1. Initial Efforts 1945 - 1960
Efforts towards developing the ,,underdeveloped countries",
as was then said, were initiated during the period following
the Second World War. For the first time, humanity thought
on a worldwilde scale. After the turmoils of World War II,
the people were seized by a desire for harmony. They wanted
to improve the world. The rich in ,,the one world" should
help the poor so that these could also live happily. It was
the time of decolonization, and feelings of guilt about the
conditions in which the countries were released into independence
may have played a role. In the United Nations, the young states
were given a platform for expressing their wishes and soon
a rapid economic development became the declared objective
of these countries' governments.
A few years later there was an additional motive: during
the period of cold war it was thought that these people's
misery would conduct them to communism, and help for combatting
poverty would retain them for the free world. At that time
the general opinion was that the problem of development could
be solved rapidly. Economists and politicians considered development
synonymous with growth of national income. The cause of underdevelopment
was seen in the lack of necessary factors of production, especially
capital and training. Consequently, capital and technical
aid became the instruments of development policy. According
to the example set by industrial countries a rapid industrialization
— which did not seem to be connected with specific socio-cultural
systems — was considered to be the promising way to
development. The scarcity of capital for this industrialization
and possibilites of overcoming it were the main subjects discussed
by the development theoreticians of that time.
According to Harrod (9) and Domar (6) the growth rate depends
upon the savings rate and, since the latter is insignificant
in poor countries, capital aid should cover the shortage of
funds — as the Marshall Plan did for Europe. In 1956
Lewis (21) saw that a rapid expansion of industry would lead
to a greater accumulation of capital and, thus, to a further
industrialization that would withdraw surplus labour from
the traditional agrarian sector. In the initial phase the
task of agriculture in these two-sector-models was to release
labour together with a marketable surplus in order to keep
the wage level low and allow high profit rates. This would
result in high growth rates for industry. Aid in small doses
would not be sufficient. Due to the indivisibility of investments,
Rosenstein-Rodan (31) was of the opinion that a ,,big push"
is necessary to achieve effects. In 1956, Rostow (32) put
forward his theory of growth stages which met with great resonance.
According to this theory, the transition from underdevelopment
to development can be described as a series of stages through
which all countries must proceed. One of the principal necessities
for any take-off is seen in the mobilization of savings in
order to generate sufficient investment to accelerate economic
growth. At each stage a particular 'leading sector' has to
play the decisive functions.
At a time when rapid industrialization was considered to
be the appropriate way leading to development, great importance
was not attached to agriculture. In the industrial countries
the experience had been made that, as development increases,
the share of agriculture in the overall economy decreases.
This results from the fact that, as income increases, the
share spent on food becomes less and less significant and,
as labour productivity goes up, fewer and fewer people can
assure the necessary agrarian production. According to Boeke's
(3) dualism theory, development policy ought to support the
necessary structural change, repress the traditional agrarian
sector and transfer the surplus labour from traditional agriculture
to industry — the motor of growth. The thesis, advanced
by Prebish (28) in 1949, that the terms of trade between industrial
and agrarian countries had deteriorated, allowed few opportunities
to be assumed for growth on the basis of agrarian products.
Due to the price decline for their products, the poor countries
had to constantly increase their exports to be able to pay
for an unchanged amount of imports. According to Bhagwati
(2) instead of growth a real immiserizing growth is achieved.
In 1958 Hirschman (11) argued that agriculture did not provide
many incentives to suppliers and processors to take up new
activities and that, as a result, investments into industry
were more appropriate to achieve a rapid growth.
Within the framework of these concepts which did not attach
great importance to agriculture, agrarian policy, including
that of FAO, had two main objectives: to increase food supply
to the production level achieved in the pre-war period and
to raise farm income. At the time, both were, to aconsiderable
extent, successful. Under the methodological aspect, emphasis
was laid on transferring production methods, which were common
in industrial countries, by means of extension and model farms
as examples of modern agriculture. However, the farmers' reaction
to extension was often insignificant, not least because it
offered innovations that were not very profitable. Therefore,
theory characterized the farmers as being tradition-minded.
During the whole of that growth-oriented period, discussions
as to who draws the benefits from this growth were scarce,
and the poor people were mostly neglected. Indeed, the opinions
differed: Nurkse (27) believed, as early as 1953, that the
limited demand in the poor countries was a more serious cause
of the few incentives to invest than was the lack of capital.
In 1957 Myrdal (26) turned, for the first time, against explaining
underdevelopment merely under the economic aspect and demanded
a comprehensive analysis of all social relations at the national
and international level. However, the greatest deviations
from the growth-oriented development strategy occurred on
grounds of political considerations. During the time of the
'cold war' a non-revolutionary way of changing the rural areas
was sought in the concept of community development, which
made use of the experiences of social sciences. The mere transfer
of western concepts caused the success to be limited, and,
as the divergences between East and West were mitigated, the
importance of these programmes declined. Around 1960 there
was no theory competing with a growth concept based on rapid
industrialization which agriculture should support by supplying
capital and labour.
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