Faculty / School
School of Economics and Social Sciences (SESS)
Department
Department of Economics
Was this content written or created while at IBA?
Yes
Document Type
Article
Source Publication
Journal of Gender and Social Issues
Keywords
Economic,Future development,New paradigm
Disciplines
Business
Abstract
Since the late 1940s when the developing countries started gaining independence, development literature was dominated by pessimists who believed that these countries were condemned to live in poverty, hunger and illiteracy. Prebisch-Singer hypothesis advanced the proposition that the developing countries produce agricultural commodities whose demand by advanced countries would be limited while they have to rely upon the advanced countries for imports of industrial products. Therefore, the primary commodity exporters would continue to face a secular decline in terms of trade due to a combination of low income and price elasticities of demand. This decline would transfer income from poor to rich countries and thus contact with the international economy was detrimental to the welfare of the developing countries and would retard growth keeping these countries entrapped in poverty. They proposed that the only way to avert this tendency was to protect domestic manufacturing industries by pursuing import substitution strategy. India under Nehru, a Fabian Socialist took the lead and adopted a centrally planned, Command and Control economy dominated by the public sector and an inward looking industrialization behind high tariff walls. Other countries followed the Indian example. The Cold War between the Soviet Union and the US also brought to fore the two alternative economic models i.e. centrally planned allocations and market based allocations of resources. AS the Soviet economy was growing relatively rapidly, newly independent countries wanted to shun the capitalist model which they associated with colonialism and neocolonialism, the theoretical insights provided by Nurske, Singer and Prebisch guided the leaders of the newly independent countries. Unfortunately, the evidence over the next quarter of century proved that the protectionist strategy failed in achieving the objectives of accelerated growth and poverty reduction. Academic research based on country case studies and the successful experience of Korea, Taiwan, Hong Kong, Singapore followed by Malaysia, Thailand, Indonesia, Brazil and then China demonstrated that access to the markets of advanced countries resulted in higher export earnings that augmented their foreign exchange
Recommended Citation
Husain, I. (2022). Towards a new paradigm for future development pathway. Journal of Gender and Social Issues, 21 (2), 93-100. Retrieved from https://ir.iba.edu.pk/faculty-research-articles/219