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1、Government and MarketLecture 8 Dependency Theory and Developmental State上海交通大学国际与公共事务学院黄琪轩Readings for this week1,Frank,Andre Gunder.1966.“The Development of Underdevelopment.”Monthly Review 17(September):17-31.2,Zhu,Tianbiao,“Developmental States and Threat Perceptions in Northeast Asia Journal of
2、Conflict,Security and Development”,2(1):6-29,April 2002.Outline1,What is Dependency Theory2,The Role of Trade in Development3,Different explanations for Asia success in the literature 4,Main Features of Developmental State 5,Rise and Decline of Developmental State1,What is Dependency Theory In devel
3、opment studies,dependency speaks to a situation in which a particular country or region relies on another for support,“survival”and growth.Dependency Theory emerged in the 1950s as a critique of Modernization 1,What is Dependency Theory Modernization theory:Development is linear process,with clear s
4、tages:-MarxRostowTraditional mentality vs Modern attitudes1,What is Dependency Theory Against Modernization Theorist,Dependency Theorist claim that:Modernization,Industrialization,Urbanization,to Development do not lead in the periphery.Instead,they foster Underdevelopment.1,What is Dependency Theor
5、y ContdMain Thesis:Underdevelopment is not the product of the persistence of“traditional”society;instead,it is generated by the expansion of capitalism.1,What is Dependency Theory ContdIn this capitalist system countries are divided into Metropolis and Satellites or Core and Periphery.The capitalist
6、 system operates where peripheries/Satellites provide raw material for the Core countries who manufacture and sells it.It is the basis of dependency and Underdevelopment.1,What is Dependency Theory ContdDependency theory holds that“the condition of underdevelopment is precisely the result of the inc
7、orporation of the Third World economies into the capitalist world system which is dominated by the West and North America.1,What is Dependency Theory ContdThe expansion of the market does not necessarily produce either modernization or development.On the contrary,capitalism makes societies look like
8、“feudal”in the periphery.1,What is Dependency Theory ContdDevelopment and underdevelopment constitute the two sides of the same coin:capitalism.The periphery is underdeveloped because of the development of the center.1,What is Dependency Theory ContdThis new Marxism is a critique of Marxs ideas.Wher
9、eas Marx described capitalist is a progressive rather than a regressive movement,neo-Marxists relied almost solely on the negative and exploitative aspects of the system 1,What is Dependency Theory ContdMarx describes the British“double-mission in India”as first destructive,then“regenerating the old
10、 Asiatic society,and laying the material foundations of Western society in Asia”(Marx 1853).1,What is Dependency Theory ContdMarx and Engels expounded that“The bourgeoisie,by the rapid improvement of all instruments of production,by the immensely facilitated means of communication,draws all,even the
11、 most barbarian,nations into civilization”(Marx and Engels)1,What is Dependency Theory ContdPrebisch“criticized the outdated schema of the international division of labor”Trade process produced declining terms of trade for the peripheral countries.In order for these backward countries to development
12、,they must disassociate themselves from all relations with the First World.2,The Role of Trade in DevelopmentThe Case for Free Trade:Efficiency arguments,Learning,technological changeThe theory of Comparative advantageAbsolute versus relative advantageTrade as the engine of growth:Trade has grown mo
13、re than twice as fast of Global GNP since 1950.(sharp drop in transport costs)Country differences:in performance,size,manufacturingRegional variations in Growth of TradeGrowth rates,1970-1986 1986-2002East Asia:-10.8%South Asia 5.3 10.7Latin America4.8 7.2SSA 2.2 3.6World 5.4 6.32,The Role of Trade
14、in Development ContdExport pessimism returns periodically in LDCs:Free trade favors west Comparative advantage in commodities is a disadvantage:Engels law,substitutes,etc.Terms of trade getting worseFallacy of compositionIs free Trade passe?The case for industrial planning(see Krugman)Declining valu
15、e of Ag.CommoditiesCocoaCoffeeSugarCotton(US cents per kg)1954490678.527.653251982 188335.719163.6198427034312188.53,Different explanations for Asia success 19621986RankGNP/pcRankGNP/pcTaiwan 85$17038$3,580Korea99110442,372Hongkong 40450286,906Singapore 38490257,411Japan306101112,838Brazil67240551,8
16、11Mexico51340521,8393,Different explanations for Asia success Contd 1,Culture2,Geopolitical factors.(Specific historical,international circumstances)3,Free Trade Market Conforming4,Developmental State Market Distorting4,Main Features of Developmental StateA,Consistent commitment to economic growth.B
17、rutal repression of countryside and organized labor Aggressive investments in technology acquisition4,Main Features of Developmental State ContdB,Selective Industrial Policy.Picking“winners”4,Main Features of Developmental State ContdC,Pilot Agencies MITI Government control of financial sector Stabi
18、lity of main macro Strategic use of foreign exchange Promotion of exports,but not free trade.Strong partnership between private sector and state agents on behalf of growth.5,Rise and Decline of Developmental StateZhu,Tianbiao:Extremely intensive and long-term threat perception Rise of Developmental State