The Dynamics of Socio-Economic Development: An Introduction

by Adam Szirmai

• ISBN13: 9780521817639
• ISBN10: 0521817633
• Format: Hardcover
• Copyright: 2005-03-14
• Publisher: Cambridge University Press

Summary

Why are poor countries poor and rich countries rich? How are wealth and poverty related to changes in nutrition, health, life expectancy, education, population growth and politics? This modern, non-technical introduction to development studies explores the dynamics of socio-economic development and stagnation in developing countries. Taking a quantitative and comparative approach to contemporary debates within their broader context, Szirmai examines historical, institutional, demographic, sociological, political and cultural factors. Key chapters focus on economic growth, technological change, industrialisation, agricultural development, and consider social dimensions such as population growth, health and education. Each chapter contains comparative statistics on trends from a sample of twenty-nine developing countries. This rich statistical database allows students to strengthen their understanding of comparative development experiences. Assuming no prior knowledge of economics the book is suited for use in inter-disciplinary development studies programmes as well as economics courses, and will also interest practitioners pursuing careers in developing countries.

Table of Contents

List of figures	xvii
List of tables	xix
List of boxes	xxiii
Preface	xxv
List of abbreviations	xxix
Acknowledgements	xxxii
Chapter 1 Developing countries and the concept of development	1	(34)
1.1 Approaches to development	2	(2)
1.2 The development debate	4	(2)
1.3 Growth and development	6	(3)
1.4 Are growth and development desirable?	9	(2)
1.5 Development and Westernisation	11	(1)
1.6 Indicators of growth and development	12	(4)
1.7 Does the 'third world' exist?	16	(12)
1.8 What do developing countries have in common?	28	(7)
Chapter 2 Development of the international economic order, 1450-2000	35	(33)
2.1 International economic order	36	(1)
2.2 Economic breakthrough and external expansion from Western Europe	36	(3)
2.3 Why expansion from Europe instead of from China?	39	(4)
2.4 European expansion in the world	43	(20)
2.4.1 Types of international economic orders	45	(2)
2.4.2 The first wave of expansion, 1400-1815	47	(3)
2.4.3 The first wave of decolonisation	50	(1)
2.4.4 The second phase of European expansion, 1815-1913	51	(2)
2.4.5 The period 1870-1913	53	(1)
2.4.6 Migration flows	54	(5)
2.4.7 Non-colonised areas	59	(1)
2.4.8 Latecomers in the process of economic development	60	(1)
2.4.9 The period 1913-1950	60	(1)
2.4.10 The period after World War II	61	(2)
2.5 Two perspectives on developments in the world economy; 1500-2000	63	(1)
2.6 Key issues in development	64	(4)
Chapter 3 Growth and stagnation: theories and experiences	68	(49)
3.1 What are the basic sources of growth? How do economies grow and societies become more prosperous?	69	(1)
3.2 Classical thinking about growth, development and stagnation	70	(8)
3.2.1 Adam Smith	71	(1)
3.2.2 The classical economists Ricardo, Malthus and Mill	71	(1)
3.2.3 Friedrich List	72	(1)
3.2.4 Classical sociologists: Spencer, Tönnies and Durkheim	72	(2)
3.2.5 Karl Marx	74	(1)
3.2.6 Imperialism	75	(1)
3.2.7 Max Weber and Joseph Schumpeter	76	(2)
3.3 Internal and external approaches	78	(1)
3.4 Explanations of economic backwardness	79	(11)
3.4.1 Rostow's theory of the stages of economic growth	79	(2)
3.4.2 Kuznets's preconditions for industrialisation	81	(1)
3.4.3 Advantages of backwardness	82	(1)
3.4.4 Neoclassical theories of growth	83	(4)
3.4.5 Evolutionary theories of economic change	87	(1)
3.4.6 North and Thomas: efficient institutions	88	(1)
3.4.7 Myrdal: Institutional reforms	89	(1)
3.5 Explanations of underdevelopment	90	(7)
3.5.1 Neo-Marxist theories of underdevelopment	91	(3)
3.5.2 Structuralism and theories of unequal exchange	94	(2)
