class5-New theories

Class5-New theories - Class 5 Contemporary Models of Development and Underdevelopment(based on chapter 4 5-1 Announcement Quiz 2 will be this week

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9/5/2011 1 Class 5 Contemporary Models of Development and Underdevelopment (based on chapter 4) 5-1 Announcement Quiz # 2 will be this week starting Thursday. First research paper is due on Oct. 4 at the beginning of the class. 5-2 Readings Textbook, chapters 4 and 5 Reader – Ferraro, Vincent, ch.6 “Dependency Theory” – Barro, Robert, ch. 10 “Democracy and Growth” 5-3
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9/5/2011 2 Review of Theories Thomas Malthus: diminishing marginal productivity of labor The classical growth model – Harrod-Domar model (AK model) – Emphasis on savings as growth factor The neoclassical growth model – Solow model – Diminishing marginal productivity of capital and convergence 5-4 New Growth Theories: Motivation How do we reconcile the huge observed differences in per capita income with modest predictions of the Solow model? The parameters in the Solow model (saving rate, labor force growth, and productivity growth) are endogenous and need to be explained. Technical change is also endogenous and needs to be explained. 5-5 Outline We will consider the following theories: – Human capital theory – Technical progress: • A model of deliberate technical progress • Technological spillovers and externalities – Underdevelopment as coordination failure – The big push theory – The role of linkages – Kremer’s O-ring theory – Institutional factors theories – International dependence theories 5-6
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9/5/2011 3 4-7 Human Capital and Growth Augment the Solow model by permitting individuals to “save” in the form of human capital This model allows for diminishing returns to capital and no convergence.
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This note was uploaded on 01/29/2012 for the course ECON 445 taught by Professor Mcmanus during the Fall '08 term at UNC.

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Class5-New theories - Class 5 Contemporary Models of Development and Underdevelopment(based on chapter 4 5-1 Announcement Quiz 2 will be this week

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