What are the key economic sociology theories for emerging markets?

1 Modernization theory

Modernization theory is a classic perspective that argues that emerging markets can achieve economic development by following the path of Western industrialization. It assumes that there is a linear and universal process of modernization that involves adopting Western values, norms, institutions, and technologies. Modernization theory emphasizes the role of external factors, such as foreign aid, trade, and investment, in facilitating economic growth and social change. However, modernization theory has been criticized for being ethnocentric, deterministic, and ignoring the historical and cultural diversity of emerging markets.

2 Dependency theory

Dependency theory is a radical alternative to modernization theory that contends that emerging markets are exploited and underdeveloped by the core countries of the global capitalist system. It argues that emerging markets are dependent on the core countries for trade, finance, and technology, and that this creates an unequal and oppressive relationship that hinders their economic development. Dependency theory emphasizes the role of internal factors, such as class, ethnicity, and nationalism, in resisting and challenging the dominant structures of dependency. However, dependency theory has been challenged for being too pessimistic, simplistic, and neglecting the agency and diversity of emerging markets.

3 World-systems theory

World-systems theory is a macro-historical perspective that analyzes the global economy as a single system composed of core, semi-periphery, and periphery countries. It argues that emerging markets are part of the semi-periphery, which are countries that occupy an intermediate position between the core and the periphery, and that have some degree of industrialization, diversification, and autonomy. World-systems theory emphasizes the role of historical and structural factors, such as colonialism, imperialism, and globalization, in shaping the economic and social dynamics of emerging markets. However, world-systems theory has been criticized for being too deterministic, static, and overlooking the local and cultural aspects of emerging markets.

4 Institutional theory

Institutional theory is a micro-level perspective that focuses on the role of formal and informal institutions in shaping economic behavior and outcomes. It argues that emerging markets are characterized by institutional diversity, complexity, and change, and that these affect the opportunities and constraints for economic actors. Institutional theory emphasizes the role of cognitive and normative factors, such as beliefs, values, norms, and rules, in influencing economic decisions and actions. However, institutional theory has been questioned for being too descriptive, normative, and underestimating the power and conflict dimensions of emerging markets.

5 Network theory

Network theory is a relational perspective that examines the role of social networks in facilitating or hindering economic activity and performance. It argues that emerging markets are embedded in dense and diverse networks of social ties, such as kinship, friendship, ethnicity, religion, and profession, and that these provide access to resources, information, trust, and cooperation. Network theory emphasizes the role of social capital, which is the value and benefits derived from social networks, in enhancing economic efficiency and innovation. However, network theory has been challenged for being too optimistic, functionalist, and ignoring the costs and risks of social networks.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?