Economic Development Theory

1. Introduction

During the final phases of World War II, it became evident that the structure of the world economy would take on a new shape. The reconfiguration of this realm was a direct result of a bi-polarized international power structure and to a moderate extent caused by the birth of third world nation states (Briscoe 2009). The ideological differences shared by the United States and the Soviet Union, and the desire to shoehorn their political ideals elsewhere, made the political and economic development of these newly independent states a subject of contestation amongst various schools of thought. The three dominant theories that explain the determinants of economic development list as followed: the modernization theory, suggesting that liberalization and democracy are the most pivotal components for economic development; the dependency theory, declaring that emerging nations should solely depend on the exportation of primary goods and import substitution industrialization; and the state-led developmental theory, encouraging state interventionism to ultimately reach export led growth (Arat 1988; Hein 1992; Reny 2011). Although each theory suggests contrasting economic approaches, the role that a state plays in the developmental phase has always been a central variable in each school of thought; nevertheless, questions concerning the states’ degree of intervention have been subject to various permutations.

These theories of economic development, however, have progressively become more depoliticized in recent decades, due to the demise of communism and the influence of globalization (Gore 2000). As a direct result, the dependency school of thought has become obsolete in the theoretical realm, while the modernization theory...

... middle of paper ...

...cally prosper despite their preexisting condition.

The dependent variable, which has been extensively used in prior examinations, is rate of growth in gross domestic product per capita. Moreover this research will cover the time range between 1960 and 1990; and the information measuring the dependent variable will be extracted from the World Bank data set. The data source is reliable because it measures the strength and size of a country’s economy of every year within a specified time period, hence allowing this paper to examine the influence that general trends have on growth rates. For the independent measures, I will utilize both qualitative and statistical analysis from previous research (which examines level of education, regime type, comparison of exports and imports, etc.) carried out by government agencies, international organization and scholars.