...------------------------------------------------- Top of Form Bottom of Form ------------------------------------------------- Top of Form Bottom of Form A CRITICAL ANALYSIS OF ROSTOWS MODEL Download CHAPTER THREE CRITICISMS, BENEFITS AND HINDRANCES OF THE MODEL 3.1 Criticisms Rostow‘s stages of economic growth is the most widely circulated and highly commented piece of economic literature in recent years. It is against Marx‘s stages of feudalism, bourgeoisie, capitalism, socialism and communism. However, there are doubts by economists in the authenticity of the division of economic history into five stages of growth as presented by Rostow. To maintain that every economy follows the same course of development with a common past and the same future is to over-schematize the complex forces of development and to give the sequence of stages a generality that is unwarranted. The under-listed are some criticisms leveled against Rostow‘s five stages of economic growth : 1. Traditional society not essential for growth that a country will pass through the first stage since countries like United States, Canada, New Zealand and Australia were born free of traditional societies and they derive the preconditions from an already advanced country; Britain. 2. All countries do not develop in linear fashion: the critics of Rostow‘s model have cited that all countries do not really develop in linear fashion, some skipped steps or took different paths. Rostow also assumed that all countries have...
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...price system as an economic mechanism. 2. CONSUMER BEHAVIOUR: Assumptions on preference ordering, indifference curve, budget constraint and consumer’s equilibrium, substitution effect (Hicks & Slutsky) and income effect, ordinary and compensated demand curves, inferior goods and Giffen goods, price consumption and income curves, derivation of labour supply and intertemporal choice, (saving and borrowing), Revealed Preference – the weak axiom and substitution effect. 3. DEMAND AND SUPPLY: Demand function, supply function, market equilibrium, stability of equilibrium, elasticities of demand and supply, consumer’s and producer’s surplus, burden of indirect taxes and subsidies, price and quantity controls, minimum wage, import tariff and quota. 4. PRODUCTION AND COST : Production function, total, average and marginal products, isoquants and economic regions of production, cost minimization and expansion path, elasticity of substitution, economies of scale, Cobb Douglas, fixed coefficient and CES functions, short run and long run costs. REFERRENCES: - Maddala-Miller Pindyck-Rubinfeld Varian (Intermediate) Ferguson-Gould Kutsoyanis (Modern Microeconomics) PAPER – II: MACROECONOMICS I Full Marks - 50 1. NATIONAL INCOME ACCOUNTING: Methods of calculating national income, national income as a measure of economic welfare and other concepts...
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...MANAGEMENT AND SOCIAL SCIENCES DEPARTMENT OF ECONOMICS DISCUSS THE VARIOUS ECONOMIC GROWTH THEORIES AND DEVELOPMENT THEORIES HOW CAN SUCH THEORIES BE USED IN ECONOMIC DEVELOPMENT IN NIGERIA. COURSE TITLE THEORY OF ECONOMIC DEVELOPMENT COURSE CODE;ECO 2911 INTRODUCTION According to Dennis Goulet in The Cruel Choice, “it matters little how much information we possess about development if we have not grasped its inner meaning”. Development is not purely an economic phenomenon. In an ultimate sense, it must encompass more than the material and financial sides of people’s lives, to expand human freedom. Every nation strives after development. Development and growth should therefore be perceived as a multidimensional process involving the reorganization and reorientation of the entire economic and social systems. The sources of economic progress can be traced to a variety of factors, but by and large, investments that improve the quality of existing physical and human resources, increase the quantity of these same productive resources, and raise the productivity of all or specific resources through invention , innovation and technological progress have been and will continue to be primary factors in stimulating economic growth in any society. ECONOMIC DEVELOPMENT THEORIES Definition of economic development It can be defined as the increase in the standard of living of a nation's population with sustained growth from a simple, low-income economy to a modern...
