Economic Development and Culture Essay

According to Easterly (2001), attempted remedies to underdevelopment (like loans, FDI, population control) are generally determined by non-economic factors such as demographic variables, cultural characteristics, and political systems. In the following paragraph, Easterly demonstrated the devastating implication of a single path to economic development in many Third World countries. Now, the assumptions of both classical economists and political economists are under attack. There is one element that both these theories ignored: culture. Sociologists and cultural anthropologists often argued that there is no single path to economic development when culture is taken into consideration. Market institutions and free trade instruments have usually low adoption rates in many underdeveloped countries (Easterly, 2001). The reason is not obvious. Traditional methods of production and exchange often obscure economic principles. These traditional methods of production and exchange constituted a significant part of culture. For example, in the 1950s, the so-called ‘trickle down approach’ became popular in the West. The idea is simple. The adoption of technology flows smoothly from the capitalist class to low income agricultural families (Easterly, 2001). Translated into income, the rate by which the capitalist class accumulates wealth is correlated with the rate by which low income agricultural families accumulates capital. In short, the approach benefits all individuals who adopt prescribed technologies (since these technologies increase production and improve efficiency). Such approach was enthusiastically received by Third World countries in the 1950s and 1960s (Easterly, 2001). However, after two decades of trial, it was clear that it failed to produce the desired results. Farmers did not adopt the prescribed technologies, as what the proponents of the approach expected. Several studies were conducted to determine cause of the failure. Culture was seen as the ‘culprit’ variable in those studies. Third World farmers failed to adopt prescribed technologies because: 1) such technologies were antithetical to traditional beliefs and farming practices, and 2) culture did not permit them to use such technologies. These results generally struck down the traditional economic approach to development. Economic principles are not the sole determinants of economic development. Easterly (2001) summarized the role of culture in economic development. His main propositions are as follows: 1) Many economic policies failed because it never incorporated elements of cultural life. Such can be said of the ‘trickle-down approach’ used by many Third World countries in the 1950s and 1960s; 2) Culture decides which and how economic policies should be undertaken. For example, an economic policy that fosters information liberalization in an Islamic country is doomed to failure. An economic policy should be socially accepted; 3) Culture provides an avenue for feedback for implemented economic policies. Culture is itself a collective entity that dictates which economic policies are sustainable in the long-run. Acceptance is not the issue, rather the long-term utility to the society; 4) Culture provides individuals, groups, and institutions the necessary moral information of specific policies. When viewed from the social exchange theory, it is these moral information that enable individuals and groups to rationally weigh the benefits and costs of particular economic policies. In the book Culture Matters, Patterson’s essay successfully showed that economic models failed to explain the persistent social and behavioral chaos that defines inner urban life (Culture Matters, 494). Patterson argued that economic models only explained the tangible elements of economic life; that is, economic models only touched issues like income, consumption, savings, and investment (Culture Matters, 495-98). When those economic models were used to explain behavioral differences across individuals, groups, and classes, they ended in self-insufficiency. However, Patterson’s essay revealed another striking fact. Cultural differences, behavioral outlook on wealth, and socio-religious beliefs were seen as determinants of income, investment, and savings. Groups that have a positive outlook on wealth and investment have tendencies to adopt capitalist principles. Groups which adhere to conservative religious beliefs tend to view capitalist principles as ‘unChristian. ’ In short, cultural differences determine economic development. To restrict economic development to the twin principles of free trade and non-government intervention is misleading. If a country wanted to experience economic development, it must take into consideration non-economic variables. Political culture, ideology, socio-religious beliefs, and systems of exchange are some of the non-economic variables that influence economic decision-making patterns. Works Cited Culture Matters. Ed. By Lawrence Harrison and Samuel Huntington. New York: New York Basic Books, 2000. Easterly, William. The Elusive Quest for Growth : Economists’ Adventures and Misadventures in the Tropics. MIT: The MIT Press, 2001.