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Rostow's Stages of Growth:

economic mechanism by which more investment leads to more growth can be described in terms of the Harrod-Domar Growth Model - save, and if domestic saving is too low increase the foreign aid

today often referred to as the AK model

CRITICISM Rostows Model: it sounds like a "narrative" of todays rich countries, it is based on the assumption that it is the only possible way (backed by the modernization theory)

it ignores the international context which is completely different today

the Theory is silent about mechanics of development process, so which factors are needed to give the certain push to enter next stage?

view that capital accumulation is key in the process

but how to transform savings into investment?

The Lewis Theory of Development

Criticism:

all assumptions are rather implausible: ignorance of labor saving investments, rural surplus of labor is optimistic, ignorance of wage raising institutions in the urban sector and diminishing returns in the urban sector

Difference to Rostow: "Less prescriptive, more on casual mechanisms, structural change, sectoral interactions" but not more relevant, assumptions do not fit reality today

The International-Dependence Revolution

Criticism: No insight how countries initiate and sustain development

experience of countries who tried ISI and state-run production has been mostly negative

The Neoclassical Counterrevolution: Market fundamentalism

Flexible prices definitely important in order to achieve efficient allocation, but many non-market goods need to be provided and price adjustment may need time to happen

Markets alone are quite myopic (kurzsichtig): policies to help markets achieve dynamic efficiency, number of public goods are core of economic growth, state should avoid extreme inequalities

more recent approach: recognizes market imperfections and attributes government key role, it also realises phenomena such as incomplete information, externalities and economies of scale, new or endogenous growth theory and coordination failure approach are partly based on these insights