3.5.3 Underdevelopment theories: a preliminary evaluation	96	(1)
3.6 Empirical study of development experiences	97	(20)
3.6.1 Growth of income per capita: can developing countries grow?	98	(4)
3.6.2 Investment: how important is capital?	102	(2)
3.6.3 Export performance	104	(2)
3.6.4 External finance: does money flow from poor to rich countries?	106	(3)
3.6.5 Are developing countries capable of structural change?	109	(3)
3.6.6 How unequal is the income distribution?	112	(5)
Chapter 4 Technology and development	117	(24)
4.1 The role of technology	117	(1)
4.2 The technology race	118	(3)
4.3 Technological change and increases in productive capacity	121	(5)
4.3.1 How to increase labour productivity?	121	(2)
4.3.2 Investing in technological change	123	(1)
4.3.3 Diffusion of technology and technological and social capabilities	124	(1)
4.3.4 Technology, productivity and competitiveness	125	(1)
4.4 Economic theories about the role of technological change	126	(3)
4.4.1 Solow	126	(1)
4.4.2 Advantages of backwardness	127	(1)
4.4.3 Endogenous and evolutionary growth theories	127	(2)
4.5 Consequences of the acceleration of technological development for developing countries	129	(4)
4.5.1 Acceleration of global technological change	129	(1)
4.5.2 Knowledge gaps	130	(1)
4.5.3 New opportunities offered by technological development	131	(1)
4.5.4 New threats	132	(1)
4.6 International technology transfer and technology diffusion	133	(4)
4.6.1 Intellectual property rights	134	(1)
4.6.2 Technological capabilities	135	(1)
4.6.3 National innovation systems	136	(1)
4.7 Biotechnology	137	(1)
4.8 Information and communication technology	137	(1)
4.9 National and international policy	138	(3)
Chapter 5 Population and development	141	(36)
5.1 Introduction	142	(1)
5.2 Perspectives on population growth	142	(1)
5.3 Growth of world population	143	(2)
5.4 The demographic transition	145	(2)
5.5 Demographic developments in developing countries	147	(4)
5.6 Socio-economic consequences of population growth	151	(14)
5.6.1 Pessimistic and optimistic perspectives	151	(1)
5.6.2 Malthusian analyses	152	(1)
5.6.3 The neo-Malthusian trap	152	(2)
5.6.4 Growth of national income, growth of per capita income and the dependency ratio	154	(1)
5.6.5 Dependency ratio and savings	154	(1)
5.6.6 Population growth and investment	155	(1)
5.6.7 Population growth, education and health care	156	(1)
5.6.8 Employment, income distribution and poverty	156	(3)
5.6.9 Population growth and the environment	159	(4)
5.6.10 Population growth and technological progress	163	(2)
5.6.11 Consequences of population growth: concluding remarks	165	(1)
5.7 Why do people in developing countries have so many children?	165	(6)
5.7.1 Introduction	165	(1)
5.7.2 Intermediate determinants of fertility: the Bongaarts model	166	(2)
5.7.3 Economic explanations of fertility	168	(1)
5.7.4 Cultural and institutional explanations of fertility	169	(2)
5.8 Policy	171	(6)
Chapter 6 Health, health care and development	177	(36)
6.1 The state of health in developing countries	178	(14)
6.1.1 Quantitative indicators of the state of health	178	(1)
6.1.2 Infant and child mortality	179	(2)
6.1.3 Life expectancy	181	(2)
6.1.4 Patterns of disease and health	183	(3)
6.1.5 Common infectious and parasitic diseases in developing countries	186	(4)
6.1.6 Epidemiological transition	190	(2)
6.2 Theoretical explanations of changes in health and morbidity	192	(12)
6.2.1 Factors affecting the state of health	192	(1)
6.2.2 Preston: per capita income and life expectancy	193	(1)
6.2.3 McKeown: the importance of nutrition	194	(1)
6.2.4 Preston and McKeown	195	(1)
6.2.5 The Mosley model and the importance of education	196	(3)
6.2.6 Caldwell: the importance of health-care policy	199	(3)
6.2.7 Standards of living, education, medical technology and health-care systems: a synthesis	202	(2)
6.3 Health and economic development	204	(2)
6.4 Health-care policy	206	(7)
