Sustainable Development and Growth Models
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Questions and Answers

What is the main difference between the Kaldor's and Romer's stylized facts?

Kaldor's stylized facts focus on broad, empirical regularities in growth patterns across economies, while Romer's stylized facts focus on the role of knowledge, technology, and innovation in driving growth.

What are the three main inputs of the Solow Model's production function?

  • Capital, Labor Input, and Natural Resources
  • Labor Input, Knowledge, Efficiency
  • Capital, Labor Input, Technical knowledge and efficiency (correct)
  • Capital, Labor Input, Technical Knowledge

    • What are the two main reasons for lower GDP per capita in China compared to other countries?

    The two main reasons are the large difference in capital per worker and the role of productivity, which indicates how efficiently capital and labor are combined.

    Adjusting GDP per capita using PPP (Purchasing Power Parity) always leads to lower income in a poorer country compared to a richer country.

    <p>False</p> Signup and view all the answers

    What are the three major structural problems that hinder economic growth in sub-Saharan Africa?

    <p>The three main structural problems are low levels of state capacity and institutional quality, political unrest and lack of education and infrastructure, and over-reliance on commodities.</p> Signup and view all the answers

    Which countries are cited as examples of successful export-led growth strategies?

    <p>South Korea, Taiwan, and China</p> Signup and view all the answers

    What is the main problem associated with countries relying heavily on external financing for infrastructure development?

    <p>The main problem is that it can lead to debt dependency, making the country vulnerable to debt distress, reduced autonomy or regime instability.</p> Signup and view all the answers

    What are the main risks associated with Special Economic Zones (SEZs)?

    <p>Both A and B</p> Signup and view all the answers

    What are the three main factors that hinder growth and sustained development according to the World Bank?

    <p>The three main factors are lack of adequate infrastructure outside SEZs, bureaucratic inefficiencies, and lack of skilled labor.</p> Signup and view all the answers

    The chaebol system in South Korea can be considered a necessary evil, as it played a key role in the rapid economic transformation following the Korean War.

    <p>True</p> Signup and view all the answers

    What is the main problem associated with the limited employment opportunities offered by Chaebols in South Korea?

    <p>The main problem is that it creates a wage gap between large and small firms, stifling entrepreneurship and hindering broader job creation.</p> Signup and view all the answers

    What are the two main economic and social issues associated with the rapid influx of youth in developing countries?

    <p>The two main issues are weak economic growth, leading to a lack of employment opportunities, and mismatched education and actual demand, resulting in overeducation or overskilling, which means individuals are overqualified for available jobs.</p> Signup and view all the answers

    What is the main difference between the Human Development Index (HDI) and the Human Capital Index?

    <p>The HDI measures how development has improved human life across three dimensions: health, education, and income. The Human Capital Index, however, measures the amount of human capital that a child born today can expect to attain at age 18.</p> Signup and view all the answers

    Underinvestment in human capital development is mainly due to high upfront costs and delayed returns, making it difficult for the poor to invest in education.

    <p>True</p> Signup and view all the answers

    Which of the following is NOT a policy solution to increase affordability of education?

    <p>Increased reliance on private sector funding</p> Signup and view all the answers

    What are the two main reasons why urban bias exists in policymaking?

    <p>Belief that investments in urban industry yield higher returns and greater political clout of urban populations</p> Signup and view all the answers

    What are the two main limitations of the service sector in driving structural transformation in developing countries?

    <p>The two main limitations are weak structural change due to limited labor absorption from lower-productivity sectors and barriers to entry for women, hindering the growth of business services.</p> Signup and view all the answers

    Strong link between rural-urban migration and industrialization is observed only in Western Europe and the United States.

    <p>False</p> Signup and view all the answers

    What is the main reason for limited job creation in urban areas of Sub-Saharan Africa despite significant rural-urban migration?

    <p>The main reason is the limited job creation in urban areas, leading to high urban unemployment.</p> Signup and view all the answers

    The sorting effect in migration implies that people with higher education levels, skills and abilities, are more likely to migrate to urban areas.

