Development Economics

Development Economics

Question One

It is possible that there can be a growth of per-capita income without the achievement of other achievements. It applies where under different conditions, the increase in per-capita income can have diverse effects such as poverty, low productivity, and lack of human development.  It applies here as the growth in the income depends entirely on the ability of individuals with low income to take part in using the opportunity available to advance through it. But in cases where they fail to make good use of the growth process, they end up in poverty despite the change in patterns.

Question Two

Development economics might be merely a combination of all other subfields of economics that only apply to low-income countries. For them, having a low –capita income has been used as a form of measure that analyzes their problem, which is poverty (Shen et al. 2018). It applies more in low-income nations leaving behind other countries. Development economics has the aim of improving the living standards, which creates a need for understanding policy dimensions.  The economist and policymakers need to understand economic development before coming up with policies such as that of raising per capita incomes and ensure they set rates that not only look unto the concerns of the low-income countries but other nations as well.

Question Three

Low levels of living can turn into a vicious cycle in developing countries. It applies based on the capital accumulation that a country has in its economy.  Capital accumulation here plays a role of creating an escape route, but when the country has low productivity, they fall under the likelihood of getting into the cycle. This cycle comes in when a country is poor and has small

real income, low capital accumulation, and low savings. Most of the developing countries suffer from low productivity, which is why they get at high risk of being in the vicious cycle.

Question Four

Purchasing power parity measures of income levels tend to show a smaller difference between poor and rich countries. The gap exists as purchasing power parity depends on the use of weights from specific commodities. These weights are used in determining the consumption patterns across nations, which in most cases, cannot avoid arbitrariness.  In this case, therefore, the use of purchasing power parity fails to measure the income levels of the nations appropriately. It does not take considerations such as how the consumption pattern varies in every country due to taste, diversity, and income distribution. It thus makes it difficult to distinguish between poor and rich countries.

Question Five

If countries are first ranked by the level of real GDP per capita, and then by the value of the Human Development Index, I expect the rankings of the countries to be similar. My conclusion would be based on how they both have a strong relationship where they evaluate the income levels in ranking nations. They as well have a nature of association when it comes to dimensional indicators such as education and health (Swadzba, 2019). Typically, they have outcomes that improve with the income, which makes both of them correlate. I with this support that one could use GDP per capita and HDI index and acquire the same results.

Question Six

The main difference between linear stages and international dependency models of development is based on their stages. Linear stages came about around the 1950s, which was considered as a fixed set of stage. Here, all the societies at the time would pass through it. On the
other hand, the international dependency model having been put up by 1970 emphasized development taking place in inequalities. It stressed majorly on third world countries which were addressed the most. Here, they can both b seen to differ as while the linear model was fixed in addressing the issue of economic development, and international dependence was not seen to be fixed on stages instead of the inequalities that existed in the market.

Question Seven

Rostow’s stages of economic growth theory can be considered to be two-sided. On one side it has been recommended for economic development while on the other it has criticisms. One significant critique of the theory is on the fact he comes out to bias on considering the western model as being the only path for economic development.  Not all countries develop through a linear way; instead, others go through the process while some skip it. But Rostow’s theory emphasizes a lot on modernization based on western influence, which is not the case for in all countries. Different nations desire to develop in different ways.

Question Eight

Developing nations have invested so much money in education and health. This effort has been adapted, considering they are the fundamental drivers for their development.  Education helps in creating progress for the nations as it also them to fill gaps that exist in poverty. Investing in health is also a way of decreasing the mortality rate in the nations. Ganimian & Murnane (2016) explains that by managing the lives of the people, it creates a broader opportunity of having economic growth in the countries. Education and health have an impact on economic development, where they increase the value of human capital.  An increase in human capital generates an improved labor market, which enhanced development.

Question Nine

Developing countries have not realized a greater positive development impact from their higher education program as a way of addressing their human capital issues. But despite making the efforts, they do not benefit from it as the investment fails to pay off well (Mbiti, 2016). Here, the college-educated individuals and on getting to the job market, they face increased demands. It forces some of them to seek employment opportunities elsewhere, which are a form of brain drain for the countries. It, in turn, leads to the failure of nations to benefit from the programs which affect the society as they do not benefit from it.

Question Ten

Child labor is a problem in developing countries as it affects the growth of human resources.  It applies where when a child is placed under forced labor, they miss out on the opportunity of going to school, which limits their ability to have a normal life.  Child labor affects not only their educational achievement but also their quality of education system offered in the countries.  Due to the limited abilities of the children to get educated and acquire job opportunities, the labor market gets affected as well. It thus limits the developing countries from managing to fight off poverty, which is a challenge to the Millennium Development Goals (MDG).

Question Eleven

Cuaresma (2017) points out that an increase in human capital leads to boosts productivity, which increases GDP.  With increased productivity, the overall income increases as well, which increases the GDP. However, in some cases, it might not lead to an increase in GDP when the working institutions are poor. Here, human capital gets concentrated on the top earners who benefit from it more, giving less to the economy. Therefore, in a case where the human capital is focused on areas that are small such as in agriculture, it makes it challenging to have the GDP increase.

References

Cuaresma, J. C. (2017). Income projections for climate change research: A framework based on human capital dynamics. Global Environmental Change, 42, 226-236.

Ganimian, A. J., & Murnane, R. J. (2016). Improving education in developing countries: Lessons from rigorous impact evaluations. Review of Educational Research, 86(3), 719-755.

Mbiti, I. M. (2016). The need for accountability in education in developing countries. Journal of Economic Perspectives, 30(3), 109-32.

Shen, W., Yang, S. C. S., & Zanna, L. F. (2018). Government spending effects in low-income countries. Journal of Development Economics, 133, 201-219.

Swadzba, S. (2019). GLOBALIZATION AND ECONOMIC GROWTH IN DEVELOPING COUNTRIES. Economic and Social Development: Book of Proceedings, 284-291