Eco. 361–16-8-2021 (Online Discussion Quiz 2—Some Vital Questions on Development 1)

Critically discuss and analyse these questions as a potential Special Adviser to Mr. President of Poverty Alleviation and Economic Development

1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

3. How can the extremes between rich and poor be so very great?

4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

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  1. Unegbu Charles Emeka says:

    Name: Unegbu Charles Emeka
    Reg no: 2018/241829
    Dept.: Economics
    Course: Eco361 Development Economics
    Question 1: What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Answer:
    1. For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organization – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    a. The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    b. Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    c. Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    d. Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    2. Second, the WTO rules should be re-written so that the developing countries can move actively using tariffs and subsidies for industrial development.
    3. Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.

    ii) The initial condition above are totally different from what the developed countries faced on the eve of their industrialization and this are what they did below:
    Characteristics of industrialization include economic growth, the more efficient division of labor, and the use of technological innovation to solve problems as opposed to dependency on conditions outside of human control.

    Question 2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development ?
    Answer:
    The term “Economic Institutions” refers to two things:
    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.
    2. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behavior. Its original focus lay in Thorstein Veblen’s instinct-oriented dichotomy between technology on the one side and the “ceremonial” sphere of society on the other.(Wikipedia)
    ii) a. Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs. They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations.
    b. institutions which are conducive to development ensure greater self-expression, allow the free flow of information and encourage the formation of associations and clubs. These form prosperous social relationships, which are conducive to greater economic interaction by increasing levels of trust and wider availability of information (Putnam, 1993). They allow greater sharing of resources through democratic institutions and the use of the state to reduce the risk attached to economic activity.
    c. There is wide-ranging evidence that institutions matter a great deal in determining the level of economic development of a country. Cross-country analyses use indicators such as degree of protection of property rights, the rule of law, and civic liberties and find that they are strongly correlated to economic performance.

    Question 3. How can the extremes between rich and poor be so very great?
    Answer:
    1. Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.
    2. Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments under tax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    3. Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    4. Denied a longer life. In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    5. Inequality is sexist. With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.
    Question 4. What are the sources of national and international economic growth?
    Answer:
    a) Sources of national and international economic growth:
    1. Human Resources: Labor inputs consist of quantities of workers and of the skills of the work force.
    Many economists believe that the quality of labor inputs—the skills, knowledge, and discipline of the labor force—is the single most important element in economic growth. A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.
    Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labor.
    2.Natural Resources: The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry. Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high-density service industries. Many countries that have virtually no natural resources, such as Japan, have thrived by concentrating on sectors that depend more on labor and capital than on indigenous resources. Indeed, tiny Hong Kong, with but a tiny fraction of the land area of resource-rich Russia, actually has a larger volume of international trade than does that giant country.
    3.Capital Formation: Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation. IN this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    4.Technological Change and Innovation: In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other. Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.
    The most dramatic technological developments of the modern era are occurring in electronics and computers, where today’s tiny notebook computers can outperform the fastest computer of the 1960s. These inventions provide the most spectacular examples of technological change, but technological change is in fact a continuous process of small and large improvements, as witnessed by the fact that the United States issues over 100,000 new patents annually and that there are millions of other small refinements that are part of the routine progress of an economy. For the most part, technology advances in a quiet, unnoticed fashion as small improvements increase the quality of products or the quantity of output.

    Question 4i. Why do some countries make rapid progress toward development while many others remain poor?
    When considering nations, economists often use gross domestic product (GDP) per capita as an indicator of average economic well-being within a country. GDP is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living. For example, in 2016, GDP per capita was $57,467 in the United States, $42,158 in Canada, $27,539 in South Korea, $8,123 in China, $1,513 in Ghana, and $455 in Liberia

  2. MBA COLLINS CHIDUMEBI says:

    NAME: MBA COLLINS CHIDUMEBI

    REG. NO.: 2018/242336

    DEPARTMENT: ECONOMICS

    Eco. 361: DEVELOPMENT ECONOMICS I

    Online Discussion Quiz 2—Some Vital Questions on Development Economics I
    Critically discuss and analyse these questions as a potential Special Adviser to Mr. President on Poverty Alleviation and Economic Development.

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    There are a lot of things to learn from the historical record of the economic progress of developed countries. Regions like the U.S.A, Japan, Europe etc. are all classed as developed regions because of the following features:
    High per capita income
    Security
    Availability of excellent health facilities
    Low unemployment rate
    Effective use of technology
    Positive balance of payment etc.
    Now, economic progression in these regions did not only take cognizance of increase in economic output, that is, GDP; but also incorporated improvement in wellbeing, living standard and life chances of the people.
    In these regions, people have the right attitude to life and work. There is also respect for fellow humans, respect for human dignity and respect for the natural environment.

    The initial conditions are similar for all countries before industrialization; what is different is the attitude of the people towards economic progression. For instance, the developed countries factor in the people wellbeing and social welfare in any development or industrialization plan. The same cannot be said for developing countries like Nigeria where personal interest rule over national interest.
    Countries at the onset of industrialization, have to understand the need to structure development to include everyone including the poor and the rich. In this way economic development or industrialization can be attained in the real sense.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    Economic institutions are those institutions set up to facilitate the management of Economic activities in a country, they include central banks, commercial banks, microfinance banks, development finance institutions etc.
    In describing their roles in shaping underdevelopment and prospects for successful development, two of the above listed Economic institutions will be discussed.
    CENTRAL BANKS: A Central bank is the apex bank in a country. It regulates the volume of currency and credit in the country. The goals of the central bank are stabililisation of currency, inflation management and reduction of unemployment in the economy. The central bank can shape the problem of underdevelopment and prospects for successful economic development in the country by using tools of economic stabililisation like monetary policy.
    By enacting monetary policy measure, the central bank can utilise implementing tools like interest rate adjustment, bank reserve ratio and open market operations.
    The central bank can stimulate economic activities in the country by lowering interest rate, this will entice investors to borrow more money for investment. The investors can use this money to set up private corporations which will need to hire workers for its operations; in this way employment will be generated. Also, these corporations will produce goods and render services, thus increasing aggregate demand in the economy and thus pave the way for successful economic development.
    Micro-Finance Institutions: these are economic institutions that lend money to low income groups, who lack access to banking and other related services. They provide financial services to the poor. MFIs can shape the problem of underdevelopment and prospects of successful development by performing functions like encouraging entrepreneurship and self sufficiency through providing access to funds for the poor through loans. They help to reduce poverty because the loans given to the poor can help them start up a business and earn income and thus alleviate poverty. They also encourage gender equality by providing women with financial backing needed to start up their own business and actively contribute to the economy and thus put the economy on a sound development path.

    3. How can the extremes between rich and poor be so very great?

    Extreme inequality is out of control. As millions of people get poorer, we have a higher number of millionaires in the country. Nigeria have the richest man in Africa, but also have the dubious honour of being labelled the poverty capital of the world. The government is fueling this inequality by enacting negative policies that favour the rich and encumber the poor. For instance, the government policy of under taxing private corporations and wealthy individuals and under funding public services like healthcare and education has the effect of hitting the poor people hardest because, the poor make use of the under funded public services, while the rich are able to fly abroad either for proper medical treatment or education of their wards. Also, corruption, insecurity, weak institutions and lack of adequate credit disbursement facilities etc. help in increasing the income disparity between the rich and the poor; thus resulting in an economy where the rich get richer, and the poor, poorer.
    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Sources of national and international economic growth include the following:
    Natural resources
    Human capital
    Physical capital
    Technology
    Trade
    Industrialization
    Strong social and political institutions

    Some of the reasons some Countries make rapid progress toward development while many others remain poor are:
    Government policies affecting access to credit
    Government policies affecting access to Technology
    Prudent taxing and spending by the Government
    Effective utilisation of resources
    Climate and Geography
    But the main reasons for economic development disparity between nations are; the culture of the people and Government policies.
    CULTURE OF THE PEOPLE: Some cultures can hardly tolerate change and bring about development. As such, the citizens mistrust anything they see as foreign. The Boko Haram terrorist group is a good example. The terrorist group officially detest western education, which is necessary for development to take place.
    GOVERNMENT POLICIES: Policies adopted by the government also contribute to the economic development disparity between nations. For instance, where the government organize their economies to allow private ownership of corporations, property and market; the contribution of the country’s citizens in the economy will increase and thus spur economic growth and development. Conversely, where private ownership of corporations, property and market is abolished by the government; it will reduce the citizens participation in the economy and negatively influence the economy by slowing its growth and development.

  3. Name: Obodoagu somtochukwu Lilian
    Reg. No: 2018/242452
    Dept: Economics
    Level:300l
    Assignment on Eco 361
    (1)what can be learned from the historical record of economic progress in the now developed world ? Are the initial conditions similar or different from contemporary developing countries faced on the eve of their industrialization.
    History plays an important roles in the development of a country.for example , the United States would be a different country today if France or Spain had ruled us instead of great britain.we might have different form of govt. Our culture and language likely would be different.
    It is also through the historical record of economic progress tell us how the development come about, so it is the bedrock of development in the now developed world.
    The initial condition is different from the contemporary developed countries as a result of industrialization advancement in the contemporary developed countries through the aid of science and technology.
    (2)what are the economic institutions and how do they shape problems of underdevelopment and prospects for success development.
    Economic institutions is defined as a company or an organization that deals with money or with managing the distribution of money, goods and services in an economy.Banks, government organization and investment funds are all economic institutions
    They shape problems of underdevelopment and prospects for successful development through
    (1) through the provision of development theories and approaches to poverty reduction
    (2) Through that help of economic disparities in the underdeveloped countries
    (3)They bring about the overview of the block chain technology, in other to recuce poverty and improve the living conditions of people in underdeveloped countries.
    (3)How can the extremes between the rich and the poor be so very great.
    The extremes between the rich and the poor undermine the fight against poverty, damaging our economies and tearing our societies apart.
    The extremes gap between the rich and the poor can be great when government around the world must act now to build a new, human economy that values what truly matters to the society rather than fueling an endless pursuit of profit but an economy that can work for everyone, not just a fortunate few.
    (4)what are the source of national and international economic growth? Why do some countries make rapid progress towards development while others remain poor.
    There are four main sources of national and international economic growth such as(1)Human resources such as size of labour force, education,skills and discipline.
    (2) National resources:oil and gas, soil and climate
    (3)Capital formation: equipment and factories, social overhead capital
    (4) Technology and enterprenurship: quality of scientific and engineers knowledge, managerial know how, reward of innovation.
    Some countries makes rapid progress toward development while others remain poor because some countries are full of institutionalized corruption, low quality education and brain drain.In countries with institutionalized corruption and lack of rule of law, this system is purposely maintained by government officials because they are becoming very rich from it. They siphon off public funds from corruption and also involve themselves in the market economy and then restrict competition for others through all kinds of tricks or threats or force if necessary.
    And also some countries are rich and others are poor because of their natural resources or national resources ,some are endowed with surplus natural resources

  4. Nkachukwu Paul chukwuanugo says:

    Name: NKACHUKWU PAUL CHUKWUANUGO
    Reg No: 2018/245112
    Course: ECO 361(DEVELOPMENTAL ECONOMICS)
    Department: COMBINED SOCIAL SCIENCE
    Combination: (ECONOMICS/POLITICAL SCIENCE)
    Email Address: coolestkidpaul@gmail.com

    Critically discuss and analyse these questions as a potential Special Adviser to Mr. President of Poverty Alleviation and Economic Development

    Questions;

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    3. How can the extremes between rich and poor be so very great?

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Answers;
    1. Lessons learnt from the historical record of economic progress in the now developed world.

    •WIDESPREAD USE OF TARIFFS AND SUBSIDIES
    Almost all of today’s rich countries used tariff protection and subsidies to develop their industries in the earlier stages of their development. It is particularly important to note that Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through free-market, free-trade policy, are actually the ones that most aggressively used protection and subsidies.

    Contrary to the popular myth, Britain was an aggressive user, and in certain areas a pioneer, of activist policies intended to promote its industries. Such policies, although limited in scope, date back to the 14th century (Edward III) and the 15th century (Henry VII) in relation to woollen manufacturing, the leading industry of the time. At the time, England was an exporter of raw wool to the Low Countries, and Henry VII for example tried to change this by protecting woollen textile producers, taxing raw wool exports, and poaching skilled workers from the Low Countries.

