Economic Development Notes CH3 - Economic Development Notes...

This preview shows page 1 - 3 out of 8 pages.

Economic Development NotesCH 3: Classic Theories of Economic Growth and DevelopmentThe reason for having 2 axes’ in a graph is to measure the 2 variables. The demand shows a relationship. The kind of relationship between a good and the constant is the inverse. Marginal- The demand curve is the marginal analysis Supply curve is the marginal cost. 1.Four approachesLinear-stages-of-growth modelTheories and patterns of structural changes The international-dependence revolutionThe neo-classical, free market counterrevolution 2.Development as growth & the linear-stages theoryCapital fundamentalismi.Two strands of thoughtoMarshall Plan experience following WW2. Massive amount of US financial and technical assistance enabled war-torn nations of Europe to rebuild and modernize their economies.oHistorical experience of the now developed nations: All modern industrialized nations were once undeveloped agrarian societiesLed the rich-nation experts to believe the key to development laid in the arms of massive capital injections. 3.Rostow’s stages of Growth (Walt Rostow) Developmental transition was a series of steps/stages through which all counties must proceed:i.The traditional societyii.The Pre-conditions for the take-off into self-sustaining growthiii.The take-offiv.The drive to maturityv.The age of high mass consumption. A principal strategy of development necessary for take-off:i.Mobilization of domestic and foreign saving in order to generate “sufficient” investment to accelerate economic growth.ii.The economic mechanism whereby saving leads to investment which leads to accelerated growth is seen in the Harrod-Domar growth model.oAK model- based on a linear production functionoOutput, Y, is a function of the capital stock, K, times a constant, A; Y = f(KA)

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture