hw1ak - Spring2009 Economics 115B Macroeconomic Development...

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University of California-Davis Spring 2009 Economics 115B: Macroeconomic Development Homework One Answer Key- Please Review for Midterm Instructor Teaching Assistants: Wing Thye Woo Gabriel Mathy Part 1)  The following questions should be answered in 1-2 paragraphs each: These answers are  intended to be sketches of an answer—you should try to flesh the issues out a little more  in homework, but still within the 1-2 paragraphs: 1) In lecture 2, we outlined the main factors affecting economic growth.  Using Sachs  chapter 2, explain how these factors were at play in the historical development of Great  Britain.  Are there any extra factors not highlighted in class? The factors highlighted in class were: economic policy; geography; culture; diseases and  endowment. Here’s a summary of Sachs’ views on Britain: Faster technological change is the main thing that drove this break to modern  economic growth, but there are more fundamental reasons behind this technological  change, which, according to Sachs include:  a change in institutional setting, whereby the power of the monarchy was  reduced and parliament had more control over society- they had better  incentives to create a good business environment than the kings. Society became more meritocratic: the last vestiges of feudalism were  removed so that people could reap the rewards of their own labor instead of  being obliged to work for their lords etc.  The scientific revolution was strong in London after the Renaissance,  arguably spurring invention and technological change.
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Sachs also argues that geography worked in Britain’s favor—being an island,  it was safer from invasion and could also trade easily, and get access to its  colonies with its many natural resources.
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