    Particularly between the trade policy reform of its first Prime Minister, Robert Walpole, in 1721 and its adoption of free trade around 1860, Britain used very dirigiste trade and industrial policies, involving measures very similar to what countries like Japan and Korea later used in order to develop their economies. During this period, it protected its industries a lot more heavily than did France, the supposed dirigiste counterpoint to its free-trade, free-market system.
    The USA, today’s supposed champion of free trade, was even more protectionist than Britain throughout most of its history before the Second World War. According to the authoritative study by Paul Bairoch, between the Civil War and the Second World War, it was literally the most heavily protected economy in the world.
    In this context, it is important to note that the American Civil War was fought on the issue of tariffs as much as, if not more than, on the issue of slavery. Of the two major issues that divided the North and the South, the South had actually more to fear on the tariff front than on the slavery front. Abraham Lincoln was a well-known protectionist who had cut his political teeth under the charismatic politician Henry Clay in the Whig Party, which advocated the ‘American System’ (thus named on the recognition that free trade was in ‘British’ interests), which was based on infrastructural development and protectionism. On the other hand, Lincoln thought the blacks were racially inferior and slave emancipation was an idealistic proposal with no prospect of immediate implementation – he is said to have emancipated the slaves in 1862 as a strategic move to win the War rather than out of moral conviction.
    •THE LONG AND WINDING ROAD TO INSTITUTIONAL DEVELOPMENT
    The story is similar in relation to institutional development. Contrary to what is assumed by today’s orthodoxy, most of the institutions that are regarded as pre-requisites for economic development emerged after, and not before, a significant degree of economic development in the now-developed countries. Without claiming to be exhaustive, let us examine the six categories of institutions that are widely believed to be pre-requisites of development: democracy, bureaucracy, intellectual property rights, institutions of corporate governance, financial institutions (including public finance institutions), and welfare and labour institutions.
    Whatever one’s position is on the relationship between democracy and economic growth in today’s world, it is indisputable that today’s developed countries did not develop under democracy. Until the 1920s even universal male suffrage was a rarity. It was not until the late 20th century that all developed countries became truly democratic. Spain and Portugal were dictatorships until the 1970s; votes were given to all ethnic minorities in Australia and the USA only in 1962 and 1965 respectively; while women in many countries were given the suffrage only after the Second World War and in Switzerland as late as 1971. Until the Second World War, even when democracy formally existed, its quality was extremely poor. Secret balloting was introduced only in the early 20th century in France and Germany, and corrupt electoral practices, such as vote buying, electoral fraud, and legislative corruption, lasted in most of today’s developed countries well into the 20th century.
    In terms of bureaucracy, sales of offices, the spoils system, and nepotism abounded in most countries until the early 20th century. Modern professional bureaucracies first emerged in Prussia in the early 19th century, but much later in other countries – even Britain acquired a modern bureaucracy only in the mid-19th century. Until the Pendleton Act in 1883, none of the US federal bureaucrats were competitively recruited, and even at the end of the 19th century, less than half of them were competitively recruited.
    A similar story emerges in terms of intellectual property rights institutions, which have become a key issue following the recent controversy surrounding the TRIPS (trade-related intellectual property rights) agreement in the WTO. Until the late 19th century, many countries allowed patenting of imported inventions.
    From the above Lessons, it’s only fair to say that the initial condition faces by the now developed countries differs from that which is been faced by the developing countries. But also, these lessons should have way for a total reconstruction of all organizations and institutions as well as laws which aids development.
    2. Economic institutions and their importance
    The term “Economic Institutions” refers to two things: Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    Institutions matter. For an economist, institutions are the “rules of the game” that create the incentives for people and businesses. For example, when people are able to earn a profit from their work or business, they have an incentive not only to produce but also to continually improve their method of production. The “rules of the game” help determine the economic incentive to produce. On the flip side, if people are not monetarily rewarded for their work or business, or if the benefits of their production are likely to be taken away or lost, the incentive to produce will diminish. For this reason, many economists suggest that institutions such as property rights, free and open markets, and the rule of law (see the boxed insert) provide the best incentives and opportunities for individuals to produce goods and services.
    Economics institutions and their importance.
    •A property right is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals. Society approves the uses selected by the holder of the property right with governmental administered force and with social ostracism
    • A legal rule has two consequences. The most immediate is to determine who pays what penalty to whom if the rule is broken. Thus, one might describe a law against speeding as a rule providing that anyone caught driving more than fifty-five miles an hour on the Dan Ryan Expressway must pay fifty dollars to the city of Chicago. Viewed this way, a speeding law is simply a way of raising revenue and a speeding ticket a rather peculiar sort of tax bill….
    Economics has made a substantial contribution to our understanding of the law, but the law has also contributed to our understanding of economics. Courts routinely deal with the reality of such economic abstractions as property and contract. The study of law thus gives economists an opportunity to improve their understanding of some of the concepts underlying economic theory.
    • The market, then, is not simply an array, but a highly complex, interacting latticework of exchanges. In primitive societies, exchanges are all barter or direct exchange. Two people trade two directly useful goods, such as horses for cows or Mickey Mantles for Babe Ruths. But as a society develops, a step-by-step process of mutual benefit creates a situation in which one or two broadly useful and valuable commodities are chosen on the market as a medium of indirect exchange. This money-commodity, generally but not always gold or silver, is then demanded not only for its own sake, but even more to facilitate a reexchange for another desired commodity.
    • The Federal Reserve System (the Fed) has been the central bank of the United States since it was created in 1913. The main purpose of a central bank is to regulate the supply of money and credit to the economy. The board of governors, the Fed’s principal policy-making organization, plays a key role in this process.

    3. Extreme between the rich and poor
    Extreme inequality is out of control! Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer.
    Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education.
    These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.

    4. SOURCES OF NATIONAL AND INTERNATIONAL ECONOMY GROWTH.
    The sources of growth in a developing economy are no different from those in the advanced industrialised countries. There are four basic requirements, which are:
    Natural resources – land, minerals, fuels, climate; their quantity and quality
    Human resources – the supply of labour and the quality of labour.
    Physical capital and technological factors – machines, factories, roads; their quantity and quality
    Institutional factors – these may include the banking system, the legal system and important factors like a good health care system.
    Economic growth is caused by improvements in the quantity and quality of the factors of production that a country has available, i.e. land, labour, capital and enterprise. Conversely economic decline may occur if the quantity and quality of any of the factors of production falls. In this section we look at approaches that developing countries could take to improve the quantity and quality of factors of production.

    4b. Why do some countries make rapid progress toward development while many others remain poor?
    Many people mark the birth of economics as the publication of Adam Smith’s The Wealth of Nations in 1776. Actually, this classic’s full title is An Inquiry into the Nature and Causes of the Wealth of Nations, and Smith does indeed attempt to explain why some nations achieve wealth and others fail to do so. Yet, in the 241 years since the book’s publication, the gap between rich countries and poor countries has grown even larger. Economists are still refining their answer to the original question: Why are some countries rich and others poor, and what can be done about it?
    Rich” and “Poor”
    In common language, the terms “rich” and “poor” are often used in a relative sense: A “poor” person has less income, wealth, goods, or services than a “rich” person. When considering nations, economists often use gross domestic product (GDP) per capita as an indicator of average economic well-being within a country. GDP is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living. For example, in 2016, GDP per capita was $57,467 in the United States, $42,158 in Canada, $27,539 in South Korea, $8,123 in China, $1,513 in Ghana, and $455 in Liberia.
    Because GDP per capita is simply GDP divided by the population, it is a measure of income as if it were divided equally among the population. In reality, there can be large differences in the incomes of people within a country. So, even in a country with relatively low GDP, some people will be better off than others. And, there are poor people in very wealthy countries. In 2013 (the most recent year comprehensive data on global poverty are available), 767 million people, or 10.7 percent of the world population, were estimated to be living below the international poverty line of $1.90 per person per day.3 Whether for people or nations, the key to escaping poverty lies in rising levels of income. For nations specifically, which measure wealth in terms of GDP, escaping poverty requires increasing the amount of output (per person) that their economy produces. In short, economic growth enables countries to escape poverty.

  5. Number 1 :
    Question :what can be learned from the historical record of economic progress in the now developed world?. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    Answer:The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.To most of those who govern the global economy today – the developed country policy-makers, international business leaders, and the international economic organisations (the International Monetary Fund, the World Bank, and the World Trade Organisation) What the developing countries need, they argue, is the ‘good’ economic policies and institutions that the developed countries themselves used in order to develop – such as liberalisation of trade and investment and strong patent law. Their belief in their own recommendations is so absolute that in their view it has to be imposed on the developing countries at all costs through strong bilateral and multilateral external pressures.As is well known, there have been heated debates on whether these policies and institutions are suitable to the developing countries. The curious thing is that even those who are sceptical of their suitability rarely question whether these are the policies and the institutions that the developed countries actually used in order to become rich. However, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Hence, the initial conditions are similar for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    Number 2:
    Question : what are economic institutions and how do they shape the problems of underdevelopment and prospects for successful development
    Answer :Economic Institutions are Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions. Economic institutions provides power and authority to its holder, economic institutions significantly socialize the members of the society through their respective norms, economic institutions fulfills the human need for which they have developed also, economic institutions provides the opportunities to the people to earn their livelihood through which people satisfy their basic needs.
    Number 3 :
    Question: How can the extremes between rich and poor be so very great
    Answer : There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    -Inequality in wages and salaries
    -The income gap between highly skilled workers and low-skilled or no-skills workers;
    -Wealth concentration in the hands of a few individuals or institutions;
    -Labor markets;
    -Globalization;
    -Technological changes;
    -Policy reforms;
    -Taxes;
    -Education;
    -Computerization and growing technology;
    -Racism;
    -Gender;
    -Culture;
    -Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers. Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:
    Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers
    Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.
    Number 4: what are the sources of national and international economic growth? Why do some countries make rapid progress towards development while many others remain poor
    Answer : Natural factor – the quality and/or quantity of land or raw materials.
    Human factor – the quality and/or quantity of human resources/capital.
    Physical capital and technological factors – the quality and/or quantity of physical capital.
    Institutional factors such as finance and banking system,education system healthcare,infrastructure,political stability.Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. At times people living near navigation routes or in temperate climates have fared better than people living far away from coastlines or in frigid climates. Some analysts also argue that culture plays a role in growth.While inherent traits are responsible for some differences in economic growth, government and central bank policies also play a role. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth.

  6. Hassan Fadhilah Olamide
    2019/245672
    300level (2/3)
    Education Economics
    Eco 361
    Development Economics
    Assignment

    Number 1 :
    Question :what can be learned from the historical record of economic progress in the now developed world?. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    Answer:The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.To most of those who govern the global economy today – the developed country policy-makers, international business leaders, and the international economic organisations (the International Monetary Fund, the World Bank, and the World Trade Organisation) What the developing countries need, they argue, is the ‘good’ economic policies and institutions that the developed countries themselves used in order to develop – such as liberalisation of trade and investment and strong patent law. Their belief in their own recommendations is so absolute that in their view it has to be imposed on the developing countries at all costs through strong bilateral and multilateral external pressures.As is well known, there have been heated debates on whether these policies and institutions are suitable to the developing countries. The curious thing is that even those who are sceptical of their suitability rarely question whether these are the policies and the institutions that the developed countries actually used in order to become rich. However, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Hence, the initial conditions are similar for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    Number 2:
    Question : what are economic institutions and how do they shape the problems of underdevelopment and prospects for successful development
    Answer :Economic Institutions are Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions. Economic institutions provides power and authority to its holder, economic institutions significantly socialize the members of the society through their respective norms, economic institutions fulfills the human need for which they have developed also, economic institutions provides the opportunities to the people to earn their livelihood through which people satisfy their basic needs.
    Number 3 :
    Question: How can the extremes between rich and poor be so very great
    Answer : There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    -Inequality in wages and salaries
    -The income gap between highly skilled workers and low-skilled or no-skills workers;
    -Wealth concentration in the hands of a few individuals or institutions;
    -Labor markets;
    -Globalization;
    -Technological changes;
    -Policy reforms;
    -Taxes;
    -Education;
    -Computerization and growing technology;
    -Racism;
    -Gender;
    -Culture;
    -Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers. Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:
    Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers
    Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.
    Number 4: what are the sources of national and international economic growth? Why do some countries make rapid progress towards development while many others remain poor
    Answer : Natural factor – the quality and/or quantity of land or raw materials.
    Human factor – the quality and/or quantity of human resources/capital.
    Physical capital and technological factors – the quality and/or quantity of physical capital.
    Institutional factors such as finance and banking system,education system healthcare,infrastructure,political stability.Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. At times people living near navigation routes or in temperate climates have fared better than people living far away from coastlines or in frigid climates. Some analysts also argue that culture plays a role in growth.While inherent traits are responsible for some differences in economic growth, government and central bank policies also play a role. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth.

  7. Hassan Fadhilah Olamide
    2019 /245672
    300l (2/3)
    Education Economics
    Eco 361
    Assignment
    Number 1 :
    Question :what can be learned from the historical record of economic progress in the now developed world?. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    Answer:The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.To most of those who govern the global economy today – the developed country policy-makers, international business leaders, and the international economic organisations (the International Monetary Fund, the World Bank, and the World Trade Organisation) What the developing countries need, they argue, is the ‘good’ economic policies and institutions that the developed countries themselves used in order to develop – such as liberalisation of trade and investment and strong patent law. Their belief in their own recommendations is so absolute that in their view it has to be imposed on the developing countries at all costs through strong bilateral and multilateral external pressures.As is well known, there have been heated debates on whether these policies and institutions are suitable to the developing countries. The curious thing is that even those who are sceptical of their suitability rarely question whether these are the policies and the institutions that the developed countries actually used in order to become rich. However, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Hence, the initial conditions are similar for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    Number 2:
    Question : what are economic institutions and how do they shape the problems of underdevelopment and prospects for successful development
    Answer :Economic Institutions are Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions. Economic institutions provides power and authority to its holder, economic institutions significantly socialize the members of the society through their respective norms, economic institutions fulfills the human need for which they have developed also, economic institutions provides the opportunities to the people to earn their livelihood through which people satisfy their basic needs.
    Number 3 :
    Question: How can the extremes between rich and poor be so very great
    Answer : There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    -Inequality in wages and salaries
    -The income gap between highly skilled workers and low-skilled or no-skills workers;
    -Wealth concentration in the hands of a few individuals or institutions;
    -Labor markets;
    -Globalization;
    -Technological changes;
    -Policy reforms;
    -Taxes;
    -Education;
    -Computerization and growing technology;
    -Racism;
    -Gender;
    -Culture;
    -Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers. Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:
    Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers
    Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.
    Number 4: what are the sources of national and international economic growth? Why do some countries make rapid progress towards development while many others remain poor
    Answer : Natural factor – the quality and/or quantity of land or raw materials.
    Human factor – the quality and/or quantity of human resources/capital.
    Physical capital and technological factors – the quality and/or quantity of physical capital.
    Institutional factors such as finance and banking system,education system healthcare,infrastructure,political stability.Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. At times people living near navigation routes or in temperate climates have fared better than people living far away from coastlines or in frigid climates. Some analysts also argue that culture plays a role in growth.While inherent traits are responsible for some differences in economic growth, government and central bank policies also play a role. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth.

