Theories of Economic Development

Why This Matters

Understanding theories of economic development is essential for AP Human Geography because these frameworks explain why global wealth is distributed so unevenly and what forces keep some regions prosperous while others struggle. You're being tested on your ability to analyze spatial patterns of development, core-periphery relationships, and the role of globalization—and these theories provide the conceptual vocabulary you need to do that effectively.

These theories aren't just academic abstractions—they shape real policy decisions that affect billions of people. When an FRQ asks you to explain development disparities or evaluate strategies for economic growth, you need to know which theory applies and what it predicts. Don't just memorize names and dates; understand what each theory blames for underdevelopment and what solutions it proposes. That's what separates a 3 from a 5.

---

Core-Periphery Frameworks

These theories focus on how global economic relationships create and maintain inequality between wealthy and poor nations. They argue that development isn't just about individual country choices—it's about position within a global system.

World-Systems Theory

• Divides the globe into core, semi-periphery, and periphery—developed by Immanuel Wallerstein to explain how capitalism operates as an interconnected global system
• Core nations extract wealth from periphery nations through unequal trade relationships, keeping peripheral economies dependent on raw material exports
• Semi-periphery acts as a buffer zone—countries like Brazil or South Korea that have characteristics of both, providing stability to the overall system

Dependency Theory

• Blames underdevelopment on colonial exploitation—argues that poor countries aren't "behind" but were actively underdeveloped through resource extraction
• Core-periphery relationship is structural, meaning developing nations face built-in barriers that prevent them from following the same path as wealthy nations
• Directly critiques modernization theory for ignoring how colonialism and unequal trade created the conditions that keep countries poor

---

Linear Development Models

These theories propose that all countries follow a predictable path from traditional to modern economies. They tend to be optimistic about development but face criticism for oversimplifying complex processes.

Rostow's Stages of Growth Model

• Five stages from traditional society to high mass consumption—the most testable development model, appearing frequently on multiple-choice questions
• "Take-off" stage is the critical turning point when industrialization begins and growth becomes self-sustaining through investment and technological change
• Criticized for Western bias and oversimplification—assumes all countries can replicate the Western path without acknowledging colonial history or structural barriers

Modernization Theory

• Societies progress from traditional to modern through adoption of Western technology, values, and institutions
• Industrialization is the engine of development—argues that shifting from agriculture to manufacturing transforms economies and societies
• Western nations serve as the development model—controversial assumption that ignores alternative paths and cultural differences

---

Market-Based Approaches

These theories emphasize internal factors and free-market mechanisms as the primary drivers of economic growth. They focus less on global exploitation and more on domestic policy choices.

Neoliberal Theory

• Advocates free markets, deregulation, and privatization—became dominant in the 1980s through institutions like the IMF and World Bank
• Globalization promotes growth by opening markets, attracting foreign investment, and increasing efficiency through competition
• Critiques government intervention as inefficient and corruption-prone, arguing that market forces allocate resources more effectively

Endogenous Growth Theory

• Growth comes from internal factors—especially human capital, innovation, and knowledge accumulation rather than external trade relationships
• Education and R&D investment drive development—suggests countries can grow by investing in their own people and technology
• Policy matters significantly—governments can boost growth through strategic investments in research, education, and infrastructure

---

Spatial and Geographic Approaches

These theories bring geography back to the center, examining how location, agglomeration, and transportation costs shape where economic activity concentrates.

New Economic Geography

• Location determines economic outcomes—developed by Paul Krugman to explain why industries cluster in specific places
• Agglomeration economies create self-reinforcing growth—when firms locate near each other, they benefit from shared labor pools, knowledge spillovers, and specialized suppliers
• Transportation costs and market access explain why some regions develop while others remain peripheral—central locations with good infrastructure attract more investment

---

Alternative and Critical Perspectives

These theories challenge mainstream development thinking, questioning whether Western-style growth should even be the goal and proposing alternative frameworks.

Sustainable Development Theory

• Development must not compromise future generations—balances economic growth with environmental protection and social equity
• Integrates economic, social, and environmental goals—rejects the idea that countries must choose between growth and sustainability
• Emphasizes equity and environmental stewardship—argues that development should reduce inequality while protecting natural resources

Post-Development Theory

• Critiques the entire concept of "development"—argues that Western development models impose foreign values and destroy local cultures
• Prioritizes local knowledge and practices over imported solutions from international institutions
• Calls for pluralistic approaches—suggests there's no single path to well-being and communities should define progress on their own terms

Institutional Theory

• Strong institutions enable growth—emphasizes that formal rules (laws, property rights) and informal norms (trust, social capital) shape economic outcomes
• Governance quality matters more than resources—explains why resource-rich countries often underperform while resource-poor countries succeed
• Property rights and rule of law create the stability businesses need to invest and innovate

---

Quick Reference Table

---

Self-Check Questions

1. Which two theories both use core-periphery frameworks but differ in their emphasis on capitalism as a global system versus colonial exploitation?

2. How would a Dependency theorist critique Rostow's Stages of Growth Model? What structural barriers would they argue the model ignores?

3. Compare Neoliberal Theory and Endogenous Growth Theory: what role does each assign to government in promoting development?

4. If an FRQ asked you to explain why industries cluster in certain regions rather than spreading evenly, which theory provides the best framework and what key concepts would you use?

5. A country wants to pursue economic growth while protecting its environment and reducing inequality. Which theory best supports this approach, and how does it differ from Post-Development Theory's critique?