The Neoclassical Counter-Revolution Model

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Developed countries can exploit national resources of developing countries through getting cheap supply of food and raw materials. Meanwhile, poor countries are unable to control the distribution of the value added to the products traded between themselves and the developed countries (Cohen, 1973; Dos Santos, 1973 cited in Ololube, 2006). The growth of international capitalism and multinational corporations caused poor countries to be further exploited and more dependent on the developed countries. Poor countries therefore could not expect sustained growth from that dependence. Following the international dependence theory, developing countries should therefore end the dependence by breaking up their relationships with the developed world, as well as by closing their doors to the developed countries (Elkan, 1995; Ghatak, 2003; Ferraro, 2008 cited in Ololube, 2006). The models gained increasing support among the developing countries because of the limited results of the stages and structural change models. However, the failures of the model were clearly reflected in the developing countries that followed the autarky policy. These countries often experienced stagnant growth and finally decided to open their economies once again…show more content…
ii.The growth rate expected has converged across countries. iii.Opening up national markets, developing countries has drawn additional domestic and foreign investments. 2.2.8.New Growth Theory Endogenous growth or the new growth theory emerged in the 1990s to explain the poor performance of many less developed countries, which have implemented policies as prescribed in neoclassical theories. Unlike the Solow model that considers technological change as an exogenous factor, the new growth model notes that technological change has not been equal nor has it been exogenously transmitted in most developing countries (World Bank,

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