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Questions and Answers
What does the Harrod-Domar model primarily assume about the capital-output ratio?
What does the Harrod-Domar model primarily assume about the capital-output ratio?
The Harrod-Domar Model considers labor force growth as a crucial factor for economic growth.
The Harrod-Domar Model considers labor force growth as a crucial factor for economic growth.
False
What were the primary conditions that facilitated the success of the Marshall Plan in Europe?
What were the primary conditions that facilitated the success of the Marshall Plan in Europe?
Necessary structural, institutional, and attitudinal conditions.
Underdevelopment is primarily due to __________ of resources within a country.
Underdevelopment is primarily due to __________ of resources within a country.
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Match the economic models with their respective characteristics:
Match the economic models with their respective characteristics:
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According to the discussed theories, what is necessary but not sufficient for development?
According to the discussed theories, what is necessary but not sufficient for development?
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The Lewis Two-Sector Model does not account for surplus labor in the subsistence sector.
The Lewis Two-Sector Model does not account for surplus labor in the subsistence sector.
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What is the main focus of the economies of poor countries in the context of development?
What is the main focus of the economies of poor countries in the context of development?
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Which model suggests that developing nations have failed due to wrong economic strategies provided by Western economists?
Which model suggests that developing nations have failed due to wrong economic strategies provided by Western economists?
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The Dualistic-Development Thesis supports the idea that poverty and wealth co-exist in developing countries.
The Dualistic-Development Thesis supports the idea that poverty and wealth co-exist in developing countries.
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What does the term 'dualism' refer to in the context of developing nations?
What does the term 'dualism' refer to in the context of developing nations?
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The _________ rejects the Chenery Model, arguing that there are no standard patterns of development for poor countries.
The _________ rejects the Chenery Model, arguing that there are no standard patterns of development for poor countries.
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Match the following theses with their descriptions:
Match the following theses with their descriptions:
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Which of the following is NOT one of the four key arguments of the Dualistic-Development Thesis?
Which of the following is NOT one of the four key arguments of the Dualistic-Development Thesis?
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The International-Dependence Revolution provides extensive insight into how countries can sustain development.
The International-Dependence Revolution provides extensive insight into how countries can sustain development.
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Developing countries are often under direct and indirect economic control of their _________ oppressors.
Developing countries are often under direct and indirect economic control of their _________ oppressors.
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What is one argument made by the International-Dependence Revolution regarding economic policy for developing countries?
What is one argument made by the International-Dependence Revolution regarding economic policy for developing countries?
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The Neoclassical Counter-Revolution advocates for increased government intervention in economic activities in developing countries.
The Neoclassical Counter-Revolution advocates for increased government intervention in economic activities in developing countries.
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What economic approach does the Neoclassical Counter-Revolution recommend for developing countries?
What economic approach does the Neoclassical Counter-Revolution recommend for developing countries?
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The Neoclassical Counter-Revolution argues that underdevelopment results primarily from __________.
The Neoclassical Counter-Revolution argues that underdevelopment results primarily from __________.
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Match the following concepts with their corresponding descriptions:
Match the following concepts with their corresponding descriptions:
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What term describes an economy with a high degree of government intervention and regulation?
What term describes an economy with a high degree of government intervention and regulation?
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According to the Neoclassical Counter-Revolution, what is a major cause of underdevelopment in developing nations?
According to the Neoclassical Counter-Revolution, what is a major cause of underdevelopment in developing nations?
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The Free-Market Approach assumes that government intervention in the economy is beneficial.
The Free-Market Approach assumes that government intervention in the economy is beneficial.
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The Neoclassical Counter-Revolution was primarily influenced by advocating for increased state control over production.
The Neoclassical Counter-Revolution was primarily influenced by advocating for increased state control over production.
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The approach that suggests developing countries should limit ties with developed countries is known as __________.
The approach that suggests developing countries should limit ties with developed countries is known as __________.
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Name one of the Asian tiger economies that exemplify successful laissez-faire economics.
Name one of the Asian tiger economies that exemplify successful laissez-faire economics.
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The _____ hand of market prices is often cited to explain how resources are allocated in a free market.
The _____ hand of market prices is often cited to explain how resources are allocated in a free market.
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Match each approach to its basic principle:
Match each approach to its basic principle:
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Which of the following is a characteristic of the Public-Choice or New Political Economy Approach?
Which of the following is a characteristic of the Public-Choice or New Political Economy Approach?
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Governments should intervene in all aspects of the economy according to the Market-Friendly Approach.
Governments should intervene in all aspects of the economy according to the Market-Friendly Approach.
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What is considered an inefficient outcome of state-owned enterprises?
What is considered an inefficient outcome of state-owned enterprises?
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What is suggested as a necessary approach for developing nations to respond to local constraints?
What is suggested as a necessary approach for developing nations to respond to local constraints?
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Neoclassical theory applies universally to all economies without question.
Neoclassical theory applies universally to all economies without question.
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What type of government intervention is necessary in markets that do not operate efficiently?
What type of government intervention is necessary in markets that do not operate efficiently?
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Development economics lacks a __________ accepted doctrine or paradigm.
Development economics lacks a __________ accepted doctrine or paradigm.
