Theories of Development
Why are some countries rich and others poor? The competing theories — modernization, dependency, institutions, and geography.
Competing Explanations
Development economists have proposed several frameworks:
Modernization theory (Rostow, 1960s): Countries develop through predictable stages — from traditional society to mass consumption. Development is a linear process that all countries can follow if they adopt the right policies.
Dependency theory (Frank, Wallerstein, 1970s): Poor countries are not simply 'behind' — they are actively kept poor by an exploitative global system. Colonial legacies, unfair trade terms, and debt traps transfer wealth from the 'periphery' to the 'core.'
Institutional economics (North, Acemoglu & Robinson): The key difference between rich and poor countries is the quality of their institutions — property rights, rule of law, inclusive political systems, and constraints on elites. Countries with 'extractive' institutions stay poor because elites capture resources rather than fostering broad-based growth.
Geography (Sachs, Diamond): Climate, disease environment, access to navigable waterways, and natural resources shape development paths. Tropical countries face higher disease burdens and lower agricultural productivity.