DOES ECONOMIC-GROWTH BENEFIT THE MASSES - GROWTH, DEPENDENCE, AND WELFARE IN THE THIRD-WORLD

Despite recent economic gains in much of the Third World, sociologists have paid little attention to the possible national benefits of economic growth. Instead, they have focused on the possible harm caused by the Third World's dependence on foreign investment and trade. Our analysis questions that focus. Based on data for 62 less-developed countries spanning two decades, we find that the effects of dependence largely vanish when (1) the effects of economic growth are carefully specified, and (2) the ''semi-difference'' models currently in vogue in cross-national research are replaced by more appropriate difference or difference-of-logs (growth-rare) models. In light of the common claim that economic growth in the Third World benefits only the rich, we employ measures of national welfare that the rich cannot readily monopolize. The effects of economic growth on national welfare are large and robust, whereas the effects of dependence are hard to find. These findings contradict earlier studies, which had concluded that the effects of dependence dwarf the effects of economic growth.