Вы находитесь на странице: 1из 4

Neo-Classical Economic theory

1 s t is Liberal Approach:
Adam Smith: Competition in society led the development of State. Free market, no restriction, and less state intervention. So world be prosperous Due to rational being Human want to have best thing.

2 n d is Mercantile Approach (against Liberal Approach)


Protection and role of state on market. State should put tariffs, and state should import substitution policy (State should produce those things which now is importing.)

Modernization Theory
1- Cultural restriction

Control of forces of Nature Culture is the problematic thing in societys development. Modernity is the level of control of natural forces (achieving tools). The much you have the forces the much you will develop. And it is depending on the level of modernity (the much u control forces of nature) E.g.: developing technology like china and Japan that via technology they have controlled natural forces. Due to culture they fear and believe that they cant control the forces of nature. So they believe that due to culture and cultural norms they dont develop further and cant modernize. Due to traditional believe most states are not developing.

Rostous five stages of Development:

Rostow the famous economist suggested 5 stages of development from traditional to modern. 1. Traditional Stage: People believe that we cant change, because it is written in our destiny. 2. Pre-Takeoff stage: In this stage people start to believe that they can change. (changing mindset). According to rostow, the colonized states were being influence from outside (colonizers). And Europeans were influence from inside. In this stage, the nation state and central government is development. 3. Economic take-off stage: In this stage, there is kind of state which take the economic modernization as a serious job. And a government tries in promoting economy and bringing modern value system. 4. Drive to maturity: In this stage, economy becomes diversified, and technology is used than labor. And value system promotes development and favors change. 5. Age of high consumption: High quality things are available for consumption, individual enjoy services and goods. Beside material enjoyment there are also other recreational facilities.

Though modernization was believed to be way to development, but during 1960s many states got economic growth but they could not achieve development and stayed at developing position. And fate of the man not changed. In late 60s counter perspective arouse, that was the dependency perspective. They were impressed from Lenin and Marx. In this perspective it is conceived that capitalism is hurdle. It is also called structural perspective.

Dependency theory (DT)

To understand the backwardness, we should not focus on traditional societies rather on global economic structure; they shift from state to global. The development and underdevelopment is under the same phenomena. Because the structure of the global economy is such that causes to make such structure of some developed and some underdeveloped. They focus on the colonialism period. Start from India. In Europe, the development achieved under mercantile structure not liberal. So the states went to out to capture markets and raw material. The eupropean powers competing for colonizing states. The main purpose was to capture raw material. In India, there was barter system and society was producing raw material not industrialize, and was clan system. When European came they introduced cash system and they were able to purchase raw material by cash rather than barter. The local manufacturing class started to sell the produced things to out siders. Europeans were able to sell their goods in establishing markets in India and got raw materials. And gradually they established feudalism and landlords who easily give the Europeans the raw material. So elite class emerged in India and lower class too. So traditional mindset remained as they were poor class and the elite class was modernized and had global reach. The mass people were not rational so they went to religious and spiritual mindset. And elite class was modernized and rational but was manipulating the masses. So the traditional mindset was due to global economic structure rather than the culture. So when the modern and elite class emerged so the use of forces and fighters to control the colony became expensive to control. ? ? ?

3 r d is MNCs Phase
Modern times the MNCs are same doing to exploit the societies and get raw material. They build industries in developing states to extract profit and resources. Dependency theorists have divided the world into 2 categories: 1. Core states 2. Periphery states

World System theory (WST)

It is the extension of dependency theory. Almost assumptions are same. They consider underdevelopment due to global economic structure. They have divided the world in three categories: 1. Core (central and developed part) 2. Semi-periphery 3. Periphery (outer layer)

Periphery states have little diversified. Means few productions. And are vulnerable and weak. Less autonomous. If core states put sanctions so they die sooner. Dependent on core for investment and trade. They produce only raw material. Like Pakistan,

Why peripheral are underdeveloped and vulnerable? 1- They cant survive if could not sell and core states can survive. And core states can refuse to not buying things from periphery so they can survive. 2- Other vulnerability is the debt and loan issue. They take loan from imf and developed states. So they are vulnerable. 3- Other factor of vulnerablitliy is due to MNCs they are vulnerable. 4- Extraverted economy. The local industrialist worrk for others not for making their own finished products.

Semi-periphery is more diversified than periphery and more autonomous. If core put some sanctions they can manage somehow. Not totally dependent on core states. And are bit stable and developed and investments are coming from core too. Like Malaysia, Brazil and Mexico and Russia. They produce industrial things too.