1. The document discusses the theories of balanced and unbalanced economic growth. It describes Rosenstein-Rodan's "big push" theory of balanced growth, which argues for coordinated investment across multiple industries to generate demand.
2. Nurkse's version of balanced growth stresses balancing investment between sectors to avoid bottlenecks. Hirschman's theory of unbalanced growth proposes strategically investing in certain industries to stimulate growth in other sectors through linkages.
3. Hirschman categorized investment as either social overhead capital or direct productive activities and argued that underdeveloped countries should initially focus on one type, which would then stimulate the other.
The classical growth theory argues that economic growth will decrease or end because of an increasing population and limited resources Classical growth theory economists believed that temporary increases in real GDP per person would cause a population explosion that would consequently decrease real GDP.
Prof. Joan Robinson, criticised Neo Classical theory of capital and its concept of capital. Following in the Keynesian tradition, she extended Harrod's and Domar's growth models to include other variables that determine steady growth in a capitalist economy. However she states that the Golden Age is a myth, not achievable in reality.
The theory of Technical dualism is one of the theories of dualism. Professor Higgins has developed the theory of Technological Dualism. By this, he means: "The use of different production functions in the advance sector and in the traditional sectors of UDCs".
In economics, the theory of the second best concerns the situation when one or more optimality conditions cannot be satisfied.
The economists Richard Lipsey and Kelvin Lancaster showed in 1956, that if one optimality condition in an economic model cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would otherwise be optimal.
Politically, the theory implies that if it is infeasible to remove a particular market distortion, introducing a second (or more) market distortion may partially counteract the first, and lead to a more efficient outcome.
The classical growth theory argues that economic growth will decrease or end because of an increasing population and limited resources Classical growth theory economists believed that temporary increases in real GDP per person would cause a population explosion that would consequently decrease real GDP.
Prof. Joan Robinson, criticised Neo Classical theory of capital and its concept of capital. Following in the Keynesian tradition, she extended Harrod's and Domar's growth models to include other variables that determine steady growth in a capitalist economy. However she states that the Golden Age is a myth, not achievable in reality.
The theory of Technical dualism is one of the theories of dualism. Professor Higgins has developed the theory of Technological Dualism. By this, he means: "The use of different production functions in the advance sector and in the traditional sectors of UDCs".
In economics, the theory of the second best concerns the situation when one or more optimality conditions cannot be satisfied.
The economists Richard Lipsey and Kelvin Lancaster showed in 1956, that if one optimality condition in an economic model cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would otherwise be optimal.
Politically, the theory implies that if it is infeasible to remove a particular market distortion, introducing a second (or more) market distortion may partially counteract the first, and lead to a more efficient outcome.
Balance of Payment Disequilibrium and CausesNeema Gladys
1.Balance of Payment
The balance of payment of a country is a systematic accounting record of all economic transactions during a given period of time between the residents of the country and residents of foreign countries.
2.Componets of BOP
Current Account
It includes imports and exports of goods and services and unilateral transfer of goods and services.
Capital Account
Under this are grouped transactions leading to changes in foreign assets and liabilities of the country.
3. Accounting Treatment of Items (Debit and Credit Items)
Any item which gives rise to a sale of foreign exchange (an inflow) is recorded as a credit item (+) in the accounts e.g. export of goods and services
Any item which gives rise to the purchase of foreign exchange (an outflow) is recorded as a debit item (-) in the accounts e.g imports of goods and services.
4. BOP Disequilibrium
BOP is a double entry accounting record, then apart from errors and omissions, it must always balance.
The BOP deficit or surplus indicate imbalance in the BOP.
This imbalance is interpreted as BOP Disequilibrium.
A country’s balance of payments is said to be in disequilibrium when its autonomous receipts (credits) are not equal to its autonomous payments (debits).
5.BOP Deficit
A deficit or an unfavorable balance exists when the value of autonomous debit items exceeds the value of autonomous credit items.
6. BOP Surplus
A surplus or a favourable balance exists when the value of autonomous credit items exceeds the value of autonomous debit items.
