Lecture # 5: Why Is The Third World Underdeveloped?
Theoretically, social scientists and theorists have shifted their focus since WW II. Theories began to develop
on how the underdeveloped countries could attain development: first on the scene, Modernization Theory
The first Phase of development discourse:
1. Post-war restructuring and Bretton Woods
The second Phase of development discourse:
2. and The golden Years 1950-1960s in which some of these theories developed.
This model was developed by economists, theorists and bureaucrats who were far removed from the “Third
World”. Modernization theory claimed that the reason for the third world’s underdevelopment was internal,
because the third world had not modernized successfully, the modernization theory advanced a theoretical
model based on the experience of the development of Britain, US and Japan (particularly the British Model)
and suggested that these models be applied as a template onto developing countries and advanced that all
societies were alike and followed the same stages.
ALL SOCIETIES ARE ALIKE
SOCIETIES MUST PASS FROM THE “TRADITIONAL STAGE” TO THE “MODERN STAGE”
(MODELED ON STAGES OF DEVELOPMENT TAKEN FROM BRITAIN, USA & JAPAN)
THIS THEORY WAS INFLUENCED BY WALT ROSTOW’S WORK THE TRANSITION FROM
TRADITIONAL TO MODERN SOCIETIES
THIRD WORLD COULD REPRODUCE THE BRITISH MODEL
DEVELOP POLICIES TO INCREASE CAPITAL ACCUMULATION
FOSTER ENTREPRENEURIAL VALUES IN ITS POPULATION
Here are Walter Rostow’s 5 stages of development
Stage 1 Traditional Society
The economy is dominated by subsistence activity where output is consumed by producers rather than
traded. Any trade is carried out by barter where goods are exchanged directly for other goods. Agriculture is
the most important industry and production is labor intensive using only limited quantities of capital.
Resource allocation is determined by traditional methods of production.
Stage 2 Transitional Stage (the preconditions for takeoff)
Increased specialization generates surpluses for trading. There is an emergence of a transport infrastructure
to support trade. As incomes, savings and investment grow entrepreneurs emerge. External trade also
occurs concentrating on primary products.
Stage 3 Take Off
Industrialization increases, with workers switching from the agricultural sector to the manufacturing sector.
Growth is concentrated in a few regions of the country and in one or two manufacturing industries. The level
of investment reaches over 10% of GNP.
The economic transitions are accompanied by the evolution of new political and social institutions that
support the industrialization. The growth is self-sustaining as investment leads to increasing incomes in turn
generating more savings to finance further investment.