Backwardness is a lack of progress by a person or group to some perceived cultural norm of advancement, such as for example traditional societies relative to modern scientific and technologically advanced industrialized societies.
Gerschenkron's model
The backwardness model is a theory of
economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
created by
Alexander Gerschenkron
Alexander Gerschenkron (russian: Александр Гершенкрон; 1 October 1904 – 26 October 1978) was a Russian-born American economic historian and professor at Harvard University, trained in the Austrian School of economics.
Born i ...
. The model postulates that the more backward an economy is at the outset of economic development, the more likely certain conditions are to occur:
*Special institutions, including banks or the state, will be necessary to properly channel
physical capital
Physical capital represents in economics one of the three primary factors of production. Physical capital is the apparatus used to produce a good and services. Physical capital represents the tangible man-made goods that help and support the produc ...
and
human capital
Human capital is a concept used by social scientists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a substantial ...
to industries.
*There will be an emphasis on the production of producer goods rather than consumer goods.
*There will be an emphasis on capital-intensive production rather than labor-intensive production.
*There will be a great scale of production and enterprise.
*There will be a reliance on borrowed rather than local technologies.
*The role of the agricultural sector, as a market for new industries, will be small.
*There will be a reliance on productivity growth.
The backwardness model is often contrasted with the
Rostovian take-off model
Rostow's stages of economic growth model is one of the major historical models of economic growth. It was published by American economist Walt Whitman Rostow in 1960. The model postulates that economic growth occurs in five basic stages, of vary ...
developed by
W.W. Rostow
Walt Whitman Rostow (October 7, 1916 – February 13, 2003) was an American economist, professor and political theorist who served as National Security Advisor to President of the United States Lyndon B. Johnson from 1966 to 1969.
Rostow worked ...
, which presents a more linear and structuralist model of economic growth, planning it out in defined stages. The two models are not mutually exclusive, however, and many countries appear to follow both models rather adequately.
Veblen
Thorstein Veblen's 1915 ''Imperial Germany and the Industrial Revolution'' is an extended essay comparing the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
and
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
,
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at McMaster University and concluding that the slowing of growth in Britain and the rapid advances in Germany were due to the "penalty of taking the lead".
British industry worked out, in a context of small competing firms, the best ways to produce efficiently. Germany's backwardness gave it an advantage in that the best practice could be adopted in large-scale firms.
Further reading
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References
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Economics models