds significant U-shaped association between foreign investment stock and Gini coefficient of income inequality
Takeaway: relationship between income inequality and investment dependence should be revised in light of an investment-development path relating the inflow and outflow of foreign capital, rather than inflow only. More research needed with internal controls.
Wallerstein, Immanuel. 1974. “The Rise and Future Demise of the World Capitalist System.” Comparative Studies in Society and History, 14: 387-415.
World Systems Theory
**Nations are positioned in a hierarchical, global division of labor, which is a social system that solidified from the European world economy (a.k.a. capitalism).
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* “The only kind of social system is a world-system”: a unit with a single division of labor and multiple cultural systems. World empires have a common political system, world economies don’t. The 16th century European world economy became a capitalist world economy.
- Building on “dependency theory” → coins “world system theory”
- Global political economy is a capitalist world system with an unequal division of labor/class structure between core, semi-periphery, and periphery countries
- Core: dominates and exploits (economic surplus) from periphery, maintains power
- Periphery: structurally constrained, reproduce their subordinate status
- Semi-periphery: political necessity, help stabilize the polarization (both exploiters and exploited)
- 3 mechanisms that make world systems stable: military strength of dominant forces, ideological commitment, three-layered structure (semi-periphery are not allies with periphery)
- 3 factors shape a country’s position: Power; Exchange (trade flows, comparative advantage); Competition
North, Douglass C. 1990. Institutions, Institutional Change, and Economic Performance. New York: Cambridge University Press Chaps. 1-8, 12-14.
Institutional Theories
**Based on the fact that institutions shape economic perform (, North provides a framework to use institutional change to understand economic historical change.
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* Institutions structure incentives in political, social, and economic exchange.
* Institutions reduce uncertainty by providing stable (not necessarily efficient) structure to everyday life.
* Institutions are created and also evolve over time. Institutional change shapes how societies evolve. Theory of institutional change explains economic history
North, Douglass C. 1995. “The New Institutional Economics and Third World Development.” Pp. 17-26 in J. Harriss, J. Hunter, and C. Lewis, eds., The New Institutional Economics and Third World Development, London: Routledge.
Institutional Theories
New institutional economics adds institutions to neoclassical theory, which is relevant to development because institutions shape economic action. The interaction of institutions and organizations explain vastly different long-term performance of economies – how institutions persist (source of continuity) and change.
Nee, Victor, and David Stark. 1989, “Toward an Institutional Analysis of State Socialism.” Pp. 1-31 in V. Nee and D. Stark, eds., Reforming the Economic Institutions of Socialism. Stanford: Stanford University Press, 1989
Institutional Theories
Contrary to modernization theory’s view of socialism, the paths to development differ based on socialism’s institutional logic. To analyze different dynamics of development, new institutionalism focuses on social and economic institutions outside of politics.
**Szeleny, Ivan, and Balazs Szelenyi. 1994. “Why Socialism Failed: Toward a Theory of System Breakdown—Causes of Disintegration of East European State Socialism,” **Theory and Society, 23: 211-31.
Institutional Theories
Reject Modernization theory’s view that the fall of socialism is inevitable but it wasn’t. (Marxism: explain social change by philosophical laws of human nature)
Socialist economies/societies were stable (able to reproduce themselves) for a long time. System breakdown not inevitable = the result of complex interaction of EXOGENOUS (Soviet policies, military challenges, world market dynamics) + ENDOGENOUS factors (class power, popular and intellectual revolutions, elite fragmentation) at the same time, practically by accident
**Biggart, Nicole, and Mauro Guillén. 1999. “Developing Difference: Social Organization and the Rise of the Auto Industries of South Korea, Taiwan, Spain, and Argentina,” **American Sociological Review, 64:722-47.
Institutional Theories
Using a cross-national comparison of the rise of the automobile industry, authors show that paths to econ dev differ. Institutionalized differences of social organization (that legitimize certain economic actors and relationships) may be the source of economic advantage in the global economy. “Development is about finding a place in the global economy, not about convergence or the suppression of difference.”
Sokoloff, Kenneth, and Stanley Engerman. 2000. “History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World,” Journal of Economic Perspectives, 14: 217-32
Institutional Theories
The divergent paths of New World countries (Latin America/Caribbean vs US/Canada) demonstrate path dependency: countries with unequal resources to begin with create institutions that perpetuate inequality, which overall limits economic growth.
