Politics and Economics of the Third World viz a viz Theories of Development

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17/05/2013

Outline i. Abstract ii. Introduction iii. Literature Review iv. Method of Analysis v. Analysis vi. Conclusion vii. Works Cited

Abstract This paper analyzes the politics and economics of the third world. It seeks to provide information about development and the steps that countries in the developing world ought to follow in order to attain economic development and growth. The rationale is that the countries in the developing world have continued to experience challenges that hinder growth. This study will use theoretical models of development and discuss various aspects of development and politics in the third world.

Keys Words: Third World Development; Modernization; Globalization; Global South
Introduction
Various theories propose ways through which a developing country can achieve economic growth while at the same time attaining development. This has precipitated politics in the global south. This paper seeks to explore various development theories proposed by various authors. Besides, the paper will explore elements of economics that are pertinent to the third world countries. This is in recognition of the fact that many countries in the third world still grapple with poverty and slow economic development. From Immanuel Wallerstein to Rostow, the paper will provide incisive information about development, politics and economics of the third world countries. Literature Review Third World refers to a category of poor and undeveloped nations. It is typical of nations that contribute insignificantly to the world's economy. These countries are mainly found in Africa, South Asia and Latin America as indicated in the figure below (O'Sullivan 112). On the other hand, political economy refers to a sub discipline of economics that seeks to explain the relationships between political systems and economy. This is both at national level and at international level. The sub-discipline explains international political and economic systems. Development refers to any form progress that social, political and economic institutions experience due to political decisions. Cohen says that the term refers to a state of progress where every member of the society enjoys fundamental rights (7). Walt Rostow (1916-2003) is one of the theorists who came up with modernization theory. According to O’sullivan, Rostow believed that a country possesses a comparative advantage over other countries when it has inputs for production (12). Another important theorist of development is Raul Prebisch (1901-1986). He is one of the most prolific political theorists who argued that the gap between the industrialized nations and the developing nations would increase eventually. He pointed out that primary products are vulnerable to price fluctuations than manufactured products (Haslam et al. 90). The fluctuations lead to disparities between the industrialized and peripheral nations. Proponents of the hegemonic stability theory argue that the world economy needs a 'hegemon' in order to develop (Haslam et al. 93). In other words, the theory says that the world requires a country that controls all factors of production. Besides, the 'hegemon' can use all means to achieve the domination. Until 1970, the world's 'hegemon' was the USA. Globalization refers to transnational linkages that have increased in the modern world (O'Sullivan 82). Globalization has led to the convergence of language, dressing and culture. Usually, globalization has a negative impact on minority cultures. The rationale is that dominant culture becomes the standard culture all over the world. Immanuel Wallenstein contributed to the development of world systems theory. He classified the world's nations into three categories that include, core, semi periphery and periphery (Haslam et al. 93). This is due to the complex network of global exchanges that facilitate connectivity among nations. Due to the rise of capitalism in the modern world, Wallenstein believed that the global exchanges have created disparities between the three categories of nations. Hence, world nations develop within the global world system as opposed to distinct development (Rapley 20). The development occurs in stages. As such, different nations are at different stages of development. According to the world systems theory, economic exchanges between countries in the world began in 16th century and continued through 19th century. On the one hand, Rapley says that the periphery represents undeveloped nations that are rich in raw materials (34). As such, the major role of the peripheral nations is to provide raw materials and labor to the core societies. The core obtains the raw materials and labor at low prices (Haslam et al. 93). On the other hand, the core represents the developed nations who have the inputs for production process. Wallenstein points out that the major role of the core nations is to acquire the raw materials from the periphery and manufacture finished goods (Jayati 37). They sell the finished goods to the periphery at high prices. As such, the core controls and dominates the factors of productions like capital and technology. The semi-periphery nations are the nations that exist between the