The Strategy of Economic Development Chapter 1 Flashcards
Before 1914, and arguably until 1929, what held centre stage in regards to optimising chances of development?
Natural resources
Does Hirschman believe the problem of development to be absence or scarcity of human type or factors of production?
No - development instead depends on calling forth and enlisting, for development purposes, resources and abilities that are hidden, scattered or badly utilised
What do economists called Hirshman’s situation with respect to labour?
disguised unemployment
What does Gerschenkron say about development as a deliberate attempt at catching up?
Intensity and other specific characteristics of the developmental efforts of the principle Continental European countries were conditioned by the relative degree of backwardness in relation to the industrial leaders that was exhibited by each of these countries when it started its industrialisation
What is the “binding agent” required for development?
According to Hirschman, it consists in a “growth perspective” which includes not only the desire for economic growth but the perception of the essential nature of the path leading towards it
What is the problem with the group-focused image of change?
Group-focused societies are communal, cooperative and cohesive- members have a defined place and role
Individual improvement could only take place at the expense of other members and the cohesiveness therefore exceptional performance is discouraged and penalised by social mechanisms (such as the accusation of witchcraft)
What is the problem with the ego-focused image of change?
Happens in stagnant and individualistic societies- the individual doesn’t identify himself with society
Such communities are marked by the repeated ‘circulation of the elite’ where blocs of wealth and power form, only to disintegrate and be replaced by similar new blocs
What approach should then be taken?
Cooperative approach: the US has long recognised and cultivated this approach and “human engineering” has come to occupy a prominent position in the thinking of corporation executives
What is “human engineering”?
The ability to engineer agreements among all interested parties, such as the inventor of the process, the partners, the capitalists, the suppliers of the parts etc.
What is Hirschman’s balanced growth theory?
The idea that in order not to stunt growth, the various sectors of an economy will have to grow jointly in close proportion
What is the benefit of the seesaw approach over the balanced growth theory?
The seesaw method leaves considerable scope to induced investment decisions and therefore economises the principle scarce resource: genuine decision making
According to Hirschman, what is the purpose of development policy?
To maintain tensions, disproportions and disquilibria to keep the economy moving ahead
What is the complementarity effect of investment?
To make investment decisions particularly easy or compelling
What is the phenomenon of “entrained want”?
Where the increased availability of one commodity does not compel a simultaneous increase in supply of another commodity but induces slowly, through a loose kind of complementarity in use, an upward shift in its demand schedule
In what type of countries does induced investment find its validity?
In countries with a fully built-up industrial and agricultural structure where increases in demand lead to increases incapacity designed to keep marginal costs from entering the area in which they would begin to rise steeply
