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Modernization vs Dependency Theory?

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Critically Compare and Contrast Two Sets of the Following Theories of Development: Modernization, Structural Change and Dependency

Since the end of World War 2 international development has become increasingly endeavoured upon by academics and politicians alike. The impulse to further understand growth and development was largely due to the dismantling of the European empires following the war. Nations now freed from their colonial ties strived towards a modern status as economies and societies. These Third-World nations were in search of a development model to stimulate their advance towards a modern and affluent society; this was mirrored globally, for various reasons ranging from economic self-interest to genuine humanitarianism. Development institutions such as the United Nations and International Monetary Fund were created, both in 1945, to aid international cooperation and economic development.
The prominent theories of development have long been debated. Adelman (2001, p 103) said “no area of economics has experienced as many abrupt changes in its leading paradigm since Wold War 2 as economic development”. The two competing perspectives of development theory I shall compare and contrast are the Modernization and Dependency theories, both will also be applied to Latin-America.
Modernization Theory dominated developmental economics in the 1950’s and 60’s. It explains underdevelopment is a result of traditional society systems, caused by internal problems within the country. The typical characteristics of these traditional societies are a subsistence way of living, a lack of innovation and technology leading to limited productivity and a hierarchical social structure with landowners at the top of the tree. The proposed way of getting out of this underdevelopment is by becoming “modern” and passing through common and correct developmental stages. Developing a society that is dynamic, progressive, innovative and follows capitalist values (Isbister, 2001). Modernization takes a deterministic point of view that all societies will eventually become modern and progress through necessary stages of development. It also assumes that Western countries are developed and their path to being an advanced economy is the most successful way. Therefore developing nations simply must repeat these stages to achieve the developed status they desire. So the goal of development effectively became Westernization, how Western Europe and North America had transformed became the blueprint for the rest of the world. The theory also implies that cooperation between developing and developed countries is required to bridge the gap between them. So experiences, skills and knowledge from the developed world can be used in order to achieve developed status and so to not make the same mistakes as seen in history. If policy is implemented correctly than they can grow faster than developed countries and it is attainable for equal development to be reached between all nations (Hollis and Robinson, 1986).
Rostow’s “Stages of Economic Growth” model (1960), seen as the original benchmark of modernization, proposes there are five stages that take a nation from traditionalism to modernism and all societies can be identified as lying within one of these five categories. The stages begin with a traditional, stagnant society and move towards take-off, stimulated by technology and where new industries grow rapidly and reinvest profits causing rapid and sustainable growth. Society then finally moves towards the age of mass-consumption, where leading sectors primarily involve consumer goods and services and real income per head exceeds basic consumption needs.
Although Rostow states the model is ‘not merely descriptive’ it does fail to explain how one nation will move from stage to stage. Also the model and theory as a whole is limited as it assumes there are necessary conditions such as advanced institutions, infrastructure and correct attitudes, similar to the developed world. In reality most developing nations lack these and other complementary factors such as a skilled workforce and managerial competence. Another critique is can modernization completely displace traditionalism? Cultural lag is likely to occur and values persist even though the original conditions have gone.
A key flaw which led to the discovery of Dependency theory was Modernization theory’s assumption that the process is identical for all and the large pro-Western bias. Rostow says Modernization is a ‘theory about modern history as a whole’ yet it is ethnocentric, largely because most researchers were from North America and Europe.

Dependency theory was created as a way to criticize and respond to modernization theory. The theory gained support in the 1970’s following the dominance of modernization theory in the two decades previous and was largely studied by academics from developing nations, emerging first in Latin-America. (Balandier, 1956) first spoke of economic ‘dependence’ and felt inequality was rooted in global dynamics rather than national, unlike Modernization, and criticized those who didn’t recognize the ‘domination effect’ hindering developing states. Developing economies were seen as “beset by institutional, political and economic rigidities, both domestic and international, and caught up in a dependence and dominance relationship with rich countries” (Todaro & Smith, p122).
Dependency theory is not a unified theory and has three major streams of thought - the Neo-colonial Dependence model, False-Paradigm model and the Dualistic-Development thesis, each with their own analytical differences. Yet they all essentially argue that to understand development and poverty it must refer to the entire international economic system. The process that made the current leading superpowers developed consequently led to underdevelopment in other areas. The third world isn’t just poor in comparison to the developed world but it is poor because industrialization and capitalism impoverished societies including Latin-America, Africa and Asia through colonialism, imperialism and exploitative terms of trade.
Before modern economic growth, approximately 500 years ago, trade networks were not extensive. Since the growth began the world power relations fundamentally changed. The West used the developing nations to prosper and utilize cheap terms of trade and subsequently the developing world became impoverished and increasingly dependent on the West. However Warren (1973) suggested that development and dependency can coexist and does not necessarily lead to underdevelopment. Critics also argue that it is too vague on policy and fails to detail how states should achieve development and the removal of imperialist influence doesn’t always induce improvement.

