Demonstration effect
Encyclopedia
Demonstration effects are effects on the behavior
of individuals caused by observation of the actions of others and their consequences. The term is particularly used in political science
and sociology
to describe the fact that developments in one place will often act as a catalyst in another place.
Goldmann Sachs believes that the demonstration effect is encouraging more domestic firms to set up in the IT industry or increase R&D spending, leading to an increase in the countries productivity, pushing India on the way to 10% growth, alongside a number of other factors such as the Golden Quadrilateral
and a rise in the financial sector.
was that the democratization
of Iraq would demonstrate to other countries that Arab oil states could attain democracy, and also demonstrate benefits from such democratization. It was theorized that such demonstration effects would speed the development of democracy throughout the Middle East
.
Behavior
Behavior or behaviour refers to the actions and mannerisms made by organisms, systems, or artificial entities in conjunction with its environment, which includes the other systems or organisms around as well as the physical environment...
of individuals caused by observation of the actions of others and their consequences. The term is particularly used in political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
and sociology
Sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...
to describe the fact that developments in one place will often act as a catalyst in another place.
Examples
- In the late 18th century, the successful American RevolutionAmerican RevolutionThe American Revolution was the political upheaval during the last half of the 18th century in which thirteen colonies in North America joined together to break free from the British Empire, combining to become the United States of America...
might have provided a demonstration effect that sparked the subsequent French RevolutionFrench RevolutionThe French Revolution , sometimes distinguished as the 'Great French Revolution' , was a period of radical social and political upheaval in France and Europe. The absolute monarchy that had ruled France for centuries collapsed in three years...
. Generally, many argue that political movements are often given a boost from the observed success of similar political movements in other countries. The domino effectDomino effectThe domino effect is a chain reaction that occurs when a small change causes a similar change nearby, which then will cause another similar change, and so on in linear sequence. The term is best known as a mechanical effect, and is used as an analogy to a falling row of dominoes...
thesis relates to this idea; it argued that successful communist revolutions in some countries would provide an impetus for communist revolutions in other countries. - Countries often adopt economic and other policies similar to those used by successful countries; the proven success of the policies provides a demonstration effect that impels other countries toward similar policies in order to emulate that success.
- Some heterodox economists such as James DuesenberryJames DuesenberryJames Stemble Duesenberry was an American economist. He made a significant contribution to the Keynesian analysis of income and employment with his 1949 doctoral thesis Income, Saving and the Theory of Consumer Behavior...
and Robert H. FrankRobert H. FrankRobert H. Frank is the Henrietta Johnson Louis Professor of Management and a Professor of Economics at the Samuel Curtis Johnson Graduate School of Management at Cornell University. He contributes to the "Economic View" column, which appears every fifth Sunday in The New York Times.-Career:Frank...
, following the original insights of Thorstein VeblenThorstein VeblenThorstein Bunde Veblen, born Torsten Bunde Veblen was an American economist and sociologist, and a leader of the so-called institutional economics movement...
(1899), have argued that awareness of the consumption habits of others tends to inspire emulation in of these practices. Duesenberry (1949) gave the name "demonstration effect" (p. 27) to this phenomenon, arguing that it promoted unhappiness with current levels of consumption, which impacted savings rates and consequently opportunities for macroeconomic growth. Similarly, Ragnar NurkseRagnar NurkseRagnar Nurkse was an Estonian international economist and policy maker mainly in the fields of international finance and economic development.-Life:...
(1953) argued that the exposure of a society to new goods or ways of living creates unhappiness with what had previously been acceptable consumption practices; he dubbed it the "international demonstration effect." He believed that in developing nations, pressure to increase access to material goods rapidly increases primarily because people "come into contact with superior goods or superior patterns of consumption, with new articles or new ways of meeting old wants." As a result, he argued, these people are "apt to feel after a while a certain restlessness and dissatisfaction. Their knowledge is extended, their imagination stimulated; new desires are aroused" (Nurkse quoted in Kattel et al. 2009, p. 141). - Parents may take care of their parents in order to create a demonstration effect by which their children will later care for them. http://www.ingentaconnect.com/content/routledg/raef/2001/00000033/00000002/art00001
Economics
In economics, demonstration effects may help explain the spread of financial or economic crises like the Asian financial crisis. Investors do not always know everything about the economic situation of countries in which they invest. When investors see a country's economy collapse, however, they may question the safety of investments in countries with similar economic policies.Goldmann Sachs believes that the demonstration effect is encouraging more domestic firms to set up in the IT industry or increase R&D spending, leading to an increase in the countries productivity, pushing India on the way to 10% growth, alongside a number of other factors such as the Golden Quadrilateral
Golden Quadrilateral
The Golden Quadrilateral is a highway network connecting India's four largest metropolises: Delhi, Mumbai, Chennai and Kolkata, thus forming a quadrilateral of sorts. Four other top ten metropolises: Bangalore, Pune, Ahmedabad, and Surat, are also served by the network...
and a rise in the financial sector.
Foreign policy
Part of the rationale behind the 2003 invasion of Iraq2003 invasion of Iraq
The 2003 invasion of Iraq , was the start of the conflict known as the Iraq War, or Operation Iraqi Freedom, in which a combined force of troops from the United States, the United Kingdom, Australia and Poland invaded Iraq and toppled the regime of Saddam Hussein in 21 days of major combat operations...
was that the democratization
Democratization
Democratization is the transition to a more democratic political regime. It may be the transition from an authoritarian regime to a full democracy, a transition from an authoritarian political system to a semi-democracy or transition from a semi-authoritarian political system to a democratic...
of Iraq would demonstrate to other countries that Arab oil states could attain democracy, and also demonstrate benefits from such democratization. It was theorized that such demonstration effects would speed the development of democracy throughout the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
.