Identifying the Evolving Literature - Essay Example

Identify the evolving literature, the range of perspectives over the first seventy years of the political economy of development and identify the keypoints of difference between the competing paradigms and their policy recommendations. Name Professor Course Date Word Count: 1506 Introduction According to Weingast & Wittman (2006), the political economy of development or otherwise known as political economy development is an important field in the development of a country. It can be referred as the effect that international political economies lay with other nations in terms of the development prospects. The growth of the political economy of development enables the exposure of the interconnected topics, ideas and the role played by such ideas towards shaping a country’s development aspects. The assignment is put together in order to provide an understanding platform of the existing literature on economic development studies. The work is organised in a way that will elaborate more on the Post-war consensus that took place from 1950s and in the 1960s. During this period, the ideas portrayed in the literature indicate that they were focused on the theory of classical dualism. This particular theory led to the development of policies that were concentrated more on the creation of the suitable pre-conditions to facilitate development. The study will shed light on the event of increasing awareness, and the role played by advancing ideas. The ideas were resulting from the reducing reliance on the state of developmental and the increasing dependence on structural adjustment lending that will be assayed. The Early Post-war consensus In reference to Ranis (2004), the previously ignored sub-field of development economics was reinvented between the 1950s and the 1960s. During the time, the current models of the economy were deemed only to offer insights that were rather limited towards solving the challenges facing the third world. The Keynesian, Solow, and Harrod-Domar were the dominant economic models at the time. However, the ideas in these theories have little relevance for most societies. In accordance with Cairney (2012), the ideas incorporated in this literature are more of connected to the business cycles and other steady-state properties. In a more specific tone, the contemporary development models are viewed as related to the advanced countries. The Keynesian theory, for instance, has an abstract theoretical construct that abides by the abundant assumptions portrayed by the macro- theory of neo-classics. Contemporary development ideas also focused on full employment, perfect competition, and market clearing. Such ideas are considered to be of little interest to the segmented commodity, credit and labour markets of the less developed countries. In accordance with Kraft & Furlong (2008), the concept of dualism came into play in 1953 as a sociological dualism written by Boeke. According to Boeke (1953), the sociology dualism clearly portrayed the differences that existed between the Western objectives and those of other cultures. There also came up the theory of technological dualism that was castigated by Higgins (1956). Eckaus (1955) also supports the above theory by stating that advancement in terms of technology is important in economic development. The technological dualism gave a vivid definition of the differences between variable factor ratios in the conventional sectors and also the fixed coefficients that characterised the modern sector. The classical dualism is the third dominant strand of dualism that narrowed down to the interdependence and coexistence of sectors. The concept suggests that the various sectors are asymmetrical in behaviour. As a result, the sectors are dualistic in several vital analytical dimensions. The concept of classical dualism claims that an agricultural surplus was of great importance in supporting other activities that were considered rather unproductive. The classical dualism coincided with the industrial revolution in Western Europe. The industrial revolution campaigned for the provision of raw materials. In reference to Leighton & Lopez (2013), the classical school concepts that were emphasised by Ricardo in 1951 gave attention to the smooth coexistence of a large agricultural sector and a fixed land resource. In reference to Ricardo (1951), the non-agricultural activities such as manufacturing industries, as claimed in the theory, were on the rise as a result of the fixed capital that was accumulated. The labour that was poached from the agricultural sector also played a huge role in facilitating the diminishing agricultural sector. As stated by the Ricardo concept of the classical school, the fuel that led to the labour reallocation and the industrial capital accumulation was sourced from the profits made by agricultural practices. The classical school near fixity of land line of thought was influenced by the Malthusian population pressures. In an agreement, I believe that Ricardo’s theory of the stagnation of the agricultural sector became popular due to its straight-forwardness in the analytical work. The initial campaigners for modern theory were Rosenstein-Rodan in 1943, Nurkse in 1953 and Mandelbaum in 1945. The three authors came up with ideas that insinuated the importance of a surplus labour existence. Their concept considered surplus labour as a potential resource that needed to be taken to other activities for higher productivity. Lewis (1954) formulated a more precise idea of dualism in labour markets. He worked on the ingredients making up the classical tradition by campaigning for a competitive wage in other sectors compared to the institutional wage in agriculture. However, the writer found himself siding with the theory by Rosenstein-Rodan (1943) and Nurkse (1953) in terms of mobilizing the savings in the agricultural sector. Fei and Ranis (1964) support the theory by Lewis (1954) in terms of mobilizing the agricultural labour. They argue that all the workers in the agricultural sector whose payment had surpassed the low marginal product had migrated from the agricultural sector to the commercialised