Economic Development

Division of Economic Activities

• Primary Sector (ag)–

• Secondary Sector (industry) -

• Tertiary Sector (services)-

• Quaternary Sector (service- research/development)

Comparative Economic Sectors-CIA World Factbook, 2010 Estimates

Country Primary Secondary Tertiary

England .5% 23.7% 75.8%

Russia 5.4% 37.1% 57.5%

China 12.5% 47.3% 40.3%

Mexico 3.8% 25.9% 70.2%

Nigeria 26.9% 48.7% 24.4%

Iran 11.6% 42.4% 46%

Economic Indicators of Development

• GDP

• Types of Jobs

• Worker Productivity

• Access to Raw Materials

• Availability of consumer goods

• **Usually economic development coincides with social development** WHY

Self-Sufficiency Model (Balanced Growth Approach)

• Money (investment) should be spread equally amongst all sectors and regions of a country

• Promoted by setting barriers that limit imports from other places…Taxes, quotas

Self-Sufficiency

PRO• Its fair• Incomes in rural

areas keep pace with incomes in cities

• Reducing poverty more important than individual wealth

CON• Protects inefficient

businesses• Large bureaucracy• Local businesses

don’t compete in world market

Modernization Theory- Rostow“Economic prosperity is open to all

countries”Traditional Stage – Families, tradition,

subsistence farmers, lives similar to ancestors

Rostow

Take-Off Stage – Producing goods to sellIndustrial revolutionUrbanization increasesGreater individualism-

willingness to take risks, desire for ‘things’becoming consumers

Rostow

Drive to technological maturity –

Focus on obtaining higher standard of living

Poverty reduced, cities grow, population slows- kids are more expensive to raise

International trade

Rostow

High Mass Consumption-

Luxury items…now ‘necessities’

high incomesMajority of workers in

the service industry

Rostow

“Modernization” = “Westernization”

Tradition is the greatest barrier to economic development

Rostow

Pro- High income helps

poorer countries- Control population

growth- Increase food

production- Take advantage of

industrialized technology

- Foreign aid

Con- Justifies capitalist

system…development of stratified society?

- Harder for poor to get ahead

- Suggests poor countries are to blame for their plight.

Dependency Theory- Wallerstein

Capitalist World Economy – 3 types of nations

1) Core Countries – rich nations take raw materials channel wealth to NA, Eur. Aus., Japan

2) Countries of the Periphery – low income, drawn in by colonial exploitation, support with inexpensive labor large markets

3) Countries of the semi periphery- in between- exert more power than periphery but less than core.

Wallerstein

Pro- No country is in

isolation…pro??

Con- Responsibility for

poverty on rich nations- Industrialized nations

block development by exploiting poorer nations

- Culture that discourages economic growth not taken into consideration

Compare and contrast

1. How are the theories similar?

2. How are the theories different?

3. Which one do you tend to think would work best?....or which parts of each do you agree with?

Key Issues

• Why do less developed countries face obstacles to economic development? What are those obsticles?