Theories of Under Development:
According to Prof. Nurkse: It is the vicious circle of poverty
(VCP) which is
responsible for backwardness of UDCs.
Nelson has presented the theory of low level equilibrium trap for the UDCs.
This theory is based upon 'Malthus' view that when per capita income of a
country rises above the 'Minimum Subsistence Wage', the
population will tend to increase.
Harvey Leibenstein is of the view that UDCs are characterized by vicious
circle of poverty (VCP) which keeps them around a low income per capita
equilibrium state. The way out of this impasse is a certain 'Critical minimum
effort' which would raise the per capita to a level at which sustained
development could be maintained.
The Big Push Theory has been presented by Rosenstein Rodan. The idea behind
this theory is this that a big push or a big and comprehensive investment
package can be helpful to bring economic development. In other words, a certain
minimum amount of resources must be devoted for developmental programs, if the
success of programs is required. Continue reading.
The theorists of 1950s and early 1960s viewed the process of development as
a series of successive stages of economic growth through which all the advanced
nations of the world had passed. As all the modern industrial nations of the
world were once undeveloped peasant agrarian economies.
Any economy which wishes to grow it is in need of new investment, i.e., the
net additions to capital stock. If for the output worth $1, the stock of
capital worth $3 is required, then the ratio between capital and output will
be 3 to 1. Such relationship is known as COR.
Irma Adelman and Morris presented their theory of stages of economic growth
in their book "Society, Politics and Economic Development" in 1967. They share
with Rostow and others that the process of economic development can best be
analyzed in terms of stages. They use different techniques in
distinguishing these stages.
There is an other approach regarding the study of international
underdevelopment which came into being as a result of dissatisfaction against
the 'Stages approach'. Such approach is given the name of "International Structuralist
It is the international-structuralist model which highlighted the
of dual societies. This means that there exist rich nations and poor
nations at world level; and a few rich accompanied with a
majority of poor people in the developing countries.
There are different theories which are of the view
that the poverty and underdevelopment of poor countries is attributed to their
dualistic character. Continue reading.
Economies have a backward agricultural sector and have an
advanced industrial sector.
when conservative govts. were in power in US, UK, Canada and
Western Germany the neo-classical counter revolution
theory and policy was revitalized.
According to traditional/old growth theory output
growth results from one or more of three factors.
Prof. Romer, in his Endogenous
Growth Theory Model, includes the technical spillovers which are
attached with industrialization. Therefore, this model not only
represents endogenous growth but it is closely linked with
developing countries also.