Four Elements of Development.

  1. Human resources (labour supply, education, discipline) -> healthy labour force. Happy and satisfied people, qualified positive work models.  
  2. Natural resources (land, minerals, fuels, climate)-
  3. Capital formation (machines, factories, loads)
  4. Technology (Science, engineering, management, entrepreneurship, “know-how”

Poor countries face obstacles in combining these 4 elements

Low savings and investment-> low pace of capital accumulations-> low productivity-> low average income-> low savings and investment->

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(Vicious circle)

Different theories which focus of how poor countries can or may break out of the vicious cycle of poverty

  1. Take off theory- allows rapid growth in a short period of time.
    Growth leads to profits-> profits are re-invested-> create capital and productivity-> per capita income spurs ahead (examples Mexico after 1940, US 1850, Japan 1910, England 1800’s)
  2. Backwardness hypothesis.
    Less advanced country can move toward advance by borrowing technology and specialist.
  3. Balanced growth-
    Countries tend to growth same rate whether advanced or otherwise


Issues in economic Development:

  1. Balance between industry and agriculture
  2. The ...

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