January 25, Abstract This work seeks to compare a set of theories on capitalist development by investigating the assumptions made on the nature and dynamics of society.
These can be divided into two, the supply side and the demand side conditions; a. On the demand side, significant basic conditions include: Economic development is directly influenced by the performance of the industry via provision of goods and services.
Having looked at the theory of industrial economics, it is important that we take a road to look at the theories of economic development, as depending on which theory an economist may be coming from, industrial economics may note directly feed into economic development. For modern economists, however, the status of economic development is somewhat more uncomfortable: The subject of economic development dates back to the classical era of, Adam Smith and indeed, perhaps the entire Classical School.
Schumpeter's first famous book was entitled a Theory of Economic Development However, the great early concern was still Europe: It was only some time after the war that economists really began turning their concerns towards Asia, Africa and Latin America.
Faced with a new plethora of nations whose standards of living and institutions were so different from the European, modern development theory, by which we mean 25 the analysis not only of growth but also of the institutions which could induce, sustain and accelerate growth, began in earnest.
Arthur Lewis, Hla Myint were among the first economists to begin analyzing economic development as Prebisch singer and myrdal thesis distinct subject. The commissioning of numerous studies by these institutions led to the emergence of a non-academic strand of development theory.
As a result, Latin American, Asian and African countries were seen mostly as "underdeveloped" countries, i. As later made famous by Alexander Gerschenkronand, more crudely, Walt W. Rostowthe stages theories argued that all countries passed through the same historical stages of economic development and that current underdeveloped countries were merely at an earlier stage in this linear historical progress while First World European and North American nations were at a later stage.
The task of the development economist, in this light, was to suggest "short-cuts" by which underdeveloped countries might "catch up" with the developed and leap over a few stages. The celebrated early work on the "dual economy" by Sir W.
Arthur Lewisprecisely stressed the role of savings in development. Early Keynesians, such as Kaldor and Robinson, attempted to call attention to the issue of income distribution as a determinant of savings and growth.
Even modern Marxians such as Maurice Dobbfocused on the issue of savings-formation. Indeed, earlier, Rosenstein-Rodan had argued that increasing returns to scale made government-directed industrialization feasible.
The notion of turning "vicious circles" of low savings and low growth into "virtuous circles" of high savings and high growth by government intervention was reiterated by Hans W. Singer in his doctrine of "balanced growth" and Gunnar Myrdal in his theory of "cumulative causation".
Thus, government involvement - whether by planning, socio-economic engineering or effective demand management - was regarded as a critical tool of economic development. Already Hla Myint, Gottfried Haberler and Jacob Viner had stressed this avenue - arguing along lines similar to the classical doctrine of Adam Smith that trade and specialization can increase the "extent of the market".
However, earlier in the s, D.
Robertson had expressed his doubts on this account - and these were later reiterated by Ragnar Nurkse, H. Schultz, drawing upon his famous Chicago School thesis, turned away from physical capital accumulation to emphasize the need for "human capital" formation. This led to an emphasis on education and training as pre- requisites of growth and the identification of the problem of the "brain drain" from the Third World to the First and, as would later be stressed, from the private sector to government bureaucracies.
Arthur Lewis and Hans W. Singer extended Schultz's thesis by arguing that social development as a whole - notably education, health, fertility, etc. In this view, industrialization, if it came at the cost of social development, could never be self-sustaining.
Development, he argued, was a social phenomenon that involved more than increasing per capita output. Development meant, in Seers's opinion, eliminating poverty, unemployment and inequality as well.
Singer, Myrdal and Adelman were among the first old hands to acknowledge the validity of Seers's complaint and many younger economists, such as Mahbub ul Haq, were galvanized by Seers's call to redefine economic development. Thus, structural issues such as dualism, population growth, inequality, urbanization, agricultural transformation, education, health, unemployment, etc.
Also emergent, in this period, was a debate on the very desirability of growth. Schumacher, in a famously provocative popular book, Small is Beautifulargued against the desirability of industrialization 30 and extolled the merits of handicrafts economies.
As the world environmental crisis became clearer in the s, this debate took a new twist as the very sustainability of economic development was questioned.Prebisch‟s papers in opened the dependency theory episodes when they observed that trade conditions imposed by the rich countries further leads the less developed economies into poverty traps and this thought became the Singer-Prebisch.
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The Prebisch-Singer and Myrdal thesis of deteriorating terms of trade: What are the uses of shadow prices? How can the shadow price be determined? What is the concept of shadow price?
Short essay on the use of cost-benefit analysis in developing countries. Abstract. In this paper the theoretical literature relating to the Prebisch-Singer Thesis and economic development is extensively reviewed.
The aim is to examine models which exhibit a positive relation between indicators of economic development, such as per capita income, real wages, or employment and terms of trade development.
Module 5: Approaches to Development Partial theories of growth and development - vicious circle of poverty, circular causation, ulimites supply of labour, big push, balanced growth, unbalanced growth, critical minimum effort thesis, low-income equilibrium trap; Dualism-technical, behavioral and social; Ranis and fei model.
SECTION B (Medium-length Answer Questions) Answer any five questions from this section.5x12=60 5. Critically examine the Prebisch-Singer and Myrdal thesis of deteriorating terms of trade.