7.5 Theories of Development

Economist W. W. Rostow published The Stages of Economic Growth in 1960. He argued that all countries pass through the same five stages:

• 1. Traditional society: mostly subsistence farming, limited technology, little trade.
• 2. Preconditions for take-off: investment in infrastructure, education and commercial farming; an entrepreneurial class appears.
• 3. Take-off: a few industries, like textiles, grow rapidly and investment rises; growth becomes self-sustaining.
• 4. Drive to maturity: technology spreads across the economy, industries diversify and living standards rise.
• 5. High mass consumption: most people can afford consumer goods like cars and appliances, and the service sector dominates.

• It's based mainly on the history of Western Europe and the United States, and assumes other countries will follow the same path.
• It treats each country as if it develops on its own, ignoring outside forces like colonialism, global trade and debt.
• It's linear: it doesn't explain countries that stall, skip stages or go backward.
• It assumes high mass consumption is the goal, without asking whether that's environmentally sustainable (7.8).

Sociologist Immanuel Wallerstein developed world-system theory in the 1970s. He argued that since about 1500 there has been one connected capitalist world economy, and that countries' places in it, not just their own choices, shape how developed they are. He divided the world into three tiers: core, semi-periphery and periphery.

The core gains because it buys raw materials and labor cheaply from the periphery and sells it expensive manufactured goods and services. Countries can move between tiers. South Korea rose from the periphery to the core in a few decades, and some geographers describe China as semi-peripheral moving toward the core.

Dependency theory, developed by Latin American economists like Raúl Prebisch in the 1950s and 1960s, argues that poorer countries are poor partly because of how they were tied into the world economy. Colonial history and unequal trade left them exporting raw materials whose prices tend to fall or swing, while importing costlier manufactured goods.

Commodity dependence means relying on a few raw exports, like oil, metals or cash crops, for most export income. Zambia depends heavily on copper and Nigeria on oil, so falling world prices hit government budgets and jobs hard. Botswana shows that dependence isn't destiny: it used diamond income to build roads, schools and health care, and became one of the fastest-growing economies in the world after independence in 1966.

Limits: world-system and dependency theories explain inequality well but are weaker at predicting change. They have trouble explaining why some countries, like South Korea and Taiwan, escaped the periphery while others didn't.