Chapter 7 Education and development	213	(42)
7.1 Theories of the contribution of education to economic development	214	(11)
7.1.1 'Human capital' theory	214	(4)
7.1.2 Criticisms of human capital theory	218	(1)
7.1.3 Screening theory	219	(1)
7.1.4 Criticisms of screening theory	220	(1)
7.1.5 An evaluation of the human capital debate	220	(2)
7.1.6 Education as a necessary but not sufficient condition for development	222	(3)
7.2 Indicators of educational development	225	(3)
7.2.1 Indicators of educational enrolment	225	(1)
7.2.2 Educational Attainments	226	(1)
7.2.3 Financial indicators	227	(1)
7.2.4 Physical indicators	227	(1)
7.2.5 Literacy	227	(1)
7.3 Educational performance in developing countries	228	(11)
7.3.1 The initial situation after World War II	228	(1)
7.3.2 Increases in educational enrolment	229	(3)
7.3.3 Education completed	232	(1)
7.3.4 Years of education per member of the labour force	233	(1)
7.3.5 Educational expenditures	234	(3)
7.3.6 Non-formal and informal education	237	(1)
7.3.7 Summary: comparison with developments in more developed countries	238	(1)
7.4 Problems	239	(6)
7.4.1 Discrepancies between educational needs and financial resources	239	(1)
7.4.2 The quality of education	240	(1)
7.4.3 Lack of relevance	241	(1)
7.4.4 Unequal access to education	242	(1)
7.4.5 Mismatch between education and the labour market	243	(2)
7.5 Literacy	245	(3)
7.6 Nation building	248	(2)
7.7 Policy	250	(5)
Chapter 8 Economic development, structural transformation and primary exports	255	(48)
8.1 Capital accumulation and industrialisation	256	(2)
8.2 Economic development and structural transformation	258	(8)
8.2.1 Definitions of economic sectors	258	(2)
8.2.2 Structural change	260	(2)
8.2.3 Arguments in favour of industrialisation	262	(4)
8.2.4 The prestige of industrialisation	266	(1)
8.3 Accumulation of industrial capital in open and closed models of the economy	266	(6)
8.3.1 Open and closed models of the economy: early and late stages of development	266	(3)
8.3.2 Is the agricultural sector a stagnant or a dynamic sector?	269	(2)
8.3.3 What about the service sector?	271	(1)
8.4 The development of agriculture as a prerequisite for industrialisation	272	(4)
8.4.1 The role of agriculture in early stages of development	272	(2)
8.4.2 Historical examples of relationships between agriculture and industry	274	(1)
8.4.3 Conclusion	275	(1)
8.5 Open model: are primary exports an engine of growth and structural transformation?	276	(18)
8.5.1 Introduction	276	(1)
8.5.2 Comparative advantage and the role of trade in development	276	(2)
8.5.3 Primary exports as an engine of growth between 1817 and 1913: vent for surplus	278	(2)
8.5.4 Why disappointing industrialisation?	280	(1)
8.5.5 Can primary exports function as the engine of growth?	281	(2)
8.5.6 Export pessimism	283	(5)
8.5.7 Export pessimism and policy	288	(1)
8.5.8 Finding an appropriate balance between primary exports and industrialisation	288	(6)
8.6 Closed model: interactions between agriculture and industry in later stages of development and structural change	294	(7)
8.6.1 Introduction: import-substituting industrialisation in the closed model	294	(1)
8.6.2 Transfer mechanisms	295	(1)
8.6.3 Towards a balance between agriculture and industry	295	(3)
8.6.4 The mix of negative and positive incentives in a balanced growth path	298	(3)
8.7 Closed and open models and industrialisation	301	(2)
Chapter 9 Industrial development	303	(51)
9.1 Introduction	304	(2)
9.2 Large-scale industrialisation and balanced growth strategies	306	(12)
9.2.1 Economic development with unlimited supplies of labour	306	(3)
9.2.2 Capital-output ratio	309	(1)
9.2.3 Shortage of capital as the key bottleneck in economic development	310	(1)
9.2.4 Does economic development result in increasing income inequality?	310	(2)
9.2.5 The two-gap model of foreign finance: the role of financial flows from abroad	312	(1)
