Contemporary Models of Development & Underdevelopment Flashcards
These are actions taken by agents such as a firm, worker, or organization that increases the motivation for other agents to take similar actions.
Complementaries
What will arise if the agents cannot coordinate their behavior or choices to economic choices that lead to a progressive outcome?
Coordination Failure
What are the different kinds of economic models?
(DUMBOCP)
Deep Intervention
Underdevelopment Trap
Middle-income Trap
Big Push
O-ring Model
It is the concerted, economy-wide, and typically public policy-led effort to initiate or accelerate economic development across a broad spectrum of new industries and skills.
Big Push
It’s an economic model in which production functions exhibit strong complementarities among inputs.
O-ring Model
It is the condition in which an economy begins development to reach middle-income status but is chronically unable to progress to high-income status.
Middle-income Trap
It’s a poverty trap at the regional or national level in which impoverishment tends to perpetuate itself over time.
Underdevelopment Trap
It is a government policy that can move the economy to a preferred equilibrium or even a higher permanent rate of growth, which can then be self-sustaining.
Deep Intervention
It is an action taken by one agent that decreases the incentives for other agents to take similar actions.
Congestion
It is a situation in which all parties would be better off cooperating than competing; but once cooperation has been achieved, one party would gain the most by cheating, provided that others stick to cooperative agreements, thus causing any agreement to unravel.
Prisoners’ Dilemma
This model suggests that since organizational decisions of firms depend on the decisions/initiatives reinforced by other firms, public policy must pave the way for decisions that lead to development.
Big Push
This model suggests that even the smallest components of a complex production process must be performed properly if the end product of the process is to have any useful value.
O-ring Model
This model means a mistake that creeps into even the smallest tasks can cause the final product to possess absolutely no value to users.
O-ring Model
This model suggests that developing countries must focus on increasing capacity to innovate and mandating economic reforms in order to reach high-income status.
Middle-income Trap
It is often related to low capacity for original innovation or absorption of advanced technology and may be compounded by high inequality.
Middle-income Trap
This is influenced by several factors such as high population growth, low education levels, few domestic resources, and unstable political systems.
Underdevelopment Trap
This model suggests that governments must facilitate equal distribution of wealth and act towards eliminating inequalities in terms of social ranks.
Underdevelopment Trap
It pertains to the social balance in the opposing aspects within a nation.
Equilibrium
This model suggests that governments must concentrate their efforts on other crucial problems that have an essential role.
Deep Intervention
What is the opposite of a complementarity?
Congestion
It pertains to an economic condition in which a group of firms cannot achieve a more desirable equilibrium or outcome due to coordination failure.
Multiple Equilibria
It is the balance of supply and demand in the market or balance of any opposing aspects relevant to achieve social stability.
Equilibrium
What are the problems of Multiple Equilibria?
(IPULTI)
Intertemporal Effects
Poverty Trap
Urbanization Effects
Linkages
Training Effects
Infrastructure Effects
These describe how an individual’s current decisions affect what options become available in the future.
Intertemporal Effects
These describe a scenario between traditional cottage industries of rural societies and the manufacturing intensive focus of urban people.
Urbanization Effects
These describe a scenario wherein a company engages in building massive facilities to realize profitability and cater to increasing demand of product sectors.
Infrastructure Effects
These describe a scenario wherein firms underinvest in pre-boarding programs and facilities in order to provide higher wages for their workers.
Training Effects
These involve connections between firms based on sales.
Linkages
What happens when a firm buys a good from another firm to use as an input?
Backward Linkage
This occurs when a firm sells to another firm.
Forward Linkage
What occurs when the output increases by a larger proportion than the increase in inputs during a production process?
An increasing return to scale
This involves a bad equilibrium for a family, community, or nation relating to a vicious circle in which poverty and underdevelopment lead to more poverty and underdevelopment.
Poverty Trap
Logically, investments will be released on the current period if it is expected that the demand will be what?
High (in the second period)
What will cause many product sectors to invest simultaneously?
If there’s an expectation that the demand will be high.
Despite making the product sector invest simultaneously, what does the market not ensure?
That industrialization will occur
Despite making the product sector invest simultaneously, what does the market not ensure?
That industrialization will occur
What is necessary to the urbanization to achieve industrialization?
A big push
A big push to urbanization is necessary to achieve industrialization if a nation requires what to support its basic needs?
More manufactured products
Efficient industrialization may not take place if what problems are present?
Coordination problems
To whom is an economic case for when ensuring that graduates of a nation have enough skillset and require little training once they are deployed?
Mandatory public education
What are significant for industrialization strategy when one or more industries involved have increasing returns to scale, of which a larger market takes advantages?
Backward and Forward Linkages
When has a firm experienced an increasing return to scale?
If the input is increased by three times, but output increases by 3.75.
When a firm produces as much as the average output of other firms, the economy is at what?
Equilibrium
What does the curve represent in the graph for multiple equilibria?
Alternative Output Decisions
What does it mean if the curve in the graph of Multiple Equilibria intersects with the 45-degree line at 3 points?
There are 3 equilibria
