The process of economic development / James M. Cypher and James L. Dietz. View the summary of this work. Bookmark: echecs16.info The Process of Economic Development ByJames M. Cypher, James L. Dietz. Edition 1st Edition DownloadPDF MB Read online. This is a textbook with a story to tell. Discussing development from the colonial era to the present in Latin America, Asia and Africa, authors Cypher and Dietz encompass a blend Download options. Our Archive. This entry is not archived by.
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Library of Congress Cataloging in Publication Data. Cypher, James M. The process of economic development / James Cypher, James L. Dietz. —. Fourth Edition. The Process of Economic Development 3rd Edition James M. Cypher and James L. Dietz First edition published Second edition published Third. James Cap 4,5 Y echecs16.info - Free download as PDF File .pdf), Text File .txt) or read Economic Development Cappdf. Uploaded by. desarrolloregional · 1.
Economic development. Summary "The period since the publication of the third edition of The Process of Economic Development has been a time of immense change in the developing world. China, India and Brazil have enjoyed a period of huge economic growth while smaller countries such as Vietnam and Angola have also been subject to striking transformation. Environmental issues such as climate change have also had a huge impact, while issues of security in the Middle East and elsewhere have underlined the importance of natural resources and the ongoing forces of globalization. The fourth edition of this popular textbook has been updated to reflect the new challenges faced by developing countries across Asia, Latin America and Africa, while retaining its ever important emphasis on institutions, the importance of technology and the influence of global finance and business"-- "The fourth edition of The Process of Economic Development offers a thorough and up-to-date treatment of development economics. This landmark text will continue to be an invaluable resource for students, teachers and researchers in the fields of development economics and development studies.
Even though Kang analyses the mediums in a more complex fashion he failed to acknowledge the increasing patterns of financialization thereby rendering financial markets, financial actors and financial institutions Epstein, as crucial mediums for promoting capital mobility which will be given attention in this paper. The Political Economy Perspectives These analytical frameworks draw on five perspectives each of which has its unique set of arguments about capital mobility.
Before looking into the essential arguments of these perspectives as they pertain to capital mobility it will be instructive to note, from purely ecological point of view, that development or under development processes may unfold, traditionally, at the local level owing to the availability of resources which may be spatially concentrated. As Levy stresses, the maximization of these resources leads to economic development of the nation.
These resources are natural in essence. The quest to fill this gap gave rise to the neo-classical perspective to capital mobility. The Neo-classical Economic Approach Generally, the conventional neo-classical economic perspective argues that capital mobility, through trade and FDI, maximizes the use of natural resources by promoting financial development and increasing global productive efficiency and growth.
Isaksson , on his part, argues from the same neo-classical economic context that capital mobility is by theory, crucial to global resource allocation since it aids to smooth consumption and reduced risk. Isaksson submits further that capital mobility also allows for investment and economic growth as, in an unrestricted form, it facilitates specialization and production of services to the benefit of the international economy.
However, the strength of the neo-classical economic perspective as an analytical framework has been critiqued by recent empirical data which contradict the assumptions of the perspective.
Findings from the works of Gomory and Baumol and Palley suggest that FDI and outsourcing, all of which are fostered by capital mobility, may be good for private investors but may be harmful to national income. Furtherance to this, Palley challenges the functional implication of unrestricted movement of capital suggested early on by Isaksson Using China as evidence, Palley argues that trade, financial development and FDI also take place even with restricted capital.
Besides the neo-classical perspective to capital mobility is deficient because it lacks enough data which present a robust positive relationship between capital mobility and growth Kose, Prasad, Rogoff and Wei, Besides this perspective overlooks the extent to which captivity mobility may influence political arrangements. This deficiency is apparently corrected by the neo-liberal political economic perspective. That capital mobility dominates the policy agenda so completely is indicative of the ideological dimension of the debate.
These organizations are peopled by high-paid international bureaucrats drawn from around the world, who own global investment portfolios, and have homes and family in more than one country. Adopting a strictly neoclassical standpoint suggests these bureaucrats have a strong private interest in capital mobility, which likely taints the advice these institutions provide. That alone is grounds for fresh public debate over capital controls bringing in the neo-liberal political economic approach.
The Neo-liberal Political Economic Approach The neo-liberal political economy perspective presents a relationship between the economy and the political institution and shows how economic arrangements affect the political organization. As Hayek mentioned capital mobility does not just enhance freedom but also helps to protect personal freedom by disciplining governments.
Narrowing down to capital mobility as the specific economic arrangement in question the neo-liberal perspective argues that it creates a competitive market sanity that improves the quality of governance. As found in the works of Tiebouts countries are disposed to improve the quality of governance if they realize that capital is being exiting into other countries with better system of governance.
