Assignment Code: MDV-101/ASST/TMA/2022-23

Course Code: MDV-101

Assignment Name: Introduction to Development and Development Theories

Year: 2022-2023

Verification Status: Verified by Professor

Answer all the questions. All questions carry 20 marks each.

1. What are development paradigms? Discuss the sustainable development paradigm in detail.

Ans) "Thomas Kuhn defines a paradigm as "universally recognised scientific findings that, for a period, presented model problems and solutions to a community of practitioners." Kuhn created the term "paradigm" to describe the important shift in the scientific paradigm from Newton's mechanical standpoint to Einstein's realistic one. A paradigm, in Hussain's opinion, is a mode of thinking that enables the asking of queries and the search for answers. The symptoms, process, and causes of development are thus seen through a certain lens known as a development paradigm.

Three conditions must be met for a paradigm shift to be at least minimally consistent with Kuhn's concept, according to Sato and Smith, ODII: it must offer a metatheory, or one that serves to explain many other theories; it must be accepted by a community of practitioners; and it must have a body of successful practise, or "exemplars," that are used as "paradigms" in the field. They and the metatheory contend that for development to be effective, it must be centred on people, democratically managed, responsive to the entire environment—political, social, and cultural factors as well as ecological and economic ones—and balanced—for example, between the centre and the periphery, the public and private sectors, and the roles of men and women.

The Johannesburg Growth and Development Strategy describes the Development Paradigm as a basic argument for how to comprehend and address the universal development issues that confront all nations. They enumerated several ideas, including decentralised development methods, basic necessities, an emphasis on people rather than location, and sustainable and inclusive development. The ODII report noted that "development must be human-cantered, coming from within, rather than being imposed from the outside" when defining the term "development paradigm."

The emphasis of development efforts must also shift from resource-based to interactive or participatory strategies. Bellu noted that it was very unusual to see development as a "God-given" aspect of the socioeconomic system while developing the "development paradigm," implying that national and international policymakers had always believed that specific activities were required to create beneficial improvements.

The Sustainable Development Paradigm

Sustainable development gained prominence as a development idea in 1987. The Brundtland Commission on Environment and Development advised all development programmes to include sustainability as a criterion in its report, "Our Common Future." In order to be sustainable, growth, according to the committee, "must meet the demands of the present without jeopardising the capacity of future generations to meet their own requirements."

There are two main goals of sustainable development. Basic needs for all individuals, such as social security, clothing, food, and housing, as well as the preservation of the ecological balance, must be satisfied. To achieve this goal, all nations and their populations must cooperate. As a result, there are many ways to look at sustainable development, including those that are connected to the economics, society, politics, culture, and technology.

The Brundtland Report claims that sustainable development:

1. A political structure that guarantees effective citizen involvement in decision-making.

2. A sustainable and self-sufficient economic structure that can produce surpluses and technical expertise.

3. A social structure that offers remedies for the conflicts brought on by uncoordinated growth.

4. A production process that adheres to the duty to protect that ecological foundation for development.

5. A technological system that is capable of looking for fresh answers constantly.

6. A global framework that enables financially and trade-wise viable patterns.

7. A flexible administrative structure with self-correction capabilities.

Sustainable development is a multifaceted strategy to growth in which all sectors, countries, and individuals share the same objective. It assumes that rather than being independent, the participants in sustainable development are interdependent.

2. Discuss Marxian model of economic development.

Ans) Marx argued that full employment and secular economic growth are incompatible. A class conflict exists as a result of the working class's poverty. As a result of capital accumulation, the capital-to-output ratio rises steadily as profits decline. This course of economic progress is harmful to itself. Marx's theory of economic growth focuses primarily on the causes and effects of capital accumulation. Marx claimed that capitalist producers often tend to collect increasing amounts of capital and implement mechanisation into the production process in order to increase profits and assure their continued existence in the competitive economy.

