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Lecture 5

Lecture 5 - Latin American School of Development and Underdevelopment

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Political Science
Modeste Mba Talla

Feb. 6, 2014 Latin American School of Development and Underdevelopment I - The historical origins of Dependency theory  Roots in Indian nationalist thought from the turn of the twentieth century  ‘LatinAmerican School of Development and Underdevelopment’  The debate between Victor Raul Haya de la Torre and Jose Carlos Marifttegui during the late 1920s and early 1930s. Reform or Revolution?  The development process in LatinAmerica differed from the classical European model  This debate sets the scene for the two major stands which can be found within the LatinAmerican school: the structuralist-reformist and the Marxist-revolutionary. What unites these two strands?  They understood that the modernization theory…  The capitalist for of accumulation could not help them The major difference between these two:  Modernization theory cannot explain the disparities within society  History of colonization  One party wants reform, the other party wants new  You can only reform with the bourgeoisie  Structure vs. agencies  Marxism – you cannot change capitalist society. You need a revolution to change the way the society works. A- Structuralism  Inspired by John Keynes Menynard  Ideas take shape during the economic crisis of the 1930s.  Its influence beyond the ideas of Smith and Ricardo – specialization in 1 resource  This approach takes into account more complex factors in the analysis of problems o The state has control over everything  This approach includes the need to go beyond the role of the market and investment  The Latin American researchers who adapted the structural approach to development studies B- ? I guess B wasn’t important… II - CEPAL/ECLAC  Economic Commission for LatinAmerica and the Caribbean (ECLAL)  The Latin American structuralist school originated in CEPAL and thus is often referred to as the Cepalista School  In 1947, with its location in Santiago de Chile  As far back as 1949, Prebisch observed that incomes grew faster in the center than in the periphery  One of the fundamental bases of its originality stemmed from the thesis that the process of development and underdevelopment was a single process.  This widening gap was due in his view to the prevailing international division of production and trade which confined the periphery to the production of primary commodities o They just invest in cocoa, etc., not in a lot of other commodities  The disparities between the center and periphery are reproduced through international trade.  The terms of trade between center and periphery were disadvantageous to the latter represented a clear challenge to the conventional doctrine of comparative advantage through international trade.  Provided an important anchor for the ECLAproposal to create an inward-oriented development strategy. o As long as you’re creating a commodity for other’s consumption, you’re not going anywhere o No local market – safety net: the day you can’t sell outside, you can sell inside o Don’t only produce for others, also for yourself (gain control over price) III - Dependency Theory  Dependency approaches emerged out of LatinAmerica in the 1960s in reaction to modernization theories of development  The development theory was in crisis to dependency studies and structuralism  The failure of development theory to seriously examine and incorporate into its mainstream body the theories from the Third World  Came to light in the Political Economy of Growth (Paul Baran & Paul Sweezy in the 1950s)  The Third World offers the solution to the crisis in development theory  The periphery’s development problems are located within the context of the world economy, revealing the holistic nature of structuralism o Holistic study of SouthAmerica, not individual countries  This paradigm attempts to explain the unequal nature of the world’s economics  Accumulation phenomena developed at the expense of developing countries  The duality in the world economy originated with the industrial revolution in the center  The Westernizing elites in whom modernization theorists placed their faith would not lead their countries out of backwardness:  In CEPAL’s view, international trade not only perpetuates the asymmetry between center and periphery, but also deepens it. The Deterioration of the Terms of Trade:  Demand and supply conditions of commodity markets  The unequal exchange concepts and the international division to explain he cycle of economic dependence of developing countries  Dependents attributed the difficulties of development in the global South to the legacies of the long history of colonialism o Look at the history of Third World countries  The incorporation of LatinAmerica led to the emergence of an outward-oriented development model, centered on the export of primary products.  The dependency theory showed: 1- Mechanisms of capitalist exploitation of LDCs countries by transnational and multinational corporations o The difference between transnational and multinational corporations: Trans – based in 1 country. Multi – based in several countries 2- States are not as autonomous entities o Cannot disassociate from self-interests  Within the ECLASchool, there is also a healthy aptitude to remain critical,
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