In effect, the exit right of capital confers on it the power not only governments; but it changes policy and the structure of economy Crotty and Epstein, Palley argues that capital controls can contribute significantly to economic stability and create important space for autonomous national economic policy.
As a matter of fact, international capital mobility has increased notably in the past decades: on the one hand, the dispersion of international investments across different countries has increased; on the other hand, it tends to concentrate in a few regions within these.
The Neo-Marxian Approach Questions about the superficial functionality of globalization by neo-liberal economists and neo-liberal political economists had been raised by many decades ago in Marxist and Neo-Marxist analyses of imperialism i.
Slavery, colonialism and neo-colonialism using them as sources of uneven territorial development among countries. In the words of the Marxists globalization may not be essentially beneficial for some territories due to exploitation of one territory by another territory. Palley further maintains that even though financial deregulation aided in fill the capita demand gap it lasted a short while. Indeed the theory is no longer apt in analyzing development processes perhaps not only because of its monocausal character as Mandel argues but also because it is unable to distinguish among separate forces operating simultaneously Walker, In other words, even though capital mobility may operate as an isolated force in creating unequal relations between developed and developing countries Marxists failed to isolate the actual role of capital mobility in the unequal relations in their analyses.
Isolating the role of capital mobility Walker tries to correct the deficiency in the Marxist thought by suggesting that capital may use a location as a strategy against labour with local development becoming more dependent on outside capital as development comes in and goes out with capital generating a permanent reserve of stagnant places.
A review of the arguments of the neo-liberals and the Marxists has clearly showed the contrasting positions taken by each perspective. However, the arguments, in the remits of Social Structure Accumulation approach, are far beyond these two contrasting view points. Invariably, other issues are left unmentioned. In addition, the neo-Marixist and the neo-liberal perspectives have shown fundamental flaws in their analyses of the role of capital in economic development. These perspectives suffer from the tendency to exogenize indigenous social structure of countries receiving the capital.
Besides, they fail to contextualize the effectiveness of capital mobility to its appropriateness to local institutions of recipient of capital. Thus, broadening the scope in the neo-liberal and Marxists analyses of capital mobility, the neo-Marxian Social Structure of Capital Accumulation SSA believes that institutional arrangements and rules developed by political actors affect the cost and benefit of policy options. In this regard some new political economy ideas have been introduced in the literature giving rise to the neo-Marxian social structure accumulation approach.
The SSA approach suggests that firms which move capital from one geographical area to another use the threat of withdrawing their reduced standards that are socially and legally sought-after. According to him, whether such controls are well or poorly used depends on the quality of governance.
Neo-liberals tend to automatically assume they will be used badly and make that assumption a centerpiece of opposition against capital controls. He contends that a combination of democratic transparent accountable government, a professionalized civil service, and strong civil society can ensure that capital mobility controls are used well.
The neo-liberal concern with regulatory capture is real, but the answer should be the promotion of effective governance rather than abandonment of important policy tool. It is in this regard that Acemoglu and Johnson suggest that property rights institutions have a first-order effect on long-run economic growth, investment, and financial development. For example, the contract theory literature, starting with Coase and Williamson, , links the efficiency of organizations and societies to what type of contracts can be written and enforced and thus underscores the importance of contracting institutions see Hart and Moore ; Hart In contrast, other authors emphasize the importance of private property rights, especially their protection against government expropriation De Long and Shleifer ; Olson The second is Moderate Institutionalism inspired by the works of Krueger and Rodrik Subsequently, the works of Bonizzi has given refreshing lights on the role of regulation in promoting capital mobility.
Showing the relevance of the SSA approach to foreign aid, — another means through which capital mobility is crystallized, — new versions of analysis have emerged which has many appeals to this approach.
For example, following the failure associated with the overemphasis on neo-liberalism, Dominique Strauss-Khan and Robert Zoelick mentioned the need for renewed understanding of current challenges and the introduction of a new paradigm World Bank, ; IMF, This recommendation re-echoes some earlier recommendations by two models known as the socio-economic model and the political model. The socio-economic model recommends the need to introduce friendly packages that acknowledge the social structure and the socio-economic conditions of recipient countries see Bauer, ; Dzorbgo, ; Asamoa, , Easterly, ; Ninsin, The political model, on the other hand, acknowledges the importance of political institutions in ensuring the effectiveness of capital mobility.
This model calls for efficient political structures which offer credible governmental commitments of the recipient country as they implement IFI policy-related loans Marr, ; Burnside, ; Pankaj, The SSA approach has been rightly used in the works of Liu In his work, the role of capital mobility in economic development, using the agricultural sector as a case in point, presents readers with information about the dynamic and complex range of outcomes which emerge from capital mobility in various forms, levels and scopes.
