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International Development Studies

(W) – Two topics 9/10/2013 9:16:00 PM Midterm on Monday (8/19) Marxian model of industrialization in England  Had a great deal of intellectual influence on the first generation of economists.  First generation economists felt that development economics would be a recapitulation of Marxist Theory. Gerschenkron: The Advantages of Being First.  Creation of industrial labor force: scarcity vs. abundance. o Early industrialization : labor intensive, requires fairly large numbers of unskilled and semi-skilled workers; roads, railroads, mines; craft workshops play a large role. o Late industrialization : small numbers of highly skilled workers, computers, flat screens, etc…  Involved with Western Europe.  Countries that industrialized first had a number of hugely important advantages and those that industrialized later had a huge number of important disadvantages.  Disadvantages faced by countries that industrialized later. o 1) Technical and Technological – textile industry in developing world will not use foot-pedal sewing machines, meaning there is no incremental development of labor force.  Ex. Apparel industry – elementary technology over a period of time went through a total process of evolution where everything is automated and requires a great deal of capital investment.  *Doesn’t go through sequence of stages  Ex. Automobile industry – Went through early evolution in small workshops that were relying on horse-drawn carriages, hence similarity in design.  Don’t begin an automobile industry in the workshops that build horse-drawn carriages. Build them in their own workshops tailored to automobile manufacturing.  *Developing countries do not have the luxury of going through stages of development like the first developing countries (now developed countries) did. o 2) Vast amounts of capital for investment in early industrializers.  Problem: how to gain that investment in capital. o 3) Advantages that early industrializers had by default – Advantages of having Markets  Very few other players experiencing evolution of the marketplace in the same way the Western World was. o 4) Training of the labor force – Need for planned complementarities.  Countries that went through their industrialization first had the luxury of being able to take a period of time and evolve gradually the skill set of their industrial workforce to the point where at any given moment in time the additional increment of skills that would be required to perform a different task, is already available.  Ex. Underwater welding – requires a lot of skill and development before task is undertaken. Developing countries don’t have time.  Early industrializers had the luxury of industrializing with labor-intensive industries.  Ex. textile mills, coal mines. Drew a large number of people out of the countryside, especially out of small- scale farming, to labor-intensive labor. o Technological leap that is vastly difficult to overcome.  Gerschenkron’s Explanation o Those countries that developed early on were those that had banking systems. o Banking institutions that could get money and then lend it out.  Arguments. o Later industrializers – capital entry threshold – would need larger and more centralized institutions for capital investment;  Germany and France (Credit Mobilier) developed powerful banking institutions. o Last industrializers – Russia – would need large public works projects to stimulate industrialization; e.g. railroads, infrastructure, etc. o Gerschenkron’s ideas anticipated development economics Industrial Revolution Timeline  Large-scale capital intensive industrialization after 1830  1780, Adam Smith was arguing against the Welfare state implications of the Methodist Church with its emphasis on philanthropy on the private basis and increasing emphasis in public sector.  Emphasis of welfare state as a public responsibility and a cultural ethos came about during the Great Depression. o Part of debate that Smith won: resistance of welfare state type of management for newly developing country. Creates dependence?  Incremental capital not being diverted to poverty-alleviation efforts in newly industrializing countries. o *Didn’t have to bother with welfare state if until they had already reached a far enough along stage in the industrialization process. o This was a benefit because they could get the process of industrialization started without diverting valuable capit
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