9.2.6 Big is beautiful: large-scale investment, government planning and import substitution	313	(5)
9.3 Criticisms of orthodox industrialisation strategies	318	(8)
9.3.1 Shortcomings of the Lewis model	319	(2)
9.3.2 Is capital really so important?	321	(1)
9.3.3 How important is the scale of investment?	321	(2)
9.3.4 Protection breeds inefficiency	323	(1)
9.3.5 Urban industrial bias	324	(2)
9.3.6 Alternative industrialisation strategies	326	(1)
9.4 Unbalanced growth	326	(4)
9.4.1 The function of dynamic imbalances	326	(1)
9.4.2 Backward and forward linkages	327	(2)
9.4.3 Shift to the market	329	(1)
9.5 Balanced growth path	330	(1)
9.6 Medium and small-scale enterprises and the urban informal sector	331	(3)
9.7 Export-oriented industrialisation	334	(9)
9.7.1 The shift from import substitution to export orientation	334	(6)
9.7.2 Globalisation, foreign direct investment and the role of multinational companies in development	340	(3)
9.8 Liberalisation, deregulation and the debate on industrial policy: neoliberals versus interventionists	343	(2)
9.9 Outcomes of industrialisation strategies	345	(6)
9.10 Conclusion	351	(3)
Chapter 10 Agricultural development and rural development	354	(72)
10.1 Is there enough food to feed the world population?	355	(6)
10.2 What are the sources of growth of agricultural production?	361	(29)
10.2.1 How much land is still left for cultivation?	361	(6)
10.2.2 Intensification of land use	367	(5)
10.2.3 Increasing yields per harvest	372	(3)
10.2.4 Models of agricultural development	375	(5)
10.2.5 The green revolution: increase in yields per harvest	380	(6)
10.2.6 The green revolution continued: biotechnology and genetically modified crops	386	(2)
10.2.7 Summary and prospects	388	(2)
10.3 Food consumption and nutrition	390	(6)
10.4 Rural development versus agricultural development	396	(18)
10.4.1 Changes in rural societies	399	(1)
10.4.2 Three perspectives on rural development	400	(4)
10.4.3 The peasant economy and peasant households	404	(5)
10.4.4 Rationality, risk and survival strategies in peasant societies	409	(5)
10.5 Land reform	414	(5)
10.6 Collectivisation and decollectivisation	419	(2)
10.7 Non-agrarian activities and integrated rural development	421	(5)
Chapter 11 State formation and political aspects of development	426	(60)
11.1 Concepts	427	(4)
11.2 Marxist and Weberian perspectives on the state	431	(2)
11.3 Processes of state formation in Europe	433	(5)
11.4 State formation in developing countries	438	(24)
11.4.1 The importance of external penetration in processes of state formation	439	(4)
11.4.2 Internal political instability	443	(2)
11.4.3 External political interference as a destabilising factor	445	(6)
11.4.4 The role of the military in politics	451	(4)
11.4.5 One-party states	455	(2)
11.4.6 Is there a resurgence of democracy in developing countries?	457	(2)
11.4.7 Rapid growth of the public sector since 1945	459	(1)
11.4.8 'Soft states' and the political economy of rent seeking	459	(3)
11.5 The role of government in economic development	462	(10)
11.5.1 The role of the state in economic development: five examples	463	(9)
11.6 Interactions between political and economic developments	472	(8)
11.6.1 Political instability as a source of economic stagnation	472	(2)
11.6.2 Economic development and political stability	474	(2)
11.6.3 Is there a relationship between democracy and economic development?	476	(2)
11.6.4 Good governance and economic development	478	(2)
11.7 The predatory state as an obstacle to economic development in Sub-Saharan Africa	480	(3)
11.8 Concluding remarks	483	(3)
Chapter 12 Cultural dimensions of development	486	(29)
12.1 Introduction	487	(2)
12.1.1 Concepts	487	(1)
12.1.2 How important is culture?	487	(2)
12.2 The Protestant ethic and the rise of capitalism	489	(2)
12.3 Efficient institutions	491	(2)
12.4 Traditional versus modern cultures	493	(4)
12.4.1 Modernisation theory	493	(2)
12.4.2 Towards a more differentiated approach to the opposition between traditional and modern	495	(2)
