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
In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...
created by
Alexander Gerschenkron. 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 pr ...
and
human capital
Human capital or human assets is a concept used by economists 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 subs ...
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 developed by
W.W. Rostow, 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 Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...
and
Germany
Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...
,
Full text
at McMaster University
McMaster University (McMaster or Mac) is a public research university in Hamilton, Ontario, Canada. The main McMaster campus is on of land near the residential neighbourhoods of Ainslie Wood, Ontario, Ainslie Wood and Westdale, Ontario, Westd ...
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