  8. Hassan Fadhilah Olamide
    2019/245672
    Education Economics
    300l (2/3)
    Eco 361 Assignment

  9. Name: Ugwueze Martha Chioma
    Reg no: 2018/247847
    Dept.: Economics
    Assignment
    Course: Eco361 Development Economics
    Question 1: What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Answer:
    1. For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organization – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    a. The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    b. Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    c. Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    d. Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    2. Second, the WTO rules should be re-written so that the developing countries can move actively using tariffs and subsidies for industrial development.
    3. Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.

    ii) The initial condition above are totally different from what the developed countries faced on the eve of their industrialization and this are what they did below:
    Characteristics of industrialization include economic growth, the more efficient division of labor, and the use of technological innovation to solve problems as opposed to dependency on conditions outside of human control.

    Question 2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development ?
    Answer:
    The term “Economic Institutions” refers to a company or an organization that deals with money,goods and services in an economy,banks government, organization and investment funds are all economic institution.
    They shape problems of underdevelopment and it leads to successful development through:
    -Through the provision of development theories and approaches to poverty reduction.
    -Through that help of economic disparities in the underdeveloped countries.
    -They bring out overview of the block chain technology in other to rescue poverty and improve the living conditions of people in underdeveloped countries.
    (3)How can the extreme between the rich and the poor be so very great?
    The extreme between the poor and the rich can be so very great because:
    -Wealth undertaxed: while the richest country countinue to enjoy boom fortunes,they are also enjoying the lowest level of tax in decades.when government undertax the rich they is less money in circulation.
    -Underfunded public services: public services from chronic underfunding or being outsourced to private companies that exclude the poorest people.
    -Denied a longer life:in most countries having money is a passport to better healthcare being poor means sickness.people from poor communities can expect to die ten or twenty years earlier than people in wealthy area’s.
    -Inequality is the sexiest: with less income and fewer access than men,women make up the greatest proportion of the world’s poorest household and the proportion is growing and more likely found in poor employment through underpaid or unpaid care worker.
    -Lining the pockets of the world billionaires: the top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men whose fortune and power grow exponentially.Billionaires have more wealth than 4.6 billion people who make up 60 percent of the planet population while 735 people are in extreme poverty.
    (4)What are the sources of national and international economic growth?
    Sources of Economic growth
    (1)human resources
    (2) Natural resources
    (3) Capital formation
    (4) Technological change and innovation
    -Human resources: labor inputs consist of quantities of workers and of the skills of work force.It is the single most important element in economics growth e.g improvement in literacy health, and discipline,most recently the ability to use computers,add greately to the productivity of labor.
    -Natural resources:e.g arable land,oil and gas,forest,e.tc.this possession is necessary for economic success.
    -Capital formation: recall that tangible capital include structures like roads and power plant countries that grow rapidly tend to invest heavily on capital goods
    -Technological change and innovation:it means changes in the process of production or introduction of new products or services.
    It contribute greately to the increase in living standard of market economies.sources of national and economic growth rides on four wheels of labour, natural resources, capital and technology.But differ greately among others and some countries combine them more effectively than others.
    Why some countries make rapid development and others remain poor?
    A “poor country has less income”
    When considering this nations economist often use gross domestic product GDP per capital as an indicator of average economic well-being.
    (1)GDP is the total market value, Expressed in dollars,of all final goods and services produced in an economy in a given year.
    GDP is a yearly Income
    GDP by it’s population is an estimate of how much income,on average the economy produces per person(per capital) per year.In other words GDP per capital is a measure of a Nation’s standard of living.
    (2)Trade: international trade is an important part bof economic growth.
    Trade provides a broader market for a country to sell goods and services.
    Many nation’s have trade barriers that restrict their access to trade.poorer countries use trade to access capital goods(such as advanced technology and Equipment)they can increase their trade resulting in a higher rate of economic growth.
    Recent research suggests that the removal of trade barriers could close the income gap between rich and poor countries by 50.8 percent
    (3)some countries provide incentives for innovation and production.which leads to economic growth while other countries do not.

  10. Ezeozue Chinedum Success Lotachukwu says:

    Name: Ezeozue Chinedum Success Lotachukwu

    Reg No: 2018/246452

    Email: chineduezeozue@gmail.com

    As a potential Special Adviser to Mr. President of Poverty Alleviation and Economic Development:

    1a. The real lesson for developing countries from the history of the developed world is the ‘freedom to choose’.
    For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.

    1b No, the initial conditions for contemporary developing countries were obviously different from what the developed countries faced The one thing that developing nations all have in common is the fact that they are not (or not yet) developed economically. That is to say that they generally have low income levels and do not have modern, diversified economies. Within this definition, there is plenty of leeway for diversity.

    2. Economic institutions are responsible for organizing
    the production, exchange, distribution and consumption
    of goods and services.
     Economic institution is also one of the basic institutions.
    For the sake of survival each society has an economic
    system ranging from simple to complex.

    Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs (Coase, 1992, p 197; Dahlman, 1979, p. 149). They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing. Where transaction costs are small, the private enforcement of contracts may still be preferred. But as economic relations develop and become increasingly impersonal, the role of a third party to enforce compliance to rules is increasingly necessary (Shirley, 2003, p. 2).

    Such institutions increase the security that the risk of incurring in an economic transaction is matched by the full appropriation of its eventual benefits. This includes the presence of individual private property rights. If property is protected individuals are more willing to invest and to incur sunk costs. Recounting the land-ownership system in Ghana, Pande and Udry (2005) are able to show that where individual perception of security of land tenure is low, investment in the land is significantly reduced, and output consequently drops. In fact, in the few cases in which land is obtained through commercial transactions (as opposed to the traditional informal system of land redistribution), there ceases to be any difference in levels of investment because security of tenure is assured. This increases output and thus is conducive to economic development.

    3. A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers.

    Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:

    Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers
    Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.

    Acknowledged factors that impact economic inequality include, but are not limited to:

    *Inequality in wages and salaries;
    *The income gap between highly skilled workers and low-skilled or no-skills workers;
    *Wealth concentration in the hands of a few individuals or institutions;
    *Labor markets;
    *Globalization;
    *Technological changes;
    *Policy reforms;
    *Taxes;
    *Education;
    *Computerization and growing technology;
    *Racism;
    *Gender;
    *Culture;
    *Innate ability.

    4. The following points highlight the four important sources of economic growth of a country. The sources are: 1. Human Resources 2. Natural Resources 3. Capital Formation 4. Technological Change and Innovation.

    Source of Economic Growth # 1. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force.

    Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth.
    Source of Economic Growth # 2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.

    Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high-density service industries.
    Source of Economic Growth # 3. Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation.

    In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    Source of Economic Growth # 4. Technological Change and Innovation:
    In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.

    Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.

    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.

    4b. Some countries make rapid progress toward development while many others remain poor. This is why:
    Economic growth of less-developed economies is key to closing the gap between rich and poor countries. Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty. Factors that can increase productivity (and growth) include institutions that provide incentives for innovation and production. In some cases, government can play an important part in the development of a nation’s economy. Finally, increasing access to international trade can provide markets for the goods produced by less-developed countries and also increase productivity by increasing the access to capital resources.

  11. Onyemalu Ogochukwu Maryanne says:

    Onyemalu Ogochukwu Maryanne
    2018/242424
    Eco 361
    Developmental Economics
    1a. What can be learned from the historical record of economic progress in the now developed world?
    Answer: for the last two decades or so , the developing countries have been under great pressure from the developed countries and the international institution they control to adopt a set of”good policies” in order to Foster their economic development.The historical fact is that, today’s developed countries did not develop on policies and the institutions they now recommend or should I say force on the developing countries.Actually all of today’s developed countries used tariff and subsidies to develop their industry in the earlier stages of their development they did not have basic institution such as democracy, central banks patent laws.
    Given that the adoption of “good policies” and “good institutions” has failed to generate the promised acceleration of economic development in the developing world and has in some cases led to economic and social collapses a radical rethinking of the development orthodoxy is required firstly,all conditions attached to bilateral and multilateral financial assistance to developing countries should radically changed,as the orthodox way is not working and the that there can be no single way of “best practice” policies that everyone should use . Secondly the wto(world tracle organisations ) rules should be rewritten so that the developing countries can more actively use taricffs and subsidies for industrial development . Thirdly ,improvements in institutions should be encouraged , but this should not be equated with imposing a fixed set of today’s, not even yesterday “Anglo American institutions on all countries, nor should it be attempted in haste,as institutional development is a lengthy and costhy process.
    1b. Are the initial conditions similar or different for contemporary developing countries face on the eve of their industrialization?Answer:the initial conditions are different for contemporary developing countries when they face the eve of their industrialization because the developed countries didn’t use good policies or good institutions to experience economic growth but the developing countries are being recommended or forced to use good policies and institutions
    2. What are economic institutions,and how do they shape problems of underdevelopment and prospects for successful development?
    *Economic Institutions:a company or an organization that deals with money or with managing the distribution of money,goods and services in an economy.Banks, government organizations and investment funds are all economic institutions.
    *Economic Institutions shape problems of underdevelopment and prospects for successful development since they influence the structure of economic incentives in society. Without property rights, individuals will not have the incentive to invest in physical or human capital or adopt more efficient technologies.
    3. How can the extremes between rich and poor be so very great?
    We should know that there is a great inequality between rich and poor. The world’s richest 1% have more than twice as much wealth as 6.9 billion people. Almost half of humanity is living on less than $5.50 a day.
    1. Lining the pockets of the world’s billionaires: trillions of dollars of wealth are in the hands of a small group and the fortune and power of these people continue to grow. Billionaires have more wealth than 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile around 735 million people are still living in extreme poverty
    2. Wealth undertaxed:while the richest continue to enjoy booming fortunes,they are also enjoying some of the lowest levels of tax are falling disproportionately on working people.when government undertax the rich, there’s less money for vital services like healthcare and education and increasing the amount of care work that falls on the shoulder of women and girls
    3. Underfunded public services:at the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people
    4. Denied a longer life: in most countries having money is a passport to better health and a longer life,while being poor all too often means more sickness and an earlier grave. Peace from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries,a child from a poor family is twice as likely to die before the age of five than a child from a rich family
    5. Inequality is sexist:with less income and fewr assets than men, women make up the greatest proportion of world’s poorest households and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labour. They are also supporting the state through billions of hours of unpaid or underpaid care work,a huge but unrecognized contribution to our societies and economic prosperity.
    4a. What are the sources of national and international economic growth?
    1. More capital:one of the sources of economic growth is more capital,the more the capital being inputed in an economy will lead to economic growth
    2. More labour: another source is more labour,when there is an increase in labour there is economic growth
    3. Better use of existing capital or labour:when there is an efficient use of the existing capital and labour,it leads to economic development
    The growth that results from increases in capital and labour represents growth due to increase in inputs.
    4b. Why do some countries make rapid progress toward development while many others remain poor?
    1. Government:in most countries government has a significant influence on economic performance, especially due to it’s size. Regulations,taxes and government spending can vitalize or stifle economic activity. If government spending is more than the taxes and subsidies accumulated,the country will experience a deficit but if not it will experience a surplus
    2. International trade and Finance:if the trade is slowed, countries will have to produce goods and services that they produce less efficiently. Countries are to specialize on the resources they have in country,if a country has capital they should be involved in agriculture and so on and if labour intense they should produce electronics,etc.
    3. Technology and investment:a country with high technology will tend to progress faster than countries with low technology and if there is investment in research and technology,the country will develop faster than countries that do not have investment
    4. Political,social and geographical conditions:a country with good political condition will improve and progress. Countries that have good weather and good climate conditions will progress well and faster than those that have bad political, social and geographical conditions.
    5. Money and Banking:when there is a good banking condition will progress very fast since the banks are able to regulate money well and efficiently.

  12. Okoye Chidimma Favour says:

    OKOYE CHIDIMMA FAVOUR
    2018/246412
    chidimmafs700@gmail.com
    ECONOMICS EDUCATION

    ASSIGNMENT:
    (1): what can be learned from the historical record of economics progress in the now developed world?, are the initial conditions similar or differ for contemporary developing countries from what the developed countries faced on the eve of the industrialization?

    (2): what are economics institutions and how do they shape problems of underdevelopment and prospects for successful development.

    (3): How can the extremes between rich and poor be so very great.

    (4): What are the sources of national and international economic growth, why do some countries make rapid progress towards development while many other remain poor.

    As a potential special special to Mr. President on poverty alleviation and economic development.
    Critical discussion and analyzing of these questions THUS;
    SUMMARY:
    (1) What can be learned from the historical record of economic progress in the now developed world.
    The historic record of economic progress in the now developed world is that they have an active citizen, They engage their resources in full capacity. Also, back then unlike now there is less corruption which means no selfishness from the citizens, that is privatizing public fund, developing oneself, everyone works together in achieving and developing the country.

    The initial conditions is not really similar but differs from contemporary developing countries from what developed countries faced on the eve of the industrialization because The world is getting corrupt day by day people no longer care about country, about their neighbors about anybody but themselves so even those that are in charge of developing the country that are given the responsibilities to oversee good working of the country embezzle the fund for themselves.

    (2) Economic institutions are companies or an organization that deals with money or with managing the distribution of money, goods and services in an economy. Banks, government organization, and investment funds are all economic institutions.

    How economic institutions shape problems of under development is that economic institutions affects the economy both directly and indirectly, they influence government policies which in turn influence growth and distributional outcomes, which then affect the pace of under development or development reduction they directly influence the pace and equality of economic growth.Development bank as an example of economic institutions help in providing short and medium term loans for agriculture and industries thereby helping to solve the problem of underdevelopment.
    With the help of some economic institutions small peasant farmers can get loan to fund their industries and farm.
    Prospects for successful development is making good policies and encouraging active citizenship.