Brief PPT on Balance of payment Vs Balance of TradeShubham Parsekar
The ppt is based on Balance of payment and Balance of trade, their meaning ,factors affecting them and difference between both i.e BOP & BOT.
i hope this presentation will be helpful to you , as everything is tried to fit in these slides. i suggest everyone to just go through the economics text book and gain more insights if one is very much interested in it.
please like the presentation and comment below your views about it.
follow me on slideshare for more informative power point presentations.
new industrial policy 1991 is about the changes made in the policy in 1991. this policy is devided into two parts 1 is announced on 24 july 1991 which is concernd with the large scale industres including the middle scale and the second part is announced on 6 august 1991 and concerned with small scale sector............
Investment is defining as asset or item that is
purchased with the hope that it will generate income or
appreciate in the future. In an economic sense, an investment is
the purchase of goods that are not consumed today but are
used in the future to create with. In finance an investment is a
monetary asset purchased with the idea that the asset will
provide income in the future or appreciate and be sold at a
higher price. The purpose of this paper is to investigate the
impact of investment (public and private) on economic growth
in Sudan during the period 1999-2011. Date were collected
from central bureau of statistics. Using these data ordinary
least squares method was applied to the linear form of the
model. The obtained results showed that: investment has
positive impact on economic growth measured by nominal
gross domestic product, real gross domestic product and
growth rate of gross domestic product. This is similar to what
mentioned in economic theory.
Theories and models for Regional planning and developmentKamlesh Kumar
This is a work on the major theories of Regional planning mainly consisting the work of Francois Perroux, Gunnar Myrdal, Albert O. Hirschman, Walter Whitman Rostow and John Friedman.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
ECON3501
CARIBBEAN ECONOMIC
DEVELOPMENT
UNIT 4 – ECONOMIC GROWTH
RESOURCE MATERIALS
Levitt, Kari; Witter, Michael (1996). The Critical Tradition of Caribbean Political
Economy: The Legacy of George Beckford. Kingston. Ian Randle Publishers
Beckford; George (2000) Persistent Poverty; Underdevelopment in the Plantation
Economies of the Third World. UWI Press.
Todaro Michael & Smith Stephen; C. (2011) 11th Ed. Economic Development. Pearson
Education & Addison-Wesley
Bhagwati Jagdish (2004). In Defence of Globalization, Oxford University Press
Blackman; Courtney. (2005). The Practice of Economic Management: Caribbean
Perspective Kingston: Ian Randle Publishers
United Nations- UNDP, Human Development Report. World Bank-World
Development Report
2
ECONOMIC GROWTH
Economic growth has two meanings.
Firstly, and most commonly, growth is defined as an increase in the
output that an economy produces over a period of time based on per
capita. That is, an increase in GDP or GNI per capita.
The second meaning of economic growth is an increase in what an
economy can produce if it is using all its scarce resources.
An increase in an economy’s productive potential can be shown by an
outward shift in the economy’s production possibility frontier (PPF).
3
PER CAPITA STATISTICS
Per Capita is used to refer to a unit or each
person within a population.
A country’s economic growth and comparison
of living standards among countries can be
expressed using GDP per capita or GNI per
capita information.
Per capita GDP or GNP is simply a country’s
GDP or GNP divided by its population.
Using per capita statistics is a better measure
of the well-being for the average person.
Bahamas, The
2019 34,863.70
Puerto Rico
2019 32,873.70
Turks and Caicos Islands
2019 31,353.30
St. Kitts and Nevis
2019 19,935.00
Curacao
2019 19,689.10
Barbados
2019 18,148.20
Trinidad and Tobago
2019 17,398.00
Antigua and Barbuda 2019 17,112.80
Uruguay
2019 16,190.10
Panama
2019 15,731.00
Top 10 countries in the Latin America and Caribbean
region for 2019 based on figures from Worldbank.org
4
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-BS
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-PR
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-TC
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-KN
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-CW
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-BB
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-TT
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-AG
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-UY
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZJ-PA
THE PRODUCTION POSSIBILITY FRONTIER
(PPF)
Q
u
a
n
ti
ty
o
f
C
o
m
p
u
te
rs
P
ro
d
u
c
e
d
Quantity of Cars Produced
3,000
1,000
2 ...