core and the periphery. Wallenstein posits that semi periphery nations attempt to enhance development although they lack enough capital and technology to allow rapid economic growth (Haslam et al. 93). The rationale is that the capacity of the nations to engage in massive production of finished products is limited. To this end, both periphery and semi periphery nations depend on the capital investment from the developed nations (Jayati 37). Besides, the periphery has the largest number of countries while the core is composed of few but rich nations. Wallenstein articulates that the world systems theory is anchored in the belief that the global exchanges lead to commoditization of merely every aspect of the society (Rapley 23). In other words, the world's system is external, alienating and strips human beings off their intrinsic values. As such, the world's systems theory argues that the domination of core nations on the periphery and semi periphery nations lead to dependency. The rationale is that the periphery nations depend on the core nations for capital and technology. International politics of development have elicited innumerable debates all over the world. Notably, Charles Kindleberger and Robert Gilpin argued that the world system requires a 'hegemon' in order to attain stability. Hegemonic stability theory is anchored in the argument that the core, semi periphery and periphery nations ought to be guided by one nation (hegemon) that has various characteristics. According to them, the features and characteristics of the 'hegemon' are ambiguous and vague. However, Robert Keohane attempts to provide specific characteristics of the 'hegemon'. At the outset, a 'hegemon' ought to have an undivided control and domination over raw materials and labor. This is in addition to control over global markets and capital investments. In essence, the 'hegemon' has to come from the core nations owing to the fact that they control capital and technology (Cohen 89). Besides, the core nations have all the inputs used in the production system. The process globalization refers to the unprecedented growth in the transnational linkages. The linkages may be social, economic and political. In the recent years, the world has witnessed an expansion and intensification of these global linkages (Preston 121). The process has influenced many aspects of societies all over the world. As such, there has been a raging debate on the impact of globalization in all spheres of political economy. At the outset, hyperglobalists argue that the process of globalization has positive impacts in all countries. To assert their point, they pinpoint the growth of global financial flows between 1979 and 2000. Hyperglobalists believe that multinational corporations are critical in the process of development for all countries. To them, multinational corporations have enhanced prosperity and efficiency in the international economy (Preston 121). Method of Analysis This paper will analyze the economic development of third world using qualitative analysis and theories from different authors. The paper will also provide the analysis with accurate information about economic growth and development in the global south. Analysis Keohane argues that the hegemony allows the core nations to wield immense powers over the periphery nations (43). The power and influence take different forms.
| |Total External Debt |Total External Debt |Debt Service | |
| |(Millions Of $US) |(as a % of GNP) |(as a % of Exports) | |
| |1990 |1980 |1980 | |
| | | | |1990 |
|Algeria |26,806 |47.1 |27.1 |59.4 |
|Argentina |61,144 |48.4 |37.3 |34.1 |
|Bolivia |4,276 |93.3 |35.0 |34.1 |
|Brazil |116,173 |31.2 |63.1 |20.8 |
|Bulgaria |10,927 |1.1 |0.3 |56.9 |
|Congo |5,118 |98.0 |10.8 |20.7 |
|Cote d'Ivoire |17,956 |58.8 |28.3 |38.6 |
|Ecuador |12,105 |53.8 |33.9 |33.2 |
|Mexico |96,810 |30.5 |49.5 |27.8 |
|Morocco |23,524 |53.3 |32.7 |23.4 |
|Nicaragua |10,497 |112.1 |22.3 |4.1 |
|Peru |21,105 |51.0 |46.5 |11.0 |
|Poland |49,386 |16.3 |17.9 |4.9 |
|Syria |16,446 |27.1 |11.4 |26.9 |
|Venezuela | 33,305 |42.1 |27.2 |20.7 |

Hegemonic power may be coercive or consensual. In other words, the 'hegemon' has the power to coerce the world's nations to adopt specific strategies to achieve their ends. The rationale is that it has the military, political, social and economic powers. For instance, the US was the hegemon of the world until 1970 (Jayati 27). The reason is that the country had superior military, economy and social institutions. This way, the US has been able to coerce various countries to adopt democracy, free markets and political liberalism. This is the role of the hegemon. Nevertheless, hegemony stability theory highlights that the 'hegemon' may predispose the world to various risks. The rationale is that the nation may create institutions to limit some nations from engaging in meaningful global exchanges. Besides, the country may be able to dictate the nature and form that the global economy takes. For instance, after the Second World War, the United States became the dominant nation in the world. Consequently, it was able to facilitate the formation of various international bodies. Particularly, the creation of The World Bank and International Monetary Fund was the initiative of the US. Hence, the country can