    (3)
    How the extreme between rich and poor be so so very great is that in our world today the rich gets richer and the poor gets poorer because the opportunities for development can only be assessed by the rich not for the poor, for example, education is needed for basic human development and innovation, but the poor do not have the assess to that basic education only the rich.

    (4)
    The sources of national and international economic growth are; natural resources, human capital, technology, innovation, social and political structure, trade, industrialization etc.

    Why some countries make rapid progress towards development while many other remain poor is because,The countries that makes huge progress channel their resources into the right place, they make use of every little resources they have, they work it into its full capacity, they make use of all the sources of economic growth, for example they improve innovations, they give opportunities for development, they train their manpower (labour) but other countries that remain poor because they focus on one source of growth without exploring other sources of growth, that is, they focuses on one of the sources of economic growth for example the natural resources like Nigeria, Nigeria focuses on their natural resources which is OIL and abandoning other means through which the economy can be developed.

  13. Okoye Chidimma Favour says:

    OKOYE CHIDIMMA FAVOUR
    2018/246412
    chidimmafs700@gmail.com
    ECONOMICS EDUCATION

    ASSIGNMENT:

    (1): what can be learned from the historical record of economics progress in the now developed world?, are the initial conditions similar or differ for contemporary developing countries from what the developed countries faced on the eve of the industrialization?

    (2): what are economics institutions and how do they shape problems of underdevelopment and prospects for successful development.

    (3): How can the extremes between rich and poor be so very great.

    (4): What are the sources of national and international economic growth, why do some countries make rapid progress towards development while many other remain poor.

    As a potential special special to Mr. President on poverty alleviation and economic development.
    Critical discussion and analyzing of these questions THUS;
    SUMMARY:

    (1) What can be learned from the historical record of economic progress in the now developed world.
    The historic record of economic progress in the now developed world is that they have an active citizen, They engage their resources in full capacity. Also, back then unlike now there is less corruption which means no selfishness from the citizens, that is privatizing public fund, developing oneself, everyone works together in achieving and developing the country.

    The initial conditions is not really similar but differs from contemporary developing countries from what developed countries faced on the eve of the industrialization because The world is getting corrupt day by day people no longer care about country, about their neighbors about anybody but themselves so even those that are in charge of developing the country that are given the responsibilities to oversee good working of the country embezzle the fund for themselves.

    (2) Economic institutions are companies or an organization that deals with money or with managing the distribution of money, goods and services in an economy. Banks, government organization, and investment funds are all economic institutions.

    How economic institutions shape problems of under development is that economic institutions affects the economy both directly and indirectly, they influence government policies which in turn influence growth and distributional outcomes, which then affect the pace of under development or development reduction they directly influence the pace and equality of economic growth.Development bank as an example of economic institutions help in providing short and medium term loans for agriculture and industries thereby helping to solve the problem of underdevelopment.
    With the help of some economic institutions small peasant farmers can get loan to fund their industries and farm.
    Prospects for successful development is making good policies and encouraging active citizenship.

    (3)
    How the extreme between rich and poor be so so very great is that in our world today the rich gets richer and the poor gets poorer because the opportunities for development can only be assessed by the rich not for the poor, for example, education is needed for basic human development and innovation, but the poor do not have the assess to that basic education only the rich.

    (4)
    The sources of national and international economic growth are; natural resources, human capital, technology, innovation, social and political structure, trade, industrialization etc.

    Why some countries make rapid progress towards development while many other remain poor is because,The countries that makes huge progress channel their resources into the right place, they make use of every little resources they have, they work it into its full capacity, they make use of all the sources of economic growth, for example they improve innovations, they give opportunities for development, they train their manpower (labour) but other countries that remain poor because they focus on one source of growth without exploring other sources of growth, that is, they focuses on one of the sources of economic growth for example the natural resources like Nigeria, Nigeria focuses on their natural resources which is OIL and abandoning other means through which the economy can be developed.

  14. Okoye Chidimma Favour says:

    OKOYE CHIDIMMA FAVOUR
    2018/246412
    chidimmafs700@gmail.com
    ECONOMICS EDUCATION

    ASSIGNMENT:

    (1): what can be learned from the historical record of economics progress in the now developed world?, are the initial conditions similar or differ for contemporary developing countries from what the developed countries faced on the eve of the industrialization?

    (2): what are economics institutions and how do they shape problems of underdevelopment and prospects for successful development.

    (3): How can the extremes between rich and poor be so very great.

    (4): What are the sources of national and international economic growth, why do some countries make rapid progress towards development while many other remain poor.

    As a potential special special to Mr. President on poverty alleviation and economic development.
    Critical discussion and analyzing of these questions THUS;
    SUMMARY:
    (1) What can be learned from the historical record of economic progress in the now developed world.
    The historic record of economic progress in the now developed world is that they have an active citizen, They engage their resources in full capacity. Also, back then unlike now there is less corruption which means no selfishness from the citizens, that is privatizing public fund, developing oneself, everyone works together in achieving and developing the country.

    The initial conditions is not really similar but differs from contemporary developing countries from what developed countries faced on the eve of the industrialization because The world is getting corrupt day by day people no longer care about country, about their neighbors about anybody but themselves so even those that are in charge of developing the country that are given the responsibilities to oversee good working of the country embezzle the fund for themselves.

    (2) Economic institutions are companies or an organization that deals with money or with managing the distribution of money, goods and services in an economy. Banks, government organization, and investment funds are all economic institutions.

    How economic institutions shape problems of under development is that economic institutions affects the economy both directly and indirectly, they influence government policies which in turn influence growth and distributional outcomes, which then affect the pace of under development or development reduction they directly influence the pace and equality of economic growth.Development bank as an example of economic institutions help in providing short and medium term loans for agriculture and industries thereby helping to solve the problem of underdevelopment.
    With the help of some economic institutions small peasant farmers can get loan to fund their industries and farm.
    Prospects for successful development is making good policies and encouraging active citizenship.

    (3)
    How the extreme between rich and poor be so so very great is that in our world today the rich gets richer and the poor gets poorer because the opportunities for development can only be assessed by the rich not for the poor, for example, education is needed for basic human development and innovation, but the poor do not have the assess to that basic education only the rich.

    (4)
    The sources of national and international economic growth are; natural resources, human capital, technology, innovation, social and political structure, trade, industrialization etc.

    Why some countries make rapid progress towards development while many other remain poor is because,The countries that makes huge progress channel their resources into the right place, they make use of every little resources they have, they work it into its full capacity, they make use of all the sources of economic growth, for example they improve innovations, they give opportunities for development, they train their manpower (labour) but other countries that remain poor because they focus on one source of growth without exploring other sources of growth, that is, they focuses on one of the sources of economic growth for example the natural resources like Nigeria, Nigeria focuses on their natural resources which is OIL and abandoning other means through which the economy can be developed.

  15. Okoye Chidimma Favour says:

    OKOYE CHIDIMMA FAVOUR
    2018/246412
    chidimmafs700@gmail.com
    ECONOMICS EDUCATION

    ASSIGNMENT:

    (1): what can be learned from the historical record of economics progress in the now developed world?, are the initial conditions similar or differ for contemporary developing countries from what the developed countries faced on the eve of the industrialization?

    (2): what are economics institutions and how do they shape problems of underdevelopment and prospects for successful development.

    (3): How can the extremes between rich and poor be so very great.

    (4): What are the sources of national and international economic growth, why do some countries make rapid progress towards development while many other remain poor.

    As a potential special special to Mr. President on poverty alleviation and economic development.
    Critical discussion and analyzing of these questions THUS;

    SUMMARY:
    (1)
    What can be learned from the historical record of economic progress in the now developed world.
    The historic record of economic progress in the now developed world is that they have an active citizen, They engage their resources in full capacity. Also, back then unlike now there is less corruption which means no selfishness from the citizens, that is privatizing public fund, developing oneself, everyone works together in achieving and developing the country.

    The initial conditions is not really similar but differs from contemporary developing countries from what developed countries faced on the eve of the industrialization because The world is getting corrupt day by day people no longer care about country, about their neighbors about anybody but themselves so even those that are in charge of developing the country that are given the responsibilities to oversee good working of the country embezzle the fund for themselves.

    (2)
    Economic institutions are companies or an organization that deals with money or with managing the distribution of money, goods and services in an economy. Banks, government organization, and investment funds are all economic institutions.

    How economic institutions shape problems of under development is that economic institutions affects the economy both directly and indirectly, they influence government policies which in turn influence growth and distributional outcomes, which then affect the pace of under development or development reduction they directly influence the pace and equality of economic growth.Development bank as an example of economic institutions help in providing short and medium term loans for agriculture and industries thereby helping to solve the problem of underdevelopment.
    With the help of some economic institutions small peasant farmers can get loan to fund their industries and farm.
    Prospects for successful development is making good policies and encouraging active citizenship.

    (3)

    How the extreme between rich and poor be so so very great is that in our world today the rich gets richer and the poor gets poorer because the opportunities for development can only be assessed by the rich not for the poor, for example, education is needed for basic human development and innovation, but the poor do not have the assess to that basic education only the rich.

    (4)

    The sources of national and international economic growth are; natural resources, human capital, technology, innovation, social and political structure, trade, industrialization etc.

    Why some countries make rapid progress towards development while many other remain poor is because,The countries that makes huge progress channel their resources into the right place, they make use of every little resources they have, they work it into its full capacity, they make use of all the sources of economic growth, for example they improve innovations, they give opportunities for development, they train their manpower (labour) but other countries that remain poor because they focus on one source of growth without exploring other sources of growth, that is, they focuses on one of the sources of economic growth for example the natural resources like Nigeria, Nigeria focuses on their natural resources which is OIL and abandoning other means through which the economy can be developed.

  16. Ugochukwu ugonnaya Judith 2018/244297 says:

    Name: ugochukwu ugonnaya Judith
    Dept: social science education (education economics)
    Regno: 2018/244297
    Eco 361: critically discuss and analyse these questions as a potential special adviser to Mr President on poverty alleviation and economic development.

    Question 1: what can be learned from the historical record of economic progress in the new developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization.
    A. What can be learned from the historical record of economic progress in the now developed world?
    The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saaran Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them. To most of those who govern the global economy today – the developed country policy-makers, international business leaders, and the international economic organisations (the International Monetary Fund, the World Bank, and the World Trade Organisation) – the solution to this problem is clear. What the developing countries need, they argue, is the ‘good’ economic policies and institutions that the developed countries themselves used in order to develop – such as liberalisation of trade and investment and strong patent law. Their belief in their own recommendations is so absolute that in their view it has to be imposed on the developing countries at all costs through strong bilateral and multilateral external pressures. As is well known, there have been heated debates on whether these policies and institutions are suitable to the developing countries. The curious thing is that even those who are sceptical of their suitability rarely question whether these are the policies and the institutions that the developed countries actually used in order to become rich. However, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries.
    The developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development. The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries. Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services. Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required. Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use. Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    B. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    The policies and institutions that the rich countries are recommending to the poor countries are not the ones that they themselves used when they were developing, what is going on? We can only conclude that, whether intentionally or not, the rich countries are effectively kicking away the ladder that allowed them to climb to where they are now. It is no coincidence that economic development has become more difficult during the last two decades when the developed countries started turning up the pressure on the developing countries to adopt the so-called ‘good’ policies and institutions. What can be done to change this? First, the facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of ‘getting history right’, but also one of allowing the developing countries to make more informed choices. This is not to say that every developing country should adopt an interventionist development strategy. Some of them may indeed benefit from following the Swiss or Hong Kong models. However, this strategic choice should be made in the full knowledge that historically the majority of the successful countries did the opposite in the past when they faced the same international competitive challenge from more advanced countries, which the developing countries face now. Second, the conditions attached to bilateral and multilateral financial assistance offered to developing countries should be radically changed. It should be accepted that the orthodox recipe is not working, and also that there can be no single ‘best practice’ policies that everyone should use. More specifically, in terms of policies, the ‘bad policies’ that most of today’s developed countries used with so much effectiveness when they were developing countries themselves should be at least allowed, if not actively encouraged, by the developed countries and the international development policy establishment that they control. While it is true that activist trade and industrial policies can sometimes degenerate into a web of red tape and corruption, this should not mean that these policies should never be used under any circumstances. Third, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. They should also be allowed to have less stringent patent laws and other intellectual property rights laws. Fourth, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries. There need to be more serious attempts, both at the academic and the practical levels, to explore exactly which institutions are necessary, or at least beneficial, and for what types of countries, given their stages of development and their economic, political, social, and even cultural conditions. Special care has to be taken in order not to demand excessively rapid upgrading of institutions by the developing countries, especially given that they already have quite sophisticated institutions when compared to today’s developed countries at comparable stages of development, and given that establishing and running new institutions is costly. By having the freedom to choose policies and institutions that are more suitable to their conditions, the developing countries will be able to develop faster. This will also benefit the developed countries in the long run, as it will increase their trade and investment opportunities. That the developed countries, and the international institutions which they influence, cannot see this is the tragedy of our time. We can conclude that the conditions differ by a wide range.

