Economic Theories. Clark and Fisher model of development.

1. Clark and Fisher
Model of
Development
Submitted by: D.Misyuk
Matrikulnummer: 02880509
Submitted to : A. Hecht
FH-Hof, 2010

2. Table of Contents
• Biography of Clark and Fisher
• Model of Development, examples
• Criticism of the model
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3. Biography: Clark
John Bates Clark
(January 26, 1847 – March 21, 1938)
•Was born and raised in Providence, Rhode Island
•Graduated from the Amherst college in the age of 25
•1872-1875 attended University of Zurich and
University of Heidelberg, where studied under Karl
Knies ( one of the leaders of the German Historical
School) http://www.nndb.com/people/537/000113198/
•After return to USA, taught history, economics and john-bates-clark.jpg
other subjects in the Carleton, Smith and Amherst
colleges
•In 1895 got a position in Columbia University (John
Hopkins University)
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4. Biography: Clark
Theoretical Work
• Early works – critics of capitalism, reflecting the
influence of the German socialism. Competition is not
a universal remedy.
“… We do not eat men … but we do it by such indirect and
refined methods that it does not generally occur to us that we
are cannibals” (Clark, J. B., 1878, How to Deal with Communism)
• Change of views, finishes the first work The
Philosophy of Wealth (1886) http://www.nndb.com/people/537/000113198/
john-bates-clark.jpg
“… was convinced that pure competition was the
“…he
natural and normal law by which the economic order
obtained justice” (Everett, J. R., 1946, Religion in Economics)
• The foundation of further work – competition
“If nothing suppresses competition, progress will
continue forever” (Clark, J. B., 1907, Essentials of Economic
Theory)
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5. Biography: Clark
Main Works
• The Philosophy of Wealth (1886)
• The Distribution of Wealth (1899, 1902)
• Essentials of Economic Theory (1907) http://www.nndb.com/people/537/000113198/
john-bates-clark.jpg
• Social Justice without Socialism (1914)
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6. Biography: Clark
John Bates Clark Medal
• The John Bates Clark Medal is awarded
by the American Economic Association to
“that American economist under the age of forty who
is adjudged to have made a significant
contribution to economic thought and knowledge“
• One of the most prestigious Awards
http://www.vanderbilt.edu/AEA/clark_medal.
htm
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7. Biography: Fisher
Irving Fisher
(February 27, 1867 Saugerties, NY– April 29, 1947, NY)
• Since childhood he had a good mathematical
abilities and flair for invention
• Graduation from Yale in 1888 with BA degree
• In 1891 he was granted Yale Ph.D in Economics
• Teacher Maths., Prof. Econ., Yale Univ.,
http://www.economystery.com/economists/irving_fis
1892-5, 1895-1935; her.php
• Businessman, derectorships, prolific writer
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8. Biography: Fisher
Publications
• Mathematical Investigations in the Theory of Value
and Prices (1892, 1961);
• The Nature of Capital and Income (1906, 1927)
• The Purchasing Power of Money (1911, 1920)
• Elementary Principles of Economics (1912)
• Stabilizing the Dollar (1920);
• The Making of Index Numbers (1922, 1927)
• The Money Illusion (1928) http://www.economystery.com/economists/irving_fis
• The Theory of Interest (1930, 1961) her.php
• Booms and Depressions (1932)
• The debt-deflation theory of great depressions
(1933)
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9. Clark-
Clark-Fisher Model of Development
• Two economists Fisher and Clark put forward the idea, that
economy would have three stages of production.
• The model uses percentages employed in each sector.
• It shows how as economy grows the relative importance of
different sector changes.
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10. Clark-
Clark-Fisher Model of Development
Following stages are
proposed:
•Primary production
•Secondary production
•Tertiary production
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11. Clark-
Clark-Fisher Model of Development
1. Primary production
• Is related to activities of
extracting raw materials through
agriculture, mining, fishing, and
forestry.
• Low income countries are
assumed to be dominated by
primary production.
• These are relatively primitive
economies
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12. Clark-
Clark-Fisher Model of Development
2. Secondary production
• Is related to the growth of
manufacturing and construction
sectors
• Middle income countries are
often dominated by secondary
production.
• To fulfill the growing demand in
industrial goods
• Leeds to the decrease of
agriculture sector
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13. Clark-
Clark-Fisher Model of Development
3. Tertiary production
• Is concerned with the provision
of services, such as
-education
-healthcare
-financial services
-tourism
and others
• This sector dominates in high-
income countries
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14. Clark-
Clark-Fisher Model of Development
This change is driven by an increase in productivity per employee.
• Increased productivity in agriculture frees
1 people to work in manufacturing.
• Increased manufacturing productivity and
increased income means people that people
spend proportionally less on agricultural
2 goods,
• and then less on manufacturing goods than on
services.
3
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15. Clark-
Clark-Fisher Model of Development
4. Quaternary production
• The quaternary sector of the economy
is an extension of the three-sector
hypothesis of industry.
• It principally concerns the intellectual
services:
-information generation
-information sharing
-consultation
-education
-R&D
• It is sometimes incorporated into the
tertiary sector but some argue that
intellectual services are distinct enough to
warrant a separate sector.
• This sector evolves in well developed
countries and requires a highly educated
workforce
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16. Clark-
Clark-Fisher Model of Development
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17. Clark-
Clark-Fisher Model of Development
Criticism of the model
• There are many LDCs where the main sector is a service
sector, without having a properly developed secondary sector.
Examples:
-Kenya (tourism)
-Malta (tourism, financial services)
-Cyprus (tourism, financial services)
-Hong Kong (financial services)
• The model ignores the international economic context , not
taking into consideration the import of manufactured goods .
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18. Q&A
Thank you for your
kind attention!!
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19. Sources of Information
1. http://en.wikipedia.org/wiki/John_Bates_Clark_Medal
2. http://en.wikipedia.org/wiki/John_Bates_Clark#cite_note-5
3. http://ru.wikipedia.org/wiki/%D0%9A%D0%BB%D0%B0%D1%80%D0%BA,_%D0
%94%D0%B6%D0%BE%D0%BD_%D0%91%D0%B5%D0%B9%D1%82%D1%81
4. http://en.wikipedia.org/wiki/Irving_Fisher
5. http://www.cpm.ll.ehime-u.ac.jp/AkamacHomePage/Akamac_E-text_Links/Fisher.html
6. http://www.geography.learnontheinternet.co.uk/topics/empstruct.html#structure
7. http://www.bized.co.uk/virtual/dc/copper/theory/th6.htm
8. http://www.slideshare.net/fozzie/clark-fisher-model
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