There are three effects of this trend of capital accumulation and technological progress:

1. It results in the eradication of small business owners and the concentration of capital in the hands of a select few entrepreneurs.

2. It causes the working class to become more impoverished and increases the size of the industrial reserve army.

3. It causes a propensity for profit margins to decline.

The eventual collapse of the capitalist system is caused by all of these factors taken together. Marx has made three contributions to the theory of economic development.

1. He came up with the materialistic view of history.

2. He listed the factors that drive economic growth.

3. He offered an alternative course for deliberate economic growth.

We can observe the circularity of the Marxian model. Let us start with profit as the prime mover of the capitalist system.

High profit →Competition → Capital Intensive Technology → Capital- Output ratio → Profit fall.

Profit growth encourages investment and increases the stock of capital, enabling business owners to benefit from the continual stream of technological advancements. Intense rivalry causes reduced profitability, increased unemployment, and a rise in the capital production ratio. Capitalists must constantly bring technological advancements to stay competitive, which necessitates the accumulation of more and more capital and the use of increasingly capital-intensive strategies.

The following strategies can be used to accomplish this goal:

1. The salary rate should be lowered to the absolute minimum.

2. Increase the number of labour-saving strategies you use, keeping w at a minimum while raising q.

3. Work harder for longer hours to boost q without raising w.

4. bolster the monopoly's ability to raise prices without increasing salaries.

Marx predicted that the economic crises would result in longer and weaker booms as well as deeper and deeper depressions over the long term. The rate of profit will keep declining despite the best efforts of the capitalists. Capital accumulations during a boom lead to temporary full employment conditions and an increase in salaries. A rise in wages lowers the rate of profit, which discourages investment and contributes to depression. Every action taken by business owners to maintain profits worsens the plight of the working class. Marx predicts that eventually the workers will have had enough and would launch a revolution to destroy the capitalist system using their sheer numbers.

Marx does, however, mention a number of countervailing elements that halt the general law of the declining rate of profit. These elements are

1. The cost of constant capital may decline with technical advancement.

2. The rate of exploitation is increased by the capitalist to maintain continual profit.

3. increased expropriation operations against less powerful capitalists.

Marx, however, was adamant that the fundamental trend toward economic collapse is still present despite these opposing factors because they are merely transitory in nature. The expropriators are ultimately expropriated. The capitalist system itself collapses due to fundamental conflicts. Capitalism's triumph cannot continue indefinitely.

3. What is the basic idea behind unbalanced development theories? Discuss Hirschman’s strategy of unbalance.

Ans) Hirschman, Fleming, Leibenstein, and Singer proposed imbalanced growth as a plan for the development of undeveloped countries. The approach places more focus on investing in strategic economic sectors as opposed to all sectors at once because resources are few in less developed nations. According to the notion, linking effects would naturally help the other sectors. Hirschman contends that the goal of development policy should be to preserve tensions, disparities, and instability in order to keep the economy growing.

Hirschman developed the idea of imbalanced growth in a methodical way. A number of economists, including Singer, Kindleberger, Streeten, and others, have endorsed this hypothesis. Investments should be done in a few carefully chosen industries due to a nation's limited capital and other resources. The profits from them should subsequently be invested in the growth of the other sectors. According to Hirschman, only developed nations can pursue the idea of balanced growth, and if a nation were ready to adopt this theory, it wouldn't have been undeveloped in the first place. On the grounds of a lack of capital, capital goods, skilled labour, and critical raw materials, he promoted imbalanced growth. Hirschman believes that balanced growth is both undesirable and unachievable.

A method of selective investment has been promoted by some theorists as the economic catalyst in emerging nations. Hirschman popularised the notion of making disproportionate investments in some economic areas to balance out the imbalances already present in a country's economy. According to Hirschman, LDCs lack the resources necessary to develop a well-balanced big-push investment strategy.

