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Critical Assessment on IMF Paper

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Critical Assessment on IMF Paper The importance of federalism in spreading economic development and its benefits has been almost entirely overlooked. By and large, what has passed for national development in the Third World is not national at all, but rather concentrated in a single metropolitan area, usually that of the capital. This area not only has monopolized the infusion of new resources to the country but has managed to drain the countryside of a major share of such resources as existed there prior to independence1. According to Purfield, the resultant impoverishment of the countryside without appreciable progress in the metropolis has become a feature of Third World national economies which reflects a vicious circle. ...read more.


But because of the existence of federalism, the new resources are inevitably spread over a number of centers. At the very least, the capital of every federated state has some claim on the national resources, and together they work to prevent the single metropolis syndrome. This means that more people have a chance to benefit from development efforts. At least, it means that some of the worst excesses of resource concentration are eliminated, and a basis for truly national development begins to emerge. India and Nigeria are prime examples. Although Calcutta and, of late, Bombay and Lagos suffer from the worst aspects of the rural-urban migration, in both countries one does not have to live in Calcutta, Bombay, or Lagos to gain benefit from economic development. ...read more.


The politics of federalism offers a means for extending economic benefits more widely than has otherwise been the case in the Third World. The development of new governmental arrangements - at least new to the modern era (some have classic antecedents, Weingast 1995, Przeworksi, A. and Limongi, F. 1993). These new governmental arrangements have moved in two directions simultaneously, to create both larger and smaller political units for different purposes, to gain economic or strategic advantage while at the same time maintaining an indigenous community, better to accommodate ethnic diversity. All embody the idea of more than one government exercising powers over the same territory. That idea, which was at the heart of the American invention of federalism, was anathema to the European fathers of the modern nationstate. ...read more.

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