week 7 - logics and patterns of development in the global south Flashcards
Developmental aspirations mid-20th century
- Liberal expectations: including the south in the international trading system would bring development as it had in the west
- colonialism was not seen as an impediment to development
- US President Harry S. Truman: we must embark on a bold new program for making the benefits of our scientific and industrial progress available for the improvement and growth of underdeveloped areas”
- tied in with US security aims was an interest in demonstrating the superiority of capitalism as a source of development
Modernization theory (liberal perspective)
- Great optimism or universal development
- WW Rostow: five common stages of growth: traditional society; preconditions for the take-off; drive to maturity; high mass consumption
Results uneven in 1960s, but signs of significant progress:
a) growth rates
b) life expectancy
c) broader provision of such public goods as education and healthcare
d) green revolution- agricultural production improves sustainability with support of better materials and technology
Societies move from tradition to modernity
a) traditional: ascription, low social mobility, extended kinship structure, elitist and hierarchical political authority
b) modern: achievement, high social mobility, nuclear families, dynamism, and rational legal authority
c) the two ways of life clash, modernity prevails
d) but modernization’s failures are attributed to the strength of the traditional impulse, or insufficiently modern attitudes and beliefs
e) Latin America: Catholicism, feudal values, indigenous populations, and aristocratic influence can explain weak entrepreneurial activity
Modernization effects
- the benefits were concentrated in a few successful southern states, with the rest still experiencing weak growth and or high levels of poverty
- results must less impressive as of the late 1960s - in terms of malnutrition, unemployment and inequality
- this approach attributed development inadequacies not to its basic propositions, but rather to a set of impediments seen as peculiar to the south
Important substitution industrialization: Latin America
- cold was brought return to colonial trade relations: client states as providers of raw materials, purchasers of manufactured goods
- Latin America responded in the 1950s and 60s with ISI:
a) aim to create domestic manufacturing, give jobs to local workers, provide cheaper goods at home and export some abroad
b) tariffs protected the domestic market so infant industries could grow by replacing imports
c) some state subsidies and state ownership to stimulate targeted industrialization
ISI Latin America
Problem with ISI
a) domestic markets not large enough
b) still importing technological know how and machine tools and parts
c) domestic actors resisted giving up tariffs and subsidies as required
d) and bureaucratic authoritarianism: as domestic markets saturated, growth stunted, leading to massive popular unrest, and military coups justified by the need for public order and economic management
Dependency theory
- built on key insights of ISI: need for domestic industrial development
- but represented a radical response to perceived failures in development under modernization and ISI
- dependency: when a country’s economic development is heavily conditioned by the development and expansion of another economy
- dependency theory argues that capitalist development of a dependent country is very unlikely, due to the structure of exchange relations
- inspiring revolutions in places like Cuba and Nicaragua
- rejects the emphasis on the individual nation state, and on cultural struggles within them
- nation states must be placed within the context of the global political economy - a new level of analysis
- Lenin was right - capitalism operates on the global scale, serving as the main influence on national development
- the global capitalist system is interconnected but highly unequal
- countries at the centre of the system develop by under-developing others (core vs periphery)
- the core economies in the global south do the same to their satellites, and so on down the line
- southern product responds to the needs of the metropolitan economy, not its own, the development of under-development
- so the benefits of capitalism don’t trickle down
- the bourgeoisie may remain weak and compromised, acting in service of the metropole
- frank: the further from global capitalism, the more developed
- the system began developing in the 16th century, with the emergence of colonial relations: southern resources for western manufacturing
- over time, the system is increasingly irreversible - supported by sustained differences in state strength
Developmental states
- Japanese successes notified early 1960s - reliance on exports confirms conventional account
On closer look, the case wasn’t so straightforward
a) too must state involvement - against model calling for small states that support property rights and contracts and get out of the way
b) model soon extended to authoritarian South Korea and Taiwan
c) pro-development state challenges neo-utilitarian approach - state officials always seeking corrupt gains
Developmental states - states vary
Predatory
a) marketization of state: holding any slice of power constitutes a veritable exchange instrument convertible into illicit acquisition of money or other good
b) spending goes not to development, but to power via patronage
c) society remains fragmented into groups competing for favour
Developmental states - developmental
a) autonomy - a cohesive, merit and expertise based bureaucracy capable of formulating and pursuing a goal regardless of the demands of dominant social groups
b) Embeddedness - well established networks which permit the state to learn what is needed by business elites to drive development
c) embedded autonomy - the capacity to provide guidance and resources to economic actors to unlock unseen potential
d) enable “development of a bourgeoisie oriented to long term profit based productive investment
Developmental states - Gerschenkron
Strong states are required and will emerge:
a) early industrializers accumulated capital slowly, in small mills and miners, before investing in ever more capital rich industries
b) so, these industrializers operated as individual entrepreneurs, and felt no need for help from institutions
c) later industrializers had to accumulate capital more quickly, which required innovative contributions from banks and then the state
d) the later the industrializer, the more reliant on the state
e) and on collectivist ideologies justifying the state’s role
Developmental states - Japan
Keys to Japanese success:
a) industrial strategy devised by state - ministry of international trade and industry
b) use of financial institutions to divert savings to investment
c) disciplined support - state reorientation of production from domestic to export markets
d) pick winners - sectors and firms within them
e) tariffs and import restrictions protect emerging industry
f) subsidies and low interest loans enable industrial development
g) public risk absorption - encourage private sector risk taking by publicly assuming losses
Developmental states - east Asia
a) strong states before foreign investment appears
b) states acquired autonomy as Japanese colonialism weakened dominant landed class
c) assembling pro growth political coalition was easier
Developmental states - Latin America
a) awash in foreign investment before states could become strong
b) landed class remained strong on the ground
c) assembling a pro growth coalition required tougher negotiations
Neoliberalism
- Japanese model ran into difficulties in the lost decade (1991-2001)
- the global lost decades (1980s-90s) saw the emergence of a debt crisis, as demand for exports dropped, prices of primary commodities fell, and loans were simply too easily available
- creditor countries and international financial institutions reschedule debts in exchange for structural adjustment and reduced public spending
- the Washington consensus forms in the 1990s: cutbacks, liberalization of trade and investment, privatization and deregulation
- India shifts from state driven growth model to neoliberalism 1991