Having looked at both theories I will now apply them to Latin-America. Modernization theory claims Latin-America is underdeveloped as they have not followed the correct path. Their irrational patterns of behaviour such as their feudal system and aristocratic rules combined with their wrong values, favouring more traditional and family systems, ultimately led to their underdevelopment. Essentially Modernization theory blames Latin-American people and their cultural factors, their only way to improve is to adopt Western values. However many Latin-American scholars, such as Gonzalez Casanova, questioned this approach. From their personal experiences led to an intuition that the move towards political and economic independence that initiates ‘take-off’ wouldn’t certainly occur. Mexico may not conform to abstract laws and this theory was not applicable (Rosemblatt, 2014, p112).
Dependency theory on the other hand concludes Latin-America is underdeveloped due to their position in the world system. As developed economies are present in the global system areas like Latin-America are exploited by their more dominant counterparts such as the USA, which effectively keeps them poor. So it is not necessarily Latin-America’s fault they are underdeveloped but their international economic relations. The prescription to change is to realign world relations and achieve a more balanced power structure. They don’t have to and shouldn’t follow a set path previously trodden by the current world superpowers like Western Europe and North America.

Comparing the two schools of thought there are three clear similarities. Firstly and fairly simplistically they both focus on Third World development and what factors promote it. Secondly the methodology is alike; the theories are highly abstract and discuss development in a very general way that is applicable to all nations, which both have come under scrutiny for. Thirdly, both have a polar theoretical framework, Modernizations being ‘traditional versus modernity’ and Dependency ‘core versus periphery’ (So, 1990).
Nevertheless there are many significant differences. Firstly, Modernization comes from a Western background, whilst Dependency is predominantly influenced by those outside of North America and Europe. Secondly, Modernization blames underdevelopment on internal issues, such as culture and lack of investment. Whereas Dependency looks towards external issues; highlighting the influence of colonialism. Following on from this Modernization sees the link between nations as beneficial, yet Dependency views just this as justifying the exploitation of developing states and the links are actually damaging. To develop they must become autonomous and revolution may be required. Thirdly, Modernization has a predominantly optimistic outlook, assuming all nations will eventually be equal. But Dependency takes the opposite view and if the international links aren’t confronted underdevelopment will only worsen.
To conclude, though most see the two theories as competing, they can also be interpreted as ‘complementary’ (Graig, 2007, p96). Rostow said his theory of Modernization was ‘arbitrary and limited’, where his model was imperfect Dependency arose and offered other alternatives, reasoning and solutions. One theory alone is too simplistic and cannot adequately explain the global complexity; both answer different questions, such as endogenous and exogenous influences. Whilst both combined do not explain all cases and offer a perfect solution they both point to relevant factors that explain developmental issues.

Bibliography: * Adelman, I. (2001). "Fallacies in Development theory and their Implications for Policy" In Frontiers of Development Economics. Washington: Oxford University Press. p103. * Balandier, G. (1956). “Le Tiers Monde: Sous-Developpement et Developpement”. Population. 11 (4), p727-741. * Graig, A. Hulme, D. and Turner, M. (2007). “Challenging global inequality: development theory and practice in the 21st century”. London: Palgrave Macmillan. * Hollis, B.C. &.Robinson, S. (1986). “Industrialization and Growth: A Comparative Study”. New York: Oxford University Press. * Isbister, J. (2001). “Promises not Kept: the Betrayal of Social Change in the Third World”. 5th ed. Bloomfield: Kumarian press. * Poznanski, K. (1984). “Technologoy Transfer: West-South Perspective”, World Politics, 37, 1, p134-152, Historical Abstracts with Full Text, EBSCOhost, viewed 11 March 2014. * Rosemblatt, K (2014). “Modernization, Dependency, and the Global in Mexican Critiques of Anthropology”. Journal of Global History, 9, p 94-121 * Rostow, W.(1960). “The Stages of Economic Growth: A Non-Communist Manifesto”. Cambridge: Cambridge University, p1 * Smelser, N. & Reed, J. (2012). “Usable Social Science [Electronic Book] Neil J. Smelser And John S Reed, n.p.: Berkeley: University of California Press, 2012. University of Liverpool Catalogue,EBSCOhost, viewed 10 March 2014. * So, A. (1990) “Social Change and Development: Modernization, Dependency and World System Theories”. London: Sage Publications * Todaro, M. & Smith, S. (2009). “Economic Development” / Michael P. Todaro, Stephen C. Smith, n.p.: Harlow : Addison-Wesley, 2009., University of Liverpool Catalogue, EBSCOhost, viewed 13 March 2014. * Valenzuela, J. & Valenzuela, A. (1978). “Modernization and Dependency: Alternative Perspectives in the Study of Latin American Underdevelopment”, Comparative Politics, 4 , p535, JSTOR Arts & Sciences, EBSCOhost, viewed 7 March 2014. * Warren, B. (1973). “Imperialism and Capitalist Industrialization”. New Left Review, 81, p3-44

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