IDSA01 Chapter 3 Notes.docx

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International Development Studies
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Leslie Chan

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IDSA01 Introduction to International Development Chapter 3-Theories of Development  over the past couple of decades three major actions have taken place:  the economic and financial crisis of late has discredited neoliberalism, the free-market dogma responsible for the development crisis  the growth of rich countries has slowed to a near halt while some of the poor countries, now known as “emerging” countries have begun to narrow the gap in income and welfare  in Latin America neoliberalism has taken a backseat and popular welfare has come to the center of development agenda  the division of countries into rich and poor began with the rise of capitalism and the accompanying colonialism and imperialism  “development” project emerged at the end of WWII to abolish this divide when it was a fraction of what it was today but yet was politically unacceptable Development Avant La Lettre  the Industrial Revolution (idea of “universal progress”) promised absolute and rapid increase in wealth that theoretically allowed for the notion that people could substantially better their lives within their lifetime  took place in a capitalist society under which capital and markets came to govern more and more of the social product, which was previously restrained by the government and social customs  increased production was not accompanied by a corresponding increase in demand as workers were not paid in full the value of their product—capitalism required a constantly expanding world market through commerce or conquest  capitalism’s geographical spread was uneven, creating accumulation of wealth in some societies and pools of poverty and misery in others  development emerged from the tension between the possibility of general human welfare that industrial capitalism offered and their failure to materialize for many  even though Adam Smith advocated that the “invisible hand” would coordinate the market and private system he did not believe that the market mechanism could rule society, some regulation was necessary  market failure is endemic to capitalism because it treats land, labour and capital as commodities even though they are not produced for sale, therefore markets cannot regulate an economy alone  nations were formed when people chose between being “drowned” by acculturation and erecting barriers against them, the expansion of capitalism was not an economic movement driven by the logic of cheap commodities for a universal world market but rather a political process in which states had to design strategies to defend their position in an international environment which put them at an economic disadvantage The Moment of Development  colonizers justified colonialism with racist rationales such as the white man’s burden and “civilizing missions”  three massive changes produced and defined the “moment of development”:  the US emerged as the most powerful capitalist nation in the world, by 1945 it accounted for half of the world’s production  the emergence of the Soviet union and power as an equal as the US, thus forcing the US to keep or wrest poor countries from the attractions of communism  many national liberation movement demanded decolonization and in order to lessen the power of its capitalist rivals and compete with the Soviet bloc, the US supported “development”  development was the product of the confrontation between capitalism and communism; capitalism’s failure was starkly revealed in the two wars and Great Depression, and a consensus emerged that the ills of capitalism could be remedied by planning, state ownership, and large state role in directing the economy in productive directions and making it more egalitarian  internationally the Bretton Woods institutions, the IMF, World Bank and GATT were designed to enable the national economic management required for welfare states and development  development theory was originally just a theory about the best way for colonial, then ex-colonial, states to accelerate national economic growth in an international environment Disputing Development  despite two decades of growth, the growth in the Third World was spurred by the demand of primary products from the First World, which perpetuated colonial economic relationships—First and Third World dominant classes had vested interests in the continuation of these relationships and were able to keep them in place Development Economics  was “Keynesian” and saw government intervention (monetary policies) in times of
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