midterms

• Dialectic


  Involves discussion between various points of view that seeks truth by logical argumentation
• Dialectical thinking


  • Seeing things from multiple perspectives
  • Everything is composed of opposites
  • To understand things more fully, we need to understand their opposites
• Social development


  Enhancing the well-being of the people in an economy, revolving around the progress or improvement of the economy, improving the quality of life of the people
• Socrates


  First exponent of the dialectic method<|>Believed that one can arrive at the truth only by constant questioning<|>Dialectics was the process of exposing contradictions by discussion so as ultimately to arrive at truth
• Hegel

  German philosopher who borrowed the dialectic method from Socrates for his political philosophy<|>Major idea was solving contradiction by aiming to reconcile contradictory positions and theorems<|>Used past traits as interpretation method<|>Argued that absolute idea or the spirit, in search of self-realisation moves from being to non being to becoming
• Thesis

  Initial state or idea
• Antithesis

  Opposing force or idea
• Synthesis

  Resolution of conflict, leading to progress
• Rostow's model


  One of the first growth theories proposed by an American economic historian in the early 1960s<|>Argued that the transition into development occurs in a series of logical stages, each stage could only be reached through the completion of the previous stage
• Stages of Rostow's model

  • Traditional society
  • Preparatory stage
  • Take-off stage
  • Drive to maturity stage
  • Mass consumption stage
• Traditional society

  • No access to science and technology
  • Most of its resources are dedicated to agricultural resources
  • People heavily rely on manual labor and self-sufficient
  • Limited ability for growth
• Preparatory stage


  1. Greater urbanization and rise in human capital accumulation

  2. Trade expands overseas creating an international market

  3. Agricultural produce to manufactured goods
• Take-off stage


  • Overall income per capita increases
  • Steadily growing economy and modern technology
  • The rate of savings and investments is such that it can automatically sustain economic growth
• Drive to maturity stage


  • Country's demand shifts from food, clothing and other basic needs to demand for luxuries
  • High valued goods become normalized to purchase
  • People live in cities creating an urban society
• Harrod-Domar model


  Developed independently by Sir Roy Harrod and Evsey Domar in the 1940s<|>Focuses on the relationship between savings rate, capital-output ratio, and economic growth rate
• Savings rate (S)


  Proportion of national income saved and invested
• Capital-output ratio (v)


  Amount of capital needed to produce one unit of output
• Growth rate (G)


  Rate at which an economy grows, determined by the savings rate and the capital-output ratio
• Growth equation

  G = S / v
• Implications of Harrod-Domar model

  • Investment-driven growth: Economic growth depends on the level of investment in the economy
  • Role of savings: Higher savings lead to higher investment, promoting growth
  • Capital efficiency: Lower capital-output ratio (higher efficiency) results in higher growth
• Stagflation

  Stagnation + Inflation
• Neoliberalism


  Political and economic policies associated with unrestrained free market global capitalism
• The term "neoliberalism" was first coined at the Colloque Walter Lippmann


  1938
• Neoliberalism refers to a shift in economic thought and policy that emerged in the late 20th century as a reaction against Keynesian economics
• Characteristics of Neoliberal Economics


  • Economic Liberalization
  • Fiscal Austerity
  • Monetary Policy
  • Role of the State
  • Market-Based Solutions and Market Flexibility
  • Economic Globalization
• Pros of Neoliberalism

  • Economic Liberalization
  • Fiscal Austerity
  • Monetary Policy
  • Role of the State
  • Market-Based Solutions and Market Flexibility
  • Economic Globalization
• Cons of Neoliberalism

  • Income Inequality
  • Social Welfare
  • Labor Market Issues
  • Environmental Impact
  • Cultural and Social Impact
  • Economic Instability
• The 2008 Global Financial Crisis marked a turning point where the shortcomings of neoliberalism became glaringly apparent
• Relying solely on traditional economic theories and models is insufficient for addressing the complex, interconnected challenges of the 21st century
• Multiple Equilibria


  Concept where an economy can settle into different stable outcomes or paths of development
• Types of Equilibria

  • Low-Level Equilibrium
  • Intermediate Equilibrium
  • High-Level Equilibrium
• Big Push Theory


  Concept in development economics that proposes a coordinated effort to promote economic growth through economic investment
• The Big Push Theory was first introduced by Paul Rosenstein Rodan in the 1940s
• Why Education Investment is Important

  • Empowers people
  • Bridges economic gaps
  • Drives innovation and growth
  • Creating Informed Citizens
• Why Infrastructure Investment is Important

  • Economic Growth
  • Improved Quality of Life
  • Increased Competitiveness
  • Long-term Sustainability
  • Enhanced Connectivity and Integration
• Why Agriculture Investment is Important

  • Food Security
  • Environmental Sustainability
  • Global Stability
• Why Healthcare Investment is Important

  • Increased Productivity
  • Enhanced Human Capital
  • Reduced Healthcare Costs
  • Resilience to Health Crises
• One of the main critiques of the Big Push theory is that it assumes a homogenous society where everyone is working towards the same goal
• 1. Ring Theory


  Coordination failure must not arise among the various tasks involved in the production process
• The O-Ring Theory was proposed by Michael Kremer in 1993