influence the decisions of the organizations to advance a certain agenda. For example, the US has cautioned the developing nations to adhere to the principles of democracy and enshrine human rights. Failure to abide by these terms, the countries may not access development funds and as such, remain in the periphery. This situation has marred North Korean political system and development. Modernization theory postulates that a country will experience economic development only if it has some key elements (Cohen 64). In particular, the proponents of the theory point out that science and technology is one of the most important elements that can accelerate development within a country. In addition, the theorists state that financial savings and capital investments are critical elements of development especially in the third world. Moreover, a country ought to have a dynamic class of wealthy and entrepreneurial citizens. This is in recognition of the fact that the theory originated from the European experience of agrarian and industrial revolutions. To that end, modernization theory is inspired by traditional feudal system that was typical of European societies especially between 15th and 19th centuries. In 1950's, the theory gained momentum in different nations and was used as a blueprint to stimulate development in the global south. Walt Rostow was amongst the greatest contributors of modernization theory. He argued the world would experience development when its economy becomes liberal. Besides, Rostow prescribed five stages that a country ought to go through in order to achieve economic maturity (Cohen 64). Also known as, the Rostovian Take off Model, his theory describes every stage of economic growth and its characteristics. The first stage of economic development refers to the agricultural societies. Countries in this stage depend on agriculture and have limited productivity. Besides, technology is apparently absent in such societies. Cohen argues that agricultural societies value patriarchy and experience strong kinship ties (65). However, the societies have no centralized government and authority. The second stage of economic growth is known as the pre-condition for takeoff. Countries in this stage have improved technology and increased amount of financial resources. In such a society, there is an emergence of business and entrepreneurial classes. The financial systems are stable due to the establishment of banking and currency system. This is in addition to a centralized political authority. The third stage of economic development is referred to as take-off. This stage is typical of large industries, high rates of capital investment, availability of appropriate technology, mechanized agriculture and high rates of urbanization (Galbraith 35). Rostow refers to the fourth stage of economic development as modernity or maturity. A country that is in this stage experiences high modernization in all aspects of the economy. Besides, there is a rise in the quality of life and standards of living for all members of the society. This is in addition to drastic changes in the patterns of exports and imports. The final stage of economic development according to Rostow is high mass consumption. In such a country, the economy focuses on production of durable goods. The economy is also typical of high government expenditure on military and social services. Robert Cox is one of the critical theorists who argued that there is no objective reality. In other words, he belongs to a school of thought that asserts that subjectivity is intrinsic and as such, there can be no value-free science. Critical theorists emphasized that world has no universal laws that are applicable to all societies, polities and economies (Haslam et al. 93). They also insisted that every social construction is distinct in terms of time and place. Besides, the world is dynamic and not static. In his contribution to the field of political economy, Cox believed that the historical structure has three components. At the outset, Cox believed that ideas were able to shape the historical structure in many ways (Rapley 76). Particularly, Cox argues that ideas are imperative in shaping the development path that a nation takes. He narrows down the historical structure to ideas that different societies and nations have regarding development. To him, development emanates from ideas that are relevant to a specific society (Peet and Hartwick 58). Second, Cox says that institutions are an important element of historical structure and hegemony. He believes that social, economic and political structures are critical in enhancing development of a specific country (Galbraith 45). These institutions are created for the sake of advancing the interests of the societal members. As such, no universal institutions can enhance development in a country. For instance, Cox dismisses the role played by International Monetary Fund and The World Bank in enhancing development within a country. Third, Cox pinpoints that material forces are a major component of historical structure. In other words, he believes that material forces motivate the developed countries to engage in development activities of the third world. However, the major objective of the developed countries is to exploit the developing countries. Cox's