Examining the Impact of Export-Led Growth Strategy: Evidences From Nigeria (1...inventionjournals
The Nigerian economy had for decades been dependent on the fragile leg of crude oil exports. An emerging trend however suggests that in the last ten years the economy was growing without job creation and poverty reduction consequent upon fall in the international oil markets. Expectedly, attention of scholars had shifted towards the development of non-oil exports as a substitute for this quagmire. This study analyses Export-Led Growth Strategy in Nigeria using Annual Data between 1960 and 2015. The study adopted the Autoregressive Distributed Lag (ARDL) Approach on a modified Cobb Douglass Production Function in the analysis. The choice of ARDL is informed by many considerations: it can be used irrespective of whether the regressors are I(1) or I(0) or a mixture of both. Results of the findings revealed that oil exports are directly related to GDP while non-oil exports are not, and implacably non-oil exports do not impact on GDP. The study also revealed that there is a long run relationship between GDP and both components of exports (oil and nonoil) which can be used to determine the possible direction of GDP. And in case of distortion in the economy, equilibrium can be restored at 12 per cent growth rate per annum as one of the study revelations. The study among others recommends that government should diversify the economy to ensure maximum contributions from all facets of the same to enhance economic growth of the country.
A Slum, for the purpose of Census, has been defined as residential areas where dwellings are unfit for human habitation by reasons of dilapidation, overcrowding, faulty arrangements and design of such buildings, narrowness or faulty arrangement of street, lack of ventilation, light, or sanitation facilities or any combination of these factors which are detrimental to the safety and health.
“A disaster can be defined as any occurrence that cause damage, ecological disruption, loss of human life, deterioration of health and health services on a scale, sufficient to warrant an extraordinary response from outside the affected community or area”. World Health Organization (WHO)
“A disaster can be defined as an occurrence either nature or man made that causes human suffering and creates human needs that victims cannot alleviate without assistance”. American Red Cross (ARC)
During the second half of the twentieth century, Colombian society underwent a number of deep transformations in its population distribution, economy, and social behaviour. World events (war and economic movements) that had taken place during the previous decades made it necessary to introduce policies involving industrialisation, based on import substitution, an approach which was officially adopted into Colombian policies under the orientation and sponsorship of the Colombian Economic Commission for Latin America and the Caribbean (CEPAL).
Transportation planning is an integral part of overall urban planning and needs systematic approach.
Travel demand estimation is an important part of comprehensive transportation planning process.
However, planning does not end by predicting travel demand.
The ultimate aim of urban transport planning is to generate alternatives for improving transportation system to meet future demand and selecting the best alternative after proper evaluation.
In today’s world with the ever increasing traffic it is inherent that we immediately find an optimum solution for it so that we can move on from being a developing nation to a super power.
There is a great need to resolve our transportation issues at the earliest as connectivity is of grave importance. Finding a systematic and organized way around the current situation is only going to benefit us in the long run. Better connectivity reduces transportation costs immensely and saves time in traveling.
Development that meets the needs of the present without compromising the ability of the future generations to meet their own needs (World Commission on Environment and Development, 1987).
Balancing the fulfillment of human needs with the protection of the natural environment so that these needs can be met not only in the present, but in the indefinite future.
The Kolkata Metro, run by the Indian Railways, is the oldest underground system in India since 1984,It runs parallel to the River Hooghly and spans the north-south length of the city covering a distance of 22.3 km.
The Global Cities Index (GCI) provides a comprehensive ranking of the leading global cities from around the world. It is designed to track the way cities plan as their populations grow and the world continues to shrink.
Technology is the usage and knowledge of tools, techniques, and crafts, or is systems or methods of organization, or is a material product (such as clothing) of these things.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
2. Two Versions of Balanced Growth
1. A critical minimum effort is required to overcome
indivisibilities in the productive processes on both the
demand and supply side of the market, i.e. ‘Big Push’
(Rosenstein-Rodan and Nurkse)
or
2. The path of development and the pattern of investment
must be balanced between the sectors of the economy
to ensure its smooth functioning.
(Nurkse and Lewis)
3. Version 1
Big Push: Rosenstein-Rodan
Paul Rosenstein-Rodan
1902 - 1985
Rosenstein-Rodan was initially
concerned with the post war
development of Eastern and South
Eastern Europe
He argued that industrialisation was the
only way to alleviate the 25%
unemployment rate due to excess
agricultural workers
However, he believed that such
investment would not occur without co-
ordination
4. The inducement to invest is limited by the size of the market
In a non-surplus producing agricultural economy there is no
initial demand for manufactured goods
Whilst Say’s Law suggests that once workers are transferred to
an individual industry (say shoe production) they will generate
their own demand by consuming shoes, Rosenstein-Rodan noted
that they will not spend their entire wages on shoes alone.
