Drawing Upon Theory of Growth and Development (Essay Sample)

DRAWING UPON THEORY OF GROWTH AND DEVELOPMENT
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Thesis Statement
Economic growth and development are important aspects in the analysis of various business entities. This is because, it helps to evaluate the trajectory that various entities follow in order to grow and develop to a point that they are able to dominate the economy they operate in. This aspect can be effectively explained by various theories and models which have been developed to help in this analysis. It is therefore, the role of this paper to study the theories and evaluate them based on the context of Chinese and United Kingdom`s industries.
Introduction
In several instances, scholars have had debates and contentions about what economic development and economic growth implies. One group had the opinion that the two implies to the same thing where as other still hold a divergent opinion (Bader, 2001). On this account, an analysis of these two terms reveals that there is wide distinction, but much related conception of what they imply. This serves as the major point of confusion when elaborating and defining the term economic development and economic growth (Kiely, 2000).
Economic growth is viewed to be the increase in total production capacity of an economy. This form of increase is either encountered in the total production ability of an economy, or generally in its per capita income. This is because per capita indicates the income per head based on the wealth creation ability of an economy (Routledge, 2003).
On the other hand, economic development tends to have contradictory explanations. It is actually the reverse or the opposite of what economic growth is, but instead it acts to the positive end. This implies that economic development pays attention to certain aspects which are not properly evaluated by economic growth (Bader, 2001). In this article therefore, economic development is seen to be the economic growth which takes into consideration changes which takes place in both cultural as well as social aspects.
In this case it is very easy to theorize and analyze aspects dealing with economic growth as compared to economic development. This is because economic growth is concerned more with quantitative aspects of the economy unlike economic growth, which is oriented towards abstract feature of the same economy. The distinction about the two is also clear in the sense that one is concerned about the human aspect of the economy, whereas the other is putting emphasis on the nonhuman aspect of the economy (Kiely, 2000).
Discussion
Different nations are based on the various structured theories on economic growth and development and follows distinctively different paths to achieve economic growth. Other nations in their growth and development took a more capitalistic approach, whereas other retained their culture of communism and socialism to achieve the same end. This form of distinction has been the fact behind development of certain theories as well as the reason why other have been criticized (Nederveen, 2001). For instance, when growth path of both China and United Kingdom are analyzed there is a big contrast on how they managed to achieve their stability. This can be seen in the different approach that these two economies adopted yet they still managed to achieve the same end and that is both economic growth as well as economic development.
Comparison based on the liner stages theory of Rostow.
Rostow’s views, as well as his contemporary theorists of the 1950 and 1960s, hold that all the developed and industrialized nations with greater economic growth, went through a series of stages in order to be able to attain such position. In his view, he stipulates that at one point all the world nations were not developed or rather underdeveloped. They operated peasant agricultural based economies, which had a lot of uncertainties in both human welfares as well as wealth accumulation (Routledge, 2003). For instance China during the period between 15th to 16th centuries, it encountered collapse of feudalism and legislative authority was transferred to local kings from nobilities (Routledge, 2003).
How the theory works.
This theory works in that, during the traditional society stage most economies employ primitive production systems. These production systems do not allow them to enhance their production in the quantity enough to feed them and result in a surplus. Therefore, such societies are characterized by the practice of economic activities such as agriculture. The central political rule according to Rostow is dominative in the social structure of these societies and this makes them have limited transformation or growth. China`s economy encountered this before Ming dynasty between 1368-1644 (Bader, 2001).
He also stipulates that at this stage, the clan as well as the family, has a significant part to play in the determination of the social organization of the society. This intern affects the production systems in the economy because the economy is majorly controlled by the land owners. Such conditions based on Rostow`s analysis took place in the United Kingdom and many other nations which have attained the mass consumption stage during the medieval periods. This can also be seen through dynasties in a country like China, for instance during the Ming dynasty, contact between east and west was enhanced leading to increased growth of cash crop in china. This is the stage where political power rested in the various regions and those who were land owners. Contrary to China, the United Kingdom experienced this stage several centuries ago, precisely in the 16th century. This stage, according to Rostow limited the economy`s ability to increase its production capacity because of the poor technology that is being used in the wealth generation process (Kiely, 2000).
Then the take-off stage is evidenced by the economy`s exploration of the modern science and substantial investment in the modern production means. This was evident in the Western Europe, where the United Kingdom is part of in the late 17th century as well as the 18th century. This is the period during the emergence of modernity and enlightenment. In the case of china, this has been experienced through alteration of its social structure and the political as well as economic orientation. China experienced increased production in the cotton, as well as, huge quantities of porcelain was also made. Chain increased its contact with the outside world, because it was during this time that the first sailors were sent out to India, East Coast of Africa as well as Arabia. This also sow the settlement of the Portuguese in the region of Macao hence the increased contact with Europe. At this level, the economy is affected by utilizing the fruits that are realized from the adoption of modern technology to encourage further investments and creation of wealth in the society (Nederveen, 2001).
The take-off stage stands to be the most decisive form of transformation that an economy adopts so as to be transformed. At this level, the economy being able to produce enough, it manages to sustain itself and there are indications of substantial growth in various aspects of the economy. This is also evidenced by technical progress in the economy as it was the case with the United Kingdom in the early 18th century. The economy experiences increased rate of investments and this sets the force in the self-enhancing process of investments. However China’s industrialization started in the 1950`s when it experienced increased mass production (Routledge, 2003). This was characterized by boom in trade and industry, for instance the prosperity of Iron industry as well as increased spinning of cotton. It also sow china`s increased export of tea to Britain. Opening of coal mines, introduction of European technology as well as steam shipping were some of the phenomena that took place in these period in china.
Based on his theory, take off stage ushers in the drive to maturity which is characterized by sustained growth. The economy grows regularly and modern technology is used through the application of various complex production systems evidenced in the modern industries. This took place in the United Kingdom in the last quarter of the 19th century and it was seen by the great and enormous increase in the number of industries. This was also staged by increased advancements in innovations as well as the use of various technologies to enhance the production system. Hence, the economy tends towards self-reliance. In the case of China, this is the stage where it is currently in. This started in the 1970s with reforms implementations to help open up its industries to the world. This is evidenced by the leadership of Mao Tse Tung who encouraged communist ideologies leading to rapid spread of industries and growth of infrastructures. The ever increasing investments and inventions have made it emerge as one of the industrialized nations and its economy has been given a high rank in the world. This is because of the long sustained production and stability in the economy.
Lastly is the stage of high mass consumption, this is the level where an economy is able to sustain itself with the production activities which it makes. These productions are so high to an extent that there is a surplus for export. This earns the country income, hence further improves the wellbeing of the economy, both in terms of growth as well as social welfare. The main interest or focus of the economy is on the production of consumer durable goods as well as focusing on services. It is held that countries like Britain and the United States of America have been able to reach this level of advancement. Hence, a nation like China is still as the drive to maturity (Routledge, 2003).
The Porter diamond model (199...