    Question 2: What are the economic institutions responsible for economic growth of an economy and how do they shape problems of underdevelopment and prospect for successful development.
    A. What are Economic Institutions?
    The term Economic Institutions refer to two things;
    * Specific agencies or foundations, both government and private, devoted to collecting or studying economic data or commissioned with the job of supplying a good or service that is important to the economy of a country.
    * Well established arrangements and structured that are part of the culture or society.
    We can say that, Economic Institutions are companies and/or organizations that deals with money or with managing the distribution of money, goods, and services in an economy. Banks, government organizations and investment funds are all economic Institutions.
    B. How do they shape problem of underdevelopment and prospects for successful development.
    Cross country empirical analysis provide strong support for the overwhelming importance of institutions in predicting the level of development in countries around the world. Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores are found to be strongly correlated to better economic performance over time. Institutions comprises for example, contracts and contracts enforcement, protection of property rights, the rule of law, government bureaucracies, financial markets. They also, however include habits and beliefs, norms, social cleavages and traditions in education (so called informal institutions). Formal institutions typically tend to be the crystalization of informal institutions (North 1990) as social norms in the realms of gender, class and caste, for example, determine rules of political participation and representation, method of economic exchange and inclusion of different groups in society.
    Institutions conducive to economic development reduces the cost of economic activities. The costs include transaction costs such as information cost, bargaining and decision cost, policing and enforcement cost. They lower transaction costs by providing common legal framework and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations. Institutions which are conducive to development ensure greater self expression, allow the free flow of information, and encourage the formation of associations and clubs. They form prosperous social relationship which are conducive to greater economic interaction by increasing levels of trust and wider availability of information. They allow greater sharing of resources through democratic institutions and the use of the state to reduce the risks attached to economic activities. Institutions conducive to economic development such as welfare state, pull resources to provide the investment in education, health, and infrastructure which lies at the basis of economic interaction and are necessary and complementary to private investment. Accordingly to this, there is wide range of evidence that proves that institutions matters a great deal in economic development.

    Question 3: How can the extremes between rich and poor be so great.
    Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer. Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education. These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    1. Lining the pockets of the world’s billionaires: The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.
    2. Wealth undertaxed: While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    3. Underfunded public services: At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    4. Denied a longer life: In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    5. Inequality is sexist: With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.
    The growing gap between rich and poor is undermining the fight against poverty, damaging our economies and tearing our societies apart.

    Question 4: What are the sources of national and international economic growth? Why do some countries make rapid progress towards development while many others remain poor?
    A. Sources of national and international economic growth
    1. Human Resources: Labour inputs consist of quantities of workers and of the skills of the work force. Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth. Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources: The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    3. Capital Formation: Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation. In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times. Accumulating capital, as we have seen, requires a sacrifice of current consumption over many years. Countries that grow rapidly tend to invest heavily in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may go into net capital formation.
    4. Technological Change and Innovation: In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other. Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    B. Why do some countries make rapid progress towards development while many others remain poor?
    In common language, the terms “rich” and “poor” are often used in a relative sense: A “poor” person has less income, wealth, goods, or services than a “rich” person. When considering nations, economists often use gross domestic product (GDP) per capita as an indicator of average economic well-being within a country. GDP is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living. Economic growth of less-developed economies is key to closing the gap between rich and poor countries. Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty. Factors that can increase productivity (and growth) include institutions that provide incentives for innovation and production. In some cases, government can play an important part in the development of a nation’s economy. Finally, increasing access to international trade can provide markets for the goods produced by less-developed countries and also increase productivity by increasing the access to capital resources.

  17. Uwa Chioma Maryjane says:

    NAME: Uwa Chioma Maryjane
    REG No: 2018/241876
    Department: Economics
    Email: chioma.uwa.241876@unn.edu.ng
    Questions 1:
    What can be learned from the historical record of economics progress in the now developed world? Are the initial conditions similar or different from contemporary developing countries from what developed countries faced on the eve of their industrialization?
    Analyzing the economies of various developed countries, it can be deduced that those countries faced various challenges which are similar or closely related to the challenges faced by developing countries, the following gives us an insight as to how their economic progress was achieved and the lessons developing countries can learn from them;
    1)Tapping the Best Leaders
    Every successful community can point to the individual or individuals who are primarily responsible for its success. Conversely, struggling communities invariably point to lack of leadership as the main reason they cannot move ahead. True community leaders view a community as a whole, clearly see the interconnectedness of every component, and understand that economic development is not an activity isolated from the development of the entire community.
    2) Comprehensive Plans
    Every community should develop-with citizen input -a comprehensive plan addressing land use (not just zoning), infrastructure, capital improvements, and community economic development. Such plans provide the framework for making development decisions. Planning helps avoid the wasted time and resources associated with ad hoc development decisions and can help mitigate the adverse impact of sprawl on Indiana’s downtowns.
    3)Retaining Existing Businesses
    The majority of new jobs are created by existing businesses. Unfortunately, few communities have an organized program for retaining and expanding existing businesses. Many existing businesses with growth potential are unaware of the many local and state resources available to assist them. These businesses have changing needs, and the community must be in a position to meet them. Those needs may include more skilled workers, more advanced telecommunications, access to an airport, or better lifestyle opportunities. These attributes are developed over time, and only constant contact with local companies can keep a community fully informed of their growing needs.
    4)Accepting Change
    It’s natural for some existing businesses to close or leave; these changes occur for a variety of reasons, often outside a community’s control. Businesses compete in a global environment, are influenced by external economic pressures, and are subject to normal business cycles.There is little a community or economic developer can do to combat, for example, business consolidations, the movement of companies offshore, or business failures due to changing consumer preferences. The commitment of additional financial or other incentives only prolongs the inevitable.
    5)Welcoming Start-Ups
    Business creation is a high-risk arena, but new small businesses are a significant source of new jobs. Every business must start somewhere, and the more conducive the environment to business start-ups, the more likely they are to occur. Access to capital, expertise, facilities and mentorship are among the most essential things a community can offer.
    6)Seeing the Big Picture
    Economic development happens at the local level, but there are no local economies. Economies are regional, and the most valuable information a community can have is a true and accurate picture of its regional economy. Along with pertinent demographic information, a regional analysis should identify existing industry groups and indicate whether those groups are stable, growing or declining. By further identifying buyers, suppliers and other related businesses, a community can invest its time and money supporting and attracting the types of businesses that clearly fit into the regional economy and, as such, are far more likely to stay or move there.
    The now developed countries encountered challenges but overcame them. The challenges are similar to what developing countries now face, if we can properly manage our resources and make welfare our primary concern our country Will develop with Time.
    Questions 2: what are Economic institutions and how do they shape the problems of underdevelopment and prospect of possible development;
    Economic institutions refers to specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    The Economic institutions plays the following roles which determines development of a country;
    1)Property Rights: A property right is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals. Society approves the uses selected by the holder of the property right with governmental administered force and with social ostracism.
    2)Political Behavior: The fact of scarcity, which exists everywhere, guarantees that people will compete for resources. Markets are one way to organize and channel this competition. Politics is another. People use both markets and politics to get resources allocated to the ends they favor. Political activity, however, is startlingly different from voluntary exchange in markets. In a democracy groups can accomplish many things in politics that they could not in the private sector. Some of these are vital to the broader community’s welfare, such as control of health-threatening air pollution from myriad sources affecting millions of individuals, or the provision of national defense. Other public-sector actions provide narrow benefits that fall far short of their costs.
    3) Federal Reserve System: The Federal Reserve System (the Fed) has been the central bank of the United States since it was created in 1913. The main purpose of a central bank is to regulate the supply of money and credit to the economy. The board of governors, the Fed’s principal policy-making organization, plays a key role in this process.
    4) Free Market: The market, then, is not simply an array, but a highly complex, interacting latticework of exchanges. In primitive societies, exchanges are all barter or direct exchange. But as a society develops, a step-by-step process of mutual benefit creates a situation in which one or two broadly useful and valuable commodities are chosen on the market as a medium of indirect exchange. This money-commodity, generally but not always gold or silver, is then demanded not only for its own sake, but even more to facilitate a reexchange for another desired commodity. It is much easier to pay steelworkers not in steel bars, but in money, with which the workers can then buy whatever they desire. They are willing to accept money because they know from experience and insight that everyone else in the society will also accept that money in payment.
    Questions 3:
    How can the extreme between the Rich and the poor be so great?
    1) Wealth undertaxed: While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    2) Underfunded public services: At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    3)Denied a longer life: In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    Questions 4:
    What are the sources of national and international economic growth?why do some countries make rapid progress towards development while many others remain poor?
    1. Human Resources: Labour inputs consist of quantities of workers and of the skills of the work force.Many economists believe that the quality of labour inputs the skills, knowledge, and discipline of the labour force is the single most important element in economic growth.A country might buy the most modern telecommunications devices, computers, electricity generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high density service industries.
    3) Capital Formation: Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories.In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    4) Technological Change and Innovation: In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    Why most countries seems to be developed while others are not lies majorly on the fact that most countries don’t appropriately utilize all resources at their disposal some countries depends majorly on one source and completely neglect the others.

  18. Uwa Chioma Maryjane says:

    NAME: Uwa Chioma Maryjane
    REG No: 2018/241876
    Department: Economics
    Email: chioma.uwa.241876@unn.edu.ng
    Questions 1:
    What can be learned from the historical record of economics progress in the now developed world? Are the initial conditions similar or different from contemporary developing countries from what developed countries faced on the eve of their industrialization?
    Analyzing the economies of various developed countries, it can be deduced that those countries faced various challenges which are similar or closely related to the challenges faced by developing countries, the following gives us an insight as to how their economic progress was achieved and the lessons developing countries can learn from them;
    1)Tapping the Best Leaders
    Every successful community can point to the individual or individuals who are primarily responsible for its success. Conversely, struggling communities invariably point to lack of leadership as the main reason they cannot move ahead. True community leaders view a community as a whole, clearly see the interconnectedness of every component, and understand that economic development is not an activity isolated from the development of the entire community.
    2) Comprehensive Plans
    Every community should develop-with citizen input -a comprehensive plan addressing land use (not just zoning), infrastructure, capital improvements, and community economic development. Such plans provide the framework for making development decisions. Planning helps avoid the wasted time and resources associated with ad hoc development decisions and can help mitigate the adverse impact of sprawl on Indiana’s downtowns.
    3)Retaining Existing Businesses
    The majority of new jobs are created by existing businesses. Unfortunately, few communities have an organized program for retaining and expanding existing businesses. Many existing businesses with growth potential are unaware of the many local and state resources available to assist them. These businesses have changing needs, and the community must be in a position to meet them. Those needs may include more skilled workers, more advanced telecommunications, access to an airport, or better lifestyle opportunities. These attributes are developed over time, and only constant contact with local companies can keep a community fully informed of their growing needs.
    4)Accepting Change
    It’s natural for some existing businesses to close or leave; these changes occur for a variety of reasons, often outside a community’s control. Businesses compete in a global environment, are influenced by external economic pressures, and are subject to normal business cycles.There is little a community or economic developer can do to combat, for example, business consolidations, the movement of companies offshore, or business failures due to changing consumer preferences. The commitment of additional financial or other incentives only prolongs the inevitable.
    5)Welcoming Start-Ups
    Business creation is a high-risk arena, but new small businesses are a significant source of new jobs. Every business must start somewhere, and the more conducive the environment to business start-ups, the more likely they are to occur. Access to capital, expertise, facilities and mentorship are among the most essential things a community can offer.
    6)Seeing the Big Picture
    Economic development happens at the local level, but there are no local economies. Economies are regional, and the most valuable information a community can have is a true and accurate picture of its regional economy. Along with pertinent demographic information, a regional analysis should identify existing industry groups and indicate whether those groups are stable, growing or declining. By further identifying buyers, suppliers and other related businesses, a community can invest its time and money supporting and attracting the types of businesses that clearly fit into the regional economy and, as such, are far more likely to stay or move there.
    The now developed countries encountered challenges but overcame them. The challenges are similar to what developing countries now face, if we can properly manage our resources and make welfare our primary concern our country Will develop with Time.
    Questions 2: what are Economic institutions and how do they shape the problems of underdevelopment and prospect of possible development;
    Economic institutions refers to specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    The Economic institutions plays the following roles which determines development of a country;
    1)Property Rights: A property right is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals. Society approves the uses selected by the holder of the property right with governmental administered force and with social ostracism.
    2)Political Behavior: The fact of scarcity, which exists everywhere, guarantees that people will compete for resources. Markets are one way to organize and channel this competition. Politics is another. People use both markets and politics to get resources allocated to the ends they favor. Political activity, however, is startlingly different from voluntary exchange in markets. In a democracy groups can accomplish many things in politics that they could not in the private sector. Some of these are vital to the broader community’s welfare, such as control of health-threatening air pollution from myriad sources affecting millions of individuals, or the provision of national defense. Other public-sector actions provide narrow benefits that fall far short of their costs.
    3) Federal Reserve System: The Federal Reserve System (the Fed) has been the central bank of the United States since it was created in 1913. The main purpose of a central bank is to regulate the supply of money and credit to the economy. The board of governors, the Fed’s principal policy-making organization, plays a key role in this process.
    4) Free Market: The market, then, is not simply an array, but a highly complex, interacting latticework of exchanges. In primitive societies, exchanges are all barter or direct exchange. But as a society develops, a step-by-step process of mutual benefit creates a situation in which one or two broadly useful and valuable commodities are chosen on the market as a medium of indirect exchange. This money-commodity, generally but not always gold or silver, is then demanded not only for its own sake, but even more to facilitate a reexchange for another desired commodity. It is much easier to pay steelworkers not in steel bars, but in money, with which the workers can then buy whatever they desire. They are willing to accept money because they know from experience and insight that everyone else in the society will also accept that money in payment.
    Questions 3:
    How can the extreme between the Rich and the poor be so great?
    1) Wealth undertaxed: While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    2) Underfunded public services: At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    3)Denied a longer life: In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    Questions 4:
    What are the sources of national and international economic growth?why do some countries make rapid progress towards development while many others remain poor?
    1. Human Resources: Labour inputs consist of quantities of workers and of the skills of the work force.Many economists believe that the quality of labour inputs the skills, knowledge, and discipline of the labour force is the single most important element in economic growth.A country might buy the most modern telecommunications devices, computers, electricity generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high density service industries.
    3) Capital Formation: Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories.In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    4) Technological Change and Innovation: In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    Why most countries seems to be developed while others are not lies majorly on the fact that most countries don’t appropriately utilize all resources at their disposal some countries depends majorly on one source and completely neglect the others which are highly important to attain greater level of development.