    <p>True</p> Signup and view all the answers

    What are the three main policy approaches needed to address the rural youth employment challenge in fragile contexts?

    <p>The three main policy approaches are 1) promoting rural livelihoods, 2) supporting the flow of people and integration of migrants in destination areas, and 3) addressing the immediate needs of migrants and fostering long-term solutions.</p> Signup and view all the answers

    What is the main aim of vocational training?

    <p>To address educational mismatch and/or overeducation/overskilling</p> Signup and view all the answers

    What are the two main objectives of aligning industrial and educational policies in terms of skill demand and supply?

    <p>The two main objectives are 1) promoting adaptive and forward-looking educational policies and 2) ensuring that vocational training is focused on labor demand.</p> Signup and view all the answers

    Which of the following is NOT a key indicator used to measure the quality and quantity of education provision?

    <p>Gross National Income per capita</p> Signup and view all the answers

    What are the main reasons why the poor often face difficulty investing in education?

    <p>The main reasons are high upfront costs and delayed returns, uncertainty about future demands, lack of information, time constraints (due to work or family responsibilities), and credit constraints.</p> Signup and view all the answers

    Positive correlation between a country's income level and educational attainment implies that countries with higher income levels tend to have higher levels of educational attainment.

    <p>True</p> Signup and view all the answers

    What are the three main concerns associated with government investment in higher education?

    <p>The three main concerns are pressure to publish, constraints on free speech, and a focus on research rather than addressing broader societal needs like health and social protection.</p> Signup and view all the answers

    What are the two main problems that contribute to youth unemployment in developing countries?

    <p>The two main problems are weak economic growth, leading to a shortage of high-quality jobs, and a mismatch between education and the demand for skills in the labor market, resulting in overeducation or overskilling.</p> Signup and view all the answers

    The demographic dividend occurs when the share of the working-age population in a country exceeds the global average, potentially leading to higher economic growth.

    <p>True</p> Signup and view all the answers

    What are the two major challenges faced by LMICs (low and middle-income countries) due to population aging?

    <p>The two major challenges are 1) strains on weak formal health systems, burdening families and making healthcare more expensive, and 2) concerns about the sustainability of pension systems and how to finance long-term care for an aging population.</p> Signup and view all the answers

    China's one-child policy has led to a decrease in the share of its working-age population, potentially slowing down economic growth.

    <p>True</p> Signup and view all the answers

    What are the five stages of the demographic transition?

    <p>The five stages are 1) pre-industrial society, 2) early industrialization, 3) late industrialization, 4) post-industrial society, and 5) declining population.</p> Signup and view all the answers

    The demographic dividend is a period when the share of the working-age population in a country exceeds the global average.

    <p>True</p> Signup and view all the answers

    What are the two main challenges faced by high-income countries (HICs) due to population aging?

    <p>The two main challenges are 1) strains on healthcare systems, as an aging population requires more healthcare services, and 2) concerns about the sustainability of pension systems, which are funded by a shrinking workforce.</p> Signup and view all the answers

    What are the three main policy areas that need to be addressed to mitigate the effects of population aging on economic performance and health?

    <p>The three main policy areas are 1) fertility policies, 2) education policies, and 3) labor and health policies.</p> Signup and view all the answers

    Study Notes

    Sustainable Development for Emerging Markets

    • Growth is a more basic measure, focusing on income increase, poverty reduction, and income inequality.
    • Development is a more complex measure, looking at increased living standards, employment opportunities, GNI (Gross National Income) at PPP (Purchasing Power Parity), and GDP per capita at PPP.
    • Important measures for assessing growth include GDP, GNI, Gini index, Lorenz curve, HDI (Human Development Index), education, health, and access to finance.
    • Sources of growth and development include capital, labor, technology, and institutions.
    • The BRICS countries are Brazil, Russia, India, China, and South Africa.

    Endogenous Growth – Romer Model

    • Kaldor's Stylized Facts emphasize broad, empirical regularities in growth patterns across economies that are relatively consistent across developed economies.
    • Romer's Stylized Facts pinpoint knowledge, technology, and innovation's role in driving growth. It also illustrates the dynamic interplay between capital and knowledge for sustained growth.

