Development

Industrial clusters have existed since the early days of industrialization. Clusters exist because of the fact (or perception) that competing firms in the same industry derive some benefit from locating in proximity to each other. These benefits are external to the firm and accrue to similar firms in proximity. Examples include the cotton mills of Lancashire, automobile manufacturing in Detroit, and information technology firms in Silicon Valley. At the firm level, the presence of firms in the same industry, which are located in proximity (in the same region), are expected to increase internal productivity. At the industry level, it is possible to see quantifiable localized benefits of clustering which accrue to all firms in a given industry or in a set of interrelated industries. The sources of this productivity increase in regions where an industry is more spatially concentrated: knowledge spillovers, dense buyer–supplier networks, access to a specialized labor pool, and opportunities for efficient subcontracting. At the metropolitan area level, productivity increases from access to specialized financial and professional services, availability of a large labor pool with multiple specializations, inter-industry information transfers, and the availability of less costly general infrastructure. At the interregional scale, these gains are expected to lead to industry concentration in metropolitan and other leading urban regions. To obtain a complete picture of clustering, one must also consider its absence. If manufacturing and service clusters are associated with regional economic growth, the absence of productive clusters suggests the absence of growth and lagging regions.

This essay focuses on two related “radical theories” of development, dependency and world-systems theory, and shows how they emerged as a critique partly of modernization theory and of the development strategy of import substitution industrialization. The dependency and world-systems perspectives on development were very influential among radical development theorists from the late 1960s onwards, all of whom agreed that capitalism had to be theorized as a world-system. These include Andre Gunder Frank, Fernando Henrique Cardoso, Theotonio Dos Santos, Walter Rodney, Samir Amin, Arghiri Emmanuel, and Immanuel Wallerstein. Some “stronger” versions of dependency, associated with underdevelopment and world-systems theory, have been introduced in recent years. In particular, A. G. Frank proposed the idea that development and underdevelopment are two sides of the same coin. A more nuanced approach to understanding dependency suggested that development and dependence were in some respects compatible. Wallerstein’s world-systems theory has spawned another approach called world-systems analysis. As theories, the ideas associated with both dependency and the world-systems are problematic, failing, for example, to adequately explain the origins of the capitalist world economy. However, both theories remain useful for understanding the current global order. In addition to recognizing that capitalism can in some respects be regarded as a world-system, the two approaches correctly assume that neoliberalism reinforces hierarchies by undermining the capacities of states to shift out of low value production into higher value sectors, as shown by historical patterns of manufacturing.

The most fundamental characteristic of a developing state is that its income, usually calculated as gross national product (GNP) per capita, is relatively low in comparison with that of an industrial country. A second characteristic shared by most developing countries is that they are former colonies. In recognition of the diversity amongst developing countries, they are sometimes divided into subgroups. The term “Least Developed Country” is used to refer to some 50 of the most vulnerable states, whose economies are vastly smaller than those of China, India, Brazil, or Mexico. The BRICS (Brazil, Russia, India, China, and South Africa) is a group of states with emerging economies whose share of world trade, investment, and foreign currency reserve is projected to continue to grow. AOSIS, the Alliance of Small Island States, is a 44-member coalition that functions as a negotiating voice for small island developing states (SIDS) within the United Nations system. The engagement of developing countries with international law typically comes in four aspects: the colonial past and contemporary continuities in international legal approaches and categories, attempts by newly independent Third World states to transform international law through the introduction of specific new legal principles, the effect of the increasing gap between the emerging economies of certain developing countries and the most vulnerable developing states, and whether structural impediments remain to the equitable participation of developing countries in international law.

The study of religion and development focuses on how the moral and ethical resources of the world’s major faith traditions such as Christianity, Judaism, Islam, Hinduism, and Buddhism might tame the worst excesses of market civilization. Whereas states, corporations, and international development institutions often define “development” as economic growth and all of the adjustments required to achieve it, religious approaches consider the consequences of this conception of development and recommend that the achievement of material gain be tempered by compassion, conscience, a greater concern for social equity, and a responsible application of science and technology to both the social and natural worlds. The origins of the field of religion and development can be traced back to Max Weber's seminal investigations into the elective affinities between Protestantism and the spirit of capitalism. In the 1980s, the majority of scholarly literature grappled with the meaning and significance of Weber’s basic ideas in various contexts and locales as scholars examined whether, when, and how religious traditions enhance or inhibit development at the international, regional, national, or community levels of analysis. After a period of hibernation, the study of religion and development was reenergized in the late 1990s as religious leaders and faith-based organizations played a central role in challenging the policies and practices of international development institutions, especially the World Bank.

The definition of “development” has changed over the years since the inception of development economics as a sub-discipline of economics in the 1950s. Initially, development economics was understood as a study of how the economies of nation-states have grown and expanded, placing the discipline in line with the classical and neoclassical traditions of economics. However, there emerged another definition, this time with a focus on how to improve the welfare of the population and the planet—although much development economics in this Marxist and neo-Marxist vein ultimately also focused on national income. The early economic models were fundamentally classical ones, emphasizing structural change, but they did allow for some state intervention to achieve development, showing the influences borrowed from John Maynard Keynes. Meanwhile, the best-known leftist traditions of development economics are structuralism and dependency theory, or the world systems theory, and the latter two have their roots in Marxist political economy. In the immediate post-World War II period, neoclassical development economics was strongly influenced by the modernization theory—a historical and sociological theory which aimed to create an alternative to neo-Marxist accounts of development based on the need to transform societies from “simple,” traditional, or underdeveloped to complex and modern.