  19. Ogbuewu Cosmos Nnachetam says:

    Name: Ogbuewu Cosmos Nnachetam
    Reg No: 2018/243754
    Department: Economics

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    The now developed World didn’t just become developed with the snap of a finger. It took years of careful Development plans. Sure they faced a lot of hardened times but they learnt from it, corrected their errors and grew from there.
    Take for example the incidents of the great depression.
    According to Wikipedia, The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across the world; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. The Great Depression is commonly used as an example of how intensely the global economy can decline.
    This period witnessed a lot of economic negativities as development became slow, retracted and had to be reconsidered. But that became a valuable lesson as hints were picked from this incident, corrections were made and errors were prevented in future.
    For more examples, the Chinese on the other hand was a destabilized State after the Chinese Civil war which lasted from 1927 to 1949. It looked more like an undeveloped third world country but look at China today, the nation is so advanced and developed in all ramifications that it’s competing with World Power.how did they get there? By careful Development plans over the years at which it was followed and kept until the late 2000’s when World saw the secret breeding of the Chinese nation in advancement and development.
    As of recent the Chinese have the 14th development plans of a duration of 5 years each:
    First Plan (1953–1957), Second Plan (1958–1962), Third Plan (1966–1970), Fourth Plan (1971–1975), Fifth Plan (1976–1980), Sixth Plan (1981–1985), Seventh Plan (1986–1990), Eighth Plan (1991–1995), Ninth Plan (1996–2000), Tenth Plan (2001–2005), Eleventh Plan (2006–2010), Twelfth Plan (2011–2015), Thirteenth Plan (2016–2020), Fourteenth plan (2021–2025)
    Unlike the Nigerian Development plan which couldn’t be followed according or kept in check due to the corrupt nature of the government in charge.
    For any economy to witness growth and development, there need to be carefully planned strategies and structured development plans which are to be followed accordingly and maintain the way it was made. Of no doubt there’ll be mistakes, errors and downsides along the way but the key element here is to learn from the mistakes and errors and keep growing. A popular saying goes, we grow because each time we fall, we rise up and keep moving
    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development
    Economic institutions are Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country.
    Examples of economic institutions in Nigeria: Federal Internal Revenue Service, Central Bank of Nigeria, Nigerian Export Import Bank, Development Bank of Nigeria, Bank of Industry, Microfinance Banks, Insurance Companies, etc
    Examples of international Economic Institutions are World Trade Organization, international monetary fund, United Nation Conference on Trade and Development
    Economic institutions, such as commodity markets, stock exchanges and option exchanges, help in creating and providing ownership of financial claims. They also help to maintain market liquidity and manage risks associated with price changes. They also provide investment opportunities and fund many projects that are beneficial to the society. Other economic institutions, such as investment banks, play vital roles in the society, including providing fundraising advice, brokerage services, and selling and underwriting securities. Economic systems are instrumental in developing a community. They also participate in projects that are beneficial to the society through their social responsibility role. They inject funds into local businesses and conduct research aimed at improving the living standards of people within a society. The role of maintaining liquidity and managing price changes is essential for achieving a stable business culture and efficient operations.
    Furthermore, The Development Bank of Nigeria exists to alleviate financing constraints faced by Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria through providing financing, partial credit guarantees and technical assistance to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.
    Of all the various Economic institutions mentioned above and more, each has a specific role to play in order to boost a nation’s economy either the institution is privately owned or government owned.

    3. How can the extremes between rich and poor be so very great?
    There are so many factors as to why the extremes between rich and poor is very great:
    Development Economics try to understand why the gap between the poor and rich is huge. In a sense the Rich plan for the long term while the poor plans for just the moment. The Rich thinks of ways by which they wealth can increase over time. They tend to diversify their businesses and aim for more business growth. As in Economic, they aim for more cost minimization and profit maximization. While the poor mostly thinks of utility at the present. In a local dialect in Nigeria(Pidgin English) there’s a saying “na who chop belle full dey think of how to get more money” simply put, one of the poor’s main concentration is on how to get their daily bread and on what to eat.
    Though in a sense, the rich enriches themselves more in the expense of the poor mass like in the case of the nigerian government, the nigerian politicians are busy stealing and embezzlement public funds with no care to the public or masses. They make policies and laws that will only favour the rich and prevent the poor from getting to the rich level. Then there’s the case of monopoly, where those in profitable businesses prevents others from entering into same business thereby having a monopolistic power and control over a lot of resources. Thereby the everyday phrase “the rich get richer while the poor gets poorer”.

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?
    According to investopedia, National growth is an increase in the production of economic goods and services, compared from one period of time to another. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
    Sources of National Growth
    1. Natural Resources
    2. Human Capital/ Resources
    3. Technology
    4. Innovation
    5. Social and Political Structure
    6. Trade
    7. Industralization
    WHY SOME COUNTRIES EXPERIENCE RAPID GROWTH AND DEVELOPMENT THAN OTHERS
    some countries experience more development than other countries simply because of their intellectual capabilities.
    They know how to manage their resources, conduct and comport them, get the necessary things that they don’t have put is needed, then make strategic development plans for the future. The government of these nations care for the welfare of the citizens more than their own self interests and work for the betterment of all.
    For me I think this is why some nations develop faster and better than other nations.

  20. Onyedekwe Henry Chinedu. says:

    Onyedekwe Henry Chinedu
    2018/242306
    Economics department

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    It is factual to say that no nation became developed over night. These developed nations have done one thing or the other which brought about their development. Looking at Japan, Japan was devastated as a result of the nuclear bombardment in Hiroshima and Nagasaki during the second world war. They were left at a state worse than Nigeria had ever been economically. Japan was still able to recover from that trauma and managed to become one of the largest economic entities of the world. Japan greatly improve it’s technological advances and also imposed a series of economic and financial policies to promote industrialization. For instance by boosting its transportation and communication networks and revolutionizing it’s light industry by the turn of the century. From this we see that industrialization which is one of the sources of growth can serve as a major divine force to boost Nigeria’s economy and eradicate poverty. We as the government should generate better policies which can aid in promoting the aspect of industrialization in Nigeria. Nigeria is also lacking in technology. Technology is a major prompter of development. Most developed nations today have a high technological expertise, countries like Japan, South Korea, United States, Germany etc. Better technologies should be introduced to aid production in Nigeria. By doing so economic progress will be possible

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?

    Economic institutions are agencies which may be government owned or privately owned devoted to collecting or studying economic data, or commissioned with the job of supplying a good service that is important to the economy of a country.

    Economic institutions are also contributors to growth across countries. Among other things, economic institutions have decisive influence on investments in physical and human capital, technology and industrial production. It is also well understood that in addition to having a critical role in economic growth, economic institutions are also important for resource distribution.

    Looking at the Central bank of Nigeria for instance, the CBN partners with Nexim bank to give loan to farmers in Nigeria at low interest. This provides the poor farmers with opportunities to boost their personal financial base hence eradicating poverty which is a problem that underdeveloped nations face and in turn, this boosts the agricultural economy which will further promote export of these agricultural produce, hence boosting development because as we know, trade is a major source of development.

    We can also say that commercial banks help in boosting development as well as eradicating some of the problems of underdevelopment. The commercial banks provides loans for eligible borrowers who want to indulge in productive activities these productive activities are in the form of supply of certain goods or service which in turn promotes employment of labour and external revenue hence more productive activity means better growth and development.

    3. How can the extremes between rich and poor be so very great?

    One of the problems which development seeks to solve is the differences which exist between the rich and the poor, as the rich is too distant from the poor in terms of wealth especially in a country like Nigeria. The workings in Nigeria favours the rich and enriches them more, while the poor struggles but gets poorer. For instance only one person is allowed to supply cement in Nigeria, this creates a monopolistic scenario as well as gives them excess profit as they can manipulate the price of cement how ever they like not minding whether it’s affordable by the poor. The poor is forced to pay for the cement because that’s the only way they can get shelter!

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Economic growth, the process by which a nation’s wealth increases over time. It generally refers to an increase in wealth over an extended period. Sources of economic growth includes
    1. Natural resources
    2. Human capital
    3. Technology
    4. Innovation
    5. Social and political structure
    6. Trade
    7. Industrialization

    The mindset of individuals can greatly impact the growth of a nation. The citizens of most rich nations work towards innovations which will lead to growth in the country as a whole, whereas in Nigeria most persons are concerned about enriching themselves, even at the expense of the nation as a whole. This is one of the reasons while a country like Nigeria remains while other nations grow.

  21. Onyedekwe Henry Chinedu. says:

    Onyedekwe Henry Chinedu
    2018/242306
    Economics department
    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    It is factual to say that no nation became developed over night. These developed nations have done one thing or the other which brought about their development. Looking at Japan, Japan was devastated as a result of the nuclear bombardment in Hiroshima and Nagasaki during the second world war. They were left at a state worse than Nigeria had ever been economically. Japan was still able to recover from that trauma and managed to become one of the largest economic entities of the world. Japan greatly improve it’s technological advances and also imposed a series of economic and financial policies to promote industrialization. For instance by boosting its transportation and communication networks and revolutionizing it’s light industry by the turn of the century. From this we see that industrialization which is one of the sources of growth can serve as a major divine force to boost Nigeria’s economy and eradicate poverty. We as the government should generate better policies which can aid in promoting the aspect of industrialization in Nigeria. Nigeria is also lacking in technology. Technology is a major prompter of development. Most developed nations today have a high technological expertise, countries like Japan, South Korea, United States, Germany etc. Better technologies should be introduced to aid production in Nigeria. By doing so economic progress will be possible

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development? Economic institutions are agencies which may be government owned or privately owned devoted to collecting or studying economic data, or commissioned with the job of supplying a good service that is important to the economy of a country. Economic institutions are also contributors to growth across countries. Among other things, economic institutions have decisive influence on investments in physical and human capital, technology and industrial production. It is also well understood that in addition to having a critical role in economic growth, economic institutions are also important for resource distribution. Looking at the Central bank of Nigeria for instance, the CBN partners with Nexim bank to give loan to farmers in Nigeria at low interest. This provides the poor farmers with opportunities to boost their personal financial base hence eradicating poverty which is a problem that underdeveloped nations face and in turn, this boosts the agricultural economy which will further promote export of these agricultural produce, hence boosting development because as we know, trade is a major source of development. We can also say that commercial banks help in boosting development as well as eradicating some of the problems of underdevelopment. The commercial banks provides loans for eligible borrowers who want to indulge in productive activities these productive activities are in the form of supply of certain goods or service which in turn promotes employment of labour and external revenue hence more productive activity means better growth and development.

    3. How can the extremes between rich and poor be so very great?
    One of the problems which development seeks to solve is the differences which exist between the rich and the poor, as the rich is too distant from the poor in terms of wealth especially in a country like Nigeria. The workings in Nigeria favours the rich and enriches them more, while the poor struggles but gets poorer. For instance only one person is allowed to supply cement in Nigeria, this creates a monopolistic scenario as well as gives them excess profit as they can manipulate the price of cement how ever they like not minding whether it’s affordable by the poor. The poor is forced to pay for the cement because that’s the only way they can get shelter!

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?
    Economic growth, the process by which a nation’s wealth increases over time. It generally refers to an increase in wealth over an extended period. Sources of economic growth includes
    1. Natural resources
    2. Human capital
    3. Technology
    4. Innovation
    5. Social and political structure
    6. Trade
    7. Industrialization
    The mindset of individuals can greatly impact the growth of a nation. The citizens of most rich nations work towards innovations which will lead to growth in the country as a whole, whereas in Nigeria most persons are concerned about enriching themselves, even at the expense of the nation as a whole. This is one of the reasons while a country like Nigeria remains while other nations grow.

  22. Okoye Chidimma Favour says:

    NAME: OKOYE CHIDIMMA FAVOUR
    REG.: 2018/246412
    EMAIL: chidimmafs700@gmail.com
    DEPT: ECONOMICS EDUCATION

    ASSIGNMENT:
    (1):. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or differ for contemporary developing countries from what the developed countries faced on the eve of their industrialization.

    (2):. What are economic institutions and how do they shape problems of underdevelopment and prospects for successful development.

    (3):. How can the extremes between rich and poor be so very great.

    (4): What are the sources of national and international economic growth? why do some countries make rapid progress towards development while many other remain poor.

    ANSWER:
    CRITICAL DISCUSSION AND ANALYZING OF THESE QUESTIONS AS A POTENTIAL SPECIAL ADVISER TO THE MR. PRESIDENT ON POVERTY ALLEVIATION AND ECONOMIC DEVELOPMENT THUS:

    (1): What can be learned from the historical record of economic progress in the now developed world.
    In a landmark study of new institutional economics, Rodrik, Subramanian and Trebbi (2002) assess the relative importance of institutions, geography and integration (trade) in determining the differences in incomes between the world’s most developed countries and the poorest ones. They find that institutional determinants “trump” all others. It is not a new intuition that for the prospering of economic activity institutions matter. Adam Smith had already noted this is surprising detail, referring to the importance of a justice system, private property rights, and the rule of law (The Wealth of Nations). Aron (2000) surveys the studies which correlate indices of development to institutional ones: 7 find a positive correlation with property rights and enforcement, 10 with civil liberties, 10 others with political rights and democracy, 4 with institutions for cooperation (e.g. clubs and associations), and 15 find a negative correlation of development with political instability. The paragraphs below explain why institutions appear so important to economic development.

    Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs (Coase, 1992, p 197; Dahlman, 1979, p. 149). They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing. Where transaction costs are small, the private enforcement of contracts may still be preferred. But as economic relations develop and become increasingly impersonal, the role of a third party to enforce compliance to rules is increasingly necessary (Shirley, 2003, p. 2).

