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Modernization Theory Of Economic Development

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DEVELOPMENT THEORIES

1. Status of economic growth and trade: Dependency theory advocates an inward looking approach to development and an increased role for the state in terms of imposing barriers to trade, making inward investment difficult and promoting nationalization of key industries. However, Modernization theory provides a highly “eurocentric” view of development(Rice, 2012). It insists that the third world is in and remains in a state of “underdevelopment” because of its resistance and historical failure to industrialize and modernize with the rest of the world. The theory suggests that these third world countries must “catch up” to the developed societies by adopting a modern way of life. It states that a move from underdevelopment …show more content…

These functions orient the economies of the dependent states toward the outside: money, goods, and services do flow into dependent states, but the allocation of these resources are determined by the economic interests of the dominant states, and not by the economic interests of the dependent state. However the modernization theory calls for development of the engine of its was capitalism. Innovation and technological growth became self-sustaining in Western Europe because they were embedded in the capitalist system. Entrepreneurs were in competition, profits were pursued by lowering costs and increasing revenues and re-investing in order to make more profits. The ultimate (unreachable) goal of neoliberalism is a universe where every action of every being is a market transaction, conducted in competition with every other being and influencing every other transaction, with transactions occurring in an infinitely short time, and repeated at an infinitely fast rate. Technology and infrastructure plays a vital role …show more content…

Repeating the western part of development: Modernization theory has helped gain the competitive edge and the transformation from the underdeveloped state to the developed one, hence it was suggested to try the loop so that the poverty circle vanishes and the transformation stage is accompanied with sustainable development. The dependency theory contrast the modernization theory over repeating the western part of development as it states that the developed nations are developed because they exploit the natural resources of the underdeveloped so n oder to repeat this process the richer will become richer and poor will become poorer. Neoclassical approach stands different in this contest with the concept of globalization that frees all the barriers and restricted trade practices. It talks about a different and a unique way of development; one may or may not repeat the old and tried ways of

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