12.5 Are there cultural obstacles to economic development?	497	(9)
12.5.1 The caste system	498	(1)
12.5.2 The low status of physical work and effort	499	(1)
12.5.3 Social obligations in African cultures	500	(1)
12.5.4 Gender discrimination	501	(1)
12.5.5 The importance of trust in market relationships	501	(1)
12.5.6 The mysterious role of ethnic minorities in economic development	502	(1)
12.5.7 Cultural differences between North and Latin America	502	(1)
12.5.8 The Soviet legacy	503	(1)
12.5.9 Asian values and the Confucian ethic	503	(3)
12.6 Civic culture	506	(1)
12.7 Cultural consequences of and reactions to Western penetration	507	(4)
12.7.1 Cultural consequences	507	(1)
12.7.2 Reactions to Western penetration and cultural disruption	508	(3)
12.8 Interactions between culture, technology and economics at micro-level	511	(4)
Chapter 13 The international economic and political order since 1945	515	(65)
13.1 Characteristics of international relations since 1945	516	(10)
13.1.1 Economic aspects	516	(5)
13.1.2 Political aspects	521	(5)
13.2 Institutions and institutional change since 1945: a chronological overview	526	(13)
13.2.1 Free trade versus international regulation	531	(1)
13.2.2 The financial institutions	531	(3)
13.2.3 The UN family of institutions and the call for a new international economic order	534	(1)
13.2.4 Responses to the new international economic order	535	(1)
13.2.5 The debt crisis and the rise of the Washington consensus	536	(2)
13.2.6 The Asian crisis and the debate on the architecture of the international order	538	(1)
13.2.7 Environment	539	(1)
13.3 The call for a new international order in the 1960's and 1970's	539	(7)
13.3.1 Criticisms of the liberal international order	539	(3)
13.3.2 Lomé agreements	542	(1)
13.3.3 Criticisms of the new international order	542	(4)
13.4 The debt crisis	546	(17)
13.4.1 What is wrong with debt?	546	(1)
13.4.2 What caused the 1982 debt crisis?	547	(2)
13.4.3 Quantitative data on debt and financial flows in developing countries	549	(9)
13.4.4 How to deal with debt?	558	(5)
13.5 Structural adjustment policies	563	(10)
13.5.1 Neoliberalism versus structuralism	563	(1)
13.5.2 Structural adjustment, IMF and the World Bank	564	(1)
13.5.3 Stabilisation and structural adjustment	565	(3)
13.5.4 The effectiveness of structural adjustment programmes	568	(5)
13.6 The Asian crisis and the renewed debate on globalisation	573	(7)
Chapter 14 Foreign aid and development	580	(53)
14.1 Why foreign aid?	581	(4)
14.2 The emergence of foreign aid	585	(3)
14.3 Development aid: sources and categories	588	(3)
14.4 Quantitative data on aid flows	591	(10)
14.4.1 Long-term trends in the magnitude and geographical distribution of aid flows	591	(3)
14.4.2 Development aid in proportion to total resource flows	594	(4)
14.4.3 Net development assistance as a percentage of gross domestic product	598	(2)
14.4.4 Reduction of the real value of aid by tying	600	(1)
14.4.5 Conclusion: the volume of aid is not negligible	601	(1)
14.5 Theories of development and objectives of aid	601	(8)
14.5.1 Aid as a source of investment, capital accumulation and growth	601	(3)
14.5.2 Aid, growth and poverty reduction	604	(2)
14.5.3 Technical assistance, human capital theory and growth	606	(1)
14.5.4 Policy dialogue and programme aid: policy reform and improvements in governance and institutions	607	(2)
14.6 Does aid work? Different perspectives on the effectiveness of development aid	609	(24)
14.6.1 Does aid contribute to welfare and socio-economic dynamism?	609	(2)
14.6.2 Radical criticisms of development aid	611	(3)
14.6.3 Neoliberal criticism of development aid	614	(3)
14.6.4 Criticism of development projects	617	(1)
14.6.5 Empirical debates about aid effectiveness and proposals for reform	618	(10)
14.6.6 Epilogue: an attempt at evaluation	628	(5)
Bibliography	633	(55)
Author index	688	(10)
Subject index	698