There are three key literatures on the political economy of development that all emphasize the importance of institutions, but in different and somewhat contradictory ways. These literatures focus on developmental states, good governance, and political economic pathways. The developmental states literature is based largely on case studies of East Asian countries that have, since about 1950, largely “caught up” to the already developed nations in Europe, North America, and the Antipodes. The central conclusion of this literature has been that successful late development requires a competent, committed state bureaucracy, independent enough to be capable of imposing its will on domestic businesspeople, but also sufficiently connected to them so as to make good decisions about what will to impose. The literature focusing on good governance, based largely in economics, also sees state actions and characteristics as keys to positive development outcomes. But while the developmental states literature argues that states need to play an interventionist role in “governing” markets (including not infrequently restricting them), the good governance literature usually looks more favorably on free markets. Finally, research in the political economic pathways literature tends to examine much longer periods of time than the other two literatures, and typically emphasizes economic and political developmental outcomes as joint products of differences in the historical trajectories followed by different countries. The key explanatory variables for this literature are a country’s circumstances in the colonial period, and levels and types of social inequality.

Lands of recent settlement refers to countries settled predominantly by European migration during the nineteenth and twentieth centuries, such as the United States, Canada, Argentina, Uruguay, Australia, and New Zealand. Current scholarship on the lands of recent settlement reveals a very active agenda of comparative studies covering a broad range of areas and issues: culture, institutions, gender, ethnicity, labor, national identity, geography, ecology, environment, noneconomic factors of growth, and transnationalization and globalization. In explaining the different levels of development between lands of recent settlement and the rest of the world, traditional explanations pointed to propitious external factors and factor endowments. These explanations include the analysis of the history of the United States based on the notion of “frontier development” and the staple theory of growth. Meanwhile, recent works debate whether institutions, culture, or geography plays a crucial role. These works focus on the social, domestic, geographic, and biological elements of development, the cultural and institutional legacy of colonialism, as well as questions on gender, ethnic, and national identity. Although they do not reject the importance of foreign demand, capital, and labor in explaining the development of the lands of recent settlement, they question the adequacy of interpretations based solely on economic factors. Ultimately, the most important contribution of the study of development of lands of recent settlement is in the area of an analysis of transnational networks and globalization.

Development cannot be separated from global political economy, but it is an inherent component of the latter. The concept of development was popularized through expansion of colonization, and underwent various transformations as the socio-political structure of the world changed over time. Thus, the central task of development theory is to determine and explain why some countries are underdeveloped and how these countries can develop. Such theories draw on a variety of social science disciplines and approaches. Accordingly, different development paradigms have emerged upon which different scholars have shown profound interests and to which they gave extensive criticisms—modernization, dependency, Marxism, postcolonialism, and globalization. With the recent emergence of the post-modern critique of development, power has become an important subject in the discourse of development. Nevertheless, a full theoretical understanding of the relations between power and development is still in its fledgling stage. Though highly apparent in human societies, social power per se is a polylithic discourse with no unified definition and implication, which has led different proponents of development paradigms to understand power differently. Although there is a dialectic contradiction between the different dialogic paradigms, the reality of development theory is that there is a large choice of theories and models from which field practicioners will draw pragmatically the most appropriate elements, or they will create their own model adapted to the situation.

International development has remained a key part of global economic relations since the field emerged more than half a century ago. From its initial focus on colonization and state building, the field has evolved to encompass a wide range of issues, theoretical problems, and disciplinary traditions. The year 1945 is widely considered as a turning point in the study of international development. Three factors account for this: the end of World War II that left the US an economic hegemon, the ideological rivalry that defined the Cold War, and the period of decolonization that peaked around 1960 that forced development issues, including foreign aid, state building, and multilateral engagement, onto the global agenda. Since then, development paradigms have continuously evolved, adapted, and been reinvented to address the persistent and arguably widening gap between the prosperous economies of the “developed North” and the developing and frequently troubled economies of the “global South.” Today, a loosely knit holistic paradigm has emerged that recognizes the deficiencies of its predecessors, yet builds on their strengths. A holistic conception of international development embraces methodological pluralism in the scholarly study of development, while recognizing the multiple ways policy practitioners may productively apply academic theories and research findings in unique settings.

One of the most significant structural transformations in postwar capitalist democracies has been the rise of the welfare state. The theoretical intent of the traditional sociological and economic inquiry into the welfare state has focused less on trying to understand the welfare state itself and more on to what extent and under what conditions welfare provisions influence social and economic outcomes such as equality, employment, and labor market behavior. Over time, however, scholars have turned toward historical and political factors. G. Esping-Andersen identified three types of welfare state that seem incongruent with the real worlds of welfare capitalism: the “liberal,” “conservative/corporatist,” and “social democratic.” In contrast to the period until the mid-1980s that focused on welfare state expansion, the late 1980s saw the emergence of new streams of literature whose emphasis was on welfare state retrenchment. More recently, scholars have advanced the argument that the globalization of capital markets has effectively increased the power of capital over governments that seek to expand or maintain relatively high levels of social protection and taxation. Another notable trend is the increased intellectual interest in the relation between development and social policy and the growing interface between social policy and economic policy. A question that arises is whether distinctive welfare regimes have the ability to survive, particularly if their norms clash with those of the competition, or Schumpeterian workfare state.