INFLUENTIAL DEVELOPMENT THEORIES

Influential Development Theories

Influential Development Theories

Introduction

Following World War II competing theories sought to explain how and why economic development takes place. For awhile now, the theoretical framework has narrowed. Mainstream development theory has settled into the neoclassical economic tradition, albeit with variations. In contrast to the narrowing of economic development theory, the meaning of development has grown wider.

Originally, development was virtually synonymous with national income increases. Access to social services and employment, including for the poor, were added in the 1970s and 1980s. More recently, absence of fear, along with reduced vulnerability and powerlessness, has been incorporated into the definition.

Within this context, the role of governance has evolved. For much of the past 60 years, mainstream economic development theory has tended to relegate governance issues to the 'back burner'. This has changed. Since the 1990s, governance has assumed a central and controversial role in development thought and practice.

Discussion

The aftermath of World War II unleashed demands for independence among the colonies of European nations. Undeterred by low incomes and levels of physical and human capital, the newly independent nations were buoyed by optimism and convinced they would rapidly develop. A new branch of economics, development economics, shared their optimism (Potter, 2008).

According to the early theories, economic growth was largely a function of capital accumulation. Developing countries needed to expand investment either through domestic savings or foreign investment, borrowing, or aid. Against the backdrop of the Cold War, nations garnered assistance from either the Soviet or Western camps or both. The rise of the Soviet Union as an economic power challenged Western models of development. State-led development and centralized planning seemed attractive, even for nations not adopting the socialist model. Dependency theory reinforced the role of the state in economic development, with import substitution spurred on by government protection, ...