Which theory argues low-income societies develop only by adopting modern institutions and values that emphasize savings?

• A. Modernization Theory
• B. Sustainable Development
• C. Dependency Theory
• D. World Systems Theory

Answer: (A)

Modernization theory asserts that low-income societies develop primarily by adopting modern institutions and values—such as formal education, bureaucratic governance, secular rationality, and a culture that emphasizes saving and investment. Savings provides the capital needed for investment in technology, industry, and infrastructure, which drives economic growth and moves a society from traditional to modern forms of organization. This perspective treats development as a linear progression through stages once a society adopts these modern practices.

Sustainable Development centers on meeting present needs without compromising future resources, focusing on balancing environmental, social, and economic goals rather than a specific path of institutional adoption. Dependency Theory emphasizes external constraints from more powerful, wealthier nations and unequal trade relationships, not the internal adoption of savings-focused institutions as the sole route to development. World Systems Theory highlights core-periphery dynamics within the global capitalist system, again focusing on external structures rather than a unilateral internal modernization path tied specifically to savings.