Take home exam part B - Abram Balloga Econ 3230 Take Home...

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Abram Balloga Econ 3230 Take Home Midterm 11/6/2008 Part B II. (2) This seems to explain one of the three patterns of the 4 NIEs recognized by Lucas (2003). Discuss. The location of the NIEs in the world economy has contributed much circumstantially to their ‘miracle’ like growth, by affecting who and by what methods they can conduct trade. Lucas recognizes that the development process requires on-the-job experiences and lack of labor skill is a limiting factor in acquiring foreign investment in low wage countries (Wan on Lucas, 877). Coe and Helpman show that trade with more advanced economies is an important ‘resource for acquiring skill’ (Wan on Lucas, 877). Here, outsourcing and learning through experience provide essential technology spillover to the NIE’s. The growth miracles are boosted by entering export industries that were not “ formerly produced in these countries” (Lucas, 62). In order to competitively produce advanced technologies for western markets, such as computers and other electronics, the NIE’s are forced to adapt more rapidly to market standards. In order to be successful, they must absorb as much spillover technology as possible, because creating this technology themselves take more time and R&D than the NIE’s can provide. Their disproportionately high growth may be associated with this leap from mature to immature technology exports. (3) Compare the line of reasoning with the approval of Lucas on the Stokey-Young view. Lucas acknowledges that “knowledge spill-overs help countries during development, and the development process needs on-the-job experiences such as export operations. Thus trade and interaction fosters concurrent growth. He approves of the Stokey-Young view concerning mature vs. immature technologies – that investment in mature technologies stagnates growth simply because there is less to learn and therefore less advancement and opportunity within these
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This note was uploaded on 06/25/2009 for the course ECON 4730 taught by Professor Henrywan during the Fall '08 term at Cornell University (Engineering School).

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Take home exam part B - Abram Balloga Econ 3230 Take Home...

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