SPECIAL NUMBER JULY 1959 THE ECONOMIC WEEKLY The Economics of Underdevelopment — A Tentative Appraisal Arun Bose In the course of the past fifteen years or so, a separate branch of economic theory has emerged, which could roughly be labelled the economics of underdevelopment. The literature is already voluminous, still growing fast, and riddled with debate. But there is no "settled body of doctrine" yet in this field. Any "appraisal", therefore, needs must be tentative. It is the writers contention, however, that this new literature has discovered, as it were, a terrain neglected by explorers of the past and lighted up many dark corners. Moreover, by putting together these new ideas, after suitable reinterpretation, we can say that a useful conceptual frame-work is about to emerge. I The second question requiring an derdevelopment equilibrium trap", answer is: compared to what desir­ in contrast to the advanced coun­ Underdevelopment Equilibrium able level of development are the tries which develop spontaneously THE point of departure is the con­ backward countries underdeveloped? automatically. The former are cept of "underdevelopment equi­ The answer explicit or implicit in caught in a "vicious circle" while librium" which, it is almost unani­ these writings is: compared to the the latter face no such problem. The mously recognised, afflicts a large level of development achieved by gap between the advanced and the number of contemporary societies. the most advanced countries. Of backward countries has been con­ course, semantically, even the most stantly widening. Consequently, The first idea that has emerged is advanced countries are "underde­ judged at any time by the level that all major countries have a po­ veloped" in the sense that they are reached by the advanced, the back­ tential for development: those that developing rapidly and have a fur­ ward countries remain "underdeve­ have not developed, but can, are ther potential for development. Mr loped". The usefulness of this idea "underdeveloped". Stated in this way, M H Dobb is perhaps the sole ex- is fairly clear, as far as the problem of course, the idea is imprecise, and ception, but even he has not built of the "widening gap" and "under­ begs two questions. in the implications of his declining development equilibrium" is concern- One question is: how is the "level rates of growth in advanced capital­ ed. More questionable is the impli­ of development" to be measured, at ist countries Into his framework of ed absence of "vicious circles" in least "ordinally", if not "cardi­ analysis of the economics of under­ advanced capitalist countries and nally"? There are difficult problems development (Maurice Dobb: 'Some the assumption that development here, encountered also in other Aspects of Economic Development', there is completely ''automatic", branches of economic theory, e g. First Lecture). The majority as­ requiring no deliberate, purposeful modern welfare economics and mo­ sumption is brought in without intervention by "non-market forces". dern academic theory of a socialist proof, evidently because it is con­ However, if we assume this merely economy. Some writers have laid sidered to be a reasonably safe ex­ to imply that deliberate "Keynesian remedies" have become almost an almost fatal stress on these pro­ trapolation of current trends. Even "automatic" in advanced capitalist blems (Bauer & Yamey: 'The Eco­ to sceptics this procedure may per­ countries in recent years, on ceteris nomics of Underdeveloped Re'gions'). haps be justified as a valid assump­ paribus principles mentioned above, One does, however, get the broad tion for the time period in which this assumption may perhaps be impression, that most writers work the problem of "internationally allowed to pass in the present con­ on the assumption that the stand­ backward areas" is expected to be text. ard of living (in terms of average solved, whatever may hold in the per capita income, however measur­ longer run. But a more satisfactory Contrast is also drawn often bet­ ed) and the average level of tech­ justification is perhaps the need for ween "underdevelopment equilibri­ nique is a useful rough-and-ready some kind of a "division of labour" um" in backward countries and measure of the level of development between the theories of development "self-sustained growth" in advanced for the kind of analysis required in of underdeveloped economies on the capitalist countries (W W Rostow: this branch of theory. Average per one hand, and of the development 'The Take-off into Self-sustained capita income is taken to be a good of developed economies on the other. Growth', The Economic Journal, indicator of the living standard of At the present stage of develop­ March 1956). This, too, is a little the masses, though Professor Viner ment of these theories, each can misleading. Even those who employ apparently strongly disagrees (Jacob perhaps better start with ceteris this term do not mean by it "autar­ Viner: 'International Trade and paribus assumptions concerning the kic growth" implying complete ab­ Economic Development' Ch VI). other (which is what is usually sence of international economic Most students would probably agree done). interactions (which would be utterly that such a rough measure is all 'Underdevelopment Equilibrium Trap' unrealistic, even for the Soviet that is needed. It would he a pity model). if the interesting results of this kind The point seems to be—and this of analysis were to be thrown on is methodologically extremely con­ Most writers do, however, tend to the scrap heap simply because of venient—that the underdeveloped ignore the role of interaction bet­ this initial hurdle, countries remain caught in an "un­ ween the advanced capitalist coun- 986 THE ECONOMIC WEEKLY SPECIAL NUMBER JULY 1959 tries of today and the backward level of prosperity". He rather re­ Ill countries at the time of the indus­ gretfully concedes, however, that trial revolution, which took place "where agriculture is prosperous The "Ego-Focused" Image of either directly, as in the case of not only do tertiary or service indus­ Western Industrialisation England or indirectly, as in the case tries tend spontaneously to grow, How exactly did the development of the USA. Apart from Marx, but there is a widespread tendency of the advanced capitalist countries important exceptions among mo­ to use disposable surplus income de­ arrest the development of the back­ derns are, of course, Mr Dobb (op rived from agricultural prosperity to ward? cit) and Mr M Bronfenbrenner subsidise uneconomic urban indus­ ('The Appeal of Confiscation in try". The result is that the overall The first is obviously by imposi­ Economic Development', Economic level of per capita income, while tion or imitation of Western ca­ Development and Cultural Change, still comparatively high, is lower pitalist institutions and private en­ April 1955). The excuse for ignor­ than it would he if urban industry terprise. Imposition was obviously ing these interactions is perhaps the were not artificially stimulated important wherever there was belief that the economics of the in­ (Jacob Viner, op cit). On this view, complete political control by Western dustrial revolutions of the nine­ the cause of underdevelopment is powers. But even where political teenth century really do not belong not the preponderance of non-agri- control was slack or indirect, there to the economics of underdevelop­ cultural activity, but the absence of was in operation a powerful "inter­ ment (which is concerned with the "prosperous*' agriculture, or perhaps national demonstration effect" of recent past and the present). And prosperous agriculture frustrated by what Professor Hirschman has re­ in recent times, the development of the "craze'' for industrialisation cently called the "ego-focused", the advanced capitalist countries (although the latter pattern is ad­ over simplified Schurnpeterian image has been "self-sustained" in the mitted to yield a ''comparatively of industrialisation in the advanced sense that mutual inter-dependence high level of per capita income"). capitalist countries, ( Albert O between the advanced capitalist Few writers, however, follow Pro­ Hirschman: 'The Strategy of Eco­ countries has been more important fessor Viner on this particular point, nomic Development".) This was na­ than their economic relations with and for reasons of space we shall tural because, neglecting variations the backward countries. Once again, omit a refutation of this view on which can be neglected as unim­ therefore, the ceteris paribus prin­ obvious realistic grounds, noting at portant for bringing out the special ciple can perhaps justify the .simpli­ the same time that, we have here a point now under consideration, until fied contrast between "underdeve­ salutary, though vague warning successful Soviet industrialisation lopment equilibrium" on the one against the dangers of "over-indus­ in the 1930s, the success of the hand and "self-sustained growth" trialisation" in the modern world. industrial leaders of the world, not on the other. excluding Japan, could very well be The proximate cause having been explained in terms of the efficacy Once the concept of "underdeve­ agreed upon, it is a question of spot­ of Western private enterprise as an lopment equilibrium" has been ac­ ting the "causes" of this cause. As engine of growth. cepted as useful, the question at once indicated above, it is possible to Now this is not quite the way in arises: what are its causes? It will present this part of the findings by which most writers who are really be argued in the sections following elaborating the central idea that making this point, put the matter. that explicitly or implicitly, the idea the very development of the ad­ The political factor of imposed emerges from most writings that vanced capitalist countries in the Western institutions is ignored by the very development of the advanc­ past century has pushed the others them. The term "international de­ ed capitalist countries in the past into "underdevelopment equilibri­ monstration effect" of Western century or so has kept the laggards um".