Instead, investments should be made in carefully chosen economic sectors that will support growth in other industries through backward and forward connections. Forward linkages encourage new linkages in sectors that purchase the output of the chosen industry, whereas backward linkages encourage new linkages in input industries. Hirschman's plan requires careful analysis of each country's circumstances to determine which investments would best help achieve an overall balance between all investment sectors.

Forward and Backward Linkages

Economic growth requires imbalances to be created. Finding the activities that lead to imbalances is the key issue, though. This calls for an understanding of the connections between various economic sectors. These links are categorised by Hirschman as forward and backward linkages.

Backward Linkages: Establishing a steel mill would raise demand for coal and steel scrap, which would increase output of these commodities. This is an example of how the growth of one set of businesses supports the growth of those industries that supply raw materials.

Forward Linkages: refer to the expansion of specific industries that make use of the intended activity's product. For instance, the development of the steel industry would support the machine tool and other sectors that use steel as a primary raw material.

Features of the Theory of Unbalanced Growth

1. Investments in important economic areas should be undertaken in order to hasten the growth process.

2. The original investment serves as an incentive or push for later investments in various endeavours.

3. The theory supports the Big Push hypothesis.

4. The theory is supported by actual observations.

5. The theory acknowledges the value of the public sector.

Hirschman's theory is based on the claim that in underdeveloped nations, the ability to invest is a significant bottleneck and that it largely depends on the investments already made. He claims that the best way to promote economic growth in a developing nation is to purposefully unbalance the economy in accordance with a predetermined strategy.

However, the investments must be made in carefully chosen economic sectors or industries that will generate new investment opportunities and, as a result, further economic growth. According to him, development must preserve a chain of disequilibria rather than eradicating them.

4. Discuss Gunnar Myrdal’s Development State Theory.

Ans) Outstanding modern development theorist Gunnar Myrdal is. His renowned work "The Asian Drama" and another book, "Economic Theory and Undeveloped Regions," provide insight into his contention regarding the causes of underdevelopment in undeveloped nations and how the role of the state is crucial in fostering institutional reforms for higher development.

Myrdal employed the concepts of "Cumulative Causation" and "Backwash Effects" as his two main terms for his development analysis.

According to Myrdal, a community can gradually transition from the spectre of underdevelopment to development thanks to an economy and the concept of cumulative causation. According to Myrdal, the majority of disadvantaged countries experience a "dualism" of development. Due to this duality in the underdeveloped areas of the poor countries, when these countries get growth-stimulating aid, the majority of it benefits the more prosperous parts of the economy.

As a result, the more developed portions of the nation advance further while the less developed areas of the nation fall behind. This is referred to as "Cumulative Causation." The transfer of people and money from less developed regions to more developed regions is another factor in the cumulative causation in undeveloped countries.

When younger, better educated migrants leave less developed areas in search of better job opportunities in more developed areas, the less developed areas are once more left with an unskilled and reliant populace. This only makes their suffering and the underdevelopment of the areas worse. In addition, high fertility maintains the low level of development in the underdeveloped parts of the impoverished countries by lowering per capita income, escalating poverty, and reducing life expectancy.

Because capital investments in established regions are safer and have higher rates of return than those in underdeveloped regions, capital likewise travels from impoverished regions to wealthy regions, much like population does. In other words, the opportunities for better investment are greater in advanced regions than in the backward regions of impoverished countries; this draw to developed regions causes a capital deficit in developing regions. According to Myrdal, "studies in many nations have shown how the banking system tends to become a tool for syphoning off the savings from the poorer regions to richer and more progressive ones where returns to capital are high and secure" if it is not controlled to operate differently.

Backwash effects refer to the cumulative transfer of skilled labour and capital investments that tend to economically destabilise a region. Myrdal favoured "spread effects" as opposed to "backwash effects". Myrdal believed that by transferring surplus capital from the more developed regions to the less developed regions, industrial expansion in the underdeveloped countries' more developed regions will have a positive impact on those regions' less developed regions in terms of demand, market opportunities, and technology.

