Economic Development: Lewis Turning Point

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What is the term used to describe the point where the marginal product of rural labor is no longer zero?

Modernization point

Lewis turning point (correct)

Urbanization point

Industrialization point

What is the result of the structural transformation of the economy in the Lewis model?

The modern sector becomes less important in the economy

Rural areas experience rapid economic growth

The balance of economic activity shifts from traditional rural agriculture to modern urban industry (correct)

The balance of economic activity shifts from urban industry to rural agriculture

What is a criticism of the Lewis model's assumption about urban labor markets?

The assumption of surplus labor in urban areas

The assumption of a constant urban wage

The assumption of a competitive labor market (correct)

The assumption of full employment in urban areas

According to the Lewis model, what happens to the labor supply curve as modern-sector wages and employment continue to grow?

It becomes positively sloped Signup and view all the answers

What is a flaw in the Lewis model's assumption about labor transfer and employment creation?

It assumes a proportional rate of labor transfer to modern-sector capital accumulation Signup and view all the answers

What is a consequence of the Lewis turning point on food production?

Food production decreases Signup and view all the answers

What is a key aspect of structural-change theory in transforming underdeveloped economies?

Transforming from agriculture to modern, urbanized, and industrial economy Signup and view all the answers

What is a main idea behind the Lewis Theory of Economic Development?

Promoting industrialization by absorbing surplus labor from the agricultural sector Signup and view all the answers

What is a characteristic of the 'patterns of development' empirical analysis by Hollis B. Chenery and his coauthors?

An empirical analysis of development patterns Signup and view all the answers

What is a key factor lacking in many underdeveloped economies, according to the text?

All of the above Signup and view all the answers

What is a goal of the structural-change approach to development?

Transforming to a modern, urbanized, and industrially diverse economy Signup and view all the answers

Who formulated a well-known theoretical model of development that focused on the structural transformation of a primarily subsistence economy?

W. Arthur Lewis Signup and view all the answers

Why may urban dwellers' demand be more concentrated in manufactured goods?

Food must be processed to prevent spoilage during transportation Signup and view all the answers

What is necessary for achieving industrialization?

A big push to urbanization Signup and view all the answers

How does an investing firm lower its own costs by using infrastructure?

By contributing indirectly to lowering the average cost of infrastructure use Signup and view all the answers

What is a characteristic of infrastructure such as roads, railroads, and ports?

It is not tradable across regions Signup and view all the answers

Why is there underinvestment in training facilities?

Because entrepreneurs know that the workers they train may be enticed away by rival firms Signup and view all the answers

Why is there too little demand by workers for training?

Because they do not know what skills to acquire Signup and view all the answers