GEOG 216 Lecture Notes - Lecture 13: Structural Change, Dependency Theory, Autarchism
13 Jun 2018
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Lecture 10- Development Theories & Pathways
Outline
• What is development?
• (ow countries change as they develop?
• Theories of economic development
• P
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What is development?
Economic dvp related to:
• Economic growth (with new resources, new trade, technological change) and
structural change
poverty wasnt seen as a bad thing, in the th century, WWI, WWII, Europe
is decimated, reconstruction becomes focal point in world, rebuilding
infrastructures)
• Growth -> basic needs country cant dvp if large part of pop is deprived of
resources) -> poverty reduction -> freedoms & capabilities
• Concept is endogenous to dvp process
to some people econ dvp is insuring their infant wont die at birth, to some
people, it has to do with rights, capabilities, becoming the person who you
have to potential to become)
How countries change as they develop
•
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• As incomes goes, up share of income spent on food tends to fall → more
money for savings, investments etc.: Engels law
• Agriculture becomes more efficient, more productive (mechanization, etc.),
frees up labor to go into labor sector, one farmer now produces more food. In
Canada a farmer can feed 120 people.
• Increased urbanization
•
Economic structural change
o Exports &imports increase with GDP
o Accumulation of capital increases with GDP (countries save $ as
incomes rise → investment possibility through education and health
in improving human capital so that theres increased savings and
increased investments)
o Share of agriculture falls and industry & services rise with GDP/capita
(over time share of agriculture decreases and that of industry and
services goes up)
• Urbanization
o Economies of agglomeration (most factories need access to similar
things (water, highways, electricity, so you go closer to one
another)
o Economies of scale, cost of output is dependent on how big your
industry is, a big factory can make more pasta much more faster than
a smaller one
• Inequality
o Kuznets curve
Structural change w dvp
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Which is driving which? Growth or inequality? Do you growth then redistribute ot
redistribute so that you can grow?
Is industrialization an outcome of urbanization or the other way around?
Theories of economic development
• Stages of growth – 1960, countries go through, stages like an airplane on the runway
trying to takeoff, and what makes the plane (country) take off is savings and
investments, saving is crucial for investments, so you have to adapt policies to allow
savings, or you can do foreign aid and provide capital to allow them to take off (anti-
communist manifesto)
• Two sector model –Arthur Lewis, econ growth occurs through industrialization. You
have urban sector where industries are more productive than farming and rural
sector where agriculture is not very efficient. So ppl are drawn from agricultural life
to factories (maquiladoras), they are more productive. You draw surplus labor to
where productivity is.
• Dependency theory- came out of Latin America. Integration of poor countries has
left them impoverished. Countries that came there first set the stage, dvped at the
expense of poor countries who cant grow or dvp anymore. World is divided
between core and periphery
• Endogenous growth theory- its not amount of input that matters but how they
interact with each other. More capital and also workers interacting with the new
machines give you that boost
Paths to economic growth
• Primary products exports
• Inward-looking industrialization
• Export-oriented industrialization
Primary product exports
• Export agricultural products and natural resources, timber, fish, oil and gas, minerals
(followed by us, Canada),
• Comparative advantage (and in some cases competitive advantage)
• Growth based on:
o New resources
o Improved use of existing resources
o Linkage effects
• Problems
o Sluggish demand, volatile prices (instability in revenue that comes in)
& unbalanced growth
Inward-looking industrialization
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Document Summary
Outline: what is development, (ow countries change as they (cid:494)develop(cid:495), theories of economic development, p a t h s t o g r o w. How countries change as they (cid:494)develop(cid:495: as incomes goes, up share of income spent on food tends to fall more money for savings, investments etc. : engel(cid:495)s law: agriculture becomes more efficient, more productive (mechanization, etc. frees up labor to go into labor sector, one farmer now produces more food. You expense of poor countries who can(cid:495)t grow or dvp anymore. World is divided have urban sector where industries are more productive than farming and rural sector where agriculture is not very efficient. So ppl are drawn from agricultural life to factories (maquiladoras), they are more productive. You draw surplus labor to where productivity is: dependency theory- came out of latin america. Integration of poor countries has left them impoverished.
