Neo-Classical Development Theory v World Systems Theory Flashcards
the divisions that exist between neo-classical development theory and world systems theory
how they define poverty and what they believe the cause of poverty is
how best to tackle poverty and encourage development
attitude towards SAPs
how they define poverty and what they believe the cause of poverty is: neo-classical development theory
the first major division between neo-classical development theory and world systems theory lies in how they define poverty and what they believe the cause of poverty is
poverty remains a highly contested term
on one hand, the neo-classical development theory sees poverty as being entirely economically based, it is defined as a lack of income or material resources, meaning that poverty can be measured through economic growth and GDP
it follows that poverty should be measured in terms of ‘absolute poverty’, which is not having the money to buy food or satisfy basic material needs
for example, the World Bank defines and measures poverty as the number of people living on $1.90 or less a day
the neo-classical development theory suggests that this poverty can be tackled through neo-liberal economic policy, such as privatisation, opening up markets and deregulation
consequently, the cause of poverty is not having these mechanisms for economic growth in place
how they define poverty and what they believe the cause of poverty is: world systems theory
on the other hand, the world systems theory believes that poverty in the South is due to deliberate economic exploitation by the North
essentially, some countries benefit while others are exploited and the world is divided into core, semi-peripheral and peripheral areas
core areas are those that are economically advanced and dominate over peripheral areas, which are those parts of the world where wages are low, technology is basic and the economy is dependent on agriculture
the core regions benefit by exploiting the periphery for raw materials and cheap labour, thus wealth drains from the periphery to the core
how best to tackle poverty and encourage development: neo-classical development theory
another disagreement roots from their differing definitions of poverty: how best to tackle poverty and encourage development
the neo-classical development theory believes that since poverty concerns the ability to meet material needs, the best way to reduce poverty is to encourage economic growth and according to this approach, unlimited economic growth is possible under the free market
this approach believes that the spread of liberal economic policy is beneficial and will lead to necessary development because increased wealth will benefit everyone by trickling down through society, allowing underdeveloped countries to become more developed
moreover, the process of development and economic growth should be a top-down process, relying on the technology and expertise of forces outside the state itself, particularly Western countries, organisations like the IMF as well as TNCs
essentially, free trade without government intervention in competitive markets will drive growth – free trade and privatisation will open up developing economies to international trade, which will inevitably trigger growth and help to reduce poverty
how best to tackle poverty and encourage development: world systems theory
contrastingly, according to the world systems theory, poverty is an inevitable product of the world system and the system needs replacing by a more equitable one where the peripheral areas are not exploited by the core regions
this approach rejects the neo-classical development theory of poverty reduction and instead tends to be much more centred around the idea that development means becoming self-reliant
rather than being a top-down process, poverty reduction and development should be bottom-up, locally controlled and involve local people directly, especially marginalised groups such as indigenous people
it should also be sustainable and rely on local knowledge rather than that outside the state
becoming self-reliant will allow periphery areas to stop being so easily exploited by the core
attitudes towards SAPs: neo-classical development theory
finally, there is divisions between the neo-classical development theory and world systems theory due to their attitudes towards SAPs
the neo-classical development theory, inspired by thinkers such as Adam Smith and David Ricardo, in turn inspired and is underpinned by the conditionality attached to SAPs
it provides much of the thinking behind SAPs, believing that the best way to promote development in underdeveloped states is to introduce economic liberalism
this may involve countries freeing up their markets, privatising state-owned industries and focusing on producing products in which they have a comparative advantage
the SAPs offered by the IMF and World Bank are therefore beneficial and are the best way to encourage growth
attitudes towards SAPs: world systems theory
but yet again, the world systems theory tends to disagree and have a more pessimistic attitude towards SAPs
this roots from its beliefs that wealth is drained from the periphery to the core and that the core essentially exploits the periphery
it would, therefore, suggest that SAPs are one of the mechanisms that the core uses to do this
so SAPs may actually do more to exacerbate poverty by keeping developing states in a dependency relationship with developed states and encouraging them to open up their markets to much more powerful businesses and enterprises, which will only damage local businesses who will not be able to cope with such huge powers dominating the market
