Throughout the 1920s American government and business discussions on Third World development remained within the context of providing the domestic economy with markets and raw materials. Economic development was synonymous with exploitation of the resources of poor lands. In the 1930s, Secretary of State Cordell Hull became a prominent advocate of economic expansion into peripheral areas. Hull's reciprocal trade concept implied that underdeveloped regions would function as raw material producers in the world division of labor. Free trade and specialization in primary goods production would bring prosperity and stability to these nations. Hull urged policies to facilitate the movement of capital from "financially stronger to financially weaker countries." This capital transfer was necessary to secure raw materials for the American economy and to stabilize Third world political and economic situations.( 80) The comments of Hull and other policymakers on creating a postwar economic order reflected a growing state consensus on the need for world development.
Economic development theory was in its nascent stages before the Second World War. Advanced capitalist nations appeared to have a cursory interest in the vitality of poor, agrarian nations. Few Western economists prior to 1940 formulated theories or plans for the development of the periphery. Some scholars believed that economic growth was grinding to a halt in the core nations, and the 1930s depression seemed to confirm this assessment. In the underdeveloped nations, however, "where economic progress had not yet dug its own grave, conditions [were] propitious to start the cycle of progress and decay."( 81) Poor agrarian nations, with their unexploited natural resources and potentially great markets, and assisted by modern technology, would quickly improve their economies.
American and other capitalist core leaders posited that societies evolved from a traditional underdeveloped state to a modern developed state. Capitalist core leaders contended that true development could only take place through the free play of market forces, the operation of comparative advantage, and the beneficial interaction between themselves and reform minded elites in the periphery. This interaction would bridge, but not close, the gap between rich and poor. Peripheral areas could profit from industrialization policies; but in most cases industrialization itself was superfluous. "Through foreign trade, specialization in the production of raw materials would serve economic and social progress as well as, or even better than, industrialization."( 82)
American policymakers embraced these principles not merely because they manifested long cherished Western economic doctrines, but also because they reflected long-standing societal needs, national values, perceived national experiences, and consequent foreign policies. American state and corporate elites used this framework as the basis for wartime and post- war planning, even as economists articulated contrary theories and Third World nations pleaded their special needs.