Dependency or Institutions? Economic Geography, Causal Mechanisms, and Logic in the Understanding of Development

Abstract

What explains the global distribution of growth and economic activity? Proponents of unit-level explanations dismiss systems-level arguments like dependency and world systems theory for logically incorrect reasons. They argue that these system-level arguments lack the precise mechanisms that various unitlevel arguments provide. But the absence of precise system-level causal mechanisms in some system-level theories does not logically imply that all system-level theories are wrong. Economic geography provides system-level theories with precise mechanisms that comport with most of the economic predictions offered by dependency theories. This does not mean that unit-level theories are either wrong or useless, but rather that unit-level explanations must (1) claim that the new economic geography is totally wrong, or (2) show how system and unit-level mechanisms interact causally, or (3) argue that unit-level mechanisms are independent of system-level causal mechanisms.

Global Inequality Challenge: An Analysis of the Disparities in Wealth and Power

“…The periphery on their part, is less innovative and characterised by low incomes and productivity, capital import dependence, a minor role in international trade, as well as being politically unstable (Klimczuk & Klimczuk-Kochańska, 2019). Advocates of the world systems theory argue that developed countries promote a form of development that disadvantages the periphery countries in favour of the industrialised core (Schwartz, 2007). World systems theory is fitting for the explanation of global inequality in this paper because it focuses on the international division of labour which divides the world into core, semi-periphery, and periphery countries.…”

Las relaciones centro-periferia en el siglo XXI

“…En otros términos, estas explicaciones prevalecientes asumen implícitamente una visión rostowiana del desarrollo, donde el desempeño económico de las naciones se explica por sus propias historias y articulaciones institucionales, sin analizar que esas unidades existen en un orden capitalista internacional, el cual posee sus propias dinámicas estructurales endógenas, y que, por lo tanto, condiciona las posibilidades de despegue económico de las periferias (Sunkel y Paz, 1970;Schwartz, 2007). Este diagnóstico estructural es, como señalamos en la sección anterior, el punto de arranque del estructuralismo latinoamericano como corriente económica heterodoxa.…”

Political Capitalism and the Rise of Sovereign Wealth Funds

“…Economic development in the world economy is neither automatic nor unproblematic (Schwartz, 2007). The continual expansion of demand in the most advanced parts of the world economy creates an opportunity for new or expanded economic activity in relatively backward parts.…”