Furtherance to his assertion, Liu hinted that whether this objective can be met will depend on a large number of factors including legal and institutional framework in the host country, the local context and the knowledge of policy makers.
These, according to Liu, are the ingredients which may enable investors to direct capital into the right kind of projects. In addition to this critique, the SSA model, specifically, suffers from the tendency to perceive the political structures as merely reactive to capital mobility; assuming that capital will be effective if political structures promote private property rights, competitive market and contract enforcement.
Additionally, the model suffers from the tendency of falsely perceiving capital mobility as value-neutral and that it causes harm only when political institutions fail. Such a false perception has been uncovered by studies which suggest that capital causes more harm than good irrespective of the effectiveness of political institutions see Boone, ; Svensson, ; Vreeland, ; Remmer, ; Lal, ; and Sorens, In other words, capital mobility is essentially value-laden.
Besides, the socio-economic model displays another striking deficiency by failing to contextualize the effectiveness of capital mobility to its appropriateness to local institutions. In other words, they assume foreign aid is effective only if it is suitable for local institutions and social structures. These deficiencies found in the neo-Marxist, the neo-liberal perspective and the Marxian social structure accumulation approach have been corrected by the new political economy insights which introduce some amount of heterodoxy in the analysis of capital mobility, in particular, and development discourse in general.
The Heterodox Political Economic HPE Perspective Heterodox political economy perspective makes a case for the role of other institutions and other social arrangements which are neither essentially legal nor economic nor political. Hence, the heterodox political economy perspective holds the view that the role of globalization expressed in capital mobility as a tool for reengineering regional economic development processes is habituated in social conditions.
This perspective suggests that geographical economic development may rely not only on the availability of natural resources, economic and political factors. Rather, improved infrastructure such as development of transportation and communication systems may influence the pace at which capital mobility occurs and eventually affect regional economic development process Marx, ; Kinda, Extending its scope, this perspective further notes that enhancement of capital mobility is equally hinged on the non-physical aspects.
In the literature it is apparent that fast-growing locations are not closed and independent economies, but rather they are, most likely, those area hosting MNEs having financial capabilities ranging from their sales efforts to reduced turnover time on fixed capital Harvey, as well as organizational innovation Walker, ; Howaldt and Schwarz, ; Neumeir, all of which crucially connect the region with foreign markets and resources.
Beyond the organizational novelties, social processes are equally involved in the spread of particular means of production and patterns of consumption Snyder, Thus, the spread of globalization through capital mobility may be contingent on social conditions as well.
As Piore and Sabel contend flexible specialisation, trust and face-to-face social relations are fundamental requirements for regional economic success in an era of global economic expansion spawned by capital mobility. It is therefore clear that the mobility of capital and its improvement thereof are hinged on a deep interrelationship between both physical and non-physical factors cutting across economic, political and social spectra.
Following are some research works which bring out how some key social ingredients which may influence the extent to which capital may flow and its possible implications for economic development. First, the political economy heterodoxy of capital mobility is also understood in the works of Pope Hence, at the center of the capital mobility-development nexus are the issues of class, race and gender.
In the works of Sorens much emphasis is displayed on how subjectively inclined actions and inactions of political leaders can either expose a country to or keep it unscathed from the challenging outcomes of the conditionalities associated with capital mobility financial aid from IFIs. In other words, the interpretation political actors attach to capital mobility may affect its developmental outcomes. Jessop brings extended aspect of the interpretative aspect of the political economy heterodoxy earlier on mentioned in the works of Sorens.
It is that aspect of heterodox political economy approach that relishes the inherent subjectivities of not only economic actions and phenomena but political structures and institutions. As a very recently introduced analytical approach, cultural political economy tries to synthesize contributions from the critical political economy and the critical analysis of discourse which are usually employed in the field of policy studies.
As found in his works, Jessop , , have provided rich exhibitions to such synthesis. Generally, the works show how the culture of interpretations plays out in the political economy of development. In effect, the focal point of cultural political economy is the incorporation of interpretations, as found policy discourses as well as political and economic imageries, in the analysis of how strategies and projects are institutionalized.
Jessop and Sum highlight the relevance of the cultural dimension understood as semiosis or meaning making in the interpretation and explanation of the complexity of social formations such as policies.
This clearly suggests that policy formulations are supposed to be undergirded by interpretations. First, he assumes that policies always reflect selective interpretations of the nature of problems, character of events, explanations of their cause, the anticipated effects, and preferred solutions. It implies that the role of capital mobility in influencing economic development will be facilitated or hampered by the constructed interpretations of the political and economic actors about the policies that would either sustain or prevent capital mobility.
