Harvard Government 20 Week 2 Handout 2

Government 20: Week 2, Lecture 2 Alternatives to Modernization Theory: Gerschenkron and Dependency Theory I.

Introduction: Why Late Development Different (or why Bolivia cannot be England) a. Why historical timing matters b. The international demonstration effect

II.

Gerschenkron: the Effects of Relative Backwardness a. Late Developers Face Different Opportunities and Constraints i. Greater Pressure to Develop Quickly ii. Ability to Borrow Technologies from Early Developers b. Late Developers Likely to Follow Different Path to Industrialization i. More rapid/emphasis on heavy industry ii. Bank-led or State-led, rather than market-led iii. Likely to be accompanied by illiberal ideologies and authoritarian regimes c. Cases i. England: early, slow, market-led industrialization (late 18th century) ii. Germany: later, bank-led industrialization (mid-19th century) iii. Russia: very late, state-led industrialization (late 19th century) d. Key Characteristics of Gerschenkron’s Approach i. Multiple Paths to Development ii. Still relatively optimistic about prospects for late development

II. The Disadvantages of Backwardness A. The Empirical Puzzle: Most countries failed to industrialize in the 20th century B. Dependency Theory a. Capitalism as an international system b. Core vs. Periphery c. Crude Dependency Theory (Gunder Frank) i. Links to global economy under-develop the periphery ii. Need to “go it alone” (19th century Japan, Latin America in 1930s) d. The “Dependent Development” Approach: Peripheral development possible, but distorted (Cardoso and Faletto) i. Greater dependence on foreign capital ii. Greater inequality iii. Authoritarianism, rather than democracy Key Terms Relative backwardness Market-led, bank-led, and state-led industrialization The International Demonstration Effect Core, periphery, and semi-periphery Unequal exchange; comparative advantage v. declining terms of trade Dependent development/Fernando Henrique Cardoso