Criticisms of Structuralism
- Structuralism fundamentally disagrees with Samuelson’s Price Factor Theory which says that free trade over the long-term equalises, it is a matter of time , thing improve not become more worse as structuralist suggest.
- For neo-classists the ultimate arbitrator is the market so government intervention as prescribed by structuralists creates imperfections and distorts markets.
- The PSH is sometimes referred to as a “myth” as there isn’t strong clear empirical evidence to back this theory up.
- Is terms of trade really the fundamentally reason behind underdevelopment?
- The ISI protectionist stages are problematic. For example, the lack of price mechanism leads to inefficiencies and rent seeking (corrupt) behaviour by the firms that are protected.
The ISI crisis in the mid-60s was self-critiqued in by the structuralist themselves
- The results showed that ISI went no way in reducing inflation or the BoP crisis.
- Periphery countries were unable to reach scale and quality to move from stage one to stage two.
- Inefficiency meant that centre countries had no incentive to import more from periphery countries.