A Column of the 'Not So Urgent' Sort: Shifts in Political Economy Terminology, Part II

Luis Martínez-Fernández
Fri, 13 Jan 2023 21:00:00 -0800
Opinion

The term "Third World" discussed in Part I of this column overlaps with, but is not synonymous with other economic and geopolitical terminologies applied to specific nations and regions including W.W. Rostow's Stages of Economic Growth model: "traditional" or "pre-modern" (as opposed to "modern"); "underdeveloped" (as opposed to "developed"), formulated by proponents of "dependency theory"; "periphery" and "semi-periphery" (as opposed to "core") hailing from Immanuel Wallerstein's World Systems theory; "Western" (as opposed to "non-Western"); "low-income" (as opposed to "developing"); and "Global South" in contraposition to the "Global North."

THREE THEORIES OF ECONOMIC DEVELOPMENT: MODERNIZATION, DEPENDENCY, AND WORLD SYSTEMS

Let's start with American economist Rostow. His economic modernization model, first outlined in 1960, placed nations and societies in one of five stages: (1) traditional, (2) with preconditions for "takeoff," (3) taking off, (4) driving toward maturity and (5) in an "age of high mass-consumption." Rostow believed that societies progress linearly along those stages eventually becoming more like the United States and Europe. But the optimism of the early 1960s, with countries like Brazil and Mexico well into the takeoff stage and Argentina reaching a high level of mass consumption, subsided as takeoffs stalled and Argentina retrogressed two stages back to "takeoff." While Rostow's model lost credence beginning in the late 1960s, the rapid industrialization of the so-called Four Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan) since the 1990s fits well within this now-discarded paradigm.
Updated: Sat Jan 14, 2023

The term "Third World" discussed in Part I of this column overlaps with, but is not synonymous with other economic and geopolitical terminologies applied to specific nations and regions including W.W. Rostow's Stages of Economic Growth model: "traditional" or "pre-modern" (as opposed to "modern"); "underdeveloped" (as opposed to "developed"), formulated by proponents of "dependency theory"; "periphery" and "semi-periphery" (as opposed to "core") hailing from Immanuel Wallerstein's World Systems theory; "Western" (as opposed to "non-Western"); "low-income" (as opposed to "developing"); and "Global South" in contraposition to the "Global North."

THREE THEORIES OF ECONOMIC DEVELOPMENT: MODERNIZATION, DEPENDENCY, AND WORLD SYSTEMS

Let's start with American economist Rostow. His economic modernization model, first outlined in 1960, placed nations and societies in one of five stages: (1) traditional, (2) with preconditions for "takeoff," (3) taking off, (4) driving toward maturity and (5) in an "age of high mass-consumption." Rostow believed that societies progress linearly along those stages eventually becoming more like the United States and Europe. But the optimism of the early 1960s, with countries like Brazil and Mexico well into the takeoff stage and Argentina reaching a high level of mass consumption, subsided as takeoffs stalled and Argentina retrogressed two stages back to "takeoff." While Rostow's model lost credence beginning in the late 1960s, the rapid industrialization of the so-called Four Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan) since the 1990s fits well within this now-discarded paradigm.

Much of the criticism launched against Rostow's theory came from the school of dependency theory, whose theoreticians included Hans Singer, Raul Prebisch, Paul Baran, Celso Furtado and Andre Gunder Frank. Discarding the stages theory, they argued that the world consisted of a core (advanced industrialized nations) and a dependent periphery composed mostly of former colonies. While Latin America's dependency theorists accepted the possibility of "dependent" economic development, others embraced the more radical view of virtually perpetual underdevelopment. Some turned the adjective "underdeveloped" into a verb, as in the title of Walter Rodney's book "How Europe Underdeveloped Africa" (1972).

American sociologist Immanuel Wallerstein expanded upon and adjusted the dependency model, digging deeper into history and adding a third category of "semi-periphery," as in industrialized nations that remain dependent on advanced technology and financing emanating from the world's core nations.

DEVELOPING OR LOW-INCOME

Another question in The New York Times survey cited in the previous part of this column asked participants whether they would use the terms "developing" nations or "low-income" nations. Largely because it has been used for decades, 6 out of 10 of respondents said yes to "developing" while only a third would use "low-income."

While that may be the case with a sampling of the general population, the term "developing nations" has gained disfavor among economists and other scholars. For one thing, it is in binary opposition with "developed nations," and critics argue that it is a simplistic, outdated and often inaccurate classification. It reinforces "us-against-them" perspectives, may suggest disdain for poorer countries and places developed nations as the universal models for imitation. It is also euphemistic. The verb "developing" suggests movement toward "development," but there are plenty of cases of stunted development and even regression. Moreover, there has never been a consensus in determining what countries are developing and which ones are already developed.

A child that is growing physically and intellectually and gaining maturity can be said to be developing. But an unproductive 40-year-old child living in their parents' basement has neither developed nor is in the process.

Academics and international organizations no longer use the term "developing nations." Since 2015/2016, the World Bank adopted a more adequate and meaningful categorization based on income: "low-income economies," lower-middle-income economies, upper-middle-income economies and high-income economies.

As is the case with other classifications examined above, the newer income-based classification has its incongruencies and limitations. Take for example the list of high-income economies based on gross national income per capita, is topped by Bermuda ($111,540), Switzerland ($90,360) and Norway ($84,090); as expected, it also includes countries like the United States ($70,430) and Japan ($42,620). But also includes much poorer countries like Romania ($14,170) and Panama ($14,010). At the other end of the income spectrum, we find Somalia ($450) and Burundi ($240).

Part III will discuss income inequality and the classifications "Western," "non-Western," "Global South" and "Global North."