    Solow Model

    • The Solow Model identifies inputs (capital, labor input, technical knowledge, and efficiency) as necessary factors in a production function.
    • The model addresses differences seen in GDP per capita across countries like China by considering variations in capital per worker and efficiency of capital and labor combination within a country.
    • Investment, calculated as saving (less depreciation), is crucial for output per capita growth.

    Economic Growth

    • Adjusting GDP per capita using PPP minimizes differences between richer and poorer countries.
    • Long-term changes due to the industrial revolution include high growth rates and medium GDP, alongside rapid population growth.
    • Sub-Saharan countries face structural issues, hindering growth from low capacity and weak institutions, poor education and infrastructure, and an over-reliance on resource extraction.
    • Recent trends in growth show resilience in parts of Asia, with swift rebounds through robust manufacturing, strong domestic demand, and effective pandemic responses; also, issues in Africa and Latin America from longstanding structural issues.
    • Human capital levels are often higher than expected economic output in certain countries, but lower in others.

    Labor and Economic Development

    • Labor share and economic development do not correlate.
    • Sector specialization shapes labor inputs (resource-rich vs. service-driven countries).
    • Trade and competitiveness influence performance, emphasizing export-led strategies. This includes trade liberalization, subsidizing specific sectors, and currency management.
    • Global competitiveness relies on robust institutions, infrastructure, stable macroeconomics and efficient market functions, including health care and education.

    Special Economic Zones (SEZs)

    • SEZs aim to improve economic development through attracting investment, creating jobs, boosting infrastructure, promoting exports, and facilitating skill and technology transfer.
    • SEZs have risks in areas like relaxing regulations (illicit activities), becoming associated with criminal activity, and insufficient infrastructure.
    • Governance, policies, and infrastructure development are significant components of a successful, sustainable SEZ initiative.

    Poverty and Inequalities

    • Poverty rates are measurable using national poverty lines, and the Gini coefficient serves to measure relative income inequality.
    • Limitations to these include arbitrary poverty thresholds, regional differences, and the difficulty in comparing data across countries.
    • Conditional cash transfer programs (CCTs) aim to address traditional social assistance program failures by focusing on health, nutrition, and education, typically tied to education or enrollment.

    Strengthening Governance and Transparency

    • Governance and transparency are crucial for development.
    • Domestic firm linkages and investments in infrastructure/skill development are key.
    • Chaebol in South Korea's role needs to be considered when understanding development.

    Structural Change

    • Rapid industrialization and urbanization are linked; migration generally benefits those migrating though some countries do not have strong links between structural change and rural-urban migration.
    • Stronger links can lead to industrialization, job creation in urban areas, and attracting rural workers.
    • Potential limitations occur in countries like Sub-Saharan Africa, where job creation does not always keep pace with rural-urban migration. Limited opportunities in urban areas contribute to high unemployment.

    Education

    • Vocational training provides practical skills targeted towards specific labor demands.
    • Aims to address a perceived mismatch between education and labor needs.
    • Align industrial and educational policies to skill demand and supply.

    Human Capital Development

    • Human development is measured by the Human Development Index and other similar indices.
    • Under-investment often occurs in human capital due to high upfront costs, uncertainty about future demand, lack of information, and time/credit constraints.
    • Increasing affordability and improving access are policy solutions to increase education levels and improve human capital development.

    Population Dynamics and Health

    • Population dynamics are related to factors such as birth rates, death rates, migration, and life expectancy.
    • Demographic dividend is when working-age population is high, correlating with increased income per capita.
    • Issues with population aging, such as strains on the health system, and the sustainability of pension systems in developed countries, warrant considerations when evaluating a country's outlook.
    • A lack of infrastructure, and other socioeconomic factors, can be detrimental to development.

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    EBC2155 Sustainable Development for Emerging Markets Notes PDF

    Description

    Explore the multifaceted concepts of growth and development in emerging markets. This quiz covers essential measures of economic growth, the role of BRICS countries, and the endogenous growth theory as described in the Romer Model. Test your understanding of how knowledge and technology impact economic development.

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