    Such institutions increase the security that the risk of incurring in an economic transaction is matched by the full appropriation of its eventual benefits. This includes the presence of individual private property rights. If property is protected individuals are more willing to invest and to incur sunk costs. Recounting the land-ownership system in Ghana, Pande and Udry (2005) are able to show that where individual perception of security of land tenure is low, investment in the land is significantly reduced, and output consequently drops. In fact, in the few cases in which land is obtained through commercial transactions (as opposed to the traditional informal system of land redistribution), there ceases to be any difference in levels of investment because security of tenure is assured. This increases output and thus is conducive to economic development.

    The historic record of economic progress in the now developed world is that they have an active citizen, They engage their resources in full capacity. Also, back then unlike now there is less corruption which means no selfishness from the citizens, that is privatizing public fund, developing oneself, everyone works together in achieving and developing the country.

    The initial conditions is not really similar but differs from contemporary developing countries from what developed countries faced on the eve of the industrialization because The world is getting corrupt day by day people no longer care about country, about their neighbors about anybody but themselves so even those that are in charge of developing the country that are given the responsibilities to oversee good working of the country embezzle the fund for themselves.

    (2) Economic institutions are companies or an organization that deals with money or with managing the distribution of money, goods and services in an economy. Banks, government organization, and investment funds are all economic institutions.

    How economic institutions shape problems of under development is that economic institutions affects the economy both directly and indirectly, they influence government policies which in turn influence growth and distributional outcomes, which then affect the pace of under development or development reduction they directly influence the pace and equality of economic growth.Development bank as an example of economic institutions help in providing short and medium term loans for agriculture and industries thereby helping to solve the problem of underdevelopment.
    With the help of some economic institutions small peasant farmers can get loan to fund their industries and farm.
    Prospects for successful development is making good policies and encouraging active citizenship.

    (3)
    How the extreme between rich and poor be so so very great is that in our world today the rich gets richer and the poor gets poorer because the opportunities for development can only be assessed by the rich not for the poor, for example, education is needed for basic human development and innovation, but the poor do not have the assess to that basic education only the rich.

    (4)
    The sources of national and international economic growth are; natural resources, human capital, technology, innovation, social and political structure, trade, industrialization etc.

    Why some countries make rapid progress towards development while many other remain poor is because,The countries that makes huge progress channel their resources into the right place, they make use of every little resources they have, they work it into its full capacity, they make use of all the sources of economic growth, for example they improve innovations, they give opportunities for development, they train their manpower (labour) but other countries that remain poor because they focus on one source of growth without exploring other sources of growth, that is, they focuses on one of the sources of economic growth for example the natural resources like Nigeria, Nigeria focuses on their natural resources which is OIL and abandoning other means through which the economy can be developed.

  23. Onyemalu Ogochukwu Maryanne says:

    Onyemalu Ogochukwu Maryanne
    2018/242424
    Eco 361
    Developmental Economics
    1a. What can be learned from the historical record of economic progress in the now developed world?
    Answer: for the last two decades or so , the developing countries have been under great pressure from the developed countries and the international institution they control to adopt a set of”good policies” in order to Foster their economic development.The historical fact is that, today’s developed countries did not develop on policies and the institutions they now recommend or should I say force on the developing countries.Actually all of today’s developed countries used tariff and subsidies to develop their industry in the earlier stages of their development they did not have basic institution such as democracy, central banks patent laws.
    Given that the adoption of “good policies” and “good institutions” has failed to generate the promised acceleration of economic development in the developing world and has in some cases led to economic and social collapses a radical rethinking of the development orthodoxy is required firstly,all conditions attached to bilateral and multilateral financial assistance to developing countries should radically changed,as the orthodox way is not working and the that there can be no single way of “best practice” policies that everyone should use . Secondly the wto(world tracle organisations ) rules should be rewritten so that the developing countries can more actively use taricffs and subsidies for industrial development . Thirdly ,improvements in institutions should be encouraged , but this should not be equated with imposing a fixed set of today’s, not even yesterday “Anglo American institutions on all countries, nor should it be attempted in haste,as institutional development is a lengthy and costhy process.
    1b. Are the initial conditions similar or different for contemporary developing countries face on the eve of their industrialization?Answer:the initial conditions are different for contemporary developing countries when they face the eve of their industrialization because the developed countries didn’t use good policies or good institutions to experience economic growth but the developing countries are being recommended or forced to use good policies and institutions
    2. What are economic institutions,and how do they shape problems of underdevelopment and prospects for successful development?
    *Economic Institutions:a company or an organization that deals with money or with managing the distribution of money,goods and services in an economy.Banks, government organizations and investment funds are all economic institutions.
    *Economic Institutions shape problems of underdevelopment and prospects for successful development since they influence the structure of economic incentives in society. Without property rights, individuals will not have the incentive to invest in physical or human capital or adopt more efficient technologies.
    3. How can the extremes between rich and poor be so very great?
    We should know that there is a great inequality between rich and poor. The world’s richest 1% have more than twice as much wealth as 6.9 billion people. Almost half of humanity is living on less than $5.50 a day.
    1. Lining the pockets of the world’s billionaires: trillions of dollars of wealth are in the hands of a small group and the fortune and power of these people continue to grow. Billionaires have more wealth than 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile around 735 million people are still living in extreme poverty
    2. Wealth undertaxed:while the richest continue to enjoy booming fortunes,they are also enjoying some of the lowest levels of tax are falling disproportionately on working people.when government undertax the rich, there’s less money for vital services like healthcare and education and increasing the amount of care work that falls on the shoulder of women and girls
    3. Underfunded public services:at the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people
    4. Denied a longer life: in most countries having money is a passport to better health and a longer life,while being poor all too often means more sickness and an earlier grave. Peace from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries,a child from a poor family is twice as likely to die before the age of five than a child from a rich family
    5. Inequality is sexist:with less income and fewr assets than men, women make up the greatest proportion of world’s poorest households and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labour. They are also supporting the state through billions of hours of unpaid or underpaid care work,a huge but unrecognized contribution to our societies and economic prosperity.
    4a. What are the sources of national and international economic growth?
    1. More capital:one of the sources of economic growth is more capital,the more the capital being inputed in an economy will lead to economic growth
    2. More labour: another source is more labour,when there is an increase in labour there is economic growth
    3. Better use of existing capital or labour:when there is an efficient use of the existing capital and labour,it leads to economic development
    The growth that results from increases in capital and labour represents growth due to increase in inputs.
    4b. Why do some countries make rapid progress toward development while many others remain poor?
    1. Government:in most countries government has a significant influence on economic performance, especially due to it’s size. Regulations,taxes and government spending can vitalize or stifle economic activity. If government spending is more than the taxes and subsidies accumulated,the country will experience a deficit but if not it will experience a surplus
    2. International trade and Finance:if the trade is slowed, countries will have to produce goods and services that they produce less efficiently. Countries are to specialize on the resources they have in country,if a country has capital they should be involved in agriculture and so on and if labour intense they should produce electronics,etc.
    3. Technology and investment:a country with high technology will tend to progress faster than countries with low technology and if there is investment in research and technology,the country will develop faster than countries that do not have investment
    4. Political,social and geographical conditions:a country with good political condition will improve and progress. Countries that have good weather and good climate conditions will progress well and faster than those that have bad political, social and geographical conditions.
    5. Money and Banking:when there is a good banking condition will progress very fast since the banks are able to regulate money well and efficiently. q

  24. Abalihi Chukwuebuka Ernest says:

    Abalihi Chukwuebuka Ernest
    2018/245128
    Economics

    Critically discuss and analyse these questions as potential special adviser to Mr. President of poverty alleviation and economic development.
    1. What can be learned from the historical records of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industriallization?

    LESSONS FOR DEVELOPING COUNTRIES FROM ADVANCED ECONOMIES PAST: Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction in sub-saharan Africa, for example, is of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-par Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies.
    Lesson 1: Governments can advance development even with low levels of government spending. Today’s low income countries spend more than twice on average than today’s advanced economies spent more than a century ago. To be sure, this difference reflects the lack of tax instrument and systems we have today. From 1850 until 1980’s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later.
    Here lies the lesson for today’s developing economies. While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be an improving the business environment to attract private capital Mobilizing private finance for development.
    Lesson 2: Today’s developing economies need to focus on building fiscal and market institutions before raising spending needs and not after they materialize.
    Government spending in the advanced 14 economies increased substantial since 1960 as they reevaluated the role of government amid rapid industrialization and globalization and new taxes became common place. The shift from agrarian to industrial to post industrial economies required different worker skills. Economic disruptions reshaped governments in the past, as is happening now with the changing world of work; leading to a large expansion of social insurance and protection spending.
    Lesson 3: Government spending by today’s developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
    Government spending among the advanced economies has increased but so has it’s vulnerability. Before 1913, spending among advanced economies ranged from less than 2 percent in GDP in Italy, or a span of 11 percent . Today, the span of spending among the advanced economies is 39 percent from 17.3 percent in Hong Kong to 56.4 percent in France.

    Conclusion
    Development paradigms vary among today’s advances and developing countries. Robust growth can happen with a smaller or a larger government, in general. Too large of redistribution, however may create substantial disincentive to work and invest, or lead tensions between formal and informal workers, employees of large companies or state owned enterprises and small private firms.
    Thus change now is clearer than ever: the changing world of work is clashing with persistent informality in developing countries and social protection systems that cover part of the population.

    2. What are economic institutions and how do they shape problems of underdevelopment and prspects for the successful development.

    What are economic institutions? When economists use this term, they mean: property rights, honest government, political stability, dependable legal system, and competitive and open market. These standards are considered important for any economy, because they create the right environment to allocate scarce resources. The term economic institutions refers to two things:
    (1) specific agencies or foundations, both govt and private, devoted to collecting or studying economic data.
    (2) well established arrangements and structures that are part of the culture or society e.g, competitive markets, the banking system, and a system of property rights are examples of economic institutions.
    HOW DO ECONOMIC INSTITUTIONS SHAPE THE PROBLEMS OF UNDERDEVELOPMENT AND PROSPECTS FOE SUCCESSFUL DEVELOPMENTS?
    ECONOMIC INSTITUTIONS AND ECONOMIC DEVELOPMENT.
    institutions and markets: the inclusive economic institutions will create the inclusive market and the market is fully bounded by the property rights of the economic institutions protect private property, it will increase the confidence of investors and get decisions on entering and improving the market.
    Institutions as engines of prosperity: the inclusive markets, technology and the education can be considered as the engines of prsoperity and they are created by the inclusive economic institutions. In the process of dconomic development, better choices will be available to people and they will choose the better options.

    (3) HOW CAN THE EXTREMES BETWEEN THE RICH AND THE POOR BE SO VERY GREAT?
    Income inequality;: the gap between the rich and the poor. One could argue that one could argue that one of the reasons for the huge gap between the rich and the poor is is in their financial decisions and management. The poor invest in liabilities while the rich invest in assets. Liabilities take away moneybfom you while assets grow your net worth. Take for example someone like bill gates whinhas the majority of assets in Microsoft’s stock continues to make more money fasternthan he can give it away due to appreciation in stock price. Unfortunately poor people don’t think like that. They think in the moment and look for easy fixes like playing lottery. For example, a man who had ended up with money from inheritance when a parent passed on. He had the opportunity to ouxhase som real estate rental properties that coups have brought in a stern of income. He passed on the opportunity because he was worried about the renovation that would need to be done, instead he opted to go on a vacationand purchase a car, both of which are liabilities.
    Conclusion
    It is not that the rich don’t purchase liabilities, they do but they typically use passive income from their investments for that.
    What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while manybothers remain poor?
    Sources of national economic growth: growth comes from the optimization and exploitation of a nation’s resources.
    Human resources: does the nation have skilled workers or large numbers to be exploited to create labour that can be exploited? A nation of artisans or engineers can be exploited for the growth of it’s economy
    Control of trade routes: trade routes is a resource that may be exploited.
    Sources of international economic growth:
    According to the classic list of Adam Smith, three factors are fundamental for the growth of the international economy. These factors are land, labour, and capital. A more complete list would contain five fundamental factors.
    1.labour
    2.natural resources
    3.capital
    4.knowledge
    5.social infrastructure
    Why do some countries make rapid progress towed development while many others remain poor?
    With Japan’s defeat in the second world war, north part of Korea was administered by Russia and south part by the us. The country, basically, was separated to two countries as spurn and north Korea and the initial economic conditions of these two countries were similar. South Korean leader, Syngman Rhea, received the support from the us and he established good institutions to achieve the growth and development. The economic and political institutions of south Korea facilitated foe innovation, investments, industrialization, technology transfer, exports, health and trade as as a result of that, south Korea became a leading country in the world.
    The North Korea leader, kim-il-sung, on the other hand was a dictator and implemented a central plan economic system with the support if the then Soviet Union. The North Korea did not practice policies for ensuring private property rights, implementation of free market system and level playing field for contracts awarding. Today, people in North Korea suffer due to very low socio-eonomic standards as a result of choices that were taken in relation to the political and economic institutions(Acemglu and Robinson 2012). In summary, difference in the choice of institutions of the rulers in the south and north Korea has resulted in a large difference in these two countries in relation to economic development.