The perspective introduced by Jessop would have massive implications for usefulness to economic development planning to him by paying specific attention to the role of a particular set of policy actors policy advisers, knowledge-brokers, industry players and think tanks and the mechanisms of persuasion and construction of meaning soft power that the use to influence the perceptions of other actors.
The CPE encourages that policy makers and policy actors in general, need to selectively attribute meaning to some aspects of the world rather than others and engage with pre-existing interpretations of the problems and solutions available to them in the decision-making process.
All such established perspectives and approaches fail to explain and predict essential and uncertain crises and changes relative to capital mobility. This has given rise to a new approach as the agency-based approach which equally operated within the realm, of political economy heterodoxy The agency-based approach recognizes that capital mobility may be constrained by financial crises leading to some developmental challenges.
As assessment of the financial crises that may constrain capital flow shows how everyday interactions, radical uncertainty, and limited human anticipation capacities combine to create sudden financial chaos. The flow of capital and its usage goes beyond interpretations and focus on human reminiscences and imaginations. In her seminal write up it would be argued that capital mobility is a function of the desire for the use of capital as means to engage in economic restructuring of nations hence the desire to see underdeveloped countries experience economic development is revealed as the function of the flow of capital from one society to the other.
Though both the CPE approach and the agency-based approach embrace the human narrative the agency-based approach expands the CPE approach in great respects. Synchronizing the political economy approaches related to capital mobility and economic development Coe, Hess, Yeungt, Dicken and Henderson assert that economic development is not a product of inherent regional advantages alone. Rather, as mentioned by Henderson, Coe, Hess, Yeung, and Dicken , the role of capital mobility depends on the suitable or inhibiting social, cultural, human, political and economic conditions that may exist in the host country and the original source of the capital.
Table 1 shows a summary of the proponents and the arguments of the various perspectives and the main issues they address. Table 1: Arguments of the Political Economy Perspectives Conclusion: Synthesis of the Perspectives Given the fact that capital mobility plays a crucial role in shaping economic development processes indeed the traditional idea that lends credence to the role geographical mobility cannot be ruled out.
However, it apparent that it is not geographical proximity per se that causes growth, but it is an important factor shaping the location behaviour of economic agents as well as the intensity of linkages between them. Thus, in this paper, I sought to bring out the political economy perspectives that would provide a detailed insight about the dynamics surrounding the capital mobility-economic development nexus.
Indeed capital mobility may have some favourable economic and political outcomes. Nevertheless, Capital mobility may have both threatening and challenging outcomes. Beyond the role of geographical proximity, the social structure and the quality of the institutions play very crucial roles in determining the flow of capital to recipient societies and the outcomes theoreof. At this point it will suffice to argue that the role of capital mobility in economic development may depend on how global production and distribution networks and regional assets are coupled to stimulate value capture, value creation and value enhancement of commodities and services.
It is important to create a more dynamic political economy framework within which capital mobility-economic development will be analysed at a time when capital mobility is becoming more nuanced and complex in terms of geographical origin and destinations, actors and the intentions. This calls for introduction of new approaches to the already existing orthodox classical, neo-liberal and the Marxist and social institutional approaches New Political Economy and Moderate Institutionalism.
The new approaches provide a synthesized political economy approach which appeal to sociological, political, economic and geographical intuitions, in terms of which capital mobility could be largely recognized as a relational and interdependent process involving a combination of the opportunities which the global economic arrangements will present and the character of local institutional arrangement in the region in adapting the real opportunities which may produce what they refer to as interactive effects.
Besides, the inclusion of these new approaches to the orthodox approaches enriches the quality and strength of the analytical tools which explain the complexities in the reconfigured capital mobility regime.
Hence, the extent to which capital is moved about into a host society and their implications thereof is determined by a host of natural, political, social, cultural, economic as well as human desires, interpretations, memories and imaginations forces which could be regulatory and non-regulatory, tangible and intangible a well as structural and interpretative in character.
For this reason, none of the political economy perspectives is capable in answering all questions related to capital mobility the analytical deficiency each may possess. Indeed the ability of a perspective to explain an issue related to capital mobility depends on the assumptions which emerge from the aspects of capital mobility a proponent of a perspective may choose to discuss.
However, given the complex narrative associated with the capital mobility and economic development it will be important to synthesize the political economy theories and approaches into a coherent whole to create a more nuanced picture.
On this score, a holistic approach to the discussion of capital mobility would require a synthesized perspective which recognizes the role of structural and human narratives as ingredients that shape the texture, direction, quantum and effects of capital mobility in any economic development trajectory.
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