Chapter 3 Classic Theories of Economic Development Copyright

Development as Growth and the Linear-Stages Theories n n Rostow’s stages of growth The

The Harrod-Domar Model (3. 1) (3. 2) (3. 3) (3. 4) Copyright © 2006.

The Harrod-Domar Model (3. 5) (3. 6) (3. 7) Copyright © 2006. Pearson Addison-Wesley.

Structural-Change Models n The Lewis theory Copyright © 2006. Pearson Addison-Wesley. All rights reserved.

Figure 3. 1 Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 6

Figure 3. 2 Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 7

Structural-Change Models n n n The Lewis theory Structural change and patterns of development

The International-Dependence Revolution n n The neoclassical dependence model The false-paradigm model The dualistic-development

The Neoclassical Counterrevolution n Challenging the statist model – Free market approach – Public

Theories of Development: Reconciling the Differences n n n Development economics has no universally

Concepts for Review n n n n Autarky Average product Capital-labor ratio Capital-output ratio

Concepts for Review (cont’d) n n n Harrod-Domar growth model Lewis two-sector model Marginal

Concepts for Review (cont’d) n n n Patterns-ofdevelopment analysis Periphery Production function Public choice

Concepts for Review (cont’d) n n n Surplus labor Traditional neoclassical growth theory Underdevelopment

Figure A 3. 1 Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 16

Figure A 3. 2 Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 17

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Development as Growth and the Linear-Stages Theories n n Rostow’s stages of growth The Harrod-Domar growth model Obstacles and constraints Some criticisms of the stages model Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 2

The International-Dependence Revolution n n The neoclassical dependence model The false-paradigm model The dualistic-development thesis Conclusions and implications Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 9

The Neoclassical Counterrevolution n Challenging the statist model – Free market approach – Public choice approach – Market-friendly approach n n Traditional neoclassical growth theory Conclusions and implications Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 10

Theories of Development: Reconciling the Differences n n n Development economics has no universally accepted paradigm Insights and understandings are continually evolving Each theory has some strengths and some weaknesses Copyright © 2006. Pearson Addison-Wesley. All rights reserved. 11

Concepts for Review n n n n Autarky Average product Capital-labor ratio Capital-output ratio Capital stock Center Closed economy Comprador groups Copyright © 2006. Pearson Addison-Wesley. All rights reserved. n n n n Dependence Dominance Dualism Endogenous growth False-paradigm model Free market Free-market analysis 12

Concepts for Review (cont’d) n n n Harrod-Domar growth model Lewis two-sector model Marginal product Market-friendly approach Necessary condition Copyright © 2006. Pearson Addison-Wesley. All rights reserved. n n n Neoclassical counterrevolution Neocolonial dependence model New institutionalism New political economy approach Open economy 13

Concepts for Review (cont’d) n n n Patterns-ofdevelopment analysis Periphery Production function Public choice theory Savings ratio Self-sustaining growth n n n Copyright © 2006. Pearson Addison-Wesley. All rights reserved. Solow neoclassical growth model Stages-of-growth model of development Structural-change theory Structural transformation Sufficient condition 14