Contemporary Theories and Approaches to Economic Development
There is a wide disparity between rich and poor populations in underdeveloped nations, as well as an unhealthy trade balance. Job opportunities, health care, drinkable water, food, education, and housing are some of the symptoms of underdevelopment. Economic development is based on two theories and approaches:
1) Modernization Theory
In sociology and economics, modernization theory is also known as development theory. Underdeveloped nations benefit from the developed world’s modernization and facilitation of sustainable development. Dependency theory is often contrasted with it. There are three parts to the theory of modernization:
- Types of societies and how they differ from those designated as modernized or relatively modernized;
- Identifying and comparing factors that make societies more or less conducive to modernization.
- Comparisons of stages of modernization and types of modernized societies with clarified prospects for further modernization, encompassing generalizations about how the parts of a modernized society fit together.
2) Dependency Theory
Raul Prebisch first advocated dependency theory in the 1950s, finding that the wealth of poor nations decreased when the wealth of rich nations increased. Diverse schools emerged from the theory. According to dependence theory, wealthy nations of the world need peripheral groups of poorer states to remain wealthy, both from the Third World and the First World. The dependency theory argues that the poverty of the periphery countries is not due to their inability to integrate into the world system, but rather to their integration.
The wealthiest nations wouldn’t be able to maintain their standard of living without the natural resources, cheap labor, and markets provided by the poor nations. A state of dependency is actively perpetuated by first world nations through a variety of policies and initiatives. Economic dependence, media control, politics, banking, finance, education, sport, and human resource development are all components of this state of dependency.
It is possible for dependent nations to be sanctioned and/or invaded and controlled militarily if they attempt to resist the influence of dependency. Dependency is, however, more often enforced by wealthy nations setting international trade and commerce rules.
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