Economic Development

Villa, Esmeralda Amor D. March 6, 2020

1BSAIS- 3

Chapter 6

1. Assess the strengths and weaknesses of the Lewis-Fei-Ranis model of

economic growth and the structural transformation. Can you think of ways
to improve the model?

Answer:

Lawis Fei Ranis model of economic growth is a dualism model in

developmental economics or welfare economics that has been
developed by John C. H. Feiand Gustav Ranisand can be understood as
an extension of the Lewis model. It is also known as the Surplus Labor
model. It recognizes the presence of a dual economy comprising both
the modern and the prehistoric sector and takes the economic situation
of unemployment and underemployment of resources into account,
unlike many other growth models that consider underdeveloped
countries to be homogenous in nature. They have failed to mention the
need for capital. Fei Ranis Model considers only labor and output as
factors of production. It is important to create surplus, It is equally
important to maintain it through technical progress.

Source:

https://www.birmingham.ac.uk/Documents/college-social-
sciences/business/economics/2010-papers/economics-papers-2010/10-06.pdf
2. Discuss the interrelationship between education and the shift that have
been taken place in industrial production in Asia over the past three
decades. How does comparative advantage fit into this paradigm?

Answer:

The manufacturing sector, viewed as an advancement essential

method t guarantee success development. This is particularly significant
in significant expense working conditions where there is need to take part
in non-cot base challenge. Non valued based challenge is compromised
of a progression of complex systems that guarantee supremacy. Effective
non-cost based challenge requires constant arrangement of multi-
dimensional incentive for cash rather than contributions from minimal
effort working situations. This complex working condition is affected by
various powers. These incorporate government strategy, innovation
advancement, profitability development and development, consistently
changing client inclinations, the moving harmony among dividing and
focusing powers of worldwide stock chains, and the elements of progress
inside the assembling firm themselves. Applying the suitable worth
making worldview is fundamental for effective advancement.

3. How can state-owned enterprises stifle innovations?

Answer:

The state sector has always been an important element of

many economies, including the most advanced ones. There are
legitimate economic and non-economic reasons for state ownership
and views on the role of government in the economy may differ
across countries and political systems. State-owned enterprises
can act on the basis of commercial considerations, or they may
have non-commercial priorities. They have some advantages about
that, in that case those advantages can take the form of direct
funding, concessionary financing, state-backed guarantees, special
regulatory treatment, exemptions from antitrust enforcement or
bankruptcy rules, and others.
 State owned monopolies for utilities, for example, have
apparent advantages such as economies of scale and
controllability, yet these monopolies turn out to be untenable
in a rapidly changing market. So that monopolies are thought
to stifle innovation and increase price levels, so government
adopt liberalization policies and sell the rights of state owned
companies
Innovation is the presentation of something new.
Without advancement, there is nothing new, and without
anything new, there will be no advancement.

4. Hobday, Amsden and others with similar views have written about
industrialization experience of countries in East Asia. What is the basic
thrust of this argument? How does their analysis impact on the current
debate about the role of China in the future growth and development
trajectory of the Asian region?

Answer:

The file of fare Development for the Asian economies that is,
configuration intensely impacted by the changing structure of fares. On
the off chance that a nation changes its fare structure in the support of
items for which import development of the world is developing quickly
then this list will be bigger than when a nation fare are not reacting to his
day of work on the planet import request. Nearly nations in Asia have
quickly developed showcases that are developing quickly, like for
example in the PCs and gadgets.

Sources: https://www.adb.org/sites/default/files/publication/156168/adbi-
wp313.pdf
 5. Discuss the total factor productivity question with respect to the Asian
developing countries.

Answer:

Total factor productivity (TFP) as a measure of overall

productivity has been gaining recognition and acceptance not only for
its academic correctness but also for its practicality among policy
makers and economic analysts. Some governments have begun to
include the TFP growth rate as a target in national development plans.
Against this background, the APO conducted a survey in 10 member
countries in 1998. The basic objective of that first survey project was to
develop a common understanding of TFP as well as to select and
adopt a common approach for measuring and comparing TFP among
member countries. For this purpose, the participating countries
compiled TFP data at the macro level using a common framework. It
was hoped that the estimation and use of TFP growth would become a
widely adopted practice in member countries.

As I research East Asia has been a model of successful economic

development during the last several decades. Until the early 1990s, it was
suggested that the model of East Asian development might provide some lessons
even for the developed West. In the late 1980s, many managerial economists
tried to explain the Japanese success by finding the positive aspects of famous
Japanese economic system from its individual employment practices, corporate
governance, and financial system. We all agree that East Asia cannot keep
growing in the future as rapidly as the past several decades. The historical record
suggests that the rate of rapid growth East Asia has experienced may happen
when countries cover behind the leaders go through a phase of catching up.

Source:

https://publications.iadb.org/publications/english/document/Financial-
Development-and-TFP-Growth-Cross-Country-and-Industry-Level-Evidence.pdf