ECO DEV 2.3

• emphasized that the prime mover of the economy is

  investments

  The Harrod– Domar model
• Every country therefore needs _______ to generate investments.

  capital
• The principal

  strategies of development from the stage approach were commonly used by

  developing countries in the ____

  early post-war years
• With a _______, the

  required saving rate can then be known.

  target growth rate
• If domestic savings were not sufficient,

  ____ would be mobilized.

  foreign savings
• two-sector model IS ALSO KNOWN AS?

  theory of surplus labour
• labour increasingly moves

  away from the agricultural sector to the industrial sector.

  two-sector model
• In International Dependence Models with unlimited supply of labour from the traditional sector, these transferred

  workers continually received only subsistence wages. T OR F

  FALSE
• The excess of modern sector profits over wages and hence investments in the modern

  sector continued to expand and generate further economic growth on the assumption that all profits would be reinvested. T OR F

  TRUE
• considered savings and investments to be the driving forces of economic

  development but in the context of the less developed countries.

  Lewis model
• However, several ________’ assumptions are not valid such as those relating to rural surplus

  labour, and the proportional rate of expansion in capital accumulation in the modern sector

  (Todaro and Smith 2009).

  Lewis
• The analysis identified that the steady accumulation of physical and human capital is

  among conditions necessary for economic growth, apart from ______

  SAVINGS AND INVESTMENTS
• Moreover, the _______ occurred not only in the two sectors but also in all

  _______, including the change in consumer demand from an emphasis

  on food and basic necessities to desires for diverse manufactured goods and

  services, international trade and resource use as well as changes in socioeconomic

  factors such as urbanization and the growth and distribution of a country’s

  population.

  structural changes AND economic functions
• focused on the pattern of development and

  hypothesized that the pattern was similar in all countries and was identifiable.

  structural change models
• on the process of _______ does recog nize that

  pattern of development can be different among countries, which is dependent on the

  countries’ particular set of factors including “a country’s resource endowment and size,

  its government’s policies and objectives, the availability of external capital and

  technology, and the international trade environment”

  structural change
• was very popular in the 1970s and early

  1980s.

  international dependence theory
• argued that underdevelopment exists because of the

  dominance of developed

  dependence theorists
• The international dependence theory is considered an extension of _____

  Marxist theory
• In the 1980s, neoclassical counter-revolution economists used three approaches,

  namely

  free market approach, new political economy approach, and market-friendly approach
• these approaches mainly

  argued that underdevelopment is not the result of the predatory activities of the

  developed countries and the international agencies

  Neoclassical Counter-Revolution Models
• underdevelopment was caused by the

  domestic issues arising from heavy state intervention such as poor resource

  allocation, government-induced price distortions and corruption

  Neoclassical Counter-Revolution Models
• As a response to public sector inefficiency, economists of the _________, focused on promoting free markets, eliminating government-imposed distortions

  associated with protectionism, subsidies and public ownership

  counter-revolution thinking
• Expanding the Harrod– Domar formulation, _________ stresses the

  importance of three factors of output growth:

  Solow neoclassical growth model
• Solow neoclassical growth model stresses the

  importance of three factors of output growth:

  increases in labour quantity and quality, increases in capital, and improvements in technology
• increases in labour quantity and quality (through ______ and ____)

  population growth and education
• increases in capital (through ______- and ______)

  savings and investments
• focused on the market to find a way out for the developing

  countries.

  Neoclassical economists
• Policies of ________therefore become the

  central elements of the national development agenda in neoclassical counter-revolution models

  liberalization, stabilization and privatization
• Foreign trade, private international

  investments and foreign aid flowing into the developing countries are expected to

  accelerate economic efficiency and economic growth of these countries. T OR F MODEL?

  TRUE AND Neoclassical Counter-Revolution Models