Theories of Development Flashcards
What is a political economy?
Focuses on relationships between production and trade and power and politics
What did David Ricardo suggest?
Comparative advantage
Economic Nationalism
Protection of national economy from foreign competition
Gershenkron
Catch up theorist who pushed for production of capital/industrial goods, physical infrastructure
What are the three modernization theories and some people involved in each?
Sociological: Durkheim, Weber, Parsons
Economic: Rostow
Political: Huntington
When did development economies occur?
After WWII during Cold War
“Big Push”
Large investments in critical industries such as infrastructure for additional economic activities, trickle down, and getting more products to market
Linkages
Introduced by Hirschman; strategic industry can stimulate development of other industries
Ragnar Nurske
Growth of imports in developing countries is mostly luxury and unimportant, superfluous consumption. He advocated for increases in taxation of exports
Arthur Lewis
Theory of surplus labor; move workers from rural to urban with same wages
Hans Singer and Raul Prebisch
Argued against international trade which would lead to declining national income since value of exports would decline compared to value of imports. Caused by income elasticity, declining terms of trade, income volatility
Income elasticity
As GDP per capita increases, more money goes to manufactured goods and services rather than raw materials. Example is people buy coffee from shop rather than the beans themselves
Declining terms of trade
Value of exports decreased relative to value of imported goods
Income volatility
Fluctuations in prices of exports means deficits and surpluses. This creates a stop and go pattern with periods of contraction and expansion caused by problems with balance of payments
Import substitution industrialization
Replace imports with growing domestic production. Played out poorly for Latin America who could not export lower-quality products
