Chapter 5

Question 1

when did the macro perspective come into place ?

Answer 1

1950-1960s

Question 2

Whats happened in the ’70s ?

Answer 2

recognising severe deficits (explaining poverty, income, wealth distribution, employment deficits, limits of groweth)

we realised more complex definition of objectives and strategies

Question 3

How about 1980’s?

Answer 3

stronger micro perspective comes into place, as a result of the influence of the New Institutional Economics.

Question 4

How about early 1990’s?

Answer 4

development and environment

Question 5

after 1990\s ?

Answer 5

changiong poverty focus, economic analysis of corruption, decentralization, cooperation, trust, participation

Question 6

Describe First Generation of DEvelopment economics

Answer 6

visionaries : trying to establish role of development economics in economics

• decolonisation : independent states were in need of advice to accelerate development
• Grand Theories: deducting strategies, ;leading to analyzing macro variables.
• we’ve experienced structurtal transformation from agriculture to industry focus, as well as interventionist role of the state
• accelerated per capita growth through capital accumulation. This lead to creation of transferring growth models (keynsian l sollow )
• There’s also been a huge criticism of neoclassical approaches. Sollution to this was a strong state. (contribution to capital formation, labour markets, distribution of wealth etc)
• Structuralism school : market system discriminates and marginalises the poor
• Establishing gigantic planning commissions. based on input output model (Jan Tinbergen) in places such as Africa and India = as a result of this, inward looking strategies due also to pessimism in international trade and globalisation at the time.

Question 7

Define Rostow’s law of stages of development

Answer 7

1) Traditional society. This is an agricultural economy of mainly subsistence farming, little of which is traded. The size of the capital stock is limited and of low quality resulting in very low productivity and very little surplus output left to sell in domestic and overseas markets
2) Pre-conditions for take-off. Agriculture becomes more mechanised and more output is traded. Savings and investment grow, to perhaps 5% of GDP. Some external funding is required.
3) Take-off. Manufacturing assumes greater importance, although the number of industries remains small. Political and social institutions develop - external finance may be required. Savings and investment grow, perhaps to 15% of GDP. Agriculture assumes lesser importance in relative terms
4) Drive to maturity. Industry becomes more diverse. Growth should spread to different parts of the country as technology improves
5) Age of mass consumption. Output levels grow, enabling increased consumer expenditure. There is a shift towards tertiary sector activity

Question 8

Criticisms of breaking up vicious circles of poverty

Answer 8

Insufficient