However, if the workers are transferred into a range of
industries producing the bulk of goods on which workers would
spend their wages then these industries will act as compliments
to each other and will thus be mutually supporting.
This requires coordination between industries
The demand side
Complimentarily Of Industries
5. Version 2
Balanced Growth: Nurkse
Ragnar Nurkse
1907 - 1959
Nurkse followed up on Rosenstein-
Rodan’s thesis
He embraced ‘Big Push’ theory, but
argued that coordination could also be
achieved by private agents, i.e. banks.
His contribution was to assert the
importance of achieving balance between
different sectors of the economy
6. A Balanced Economy
Nurkse was concerned with the path of development and the
pattern of investment
He argued that these should be of such a nature that growth
is balanced between different sectors such that no bottlenecks
or excess capacity arise
Integral to this proposition is the notion that the agricultural
and industrial sectors must be balanced
=
7. Scholars such as Hirschman, Rostow, Fleming and
Singer propounded the theory of unbalanced growth
as a strategy of development to be used by the
underdeveloped countries.
This theory stresses on the need of investment in
strategic sectors of the economy instead of all the
sectors simultaneously.
According to this theory the other sectors would
automatically develop themselves through what is
known as “linkages effect”.
Meaning of Unbalanced
Growth
8. Explaining the theory of unbalanced growth
Prof. Hirschman that
creating imbalances in the
system is the best strategy
for growth. Owing to the
lack of availability of
resources in the less
developed countries, the
little that is available must
be used efficiently.
Accordingly strategic
sectors in the economy
should get priority or
precedence over others
where income is concerned. Prof A.O Hirschman
9. 1. External Economies:– Unbalanced growth according to Prof. Hirschman
generates externalities. Further explaining, we could say that the
growth of industry A leads to or stimulates the growth of industry B and
C and so on, similarly the growth of industry B and C will lead to the
subsequent growth of industries E and F. Thus, the growth of a strategic
industries apart from providing the benefits belonging to itself also
stimulates the growth of other set of industries. The existing
externalities are explored, and fresh ones generated.
2. Complementariness:– Growth of output of industry A may generate the
demand for the products of B and C and also may reduce the marginal
cost of production in these industries. There are technical
complimentaries which stimulate the growth of related industries,
following the atrategy of unbalanced growth. Thus states Prof.
Hirschman, “Economic growth follows the course of imbalances in the
system. Competitions, tensions as well as inducements are the
inevitable outcome of the unbalanced growth, and more these are,
greater the prospects of growth.”
continued………..
10. Classification of Investment by Hirschman:
(A) Social Overhead Capital or SOC:
Social overhead capital comprises of those basic devices without which primary,
secondary and tertiary activities cannot function. This includes in it the
expenditure on roads, irrigation works, power, transport and communications. The
investment on these projects create more economies and this is called divergent
series of investment. Such investments are undertaken by Public agencies.
(B) Direct Productive Activities or DPA:
These are those activities which are a consequence of some investment, add to
the flow of final goods and services. It is called convergent series of investment
because these project appropriate more economies than they have created. These
series of investments are undertaken by private entrepreneurs. Thus investment
in agriculture or industry would be deemed as that belonging to Direct Productive
Activities.
Therefore both SOC and DPA cannot be taken up simultaneously in less developed
countries, owing to the general lack of resources. Initially, we should concentrate
on either of the two, the other one would be automatically stimulated.
11. Hirschman, thus suggests the growth of the economy in two
ways:
1) Unbalancing the economy through SOC: Growth of SOC,
according to Hirschman would stimulate investment in DPA.
For example, availability of cheap electricity is expected to
encourage the growth of small scale industries. Similarly, the
development of irrigation works is expected to stimulate the
growth of agricultural works.
2) Unbalancing the economy with Direct Productive Activities or
DPA: Investment in DPA would press for investment in SOC.
Demand for irrigation, roads, transport and communication
would increase, pressing for greater investment in these
activities. It is through this process of linkages that the
economy will grow.
continued………..
12. This figure demonstrates the path of
development, using strategy of
unbalanced growth.