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...Introduction Two Swedish economists Eli Heckscher (1919) and Bertil Ohlin (1933) laid the substantial developments on David Ricardo’s theory of comparative advantage by focusing on the relationships between national factor endowments and commodity trade patterns. Though there have been some attempts to use the Heckscher-Ohlin theory, it seems invalidity in most real-world international trade patterns. In order to evaluate the validity of the Heckscher-Ohlin theory in today’s environment, pros and cons of the statement are illustrated as following. In pro terms, this theory is a simple international trade model with only two nations, two products and two factors of production based on the similar technology. Because of its simplified assumption, the Heckscher-Ohlin theory can be easily applied to analyse theoretical patterns. However, some assumptions proposed in this theory such as the similar technology, constant return to scale, the same demand condition limit its range only to some particular regions, therefore, it seems very hard to apply this theory in many practical terms. In summary, today’s international trading environment is various and complicated, thus this over-simplified theory cannot be sufficient as a good predictor. The purpose of this paper is to examine the Heckscher-Ohlin theory to analyse whether it is a good predictor for international trade in today’s environment. In order to do this, I will describe the content of this theory and then ilustrate...
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...Endogenous growth theory addressed limitation associated with the neo classical growth model. To what extent is this assertion valid? Introduction Neo classical growth model is an approach in economics focusing on the determination of price, output and income distributions in markets through supply and demand. These is done through a hypothesized maximization of income- constrained utility by individuals and of cost constrained profits of firms employing available information and factors of production. This economic model was developed from the classical school of economics, which was dominant in the eighteenth and nineteenth centuries. It can be traced to the marginal revolution of the 1860’s, which came up with the concept of utility as a key factor in deterging value in contrast to the classical views that the costs involved in production were value’s determinant. The Neo classical approach became increasing mathematical, focusing on the perfect competition and equilibrium. Neo classical growth model considered two factors production function with capital and labour as determinants of output. Besides, it added exogenously determined factor, technology, to the production function. Neo classical growth model uses this production function: Y=AF (K, L)……….(1) Y= Gross Domestic Production (GDP) K= Stock of Capital L= Amount of unskilled labour A= Exogenously determined level of technology. *Note a change in this exogenously variable and technology...
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...this sheet to help you: • conduct a critical review of an article • structure and write a critical review 5 minute self test Circle either ‘should’ or ‘shouldn’t’ in the points below: In a critical review, you: 1. 2. 3. 4. 5. should / shouldn’t assume the reader is familiar with the text should / shouldn’t provide a summary of the text should / shouldn’t provide many quotes should / shouldn’t be ‘hyper-critical’ should / shouldn’t write an introduction, a body and a conclusion Check your answers on Page 10 This publication can be cited as: Davies, W. M. and Beaumont, T. J. (2007), Critical Reviews, Teaching and Learning Unit, Faculty of Business and Economics, the University of Melbourne. http://tlu.fbe.unimelb.edu.au/ Further credits: Pesina, J. (design and layout). FACULTY OF BUSINESS & ECONOMICS Helpsheet CRITICAL REVIEWS Introduction The process of critically reviewing an article can seem intimidating. How, you may worry, can you think of things to say about an article written by an expert? What if you can’t find anything to “criticise”? How will you avoid just producing a summary of the article? And, how should you structure the review? There are no simple techniques that can make writing a critical review easy. A critical review is something that takes time, care and thought. Perhaps, for hours and hours, you may feel you are getting, nowhere, but then suddenly, maybe while in the bath, you have an idea… The purpose of this Helpsheet is to...
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...u Table of Contents Introduction 3 Fixed Exchange rate and Disinflation in emerging markets 6 Exchange Rate proclamation and Inflation fighting credibility 9 Exchange rates, inflation and growth in small, open economies: A difference-in-differences approach 12 Monetary policy rules under a fixed exchange rate regime: Empirical Evidence from China 15 Fixed exchange rates and trade 17 Conclusion 19 Bibliography 22 Introduction This research paper looks to explore the relationship behind the infamous fixed exchange rate and the level of inflation. I also take a look at how there is a trade off between the exchange rate regime and trade activity shapes up. Fixed exchange rates are a monetary regime used by around 50% of the world’s economies. The advent of fixed exchange rates is not common in the developed world. One exception to this is the EU which maintains a very stringently monitored monetary...