and non-agriculture sectors. This would then result in a turning point where dualism would be considered as atrophy and the economies would become fully neoclassical. According to Leighton & Lopez (2013), it is, therefore, possible to claim that development after the World War 2 was accelerated by savings-pushed growth and the scarcity of capital. During this period, there was little emphasis on technology advancement in either sector. Nurkse (1953) and Rosenstein-Rodan (1943) emphasised the importance of the balanced growth of technology in the growing sectors. However, the several differences in the ideas on designing policies were pushed by a uniform goal of providing elasticity to the international trade. The trade scene was marred by policies that were totally against economic development. Differences between Dualism and Structuralism theories In accordance with Kraft & Furlong (2008), the ideas on the political economy of development have been driven by one goal although they are subject to a few disagreements. The theory of Lewis (1954) about the surplus of labour was rejected by a number of other theorists such as Haberler (1988) and Bauer (1957) in their theory on non-responsiveness to price signals. Weingast & Wittman (2006) state that most of the work at the time proved that in order to achieve proper economic development on the policy side, the interventionist state would be used as a vital instrument. This inclination to the interventionist trend was twofold. First, it had the desire to cut the pre-colonial ties that had been identified with the market mechanism. Second, there existed a strong feeling to build an economy from the agglomeration of resources and agents that required preconditions of development. In reference to Nkurunziza (2007), the embracement of the interventionist state encouraged the creation of infrastructure. The development resulted from the need for institutions to allow the efficiency of a national entity. The idea of political, economic development involved the subsidisation of newly acquired entrepreneurs in the non- agricultural sector. The subsidisations were greatly complemented by the existence of the import substitutions that protected such entrepreneurs. As a result, most governments encouraged the deployment of most arrays of indirect policies that encourage the shifting of natural resources to the non-agricultural sector. The agricultural sector was suppressed by the growing empowerment of the favoured private groups. Under the table, transfers were typical in the governments a situation that encouraged the accumulation of profits for the country or the emerging class of entrepreneurs. In reference to White (2012), the process of industrial growth was viewed by many as a possible source of economic development in many countries. Industrialisation was the key tool that every policy maker should have emulated in order to enhance the second industrial revolution. As a result, the policy makers also formulated several planning models that are used as a logical accompaniment of the industrialisation view. The view was more directed towards a smooth flow of natural resources and a domestic investment that was financed domestically with as little foreign capital as possible. Conclusion Political economists continue to be affected by puzzles from the real world on the issue of economic development policy making. The several differences in the ideas raised by the theories discussed provide a good platform for scholarly debate. It is vivid that there exists an alarming difference between the ideas of the authors although they seem to be guided by a sole objective. The paper has analysed the differences, comparisons and the various recommendations that exist between the dualism and structuralism views. Therefore, the traditional and modern policy making ideas share a number of assumptions about policy making. It is also appropriate to note that before dualism, policy views were rather irrelevant to countries in the underdeveloped regions. Bibliography Bauer P. T. (1957). Economic Analysis and Policy in Underdeveloped Coutries. Westport CT: Greenwood Press Reprint. Boeke J. (1953). Economics and Economic Policy of Dual Societies. New York: Institute of Pacific Relations. Cairney P. (2012). Understsnding Public Policy: Theories and Issues. Palgrave: Macmillan. Eckaus R.S. (1955). The Factor Proportions Problem in Underdeveloped Countries. American Economic Review 45(4), 539-565. Fei J.C.H. & Ranis G. (1961). A Theory of Economic Development. American Economic Review 51(4), 533–565. Haberler G. (1988). International Trade and Economic Development. San Francisco International Center for Economic Growth. Higgins B. (1956). The ‘Dualistic Theory’ of Underdeveloped Areas. Economic Development and Cultural Change 4(2), 99-115. Kraft M. & Furlong S. (2008). Public Policy: Politics, Analysis and Alternatives . Washington DC: CQ Press. Leighton W. & Lopez E. (2013). Madmen, Intellectuals and Academic Scribblers: The Economic Engine of Political Change. New York: Cambridge university Press. Lewis A. (1954). Economic Development with Unlimited Supplies of Labour. Manchester School of Economic and Social Studies 22:, 139-191. Nkurunziza E. (2007). An Overview of Development Studies: Background Paper. Religions and Development: working paper 2, 7-45. Nurkse R. (1953). Problems of Capital Formation in Underdeveloped Countries. New York: Oxford University Press. Ranis G. (2004). THE EVOLUTION OF DEVELOPMENT THINKING:THEORY AND POLICY. ECONOMIC GROWTH CENTER: CENTER DISCUSSION PAPER NO. 886, 2-40. Ricardo D. (1951). On the Principles of Political Economy and Taxation. In P. Sraffa, with the collaboration of M.H. Dobb, The Works and Correspondence of David Ricardo, Volume I. Cambridge: Cambridge University Press. Rosenstein-Rodan P. (1943). The Problem of Industrialisation of Eastern and South-Eastern Europe. Economic Journal 53:, 202-211. Weingast B.R. & Wittman D.A. (2006). The Oxford Handbook of Political Economy. Oxford: Oxford University Press. White L. (2012). The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years. New York: Cambridge University Press. Read More