The Contribution of Alice Amsden to the Theory of Development - Essay on Economics

Alice Amsden formulated models and concepts that challenged the conventional economics and, at the same time, she shed new light on the manner in which development economics can potentially grow. For instance, she conferred that the eradication of poverty is the chief driver of economic development. Alice and other theorists seemed to agree that education is also an important factor in economic development. While this was the case, she claimed that in the absence of simultaneous job creation, education is not feasible. In this, just as Sen (1988) supposes, Amsden challenged the belief that by simply educating individuals, jobs will necessarily appear on their own. Apparently, this is what the majority of other theorists discussed in chapter five of Sens (1988) text commonly held as the truth. Besides, Amsden agreed with the other theorists on the role of wages in stimulating structural change along with productivity. However, her thought and that of other theorists about the nature of the association between these concepts differed completely. She emphasized that higher wages and not lower earnings is what promoted this particular connection.

International Division of Labor

The international division of labor is a theory that is employed to explain the international shift of manufacturing sectors to developing countries from developed capitalist nations, a thing that has given rise to the global division of labor (Bardhan, 1993). In this division of labor, the function that the periphery plays when compared to center countries includes the provision of labor, promotion of access to the cheapest resources and locations to produce and assemble components and allowing for flexible manufacturing for international trade to other nations, which might be absent in the center states. More to this, the periphery provides opportunities such as low-cost transportation as well as communication technologies (Bardhan, 1993). The international division of labor promotes a win-win situation for all the stakeholders. For example, the organizations in the center counties are provided with an opportunity to expand their operations and hence greater profits (Bardhan, 1993). Similarly, industrial and economic development, the creation of employment, and growth in the government revenue are some of the pertinent outcomes for the periphery.

Primary Product Exporters

The primary product exporters usually experience four main challenges. These include declining terms of trade, ineffective linkages to other industries or sectors, fluctuating export earnings, and the Dutch Disease (Bardhan, 1993). According to Bardhan (1993), the Dutch disease refers to the adverse effect on an economy, which results to a sharp inflow of foreign currency. Not all primary products present these four difficulties to exporters. Instead, the export of some non-traditional primary products can allow the exporters to circumvent the issues. The non-traditional agricultural exports such as fresh fruit products and fishery products are good examples of goods that primary exporters might find as desirable to export (Bardhan, 1993). Unlike other non-traditional primary products, fresh fruit products and fishery products are known to add immense value to the existing export products. Hence, authorities across the world tend to encourage and promote the export of these goods. They are well aware that by having the primary exporters engaging with these non-traditional agricultural primary products, they will be in a better position to realize maximized value even if the worth of other non-traditional goods is falling.

References

Bardhan, P. (1993). Economics of Development and the Development of Economics. Journal of Economic Perspectives, 7(2), 129-142.

Sen, A. K. (1988). The Concept of Development. In H. Chenery and T. N. Srinivasan (eds.) Handbook of Development Economics, pp. 9-26. Amsterdam: North-Holland