Theories of Economic Development Flashcards
What is the main focus of classical economic development theory?
Classical theory emphasizes free markets and capital accumulation as drivers of development.
Which theory argues that government intervention is necessary to stimulate demand and drive growth?
Keynesian Development Theory.
What does the Lewis Two-Sector Model explain?
It describes economic growth through the transition of labor from traditional agriculture to modern industry, increasing productivity.
According to dependency theory, why do developing countries struggle to grow?
Dependency on developed nations limits growth potential, necessitating self-reliant strategies.
What is the central idea of endogenous growth theory?
Economic development is driven by knowledge, human capital, and innovation rather than just capital and labor.
How does modernization theory propose that developing countries achieve growth?
By adopting the cultural, institutional, and economic patterns of Western societies.
What are the stages in Rostow’s “Stages of Growth” model?
Traditional society, preconditions for takeoff, takeoff, drive to maturity, and high mass consumption.
Which theory highlights the role of research and development (R&D) in long-term growth?
Endogenous Growth Theory.
What does the Kuznets Hypothesis suggest about income inequality during development?
Inequality increases initially but decreases as a society becomes industrialized.
What is a key criticism of modernization theory?
It assumes all societies must follow a linear path similar to Western development, ignoring cultural and historical differences.
