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16 Cards in this Set
- Front
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Fei & Ranis model |
•Extension of the Lewis model. •Describes transformation process of a developing country from stagnation to sustainable growth. •Explains more accurate the derivation of the Lewis turning point (point when wages in capitalist sector begin to rise) -> The Fei & Ranis model provides recognition to the agricultural sector. |
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economics growth |
-To continue economic growth requires: •investments in both sectors. Both are important- agriculture and industrial sectors. •agricultural surplus (by increased productivity) must be used for investment not for consumption. |
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What is "Malthusian trap"? How to avoid it? |
-"Malthusian trap": is a condition, that excess population would stop growing due to shortage of food leading to starvation. -To avoid it, the rate of labour absorption must exceed population growth, i.e. labour productivity in agriculture must be increased. |
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Critical points in Fei & Ranis model |
in Industrial sector: - Lewis turning point: marks the end of completely elastic supply of labour. in Agricultural sector: -shortage point: MPP of labour is positive -commercialization point: MPP Labour exceeds the institutional wage. -initial/break out point: all labour is in Agriculture (MPP = marginal physical productivity ) |
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Factors that influence population growth
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Theory of demographic change: GP = GB-GD-GM *GB = Birth rate; GD= Death rate; GM = Net migration -Factors affecting GD: Medical progress, Nutritional status -Factors affecting GM: Geographic position, Crisis and wars -Factors affecting GB: Family planning, Urbanization. |
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The importance (positive)and consequense (negative) of population growth for development
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-positive: promote technological change Stimulates innovation -negative: Intensification in agriculture Environmental problems |
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Factors that determine the elasticity of labor supply (or the expansion of the capitalist sector) |
-Wage in modern sector = a premium over a fixed average level of wage in the rural sector. -At the constant urban wage level, the supply rural labour to modern sector is perfectly elastic. -Output expansion in modern sector causes both labour transfer and employment growth in that sector. -capitalists reinvest their profits => self-sustaining-> increasing demand for labour. -Self-sustaining growth and output expansion continues until all surplus rural labour is absorbed in the urban sector. |
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*Compare model Lewis vs Fei Ranis |
1. Lewis: -labour supply is elastic -surplus labor in agricultural sector -Marginal productivity of labour is zero -capitalists reinvest their profits -> increasing deman for labour =>dual economy grows, only when modern sector increases its output relative to traditional sector. 2.Fei Ranis: -extention of Lewis model -problem of dual economy is tranfer of labour from agricultural sector to non-agricultural sector. -Industrial sector absorbs all surplus rural sector. => recognize importance of agricultural development.
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Difference between MDGs and SDGs
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1.Goals: -MDGs: °reduce hunger & poverty by half ° rich donors aidingpoor recipients °8 MDGs -SDGs:° zero hunger & poverty °Both rich and poor coutries must set SDGs to remove inequality. °17 SDGs 2. Peace bulding -MDGs: not inclued -SDGs: inclued |
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What is official development assistance (ODA) What types of assistance? |
-ODA records the international transfer by a donor of financial resources or of goods or services valued at the cost to the donor, minus repayments of loan during the same period. -Financial, technical assistants, others assistants often provided by NGO |
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ODA categories
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-Bilateralassistance: aid given directly by one donor country to another country -Multilateralassistance: aid given by a donor country to a development banks and international organizations (World Bank, IMF) |
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GDP,GNI
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-GDP: total output of goods and services produced within a country's territory -GNI: =GDP + (incomes from abroad) - (income earned in the domestic economy from non-residents) |
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3 dimensions of HDI
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-Long & healthy life (life expectency index) -Knowledge (education index) -Standard of living (Income index GNI) |
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Why is labeling a market-based instrument?
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Consumer pays price premium for product which has been produced in an environmentally-friendly and/or sociallyresponsible way • Producer receives price premium as compensation for his/her higher production costs, caused by meeting the additional environmental and/or social requirements |
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How does the system of tradeable pollution permits work?
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-authority allows only for a certain level of emissions and issues permits or certificates for this amount -Total number of permits is the limit on pollution -Annual emissions for each factory must be less or equal to permit holdings -Pollution permits are tradable - can be bought and sold on the permit market - Polluter can choose whether to buy permits or to abate pollution |
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Problems of Coase theorem
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-Property rights may not always be clearly defined -High transaction (bargaining) cost -Large number of parties involved (coordination problem) |
