Development Theory

Theories of Modernization and Growth

Development involves innumerable variables, including economic, social, political, gender, cultural, religious, and environmental factors. But though development theory integrates concepts and perspectives from a range of disciplines, it was highly influenced by economic thought from the start. Early theoretical models of development equated development with economic growth and industrialization, and theorists saw countries that had not yet achieved these as being at an earlier or lower stage of development relative to Europe and North America. The most influential proponent of this view was the American economic historian Walt W. Rostow. His 1960 book, The Stages of Economic Growth: A Non-Communist Manifesto, elaborated a linear-stages-of-growth model that defined development as a sequence of stages through which all societies must pass. This conception of the nature and process of development became the basic blueprint for modernization theory.

Modernization theory emerged following World War II to address the issue of how to shape the economies of states emerging from European colonization. Its implicit aim, as the subtitle of Rostow's book makes clear, was to shape the development of these [Page 221]countries along capitalist lines. Modernization was, thus, conceived of as the relations of production and standards of living characteristic of Western Europe and the United States. In line with Rostow's model, modernization theorists treated underdevelopment as a stage common to all developing countries and a result of weaknesses in the various factors of production—land, labor, and capital. Theorists emphasized increased savings and investment as the key to development, and argued that international trade in products particularly suited to national factor endowments would enable more efficient resource allocation and greater earnings, and these could be translated into savings and then used to promote development. Theorists envisioned that, by disseminating technology, knowledge, managerial skills, and entrepreneurship; encouraging capital inflow; stimulating competition; and increasing productivity, foreign trade, together with foreign investment and aid, would be the engine of growth for developing countries.

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