ECO DEV 2.4

• emerged in the 1990s to explain the poor

  performance of many less developed countries

  Endogenous growth or the new growth theory
• implemented policies as

  prescribed in neoclassical theories.

  Endogenous growth or the new growth theory
• considers technological change as an exogenous factor,

  Solow model
• notes that technological change has not been equal nor has it

  been exogenously transmitted in most developing countries

  new growth model
• linked the

  technological change to the production of knowledge.

  New growth theorists
• emphasizes that economic growth results from increasing

  returns to the use of knowledge rather than labour and capital.

  new growth theory
• The theory argues that the higher rate of returns as expected in the Solow model is

  greatly eroded by lower levels of complementary investments in human capital

  (education), infrastructure, or research and development (R&D)

  new growth theory
• promote the role of government and public policies in

  complementary investments in human capital formation and the encouragement of

  foreign private investments in knowledge-intensive industries such as computer

  software and telecommunications

  new growth models
• The foundation of the ______ is the idea that the market may fail

  to achieve coordination among complementary activities.

  theory of coordination failure
• became influential in the 1990s.

  theory of coordination failure
• Coordination issues among complementary industries were first raised by

  _____

  Rosenstein-Rodan
• THEY emphasized the role of the government to solve the problem.

  Rosenstein Rodan, Nurkse, Hirsch man
• In order to reach an optimal level of coordination, the policy they recommended was a _____

  big push
• A public-led massive investment program— which can cause

  complementarities to take place in the rest of the economy.

  BIG PUSH
• AN ecosystem where the behaviour of one can affect the others’.

  economy
• “A firm’s productivity depends not only on its own efforts, and abilities, and on general

  economic conditions (for example, the macroeconomic environment and the legal

  system), but also on the actions of other firms, infra-structure, regulation and other

  public goods” ACCORDING TO?

  Rodriguez-Clare
• also indicated that success or failure of an action could depend on its

  milieu.

  Rodrik
• The theory often highlights the problems of market failure that require selective

  government intervention to ensure that several things work well together at the same

  time.

  Theory of Coordination Failure OR Contemporary Theories of Economic Development
• is recommended recently by United Nations Development

  Programme

  big push
• suggests that for developing countries to break out of the poverty

  trap, a big push of basic investments between now and 2015 in public administration,

  human capital and key infrastructure is necessary.

  big push
• The global and industrial society, driven by new technology, is generating economic

  growth rather than a ____ of nations. according to?

  sustainable development and Coccia
• Scholars assert that one of the main effects of development on environment is

  _________, which started with the Industrial Revolution in Europe and North America,

  driven by technical and economic change of steam engine, internal combustion

  engine, and other new technology

  pollution
• The development of nations generates _______ but also a general pollution that has negative consequences on environment, health (e.g., cancers), and food safety in society.

  economic growth
• The __________ is driven by the expanding content of human life

  interests, using new technology and science advances

  concept of development
• Human society should focus on _________, rather than

  economic growth, for improving long-run environmental and social factors, and health

  of people.

  patterns of sustainable development
• ________ is also affected by economic, social, psychological, anthropological, and

  perhaps biological factors that can generate uncertain and unknown long-term effects

  in environment and society

  Development