Spread effects refer to these positive benefits that the more developed regions would have on the socioeconomic growth of the less developed regions. The primary challenge facing the developing world is to make sure that the beneficial impacts of "spread effects" will significantly offset the detrimental consequences of "backwash effects."

Myrdal contends that the "spread effects" in the developing nations are insufficient and consequently unable to counteract the "backwash effects" brought on by regional imbalances in these nations. According to Myrdal, it is impossible to achieve balance between "backwash effects" and "spread effects" in developing nations. Regional disparities within diverse regions of the poorer countries are consequently far wider than those of the wealthy countries. It explains why regional disparities are growing in developing nations while decreasing in developed ones. Therefore, regional differences and imbalances in terms of socioeconomic development in impoverished countries are the result of "cumulative causation," according to the Myrdal development state theory.

5. What do you understand by Capabilities Approach? Discuss the basic concepts of Capability Approach.

Ans) The capability approach (also referred to as the capabilities approach) is a normative approach to human welfare that concentrates on the actual capability of persons to achieve lives they value rather than solely having a right or freedom to do so It was conceived in the 1980s as an alternative approach to welfare economics. In this approach, Amartya Sen and Martha Nussbaum combine a range of ideas that were previously excluded from (or inadequately formulated in) traditional approaches to welfare economics. The core focus of the capability approach is improving access to the tools people use to live a fulfilling life.

Basic Concepts of Capability Approach

A new theoretical framework addressing wellbeing, development, and justice has arisen called the capabilities approach. This framework has its roots in Aristotle, Adam Smith, and Karl Marx. But Professor Amartya Sen invented this strategy, and Martha Nussbaum and several other academics expanded on it. According to the capability approach, a person's ability to achieve wellness depends on their capacity for doing and being certain things, which in turn affects the kind of life they are actually able to lead.

The capabilities approach can be thought of as a framework that includes the exercises listed below:

1. Evaluating the health of the individual

2. Assessing and evaluating social arrangements.

3. Creating social transformation policies for society.

The capacities approach gives some of a person's beings, doings, and opportunities to realise those beings, doings, and opportunities priority. Simply said, the capabilities approach outlines the data we should consider when assessing how well someone's life is going. To use this method, one must choose the people and actions that are important and understand how to combine each person's abilities and functioning to assess their total wellness.

Instead of being an explanatory theory that explains the ideas of poverty, inequality, and wellbeing, the capacity approach is a theory that aids in conceptualising them. Following is a discussion of a few fundamental ideas that make up the crucial elements of the capability approach (Wells):

Functioning and Capabilities: Functioning refers to the many "beings" or states that people can take on, as well as the "doings" or activities that people can engage in. Beings can be, among other things, well-fed or underfed, housed in a comfortable environment, educated or illiterate, a part of a positive social structure or a criminal organisation, happy or melancholy, etc. Traveling, researching, raising a kid, voting, debating, torturing animals, stealing, giving money to charities, and other activities are examples of different types of "doings."

A measure for interpersonal comparisons: According to the capacity method, "functioning" and "capabilities" are the best indicators for the majority of interpersonal assessments. People's "functioning"—their beings, doings, and "capabilities"—or the opportunities they have to attain those functioning—should be the basis for interpersonal judgments. The beings and the doings make life valuable as a whole.

Basic capabilities: Numerous opportunities are referred to as capabilities and are necessary for health. However, the term "basic talents" refers to the set of skills that are a person must possess in order to be free from squalor and poverty. These are the skills required to reach a certain level of wellbeing. Depending on each country's degree of development, different countries will have different threshold levels of skills. In less developed nations, only those capabilities are considered fundamental that are absolutely necessary for survival.

Capabilities as freedoms: A person's freedom and access to options that are available to them to choose from are referred to as their capabilities. The individual need to have the freedom to select from the possibilities. For instance, a person who needs to commute from one location to another should have a variety of options open to them and should be free to select any of them.