Lecture 10 : Development Theory and Pathways Flashcards
What are the ywo features of the definition for the developement
1- historic definition
2- as the economy expands, its character changes too
Second definition of the development
economic development is endogenous to the development process
So in other words, where a country is in its development process changes ita vision of development
How countries change as they ‘develop’ ??
1- Economic structural change
Exports & imports increase with GDP
Accumulation of capital increases with GDP
Share of agriculture falls and industry & services
rise with GDP/capita
2- Urbanization
Economies of agglomeration
Economies of scale
3- Inequality
Kuznet’s curve
Explain :
How countries change as they ‘develop’
Economic structural change
Eports & imports increase with GDP
Accumulation of capital increases with GDP
Share of agriculture falls and industry & services
rise with GDP/capita
Explain Engel’s Law
As the income increases, the share of income spent on food decreases .
++$$$ for savings, spent of manufactured goods and services
What are the two reasons that explain that as an economy grows, the agricultural sector goes down
1- engel’s LAw
2- Agricultures becomes +++ productive as economy grows
so it freezes up labour
Explain how Urbanization chnages as countries develop
Economies of agglomeration
Economies of scale
Explain how Inequality changes as countries develop
Kuznet’s curve
As countries change, they first see an increase in inequality ans then a decrease.
Theories of economic development
Stages of growth
Two-sector model
Dependency theory
Endogenous growth theory
Explain the stages of growth theory
invented by al rustal in 1960
countries go tru stages like an airplane on the airway
What makes the plane take off ?
Savings + Investments
So a country need to adopt policis to enable savings
So foreigh assiatance comes from rustand
Explain the two sector model theory
As u bring +++ pppl in the rural sector, u get them working in factories and it makes them be +++ productive ppl.
trough industrialization
increase of capital investment
( ex railways in US whereahres were sold to the public )
Explain the dependency theory
Counties that developed first are taking advantage of the ones that developed second.
The global system of then world serves the interest of the wealthy
Explain the Endegenous growth theory
1- itès not the amount of inputs that matters.
Itès the interaction btw capital and people
Ex: trough taxes
Paths to economic growth
Primary products exports
Inward-looking industrialization (ISI)
Export-oriented industrialization (EOI)
Explain the PPE
Primary product exports
Export agricultural products, timber, fish,
oil and gas, minerals
Comparative advantage
Growth based on:
New resources
Improved use of existing resources
Linkage effects
fiscal, production and consumption linkages
Canada, US = goooodddd
But no good for some other countries : argentina
Problems:
There can be very low demand for only one product
Sluggish demand, volatile prices & unbalanced
growth
