Tải bản đầy đủ - 0 (trang)
Appendix 3.1: Components of Economic Growth

Appendix 3.1: Components of Economic Growth

Tải bản đầy đủ - 0trang

Chapter 3

Classic Theories

of Economic

Growth and

Development



Copyright © 2009 Pearson Addison-Wesley. All rights reserved.



Class Theories of Economic

Development – Four Approaches

• Structural change model

– Linear stages of growth

– Saving-investment

– Rural-urban migration



• Neocolonial dependence theory

– Dependence: Center vs. Periphery

– False Paradigm



• Neoclassical theory

– Market friendly approach

– Dualistic approach

– Public choice approach



Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­2



Rostow’s Linear-Stages Model

1. Traditional society

2. Pre-condition to take-off

3. Take-off

4. Drive to maturity

5. Age of high mass consumption

Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­3



Rostow’s Linear-Stages Model

1. Traditional society: slow economic and

population growth

2. Pre-condition to take-off: development of

institutions, organizations, and

infrastructure

3. Take-off: large investment in selected

industry (10 to 15% of GDP)

Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­4



Rostow’s Linear-Stages Model

4. Drive to maturity: sustained growth of the

industry and economy

5. Age of high mass consumption:

production of consumer goods and

services to serve an affluent society



Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­5



Rostow’s Linear-Stages Model

GDP Growth

Economic Growth



Post Take­off

Take­off

Pre Take­off



t1

Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



t2



Time



3­6



Harrod-Domar Growth Model

S = sY



S=Saving; Y=Real GDP; s=Saving Ratio



I = ΔK



I=Investment; ΔK=Capital Accumulation



S=I



Saving-Investment identity



Define the Marginal Capital-Output Ratio as k = ΔK/ΔY

Write ΔK = kΔY or I = kΔY

From S = I, write sY = kΔY or

Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



ΔY/Y = s/k

3­7



Harrod-Domar Growth Model

The source of growth is saving and investment in

production of goods and services. Accordingly,



GDP growth rate = s/k

s = national saving ratio; k = marginal capital-output ratio

If s=6% and k=3, then GDP growth rate=2%. Given k=3,

to raise growth rate to 4%, we need to increase the saving

ratio from 6% to 12% with 6% of foreign saving

Copyrightâ2009PearsonAddisonư

Wesley.Allrightsreserved.

3ư8



Criticism of Investment Models

Many LDCs have not been able to take-off

or achieve maturity despite massive

foreign investment

• Many nations have neglected the

development of institutions, organizations,

and infrastructure required for

industrialization

Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­9



The Lewis Development Model

• Rural agricultural sector

– Low or even zero Marginal Product of Labor so that

labor is a redundant factor and wage rate is at the

subsistence level



• Urban industrial sector

– Rising demand for unskilled labor to be trained for

industrial growth results in greater employment and

more profits and higher wages



• Rural-Urban migration

– To find jobs and earn higher wages

Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­10



Demand for Labor

Wage

R: Rural 

W: Wage 

D: Labor Demand



WU



Profit



U: Urban

E: Employment 

S: Labor Supply



SR



WR

Wage



DU1 DU2

E1



E2



Investment in urban areas

increases the demand and

employment for rural labor.



Employment



Copyright © 2009 Pearson Addison­

Wesley. All rights reserved.



3­11



Tài liệu bạn tìm kiếm đã sẵn sàng tải về

Appendix 3.1: Components of Economic Growth

Tải bản đầy đủ ngay(0 tr)

×