Theories of Economic Development
Classical Liberal
b. This led to an emphasis on large-scale infrastructure projects and on foreign aid loans.
c. In the "stages" version of this approach, undeveloped countries were thought of largely as "primitive" or "early" versions of Western countires. Lesser Developed Countries needed to follow the pattern of development set by the west. For example, Alexander Gerschenkron and W. W. Rostow.
e. Shifted concerns from the overall rate of economic growth to considerations of poverty, inequality, urbanization and other social ills.
f. In the "small is beautiful" version of this approach, some economists even questioned the desirability of economic growth. For example, E. F. Schumacher.
h. Shifted concerns to "import substitution," high tariffs and government protectionism. A Marxist version of this set of theories also developed based on Lenin’s analysis of colonialism.
i. In the "dependency" version of this approach, some economists feared that the Third World would regress into a source of raw materials for developed nations and that the world economy would be divided into a "core" and a "periphery." For example, Raul Prebisch.
k. Shifted concerns from the role of government—often considerable in structural theories—to private investment and market efficiency.
l. This set of theories is currently the most widely practiced. M. Friedman is a major theorist.
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