3. - Dominant economic theories determines the allocation of res ources
and s ome countries benefit more from this
- Unequal res ource dis tribution between counties → creating a gap
between rich and poor countries
- Britain us ed their res ources effectively and es tablis hed thems elves
as the dominant s uperpower in economic development
- Countries that were behind in development were determined to
compete and adopted s trategies which benefited their economies
with their res ources
- Development did not s pread to third world countries due to
colonialis m and limited technology
- Marxists theories → labour and res ources were exploited in third
world countries by powerful s tates
Introduction
6. Adam Smith
- Theory of the invisible hand
- Unfores een forces move the free market
- Prices of goods and s ervices are determined by s upply and demand
- Economic growth is determined by cons umers who behave in a manner
which maximizes their return
- The rich would have enough money to purchas e goods and s ervices at the
given price
- Res ources would be dis tributed accordingly with this s ys tem
7. Malthus and Ricardo theory
- Refutes the invis ible hand theory
- Dis tribution of res ources would be unequal
- Populations would increas e beyond the limits of the availability of food
- Economic growth would not occur due to a mis allocation in res ources
- Ris ing demand for food
- More land needed for farming
- Cos t of production for farming would ris e
- Higher prices
- Lower wages and profits
- Lower s pending power for cons umers
- Reduced economic growth
8. Malthus and Ricardo theory
- This theory was challenged
- There are better lands in Europe for farming
- Regions could export their s urplus
- Improved trans portation facilities
Eg: Potato and maize were growing crops with increas ed nutritionalvalue
- Jevons : Warned agains t exhaus ting coal s upply
- Becaus e there is an increas e of the us age of energy and energy res ources
9. Marxist Theory
Productivity through capitalists exploitation of the work force and capital
accumulation contributed to the relative s urplus and economic growth
10. Marxist Theory
- Main concern → inequality in the distribution of means of production and
class relations
- Imperial state capitalists (Wealthy European nations) → exploited the
External Proletariat (Third world countries)
- European capitalists brought peace to their own countries and workers by:
- Draining surplus of colonies
- Preventing industrial development of third world countries
11. Marxist Anti-Imperialist Theory
- Colonies had the freedom to develop economically after being liberated from
colonialis m
- Once countries are not colonized, it willbecome more economically
developed
- Third world countries could not develop due to backward minds ets .
- Why?
- Wes tern countries experience was the proof that economic
development can happen
12. Which one do you agree with?
Marxist view
Marxis t Anti-
Imperial Theory
13. European Domination
● Unequal distribution of resources
● “Growth is natural”
a. Dominant paradigm for 100 years in Europe
b. Started in Britain
● Some nations were richer than others
a. More res ources and larger growth
b. Benefitted more than countries who had fewer
res ources
c. Rich become richer. Poor become poorer.
14. European Domination
● Land was the most unequally distributed factor
of production.
● Labour and capital were more equal, as they
were mobile and could be exchanged
a. Labour migration - better opportunities
b. Capital - trans ferred or s aved
c. Knowledge - could be bought
● Comparative advantage to increas e efficiency
with available res ources .
16. France
● Sent emissaries to learn from Britain
● Sent s pies to gather information on bus ines s tactics
and techniques
● Lured Britis h workers and mechanics to apply their
knowledge in the manufacturing proces s .
● Imported machinery to replicate Britain’s
technological advancement
17. 1. Other countries s et trade barriers on Britis h imports
a. France s et prohibitions and ins pections on foreign cloth
to prevent fraud
2. Adoption of new technologies
a. - Required more capital to pay for new machines
b. - Train technical s taff and s ecure technology
Response to Britain’s trade barriers & law
19. Why were the British so advanced?
- Used their knowledge
and res ources to
their advantage
- Created a global
minds et that they
were ahead and
dominant
- Other countries has
the potential but
were not effective
and efficient in
applying their
knowledge
- Inferior backward
minds et
20. - Thrived in cultural and intellectual capability, and
were s ometimes ahead of Europe
1. Science and chemis try
2. Technical and Commercial experience
3. Invention and Manufacturing
- Some countries followed Britain’s development
Developing and advancement
22. Latin America
- Focused on trading
primary products to
overs eas
manufacturers
- Were not determined
to compete with
global s uperpowers
- Lack of awarenes s
- Belief of Europe’s
domination as the
natural order of
things
- Not all countries
benefit from
s pecialization
Asia, European
colonies, Africa
23. - Canada → fur, timber, grain, minerals
- Argentina → hides , grain, frozen meat
- Brazil → gold, s ugar, hard woods ,
coffee
- Medieval England → wool
- United Stated: tobacco, cotton, grain
- Sweden → timber, copper, iron ore
Countries that serves “primary
products”
24. - With the help of a s table and good
government, a non- balanced economy
will become more balanced
- Will lead to an increas e in high returns
for goods and res ources that are s old
Reason for this
28. Is a stable government
important for economic
development?
