Positional Goods, Conspicuous Consumption and the International Demonstration Effect Reconsidered

Statements such as the following description of the West Indies abound in the development literature: ‘With ready access to foreign goods and easy credit arrangements, an expanding bourgeoisie emulates the buying habits of the local elite and of more affluent societies ... Exposure to metropolitan standards affects all levels of West Indian society ... The external standards West Indians emulate include not only European but American modes of thought, behaviour, and material goods.’1 Descriptions of this sort would seem to correspond to Nurkse’s hypothesis of an international demonstration effect — namely, that ‘the attraction of advanced consumption standards exerts itself fairly widely, though of course unevenly, among the poorer two-thirds of mankind’2 — and at one level of course they do. But, what is seldom recognized is that Nurkse adopted a highly specific view of the mechanism which gives rise to this effect and as a result he was predisposed to a particular description of its consequences.