developments, but these incentives were not those emanating from an unregulated market, but
mainly the product of deliberate state intervention. In general, there was an expansion of
private sector activity - as a complement to or in parallel with that of the state - which
operated according to M mode, but usually heavily circumscribed by state-imposed
restrictions.
Consequences: the policies adopted were in some ways remarkably successful. Savings and
investment rates rose dramatically from the mid-1950s and growth accelerated in most
countries, while some, notably in East Asia, experienced spectacular growth rates. Social
indicators, such as infant mortality and literacy rates, also improved. But there were other
developments that were less welcome. Population growth accelerated, and growth in
employment, especially in the industrial sector, lagged behind output. Un and
underemployment emerged as a serious problem; the incidence of poverty remained very high
as a proportion of the population in many countries, while the absolute numbers of people
falling below the poverty line increased. A dualistic pattern of development resulted, with a
small relatively privileged modern sector leaving the rest of the economy with low incomes
and investment. The ILO summarised the position: “..it has become increasingly evident,
particularly from the experience of the developing countries, that rapid growth at the national
level does not automatically reduce poverty or inequality or provide sufficient productive
employment” (ILO, 1976, p 15). Moreover, the economic independence sought was elusive,
as dependence on developed countries for capital and technology increased.
Thinking in the late 1960s and 1970s: The events of the 1950s and 1960s led to new thinking
about development. Three distinct strands may be detected, each a reaction to different
aspects of the development experience over the previous twenty years.
First, there were those who became concerned with the lack of economic independence
achieved. This gave rise to the dependency school of thought, some Marixts and some
structuralist, by writers mostly from the South, such as Frank, Furtado and Amin (see Palma,
1978). They focussed on the problems arising from the heavy dependence in peripheral
economies, and generally advocated reduced links between rich and poor countries, although
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