X-axis: Investment cost in Socially
Productive Activities
Y- axis: Investment Cost in Direct
Productive Activities
AA, BB, CC curves: equi- productive curves
indicating various combinations of SOC,
DPA corresponding to given level of
national income
HIGHER THE CURVE GREATER THE LEVEL
OF OUTPUT!!
Growth process maybe explained by
making initial investments either to DPA
or SOC. It is because it is assumed that in
underdeveloped countries SOC or DPA
cannot be expanded simultaneously.
While the former is called Development
by Excess Capacity of SOC, the latter is
known as Shortage of SOC.
Path Of Development
13. GROWTH PROCESS
The growth process can be explained in two ways_
1. Development via excess capacity of SOC: In this sequence development takes
place when expansion of SOC reduces the cost of infrastructure in transportation,
power etc. this ENCOURAGES investment in DPA. If investment is made in SOC,
the economy will follow DEGHK route of development. Increase in investment in
SOC from D to E will induce greater investment in DPA up to point F because
transportation and power will become cheaper. Investment in DPA increases until
balance is restored at G. However is located at high equi-product curve BB which
implies that there will be caused increase in the level of output in economy.
2. Development via Shortages of SOC: In this sequence development takes place
when investment is made first in Direct Productive Activities(DPA). The Expansion
of DPA builds up pressure on SOC. In the figure, Investment is made first in DPA,
the route of development is DFGJK. We increase DPA from D to F. this results in
increase in production costs and DPA producers would realize the possibility of
considerable economies through more investment in SOC facilities. Thus, SOC
would increase to point E and then to equilibrium point G on BB curve implying
the higher level of output. If investment is further increased from G to J, this
would create pressure for more investment in SOC shifting G to H and like this the
equilibrium will be struck at point K on higher iso-product curve CC the path of
growth being DGK.
continued………..
14. Dissimilarities between Balanced Theory and
Unbalanced Theory
1. The theory balanced growth advocates the simultaneous growth of all
sectors of the economy. The theory of unbalanced growth, on the other
hand, focuses on the growth of some key sectors of the economy to
begin with.
2. Balanced growth hypothesis seeks to accelerate the process of growth
through simultaneous investment across all sectors of the economy. The
unbalanced hypothesis however, seeks to accelerate the process of
growth through imbalances in the system.
3. Balanced growth requires a lot of capital investment right from the
beginning of the growth process. Unbalanced growth requires relatively
much less investment.
4. Balanced growth strategy is a long period strategy of growth, while
unbalanced growth is a short period strategy for growth.
5. Size of the market is the principal limiting factor as according to the
balanced growth theory. But according to the unbalanced growth
theory, it is decision making and entrepreneurial skill.
15. Criticisms
Balanced growth
• The strategy is beyond the resources of
most poor countries
• Balanced growth within a closed
economy rather than specialisation and
trade contradicts comparative
advantage
• Government planning results in
government failure ie government
intervention in the market fails to bring
about an efficient allocation of
resources eg planning process creates
a bureaucracy.
• LDC development policies focusing on
import substitution, agricultural self-
sufficiency and state control of
production yield poor growth.
Unbalanced Growth
• The model leaves a lot to
chance;
• Have the correct sectors been
focused upon?
• What criteria has the
government used to identify
the sector to focus upon?
• Bottlenecks may occur where
there is a shortage in supply to
the growth sector
• There may not be a sufficient
demand for the output from
the growth sector
16. Criticism of The Unbalanced Theory of Growth
1. Inflation- The theory gives undue emphasis to development through
industrialization, not withstanding the significance of agriculture.
Because of long gestation lags in industries, flow of goods is
expected to be constricted during the short period, causing inflation.
2. Wastage of Resources- Being concentrated on a couple of
industries, resources may not be appropriately utilized. Some sectors
of the economy will grow at a faster rates while other sectors will
remain neglected.
3. No mention of obstacles- Paul Streeten observes that the theory
only mentions the establishing key industries presses for the
establishment of other industries. But the theory is oblivious to the
possible difficulties in establishing key industries to begin with. It is
not an easy task to establish key industries right at the beginning of
a development program.
4. Increase in uncertainty- The theory inherently assumes that the
success of the growth process depends on external trade and foreign
aids. This increases uncertainty of the growth process.