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Match the following concepts with their descriptions:
Match the following concepts with their descriptions:
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What enables governments to influence socially optimal resource allocations?
What enables governments to influence socially optimal resource allocations?
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Developing economies should completely avoid markets in favor of government control.
Developing economies should completely avoid markets in favor of government control.
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What can well-formulated government policies do for markets?
What can well-formulated government policies do for markets?
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Which of the following is a stage in Rostow's Stages of Growth Model?
Which of the following is a stage in Rostow's Stages of Growth Model?
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The Harrod-Domar Growth Model suggests that increased investment leads to slower economic growth.
The Harrod-Domar Growth Model suggests that increased investment leads to slower economic growth.
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What is the primary focus of the Linear-Stages-of-Growth Model?
What is the primary focus of the Linear-Stages-of-Growth Model?
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The age of high mass consumption is the __________ stage in Rostow's Stages of Growth Model.
The age of high mass consumption is the __________ stage in Rostow's Stages of Growth Model.
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What is a limitation of Rostow's Stages of Growth Model?
What is a limitation of Rostow's Stages of Growth Model?
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Match the following models to their key characteristics:
Match the following models to their key characteristics:
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Underdevelopment is solely caused by external factors according to the Linear-Stages-of-Growth Model.
Underdevelopment is solely caused by external factors according to the Linear-Stages-of-Growth Model.
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What is considered a prerequisite for the 'take-off' stage in Rostow’s Model?
What is considered a prerequisite for the 'take-off' stage in Rostow’s Model?
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Study Notes
Linear-Stages-of-Growth Model (1950s and 1960s)
- Series of successive stages all countries must pass to achieve development
- Right amount and mix of saving, investment, and foreign aid. Based on the more developed countries' experiences
- Underdevelopment is internally driven, with internal constraints within the country.
- Rostow's Stages of Growth Model (Walt Rostow): Five stages.
- Traditional society
- Pre-conditions for take-off
- Take-off
- Drive to maturity
- Age of high mass consumption
- Developed countries have passed the "take-off" stage
- Developing countries need to follow rules of development to take-off
- Mobilization of savings generates investments
- Harrod-Domar Growth Model (Roy Harrod and Evsey Domar)
- More investment leads to faster growth
- Higher capital stock from increased investment leads to growth and then savings.
- Limitations/Implications
- Rostow's model is based on Western experiences, may not be applicable to all countries. Biased towards the Western model
- Rostow's model assumes all countries want the same outcome and development measures.
- Harrod-Domar Model: assumes a constant capital-output ratio. Economic growth can be improved with better investment efficiency. Doesn't account for labor force growth or technological change. Low level of new capital formation in poor countries.
Theories and Patterns of Structural Change (1970s)
- Economies of poor countries transform from agriculture to urbanized, industrialized economies.
- Underdevelopment results from underutilization of resources as well as structural or institutional factors (including domestic and international dualism)
- Lewis Two-Sector Model (W. Arthur Lewis, later modified by John Fei and Gustav Ranis)
- Two sectors
- Traditional, rural subsistence sector (surplus labor).
- Modern industrial sector (productivity, high output)
- Surplus labor moves from the traditional sector and increases industrial sector productivity
- Emphasis on how labor transfer, and industrial investment growth, contribute to development.
- Two sectors
- Patterns-of-Development Analysis (Chenery Model)
- Examines patterns of development for numerous countries throughout the post-war period. Identifies specific characteristics like agricultural to production shifts, capital and skill accumulation, and urbanization changes.
International-Dependence Revolution (1970s)
- Developing countries are affected by institutional, political, and economic rigidities. Internal and international constraints.
- Dependence and dominance relationships with richer countries
- Underdevelopment is driven by external factors.
- Recognition of power imbalances in international relations.
- International dependence emphasizes reforms to economic, political, and institutional structures.
- Neocolonial Dependence Model
- Underdevelopment due to continuing exploitative policies of former colonial powers.
- Economic, political, and cultural policies.
- Historical evolution of unequal international capitalist relationships
- Poverty and underdevelopment in developing countries is caused by structures of industrial capitalism in rich countries.
- False-Paradigm Model
- Incorrect development strategies/models (provided by Western economists) have caused development failure.
- Faulty advice from developed countries
Neoclassical Counter-Revolution (1980s and 1990s)
- Resurgence of free-market/neoclassical orientation in development
- Government intervention slows economic growth, Underdevelopment caused by inefficient government policies
- Developing countries should promote free markets and laissez-faire economics
- Government intervention is bad for promotion of economic development
- Markets are efficient
- Neoclassical Counter Revolution (highlights the importance of individual incentives, deregulation, and free markets)
- Free-Market Approach
- Market efficiency: intervention is counterproductive.
- Public-Choice or New Political Economy Approach
- Self-interest guides all individual behavior; government is inefficient and corrupt
- Minimal government is best.
- Market-Friendly Approach
- Markets are inefficient in certain aspects and government can improve markets
- Free-Market Approach
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Description
Explore the Linear-Stages-of-Growth Model from the 1950s and 1960s, which outlines the successive stages all countries must traverse to achieve development. Learn about Rostow's Stages of Growth and the Harrod-Domar Growth Model, including their implications and limitations. This quiz will test your understanding of economic development theories.
