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econ 314 > structural change > Flashcards

structural change Flashcards

1
Q

structural change

A

when some sectors in an economy expand while others shrink, we refer to this as structural change

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2
Q

capital flight

A

investing their capital in worldwide markets instead of in the domestic economy

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3
Q

patronage

A

the creation of inefficient jobs as a way to buy votes

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4
Q

sectoral growth

A

the expansion of specific sectors of the economy

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5
Q

balanced growth

A

all economic sectors grow at the same rate

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6
Q

unbalanced growth

A

sectors grow at different rates

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7
Q

sectoral composition

A

a change in the weight of each sector in terms of the economy’s output

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8
Q

intersectoral linkages

A

the effects of conditions in one sector on other related sectors

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9
Q

backward linkages

A
  • effects on upstream sectors that play the role of suppliers for a given sector
  • promotes development of suppliers
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10
Q

forward linkages

A
  • effects on downstream sectors that are clients for a given sector
  • promote downstream customer sectors
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11
Q

big push theories

A

theories that promote the idea that development can only be successful when a government makes efforts to expand, simultaneously, various sectors on a very large scale

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12
Q

complementaries

A
  • complementaries exist when the objects must be combined in certain proportions in order to be effective
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13
Q

coordination problems

A

occur when each sector makes independent decisions but one sector’s decision depends on another sector’s decision

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14
Q

development banks

A

specialize in giving long-term loans for development purposes (export-oriented industrial firms)

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15
Q

import substitution strategies

A

focus on the development of a country’s domestic industry with the objective of a gradual decline in imports of industrial products while the domestic sectors develop

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16
Q

export promotion strategies

A

focus on developing competitive sectors for the successful export of products to the world market

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17
Q

terms of trade

A

the ration of the export price index to the import price index

18
Q

prebisch-singer hypothesis

A

countries specializing in exports of primary commodities are doomed to experience a decline in their terms of trade. based on idea that as the world economy develops, demand for primary commodities will fall behind the demand for manufactured goods.

19
Q

primary commodities

A

raw materials, agricultural products

20
Q

import substitution

A

following the path of industrialization such that domestic industry and manufacturing would replace imports from advanced industrialized countries

21
Q

infant industries

A

newly established firms that did not have a foothold in the global marketplace, or the experience and knowledge of long-established industries

22
Q

export promotion

A

employing policies that included preferential credit for exportation firms, easy access to imports, and even governmental subsidies to help firms offer competitive prices -> encouraged industries to develop and export competitive products on world markets

23
Q

poverty trap

A

if a country is very poor, it cannot afford to save because it must allocate all of its income to consumption with no resources left for investment.

24
Q

three assumptions of lewis model

A
  • labor can be moved from agriculture to industry at no cost
  • the labor market in the modern sector is competitive, and given excess labor in the agricultural sector, wages remain at subsistence level
  • profits from the modern sector are reinvested only in that sector
  • free movement, subsistence wage, reinvesting
25
Q

lewis model limitations

A
  • initial scarcity of capital limits growth
  • profits not always reinvested domestically
  • inefficient government investment
  • unions
  • creation of informal sectors
26
Q

role of institutions in lewis model

A
  • high taxes, regulation, corruption, inflation, expropriation -> capital flight
  • gov-directed industrialization -> patronage
27
Q

assumptions of harris-todaro model

A
  • migration is a rational decision
  • decision based on expected wage
  • the probability of obtaining a city job inversely related to urban unemployment
28
Q

flexible wage case equilibrium

A

Wa = Lm / Lurb) x Wm: wages in agriculture and manufacturing are equal and there is no urban unemployment

29
Q

urban fixed wage equilibrium

A

Wa = Lm / Lurb (Wm): fixed wages in urban creates unemployment in that sector

30
Q

expected wage equation harris-todaro

A

prob of job x wage = (Lm / Lurb) x Wm

31
Q

harris-todaro implications

A
  • excess migration
  • urban congestion
  • adverse effects of rural edu
  • higher unemployment
  • response: restrict migration or increase rural income
32
Q

asian miracle

A
  • export promotion
  • strong institutions to provide the framework for competition and respect for the “rules of the game”
  • at least partly due to close communication coordination between governments and the private sectors and among complementary sectors such as steel and autos
33
Q

flying geese model

A

intends to explain the catching up process of industrialization of latecomer economies

34
Q

intra-industry

A

product development with a particular developing country, with a single industry growing over three time-series curves: import, production, export

35
Q

inter-industry

A

sequential appearance and development of industries in a particular developing country, with industries being diversified and upgraded from consumer goods to capital goods and/or from simple to more sophisticated producs

36
Q

international aspect

A

subsequent relocation process of industries from advanced to developing countries during the latter’s catching-up process

37
Q

main drive of fg model

A
  • ‘leader’s imperative for internal restructuring’ due to increasing labor costs
  • leade goose shifts from labor intensive to capital intensive based on comparative advantage
  • sheds it low-productivity production to nations further down in the hierarchy in a pattern then reproduces itself between the countries in lower ties
38
Q

Trade openness

A

the share of exports to GDP

39
Q

Trade share

A

region’s exports as a percentage of world exports

40
Q

theory of comparative advantage

A
  • explains how
    economies benefit from trade through specialization and,
    therefore, greater efficiency
  • provides the justification for free trade that is almost
    unanimously accepted among economists.

econ 314 (3 decks)

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