Hall, Peter A. and David Soskice. 2001. “An Introduction to the Varieties of Capitalism,” Chapter 1, pp. 1-68 in Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press.
Institutional Theories
National political economies can be compared according to the way in which firms resolve the coordination problems. Institutional contexts structure how FIRMS coordinate.
Varieties of capitalism approach: Focuses on strategic interaction between economic actors, especially FIRMS as key agents of technological change and international competition. How firms resolve coordination problems in two types of markets and reach equilibrium?
* Liberal Market Economy: FIRMS coordinate activities via markets, competition, hierarchies. Firms behave based on demand and supply in competitive markets.
* Coordinated Market Economy: FIRMS coordinate activities via non-market relationships. Firms use strategic interactions among firms and others.
Formal and informal institutions → shapes form of coordination/strategic interaction among firms → results in different forms of political economy
**Acemoglu, Daron, Simon Johnson, and James Robinson. 2001. “The Colonial Origins of Comparative Development,” **American Economic Review, 91: 1369-1401.
Institutional Theories
Institutions of the past shape economic performance of the present. Determinants of whether Europeans could settle versus extract colonies affects institutions today.
Rosenthal, J-L. and R. B. Wong. 2012. “Before and Beyond Divergence: A New Look at the Economic History of China and Europe,” Pp. 64-77 in M. Aoki, T. Kuran, and G. Roland, eds., Institutions and Comparative Economic Development. London: Palgrave-Macmillan. 2012. (17 pages)
Institutional Theories
Political size and structure (larger spatial scale China vs. small polities
of Europe) and conflict shaped economic change: Europe’s success and China’s failure. “The nature of political integration and institutions within large regional spaces continues to affect economic performance.”
Perkins, Dwight. 1994. “There Are At Least Three Models of East Asian Development,” World Development, 22:655-61.
Role of State
The World Bank oversimplifies the heterogenous development paths in East Asia. There are similarities (export-focus, macroeconomic stability, education).
Polanyi, Karl. 1944. The Great Transformation, Chapters 3-6. Boston: Beacon Press.
Role of State
Before capitalism (market economy), economy was an accessory for society, but now, society is an accessory of the economic system. The dominance of the market economy is not inevitable, but the result of institutionalization of markets in commercial society and in the state which made land, labor, and capital into commodities
**Amsden, Alice. 1994. “Why Isn’t the Whole World Experimenting with the East Asian Model to Development?” **World Development, 22:627-33.
Role of State
The World Bank’s “market-friendly” explanation of East Asia’s development fails to acknowledge that strong state intervention (micro-institutions, industrial policy) was critical.
**Evans, Peter B. 1996. “Embedded Autonomy and Industrial Transformation,” **Political Power and Social Theory, 10:259-82.
Role of State
The DEVELOPMENTAL STATE can play an active role in promoting economic development. The degree of success depends on their EMBEDDED AUTONOMY.
Countries are situated in a framework of international division of labor. The possibilities for economic transformation are constrained by a nation’s position. BUT, States DO have agency to change their country’s position to be a “Developmental State” (reject dependency theory & world system). To do that, states must 1) possess enough capacity and autonomy and 2) choose smart strategies (i.e. which sectors to promote, figure out comparative advantage), depending on access to local information.
Core feature of successful developmental states is their “embedded autonomy”:
* Embedded = connectedness to local capital - social ties between state and domestic business owners/managers
* Autonomy = coherent internal, Weberian bureaucracy to avoid being captured by local capital (Industrial State?)These states are embedded in local capital through social ties between state bureaucrats and domestic business owners and managers.
Therefore, the developmental state can 1) autonomously judge what is “best” for the country as a whole rather than for a bunch of interest groups and 2) maintain connection to the society so as to allow for constant reevaluation of goals and policies based on local information, and 3) to effectively channel resources to various social sectors.
This balance (local connectedness and an autonomous, cohesive bureaucracy) is what makes developmental states most effective.
**Scott, James. 1998. Seeing Like a State. **Chapters 8-10. New Haven: Yale University Press.
Role of State
Modernist ideology can become imperialist, grand plans that assume progress equals good and western rationality can transform foreign cultures while ignoring local knowledge and experience (metis). This inadvertently creates informal side-sectors (e.g. favelas in Brazil, scroungers in socialist factories). Instead social engineering plans have to be (1) slow and adaptable to allow for contingencies; (2) incorporate metis; (3) reversible.