contribution to political economy reflects a modification of Gramsci's ideas on development, world order and historical structures. Gramsci argued that political hegemony is composed of power, ideas and institutions (Preston 28). However, power is not a crucial element according to Cox. The rationale is that power does not only lead to materialism but also to coercive insubordination of the poor countries. Besides, the developed countries use ideas such as capitalism to assert their dominance on developing countries (Haslam et al. 93). As such, the use of power emanates from the materialistic needs of the developed countries. Cohen states that developing countries do not lack enough power to confront the developed countries (78). To him, social, religious and cultural institutions have been influenced by the developed countries to entrench such ideas as capitalism in the third world. In the study of international relations, Peet and Hartwick assert that realism is a conceptual framework that views competition as a major characteristic of the international politics (67). Competition comes about because of unending selfish and self-interests among the participants in the global politics. Hence, nations attempt to advance their interests over others. Another conceptual framework is structuralism. It refers to the view that international politics ought to reflect all global societies in their entirety. The conceptual framework articulates that the economy cannot be analyzed as a single institution of a society. This is because the economy is influenced by political and social factors such as culture and language. Third, pluralism is a major conceptual framework that advances the argument that all nations should play a significant role in global politics. It is anchored in the belief that competing interests and ideas are important for development. Realism articulates that the main actors in international politics are multinationals, powerful and poor nations (Peet and Hartwick 78). The developed nations, through their multinational corporations, advance political interests on the third world. Conversely, structuralism holds that all aspects of a society are important in shaping its politics. As such, it is important to involve all countries in the global political arena (Haslam et al. 93). Pluralism advocates for inclusion of all nations in international politics. Skeptics pinpoint the weaknesses of the assertions made by the hyperglobalists. They believe that the effects of globalization are overrated. The rationale is that the hyperglobalists perceive multinational corporations and free trade from a positive view. This is contrary to the reality. The multinationals only advance their profit-making interests and use their influence to access raw materials especially in the third world. Besides, skeptics point out that the increase in global financial flows in 20th century were similar in 19th century (Preston 121). To them, globalization has not aided the increase in global financial flows. Besides, the multinational corporations have been accused of engaging in activities that are hazardous to the society. To this end, the positive effects of globalization are exaggerated. While globalization leads to cosmopolitanism and convergence of many aspects of the society, it may lead to a cultural backlash (Preston 121). This happens when a minority group feels that globalization threatens its culture. Conclusion In essence, there are various theories that seek explain development in the third. In particular, world systems, stability and modernization prescribe various processes that a country ought to take in order achieve development. Such proponents as Wallenstein and Rostow were proactively involved in the formulation of the theories. In addition, the process of globalization has also amplified the development processes not only in Latin America but also in Africa (O'Sullivan 34). It is therefore imperative for developing countries to improve their infrastructure in order to prepare for economic growth. Infrastructural development prepares a country for economic growth and allows it to create employment to a substantial percent of its populace (O'Sullivan 72). This way, a country accelerates its developmental path and modernizes. Countries like Brazil and Argentina have followed these theories of development and have reduced unemployment and poverty largely.

Works Cited
Cohen, Benjamin. International Political Economy: An Intellectual History. Princeton: Princeton University Press, 2008. Print.
Galbraith, John. Economic Development, Boston: Sage Publishers, 1964. Print.
Haslam, Paul, Beaudet Pierre and Schafer Jessica. Introduction to International Development. New Jersey: Pearson Publishers, 2012. Print.
Jayati, Gosh. Too much of the same: Development and Cooperation, New York: McGraw Hill Publishers, 2013. Print.
O'Sullivan, Abel. Economics: Principles in action, Upper Saddle River, New Jersey: Pearson Prentice Hall, 2003. Print.
Peet, Richard and Hartwick Thierry. Theories of Development, New York: McGraw Hill Publishers, 2009. Print.
Preston, Peter. Development Theory: An Introduction to the Analysis of Complex Change. Boston: Wiley-Blackwell, 1996. Print.
Rapley, John. Understanding Development. London: Lynne Rienner Publishers, 2007. Print.