Development Theories try to explain the same thing this course tries to explain. Why are we poor?
There are four basic Development Theories
1. The Dependency Theory developed by Fernando Henrique Cardoso http://www.youtube.com/watch?v=g84C6Nbhw0Q when he was a college student, later would become President of Brazil and renounced this theory himself. This theory was made popular by the Argentine Raul Prebisch when he was head of CEPAL ( The UN Economic Commission for Latin America), when he recommended his economic policies based on this theory. Latin American countries have used and followed Prebisch’s principles for the last 50 years, with, needless to say catastrophic consequences.
This theory was inmortalized by the Uruguayan author Eduardo Galeano http://www.youtube.com/watch?v=_6Ws_lAn2yI in his famous book Open Veins Of Latin America.
This theory claims poor countries are poor because they are exploited by rich countries. It rolls up or combines nationalism and left wing (Keynesian) economics. Poor countries are victims, and not responsible for their poverty or underdevelopment. The rich countries are to blame. This theory is often referred to as the Zero Sum Theory.
Critics of this theory have denounced it for its lack of accountability, or the ‘it’s not my fault’ kind of attitude. The Peruvian libertarian Mario Vargas Llosa calls it the ‘guilty with a clean conscience’ syndrome.
In North America various intellectuals, especially African Americans, have labeled it as the Opression Theory. They use this theory to explain why blacks are poorer than whites. according to them, whites have opressed blacks, thus explaining their lack of prosperity. What it does not explain is why blacks that have come from the Caribbean or are descendant from Caribbean immigrants are better off than African Americans.
Intellectuals like Paul Baran, frantz fannon, Regis Debray, Enzo Falletto have helped create and supported this theory.
The second theory is the Geographic Theory. It postulates poor countries are poor because of geographic location. This is also a left wing theory, and it claims strategic geographic location is key to development. Things like access to oceans, navigable rivers, fertile soil, raw materials are basic for economic success, according to this theory. When the theory fails to explain cases like Nigeria versus Switzerland, or New Zealand and Venezuela etc. it claims western countries control natural resources or have acquired natural resources by force, cunning or even disease.
The father of this theory is an American professor named Jared Diamond, who wrote the book Guns, Germs and Steele http://www.youtube.com/watch?v=bgnmT-Y_rGQ to bring forth this theory. This book was an international bestseller.
Critics of this theory disregard as interesting but plain silly, since the theory claims chance, luck or the environment has separated the haves from the have nots.
The third theory is the Cultural Theory. This theory claims, cultural aspects of people and not the environment or powerful countries determine economic success. Things like time management, punctuality, work ethic, religion, time focus, focus on education, political and economic liberty and history just to mention a few are more important to determine development and underdevelopment.
Read this article http://www.washingtonpost.com/wp-dyn/content/article/2006/12/15/AR2006121501814.html written by Lawrence E. Harrison in which he briefly describes his ideas. Latin Americans like Mendieta, Vargas Llosa, Borges and Montaner have embraced this theory. Its critics label it as covert racism.
The fourth theory is labeled as Institutionalism, and its father is Hernando de Soto the Peruvian economist. He claims prosperity only happens in a society where the rule of law is clearly established. Progress only occurs in a society where titles, deeds, ownership, property, laws are effeciently documented and respected.
In other words, development does not happen in societies where the ‘rules of the game’ are not clearly stated. Of course all of this only happens, according to De Soto, in societies where Democracy and Liberty exist.
Access De Soto’s Instituto para la Libertad y Democracia’s website to learn more about it http://www.ild.org.pe/en/organization/desoto
Make a comment on what you have found on the internet and comment on AT LEAST TWO of your classmates’ comments.