Leibenstein's Critical Minimum Efforts Theory

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Problem 1: Clarify following statement “Leibenstein’s critical minimum effort thesis fails to explain

sustainable development path of a country like Bangladesh.”

Answer: Leibenstein’s critical minimum effort thesis fails to explain sustainable development path
of a country like Bangladesh.

Leibenstein’s critical minimum efforts theory:

This theory evolved as a result of a PhD thesis submitted by Leibenstein. The essence of this theory is
that if the development efforts are of size less than the ‘critical minimum size’, they will come to nothing.
There are always some factors that pull down development and some factors that push up development.
There are positive sum factors, negative sum factors and zero sum factors of economic development. The
economy can move forward only when the first set is greater than the last two sets. The first set of factors
should be at least of critical minimum size.

The theory is based on the relationship between the three factors.

(i) per capita income,

(ii) population growth, and

(iii) investment.

Critical Appraisal of Leibenstein’s theory:

Leibenstein’s assumption that if initial investment is less than the critical minimum size, population will
increase. In a low income country also, population decline can set in, provided the government action is
rigorous as in China in recent years.

It is not necessary that the economy shall slide back to the low level equilibrium level if the effort is of
less than critical minimum size. Things cannot be exactly the same as before. One cannot come back to
the same level or standard, or structure and volume of the income. Alternatively, it is also not necessary
that once the critical minimum effort has been made, there will follow a period of uninterrupted and
sustained take off and growth.

Weaknesses of leibenstein theory:

Leibenstein’s theory is more realistic. It provides a programme of massive industrialization. Like


Rostow’s ‘take-off-stage’, this thesis seems to be more practical for underdeveloped economies. The
critical minimum effort can be properly timed and divided into smaller efforts to put the economy on the
path of sustained growth.

1. Population Growth Rate Related to Death Rate


2. Decline in Birth Rate is not due to Increase in Per Capita Income
3. Neglects Time Element
4. Role of State Ignored
5. External Forces Discussed
6. Complex Relation between Per Capita Income and Growth Rate

Problem 2: Explain relationship between “colonization” and “ dependency of poor countries” on


developed countries in perspective of India.

Answer: Relationship between colonization and dependency of poor countries.

Andre Gunder Frank (1971) argues that developing nations have failed to develop not because of
‘internal barriers to development’ as modernization theorists argue, but because the developed
West has systematically underdeveloped them, keeping them in a state of dependency (hence
‘dependency theory’.)Colonialism is a process through which a more powerful nation takes
control of another territory, settles it, takes political control of that territory and exploits its
resources for its own benefit. Under colonial rule, colonies are effectively seen as part of the
mother country and are not viewed as independent entities in their own right.

Frank argued that a world capitalist system emerged in the 16 th century which
progressively locked Latin America, Asia and Africa into an unequal and exploitative
relationship with the more powerful European nations.

British colonialism was more pragmatic than that of other colonial powers. Its motivation was
economic .So British capitalists who invested in India, or who sold banking or shipping service
there, continued effectively to enjoy monopolistic privileges. India also provided interesting and
lucrative employment for a sizeable portion of the British upper middle class, and the remittances
they sent home made an appreciable contribution to Britain's capital accumulation and industrial
development. The British rulers systematically destroyed the industries in

india.They tried to keep the ownership and management of its industries in


their hands and Indians were placed in all low level and maintenance jobs.
The Industrial Revolution in England created a serious impact on Indian
economy as it reversed the character and composition of India’s foreign
trade. This led to destruction of Indian handicrafts although there was no
substantial growth of modern factory industry.Under british colonialism, various
trade policies were enforced in order to control over indian subcontinental economy .The

objective was transforming a system of trade in which India became an


exporter of primary products like raw materials and food stuffs and an
importer of manufactures.In this prolonged process, the import
dependency for manufactured products in indian economy drastically
raised and still prevails in the present situation. Moreover, colonial
economic exploitation through the entry of British capital and through the
payment for the costs of administration led to huge economic drain of
India weakening the base of Indian economy.

https://www.economicsdiscussion.net/indian-economy/british-colonial-
rule-on-the-indian-economy/19007

British Colonialism systematically desroyed indian economy which were once self-
sufficient and independent,which was replaced with plantation of a mono-crop economy
and it induced the commercialization of agriculture. Commercialisation of Indian

agriculture during the British period created a serious impact on the Indian
economy.It indicates production of various crops not for domestic
consumption but for sale. Industrial revolution in Britain had raised the
demand for agro-raw-materials, especially indigo, raw cotton, jute,
sugarcane, groundnuts etc. for British industries.So maximum essential
agro products were exported to Britain.This meant that whole populations had
effectively gone from growing their own food and producing their own goods, to earning
wages from growing and harvesting sugar, tea, or coffee for export back to Europe. As

the British industries were offering higher prices for commercial crops the
peasants gradually started to shift their cropping pattern substituting
commercial crops for food crops. In some areas commercialisation of
agriculture reached to such an extent that the peasants even could not
produce food crops for their home consumption

By the 1960s most colonies like indian colony achieved their independence, but
European nations continued to see developing countries as sources of cheap raw
materials and labour and, according to Dependency Theory,  they had no interest in
developing them because they continued to benefit from their poverty.Exploitation
continued via neo-colonialism – which describes a situation where European powers no
longer have direct political control over countries in Latin America, Asia and Africa, but
they continue to exploit them economically in more subtle ways.

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