Models of Development - Rural Development - Lecture Slides, Slides of Human Development

Download Models of Development - Rural Development - Lecture Slides and more Slides Human Development in PDF only on Docsity! Models of Development Docsity.com Models of Development _Rostow - Stages of Growth Docsity.com Rostow - Stages of Growth • The work of American Walt W. Rostow • Rostow is an economic historian • Countries can be placed in one of five categories in terms of its stage of growth: A child in Sierra Leone making breakfast. Which stage would a country like Sierra Leone fit in? Copyright: Dave Dyett, http://www.sxc.hu/ Docsity.com Rostow - Stages of Growth 1. Traditional Society • Characterised by – subsistence economy – output not traded or recorded – existence of barter – high levels of agriculture and labour intensive agriculture Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture. Copyright: Tracy Wade, http://www.sxc.hu/ Docsity.com Rostow - Stages of Growth 2. Pre-conditions: – Development of mining industries – Increase in capital use in agriculture – Necessity of external funding – Some growth in savings and investment The use of some capital equipment can help increase productivity and generate small surpluses which can be traded. Copyright: Tim & Annette, http://www.sxc.hu Docsity.com Rostow - Stages of Growth 5. High mass consumption – High output levels – Mass consumption of consumer durables – High proportion of employment in service sector Service industry dominates the economy – banking, insurance, finance, marketing, entertainment, leisure and so on. Copyright: Elliott Tompkins, http://www.sxc.hu Docsity.com Criticisms: • Too simplistic • Necessity of a financial infrastructure to channel any savings that are made into investment • Will such investment yield growth? Not necessarily • Need for other infrastructure – human resources (education), roads, rail, communications networks • Efficiency of use of investment – in palaces or productive activities? • Rostow argued economies would learn from one another and reduce the time taken to develop – has this happened? Docsity.com Market Based Importance of the existence of the free market Government inefficiency restricts growth Role of government to liberate markets and promote competition } Establishment of property rig 3 Docsity.com International Dependence Problems created by past history - international division of labour Gap between rich and poor nations can be perpetuated by rich nations Trade may further widen the i Existence of the international debt crisis “y International agencies may not help Lack of understanding ofthe needs of developing countries Criticism: Docsity.com International Dependence • International division of labour – rich in high value activity, poor in low value, can be traced back to colonial and imperial dominance • Dominance of political decision making in the hands of a few wealthy and powerful groups who aim to maintain the status quo • Such interest groups also exercise power over international institutions and initiatives such as the World Trade Organisation, International Monetary Fund, Kyoto talks, etc. Docsity.com International Dependence • Advice given to poorer nations has been poor – e.g. lending to less developed countries, investment advice, etc. • Inability to solve the debt crisis and protectionism continues to prevent development of poorest countries The International Dependence model can perhaps be exemplified by the lack of progress on reducing emissions to restrict climate change and freeing up international trade. Copyright: Nikita Golovanov, http://www.sxc.hu Docsity.com Structural Change • Structural change models focus on the different productivity levels of economies • Process of structural change determines the rate of development • Can such structural changes be accommodated? Docsity.com Structural Change • Less developed nations – tend to be dominated by primary industries – low value added, difficult to generate wealth and thus sources of investment • Developed nations – diverse economies, high value added, high levels of investment • Structural change can be encouraged by incentives Docsity.com Lewis 2 Sector model • Agriculture - low value added • Industrial sector - higher productivity and wealth generation • Incentives to encourage workers to migrate from rural economy to urban • Rural workers have very low if not zero marginal productivity • Wage premiums in urban industry 30% above rural wages would encourage migration from rural to urban whilst still allowing profits to be made • Re-investment of profits would lead to a self perpetuating development Docsity.com