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...tended to turn Bcy feudal and led to its disintegration…. Money Economy permits payment of secure regular salaries 2. Emergence of Capitalist Economy… Created needs that only Bcratic. orgn. Could satisfy… Capitalism requires abd encourages government based on Bcratic. Orgn. Also not only govt. but pvt. Enterprise also started following Bcratic principles to enhance rationality… 3. Trend towards rationality in Western Countries… Protestantism, Devt. Of Science and Technology, Capitalism etc. 4. Democracy… Elimination of traditional rule of nobles and feudal elements and encouraging education and appointment to office on basis of Knowledge 5. Growth in Population… Larger orgn. Tend to assume Bcratic. Forms 6. Govt becam Complex… Like constructing waterways, provision of social services etc. 7. Modern forms of Communication facilitated growth of Bcy GENERAL CAUSES 1. Centralization… Increase in power of kings as compared to Church and Nobles… Military, Judicial and other functions previously carried out independently by these domains now came under state monopoly… Eg Napoleon Bonarparte and his centralized, hierarchical admn 2. Rationalization Trend… Prussia 1st to introduce system of entrance...
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...Explain and evaluate the neo-classical theory of long-run economic growth. In light of this theory what useful insights can be gained concerning the economic growth process of the UK economy over the past few decades? In recent year’s macroeconomists have become increasingly dissatisfied with Solow’s neoclassical theory of long run economic growth, through scrutiny of its application to the real world. (Gordon, 2006). In this essay these criticisms are going to be addressed first by explaining the theory, then considering the effect of changing different variables such as the savings rate, population growth and technical progress. The theory will then be applied to the UK economy over the past few decades discussing its relation to slow and rapid growth in certain periods. To conclude, criticisms will then be discussed to value the theory against reality. The neoclassical theory of long term economic growth is determined by marrying the production function and the savings investment line (Gordon, 2006). The production function studies the relationship between real GDP (Y) and the ‘autonomous’ growth factor (A) along with capital (K) and labour (N). This is shown by the equation Y=AF (K, N) (Gordon, 2006). The function tells us that sources causing an increased standard of living derive from the autonomous factor and the capital intensity. The per person production function shows how much output can be produced by a given quantity of factor input and is illustrated...
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...infrastructure. A large portion of aid to lesser developed countries is expended on short-term humanitarian goals. It is imperative to develop innovation in production to more effectively expand growth in the long-run. Therefore, proper allocation of monetary funds towards private sector development that encourages functioning institutions is beneficial to a country’s developmental efforts. Russia during the 1900’s is an example of an unsuccessful attempt to transition from communism to a democracy, attempting to follow similar patterns of growth exhibited by other countries throughout the 1900’s. The national liberalism of Russia’s communist party led to conflict within the country over economic and political...
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...“Rostow’s pattern of thought of economic development is often compared and contrasted with that of Alexander Gerschenkron, though the two are more or less compatible and complementary.” Critically discuss this statement. The theory of economic development throughout history has been of significant discussion especially in regard to the works of Rostow and Gerschenkron. The differentiation between the pattern of thoughts and ideals is a hotly debated topic within economics. The ideals the two theorists create, each substantially creditable in their own right, entail degrees of correlation and variation. Leaving the conclusion, do the to patterns of economic thought complement one another or is there distinct disparity between the two. Applied examples will be used below to analyse the extent of segregation or association between the works of Rostow and Gerschenkron. The two theories of work are mainly discussed with Asian development as it is more relevant, timely and there is significantly more information available than previous developed countries such as Great Britain. Walt Whitman Rostow developed one of the major historical models of economic growth in 1960, The Stages of Economic Growth: A non-communist manifesto. This piece portrays the process of economic development in a previously unseen approach, evidently forging it as a milestone in economic literature. Rostow's Stages of Growth model, The five stages are (1) the traditional society, (2) the preconditions...
