Liberals see the key factors in development as the efficient use of scarce resources and economic growth, which they often define as an increase in a state’s per capita income. Beyond these broad areas of agreement, the liberal development school “lacks a central unifying, theoretical argument.”60The
division between orthodox and interventionist liberals is also evident among development theorists.
Liberalism and North–South Relations 93
Orthodox Liberals and North–South Relations
Orthodox liberals devote little attention to North–South distributional issues because they assume that international economic relations are a positive-sum game and that interdependence has a mutually beneficial effect on states. Indeed, orthodox liberals often argue that North–South linkages provide more benefits to LDCs than to DCs. The sections that follow outline the orthodox liberal views regarding domestic and external determinants of development.
Domestic Development Factors Orthodox liberals assume that development
problems stem largely from inefficient LDC policies. Although liberal
modernization theory of the 1950s–1960s was considered to be passé by the
1970s, its precepts continue to influence orthodox liberal thought. Moderniza- tion theory asserts that the DCs achieved economic development by abandon- ing traditional practices and that LDCs must also replace their traditional practices with Western norms and institutions if they are to achieve develop- ment; for example, a system of rewards for innovation is essential because it helps generate surpluses that contribute to increased investment and self- sustaining growth. Although the changes required may produce dislocation and hardship, there are greater rewards and opportunities for societies that successfully modernize.61Most scholars today would concede that the terms
traditional and modern are imprecise and that “modern” values and practices
are not always superior to “traditional” ones. However, orthodox liberals continue to believe that the main factors hindering LDC development are domestic. In their view, Western states that protected private property rights successfully industrialized, and LDCs that do not enforce these rights hinder foreign investment and development. LDCs should permit private producers to operate freely through the price mechanism and should rely on governments only to provide national security, education, and services to improve the functioning of markets.62
Paths to Development Although some modernization theorists suggested that
LDCs might follow different routes to development, most modernization theorists were deterministic, advising the South to follow the same path to development that the North had taken.63For example, one theorist wrote that
the Western development model “reappears in virtually all modernizing societies of all continents of the world, regardless of variations of race, color, or creed.”64 Walt Rostow’s book The Stages of Economic Growth was highly
deterministic, claiming that societies move through five stages on the path to modernity: traditional society, the preconditions for takeoff, the takeoff, the drive to maturity, and the age of high mass consumption.65Despite the initial
appeal of this model, Rostow’s predictions regarding LDC growth were overly optimistic, and it was difficult to apply his stages to specific LDCs. For example, Rostow argued that an LDC’s growth would become self-sustaining when it reached the takeoff stage; this prediction raised false hopes that LDC development was readily achievable and irreversible. Critics of modernization theory point out that the challenges facing LDCs today are very different from
those confronting early developers. Southern development cannot be a repeti- tion of the earlier Western model because of globalization, MNCs, and the difficulty in competing with the North.66 Despite these criticisms, orthodox
liberals continue to view the Western model as the only legitimate path to development. In the late 1980s, one liberal wrote that “third-world countries are much like those of the first world and will, with a modicum of external aid and internal stability, follow in the path of their predecessors,” and another predicted that we may be witnessing “not just the end of the Cold War” but “the universalization of Western liberal democracy as the final form of human government.”67
External Development Factors Internationally, orthodox liberals view North–
South relations as a positive-sum game that benefits the South, and they often argue that “the late-comers to modern economic growth tend to catch up with the early-comers.”68 The South requires foreign investment, the diffusion of
advanced technologies, and export markets. Thus, LDCs that achieve develop- ment are integrated in the global economy through freer trade and capital flows, whereas the least developed LDCs have few trade and investment linkages with the North. Orthodox liberals believe that the East Asian NIEs developed rapidly in the 1960s–1980s because of their market orientation. Thus, Milton Friedman and Rose Friedman wrote in 1980 that “Malaysia, Singapore, Korea, Taiwan, Hong Kong, and Japan—all relying extensively on private markets, are thriv- ing,” while “India, Indonesia, and Communist China, all relying heavily on central planning, have experienced economic stagnation and political repres- sion.”69Realists by contrast see government– business cooperation and selective
government involvement as the key to East Asian economic development. Chapter 10 examines the liberal–realist debate on this issue.