29. 1. Third world country and
their economic growth
2. Slow rate of growth
30. Primary producers found that most
goods were eas ily s ubs tituted and there
is a fierce competition for primary
goods in the world market.
Conclusion
32. Trying hard to
indus trialize
Promoted to ranks of
advanced and
indus trialized nations
- Third World Countries contain a heterogeneous congeries
of rich and poor nations
- Dis tinctions are bas ed on localized dis tribution of windfall
s taples , wealth, knowledge in technologies to develop
In the middle of
nowhere
33. Trying hard to
indus trialize
- Developing
Countries
Promoted to ranks of
advanced and
indus trialized nations
- Taiwan
- South Korea
- Third World Countries contain a heterogeneous congeries
of rich and poor nations
- Dis tinctions are bas ed on localized dis tribution of windfall
s taples , wealth, knowledge in technologies to develop
In the middle of
nowhere
- Leas t
Developing
Countries
34. Does it make a difference to
be a late developer?
35. Alexander Gerschenkron’s Theory
- Gerschenkron argued that lateness is an advantage
- The gap between “what is” and “what can be” is an
opportunity
- The follower country can profit from experience and
knowledge of its predeces s ors and avoids the mis takes
that they made and by mobilizing res ources and allocating
them into the right us es which will make its growth fas ter
than its forerunners
36. Alexander Gerschenkron’s Theory
- His spurt model of late growth described that with
good judgement and management, a follower country
can catch and even s urpas s its predecessors (Eg.
Taiwan and Korea through ISIand ELIes pecially in
technology intensive industries (Eg. Rus s ia’s s urges
and collaps es )
37. Counter arguments about Lateness
Size of Gap Staples are not what
they used to be
Lateness makes
for bad politics
01 02
03
Misdiagnosis &
Mistreatment
04
Cultural Factors
05
38. - There is gap and it keeps widening
- Capital is not the bigges t problem and knowledge
and know- how are more es oteric and harder to
come by
- Two pos s ible ways to make the gap narrow down:
- Hire people
- Train one’s own people
1. Size of Gap
39. - Technological advancement limits the market
power of primary products by making them
s ubs titutable
- Example: France had learned to make s ugar from
beets in the 19th century
2. Staples are not what they used to be
40. - Lateness is the parent of bad government and
vice- vers a any kind of government, good or bad is
als o not unrelated to economics
- Although European countries took centuries to
es tablis h effective and functionalins titutions and
bureaucracies , third world countries tried to
es tablis h them in a matter to years or decades
3. Lateness makes for bad politics
41. - When countries tried to leap the gap between
backwardnes s and development and found out that
things don’t work out, they don’t cons ole thems elves
for their untimely leap
- Rather, they look for villains to blame and mention the
s ources as colonialis m, neocolonialis m, unfair trade
- At the extreme, it could lead to complete delinking
and economic is olation
- The market, is like a God, helps bes t to thos e who
help thems elves
4. Misdiagnosis & Mistreatment
42. - Values are especially thorny problem for
development becaus e they are an impediment to
growth and s tronges t in traditional s ocieties
- Many religious values operate to impede mobility
and opennes s that are conducive to efficient
allocation of res ources and economic behavior
5. Cultural Factors
47. Growth + ____ = Sustained Growth
What is necessary to sustain growth?
48. - Technological Advancement
- Increas e in Productivity
Sus tained growth can be correlated to
competition with other s ocieties
Sustained Growth
49. - Various things contribute to s ocietal growth
- As the s ociety grows , people have to grow too
- New ethics are introduced, and new behaviours
are expected from this change
Societal Transformations
54. Strengths Weaknesses
- Dominating European
countries were able to
oppres s 3rd world
countries due to the lack
of technology, knowledge
and minds et
- Oppres s ion is s tillevident
- Third world countries
s hould keep doing what
they are doing
- Third World countries
alleged s ources of their
failure as colonialis m &
unequaltrade
- Freedom from
colonization enables
Third World countries to
develop economically