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...Currency declines spread rapidly throughout South Asia, in turn causing stock market declines, reduced import revenues and even government upheaval. Although the economic storm that swept through Asian in 1997 has now declined, the wreckage left in its wake has undoubtedly take years to repair. By indulging in a debt spree that ultimately bought its high flying economies crashing to the ground, Asia may have lost a decade of economic progress. Beyond this, however, the crisis has raised a series of fundamental policy questions about the sustainability of the so called Asian Economic Model, the role of the IMF, and the virtues of floating and fixed exchange rates. The crisis also has important implications for international businesses. For a decade, the Asian Pacific region has been promoted by many as the future economic engine of the world economy. Businesses have invested billions of dollars in the region on the assumption that the rapid growth of the last decade would continue. But at the dawn of the aforementioned crisis, it has come grinding to a halt. So what could this mean for international businesses with a stake in the region, and for those that compete against Asian companies? Back in the late 1980s and early 1990s a number of authors were writing articles about the superiority of the Asian Economic Model or Asian Capitalism. According to its advocates, the countries of the Asian Pacific region, as exemplified by Japan and South Korea, had put together the institutions...
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...of Mathematics in Economics Article authored during M.A. degree between 1987-1989. Introduction Traditionally, application of mathematics had been restricted to the physical sciences, and the theories in the social sciences had been neglected, but in these days we notice that mathematical economics is flying high. We also observe that the articles on mathematical economics and fewer points on economic theory, occupy more prominent place in the economics journals. Arguments given in the favor of mathematics look attractive in the first instance but they are not free of problems. It is argued by many economists that mathematical models are recognized in providing a rational approach to solving many of the problems in decision making, allocation, and forecasting1. Mathematical models present theoretical work in their own language, which is a tool of communication, but we know that a language must be simple and easily understood to be appreciated, but as a language, mathematics is not simple and easy. In this paper, an attempt is made to discourage the excessive use of mathematics in economics, by describing its drawbacks in the economic theory. Attention is given to the scientific nature of the economics. In the beginning some definitions are given and comparison between different models are given, to develop an understanding in the subject. Mathematisation of Economics The major development of the second quarter of 20th century in the field of economics was the mathematization...
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...they came to recognize that it is an essential part in growing and establishing themselves as the leader in the competing environment. A well-executed sustainability strategy can enhance the company’s value and reinforce competitive advantage in the market while protecting the capital base. The balance of power has shifted between corporations and it is important to balance economic prosperity along with environmental and social dimensions. Sustainable business strategy represents a marked shift in traditional business practices and companies who do not adapt to the changes in these practices in order to achieve sustainable profitability will be more likely to face the brand value decline or even extinction in the future. For instance, the change represents the need to understand how all three dimensions affect each other and companies ought to consciously create new consumer preferences. However, a lot of companies still are missing guidelines to implementing a marketing strategy of sustainability as an essential part, which is at the core of ensuring organizational, social, economic and environment growth while managing overconsumption issues (White, 2011). Current researches tend to focus on developing a more sustainable approach on product design, pricing, promotion and distribution when it comes to the sustainable business strategy and companies are widely integrating this approach. On the other hand, the theoretical practices of promoting sustainable consumption in customer-citizens...
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...Economy TITLE One cannot speak of International Political Economy without at least wading through the fundamental debate between the degree of importance of political structures and market forces in economic development. This dynamic serves as one of the basic foundations of the discipline itself as well as subsequent major schools of thought. Theories in International Economy have been founded on empirical observations on the economic conditions of a set of cases and are, as Robert Cox posits, critical of the circumstances from which certain politico-economic configurations emerge[1]. A contemporary theory that has surfaced in the last few decades is the developmental state theory which sought to explain the precipitous economic progress of East Asian states after the Second World War. Although the initial outcome of adopting developmental strategies among East Asian states have shown the theory’s potency as a basis for economic development policies, subsequent events especially the results of Southeast Asian attempts to pattern itself after developmental strategies have put into question the developmental state’s efficacy as a long-term arrangement. Specifically, the Philippines’ status as an “anti-developmental” state[2] serves as a channel for criticism of the developmental state theory through other IPE theories not only in terms of strategies and policies, but also in the deeper level of societal conflict and political structures. The origins of the Developmental...
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