Reading Comprehension

From the 1950's through the 1970's, the primary strategy of first world governments in promoting third world development was to strengthen the economies of the latter by increasing supplies of capital stock such as machines, factories and other such tangible means that contribute to economic output. This was accomplished either through transfers from abroad (first world countries giving or selling capital stock cheaply to their third world counterparts) or through higher savings rates at home (citizens and governments of the third world saving enough money to purchase capital stock) and an improved allocation of resources (distributing wealth more evenly in third world countries). These strategies, however, failed to produce results because they operated on the premise that the problem of development was solely due to inequitable resource allocation. The first world governments who implemented these strategies did not take into account the participatory role played by the societies, cultures, and histories of developing nations in determining this often-imbalanced distribution.

In the 1980's, the focus of first world development efforts shifted to macroeconomic issues, namely the correction of fiscal imbalances and counterproductive monetary policies. According to this strategy, macroeconomic inequalities made it virtually impossible for markets to function effectively. While this path was preferable to that of the previous three decades because it recognized that resource allocation itself is a complex and multifaceted problem, it was still hampered by the view of development as essentially a matter of resource allocation.

Beginning in the 1990's, a new concept of third world development finally emerged. This strategy defines development as the transformation of societies. It recognizes that this transformation must include increases in living standards, a reduction in poverty, and improvements in similar quality-of-life indicators. In other words, the current way of thinking views underdevelopment not merely as an economic issue with a formulaic and technical solution, but as a human problem that can only be solved by tangibly improving the lives of people. With the dominance of this theory, it is likely that the economies of third world nations will be strengthened because their societies will be strengthened. For example, workers will be healthier and more productive, and children more educated.

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The primary purpose of the passage is to

A Offer a history of third world development strategies and show why one is likely to be the most successful
B Suggest that first world governments should not interfere with the development of third world nations
C Explain why resource allocation has nothing to do with third world development
D Refute an argument in favor of resource re-allocation as a development strategy
E Offer a comprehensive historical overview of third world economic development