  25. Owoh Anayo Jonathan says:

    NAME: OWOH ANAYO JONATHAN
    DEPT: ECONOMICS
    REG NO: 2018/250325
    COURSE CODE: ECO 361
    COURSE TITLE: DEVELOPMENT ECONOMICS
    EMAIL: owohaj@gmail.com
    QUESTIONS:
    Critically discuss and analyse these questions as a potential Special Adviser to Mr. President of Poverty Alleviation and Economic Development
    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization? 2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development
    3. How can the extremes between rich and poor be so very great?
    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?
    ANSWERS:
    1) The real lesson for developing countries to learn from developed countries is the ” FREEDOM TO CHOOSE”.
    For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    If the policies and institutions that the rich countries are recommending to the poor countries are not the ones that they themselves used when they were developing, what is going on? We can only conclude that, whether intentionally or not, the rich countries are effectively kicking away the ladder that allowed them to climb to where they are now. It is no coincidence that economic development has become more difficult during the last two decades when the developed countries started turning up the pressure on the developing countries to adopt the so-called ‘good’ policies and institutions. What can be done to change this? First, the facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of ‘getting history right’, but also one of allowing the developing countries to make more informed choices. This is not to say that every developing country should adopt an interventionist development strategy. Some of them may indeed benefit from following the Swiss or Hong Kong models. However, this strategic choice should be made in the full knowledge that historically the majority of the successful countries did the opposite in the past when they faced the same international competitive challenge from more advanced countries, which the developing countries face now.
    Second, the conditions attached to bilateral and multilateral financial assistance offered to developing countries should be radically changed. It should be accepted that the orthodox recipe is not working, and also that there can be no single ‘best practice’ policies that everyone should use. More specifically, in terms of policies, the ‘bad policies’ that most of today’s developed countries used with so much effectiveness when they were developing countries themselves should be at least allowed, if not actively encouraged, by the developed countries and the international development policy establishment that they control. While it is true that activist trade and industrial policies can sometimes degenerate into a web of red tape and corruption, this should not mean that these policies should never be used under any circumstances.
    Third, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. They should also be allowed to have less stringent patent laws and other intellectual property rights laws.
    Fourth, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries. There need to be more serious attempts, both at the academic and the practical levels, to explore exactly which institutions are necessary, or at least beneficial, and for what types of countries, given their stages of development and their economic, political, social, and even cultural conditions. Special care has to be taken in order not to demand excessively rapid upgrading of institutions by the developing countries, especially given that they already have quite sophisticated institutions when compared to today’s developed countries at comparable stages of development, and given that establishing and running new institutions is costly.
    By having the freedom to choose policies and institutions that are more suitable to their conditions, the developing countries will be able to develop faster. This will also benefit the developed countries in the long run, as it will increase their trade and investment opportunities. That the developed countries, and the international institutions which they influence, cannot see this is the tragedy of our time.
    As seen from recent researches, the initial condition for development for contemporary developing nation’s are different from what developed nations faced on the eve of their industrialization. This is because certain international bodies like WTO, WORLD BANK e.t.c. wasn’t in existence as at then and did not influence the decision of the now developed nations. So as a result, this nation’s had the freedom to choose the Economic development policies that suited them well without the restrictions of the now available international bodies/organizations.
    2) What are Economic institutions?
    The term “Economic Institutions” refers to two things:
    a. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.
    b. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    Examples of economic institutions in Nigeria: Federal Internal Revenue Service, Central Bank of Nigeria, Nigerian Export Import Bank, Development Bank of Nigeria, Bank of Industry, Microfinance Banks, Insurance Companies, etc
    Economic Institutions determine the costs of economic transactions: they spur development in the form of contracts and contract enforcement, common commercial codes, and increased availability of information, all of which reduce the costs of transactions, risk, and uncertainty. Despite their attempts to increase Economic development, they can also be the source of Economic underdevelopment. This underdevelopment brought about by Economic Institutions might be as a result of wrong decisions to tackle Economic problem, inadequate policy making and enforcement. In a bid for an Economic Institution like the CBN to spur development, they may bring out policies without making research on how those policies will affect the country. Due to their negligence, the policies made might end up having a negative effect on the Economy which will contribute to underdevelopment of the nation.
    3) Economic inequality (also known as the gap between rich and poor, income inequality, wealth disparity, or wealth and income differences) consists of disparities in the distribution of wealth (accumulated assets) and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality is related to the ideas of equity: equality of outcome and equality of opportunity. There are various numerical indices for measuring economic inequality, but the most commonly used measure for the purposes of comparison is the Gini coefficient (also known as the Gini index or Gini ratio for Italian statistician and sociologist Corrado Gini). The Gini coefficient is a statistical measure of the dispersal of wealth or income. A Gini coefficient of zero indicates that there is perfect equality—assets are equally divided between all people in the group. A Gini coefficient of one indicates that all of a group’s wealth is held by one individual. Most countries fall toward the middle of this range.
    There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    #Inequality in wages and salaries;
    #The income gap between highly skilled workers and low-skilled or no-skills workers;
    #Wealth concentration in the hands of a few individuals or institutions;
    #Labor markets;
    #Globalization;
    #Technological changes;
    #Policy reforms;
    #Taxes;
    #Education;
    #Computerization and growing technology;
    #Racism;
    #Gender;
    #Culture;
    #Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers.
    Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:
    Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers
    Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.
    4) sources of national Economic growth:
    a. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force.
    Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth.
    A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.
    Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high-density service industries.
    Many countries that have virtually no natural resources, such as Japan, have thrived by concentrating on sectors that depend more on labour and capital than on indigenous resources. Indeed, tiny Hong Kong, with but a tiny fraction of the land area of resource-rich Russia, actually has a larger volume of international trade than does that giant country.
    3. Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation.
    In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    Accumulating capital, as we have seen, requires a sacrifice of current consumption over many years. Countries that grow rapidly tend to invest heavily in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may go into net capital formation. By contrast, many economists believe that the low national savings rate in the United States—only 4 percent of output in 1996— poses a major economic problem for the country.
    When we think of capital, we must not concentrate only on computers and factories. Many investments are undertaken only by governments and lay the framework for a thriving private sector. These investments are called social overhead capital and consist of the large-scale projects that precede trade and commerce. Roads, irrigation and water projects, and public-health measures are important examples.
    All these involve large investments that tend to be “indivisible,” or lumpy, and sometimes have increasing returns to scale. These projects generally involve external economies, or spillovers that private firms cannot capture, so the government must step in to ensure that these social overhead or infrastructure investments are effectively undertaken.
    4. Technological Change and Innovation:
    In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.
    Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.
    Some other sources are:
    # Social and political structure
    # Trade
    # Industrialization e.t.c.
    Why some countries make rapid progress while others remain poor.
    Some countries makes rapid progress because they put in the right attitude towards Economic progress by doing variety of things like utilising the available resources in the country both natural and human resources, making Economic policies and ensuring they are been executed properly, fighting the corrupt government officials, educating and empowering the masses e.t.c. countries that do things listed above usually experience rapid growth while countries who don’t do all or most of the above usually remain poor or stagnant e.g Nigeria.

  26. Michael-Atu ifunanya says:

    Michael-Atu ifunanya
    2018/243767
    Economics Education

    No1. What can be learned from the historical record of economic progress in the developed world? Freedom of choice;
    If the policies and institutions that the rich countries are recommending to the poor countries are not the ones that they themselves used when they were developing, what is going on? We can only conclude that, whether intentionally or not, the rich countries are effectively kicking away the ladder that allowed them to climb to where they are now. It is no coincidence that economic development has become more difficult during the last two decades when the developed countries started turning up the pressure on the developing countries to adopt the so-called ‘good’ policies and institutions. What can be done to change this? First, the facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of ‘getting history right’, but also one of allowing the developing countries to make more informed choices.
    Second, the conditions attached to bilateral and multilateral financial assistance offered to developing countries should be radically changed. It should be accepted that the orthodox recipe is not working, and also that there can be no single ‘best practice’ policies that everyone should use. More specifically, in terms of policies, the ‘bad policies’ that most of today’s developed countries used with so much effectiveness when they were developing countries themselves should be at least allowed, if not actively encouraged, by the developed countries and the international development policy establishment that they control.
    Third, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. They should also be allowed to have less stringent patent laws and other intellectual property rights laws.
    Fourth, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries. There need to be more serious attempts, both at the academic and the practical levels, to explore exactly which institutions are necessary, or at least beneficial, and for what types of countries, given their stages of development and their economic, political, social, and even cultural conditions. Special care has to be taken in order not to demand excessively rapid upgrading of institutions by the developing countries, especially given that they already have quite sophisticated institutions when compared to today’s developed countries at comparable stages of development, and given that establishing and running new institutions is costly.
    The initial conditions are different for contemporary developing countries from what the developed countries faced on the eve of third industrialization.
    Developed Nations__The first economic category is developed nations, which can generally be categorized as countries that are more industrialized and have higher per capita income levels. To be considered a developed nation, a country generally has a per capita income around or above $12,000. Also, most developed countries have an average per capita income of approximately $38,000.
    Developing Nations__The second economic category is developing nations, which is a broad term that includes countries that are less industrialized and have lower per capita income levels. Developing nations can be divided further into moderately developed or less developed countries.

    No2. The term “Economic Institutions” refers to two things:
    Firstly, specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.
    Secondly, well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    HOW DO THEY SHAPE PROBLEMS OF UNDERDEVELOPMENT AND PROSPECT FOR SUCCESSFUL DEVELOPMENT
    A country’s social and economic institution dominate the process of economic development. They determine attitudes, motivations and conditions for development. If institutions are elastic and encourage people to avail economic opportunities and further to lead higher standard of living and inspire them to work hard, then economic development will occur.
    On the other hand, if they discourage all this, the economic development will be hampered and adversely affected. This has been rightly observed by UNO that economic development is impossible in the absence of appropriate atmosphere. So economic progress will not take place unless atmosphere is favourable to it. The people of the country must desire progress and their social, economic, legal and political institutions must be favourable to it.
    Emphasizing the significance of these institutions in economic development, Prof. A.K. Cairn-cross says, “Development is not governed in any country by economic forces alone and the more backward the country, the more this is true. The key to development lies in men’s mind, in the institutions in which their thinking finds expression and the play of opportunity on ideas and institutions.”

    No3. Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer. Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education. These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    THE WORLD’S RICHEST 1% HAVE MORE THAN TWICE AS MUCH WEALTH AS 6.9 BILLION PEOPLE. ALMOST HALF OF HUMANITY IS LIVING ON LESS THAN $5.50 A DAY.

    No4. What are the sources of national and international economic growth?
    a. Human Resources: Labour inputs consist of quantities of workers and of the skills of the work force. A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers
    b. .Natural Resources: The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    c. Capital Formation: In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation. In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    d. Technological Change and Innovation: Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.
    WHY DO SOME COUNTRIES MAKE RAPID PROGRESS TOWARD DEVELOPMENT WHILE MANY OTHERS REMAIN POOR?
    Physical factors – some areas have a hostile or difficult landscape. This can make development more difficult. Examples of this are very hot climates or arid (a lack of water) climates which make it difficult to grow sufficient food.
    Economic factors – some countries have very high levels of debt. This means that they have to pay a lot of money in interest and repayments and there is very little left over for development projects.
    Environmental factors – some places experience environmental issues, which can prevent them from developing. Examples might be extreme flooding or desertification.
    Social factors – some parts of the world have issues that are caused by people. These include low levels of education, poor water quality or a lack of doctors.
    Political factors – some countries are at war or the government may be corrupt. Therefore money does not reach the people who need it most and spending on areas such as education and infrastructure may be insufficient.
    Natural resources – some countries have an abundance of raw materials such as oil or precious minerals. These can be sold and the money invested into developing the country.

  27. 1. What can be learned from the historical record of economic progress in the now developed world?

    • For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    • The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    • Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    • Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    • Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    • Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    • Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Yes there is a difference between the eve of industrialization in developing countries and developed countries, This process has not been uniformly introduced in all countries, nor has it occurred at the same time or at the same rate. Despite the common features of industrialization, these differences in its introduction and adoption have produced inequities among nations and among people on a scale never before experienced. for example:
    In describing various countries and regions of the world, certain terms have been adopted, first by official agencies such as the United Nations and national governments, and then more generally by scholars, journalists, and those interested in making sense of international relations. According to a now commonly used United Nations classification, more developed countries (MDCs, or developed countries) comprise all of Europe, North America (excluding Mexico), Japan, Australia, and New Zealand. Other countries (e.g., Singapore, Taiwan, and Israel) constitute recent additions, while many of the former Soviet-bloc countries (including the Russian Federation) are now in a developing, or “transition,” phase. Less developed countries (LDCs, or developing countries) make up the remainder. The distinction between MDCs and LDCs mirrors the famous “North–South divide,” a phrase coined by former West German chancellor Willy Brandt (1980) in his Commission’s report to the World Bank. LDCs have also been referred to as the Third World, a term devised in post–World War II Europe to distinguish the politically nonaligned, underdeveloped nations of the world from the industrialized capitalist nations (First World) and the industrialized communist countries (Second World) (Worsley 1984, pp. 306–315).
    In some cases, the underlying variable upon which these distinctions are based is economic, in other cases it is political, and in still others it is unspecified. However, generally speaking, MDCs are “rich” and LDCs are “poor.” In 1996, the per capita gross national product (GNP) among all MDCs was US$25,870, while in the LDCs it was only US$1,183 (World Bank 1998, p. 38). The major explanation for this vast discrepancy is that MDCs are fully industrialized whereas LDCs are not. In 1994, the industrial market economies produced 81.4 percent of total world manufactures (World Bank 1997, p. 152). Considering that LDCs comprise 84 percent of the world’s population (World Bank 1997, p. 36), their industrial output and, consequently, their standard of living are dramatically lower than in MDCs.

    Industrialization is a complex process comprised of a number of interrelated dimensions (Hedley 1992, pp. 128–132). Historically, it represents a transition from an economy based on agriculture to one in which manufacturing represents the principal means of subsistence. Consequently, two dimensions of industrialization are the work that people do for a living (economic activity) and the actual goods they produce (economic output). Other dimensions include the manner in which economic activity is organized (organization), the energy or power source used (mechanization), and the systematic methods and innovative practices employed to accomplish work (technology). Table 1 specifies these dimensions and also lists indicators commonly used to measure them.
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    According to these indicators, MDCs are fully industrialized. On average, close to one-third of the labor forces in these countries are employed in industry (three-fifths work in the service sector); manufacturing makes up approximately one-quarter of the gross domestic product; the overwhelming majority of workers are employees of organizations; commercial energy consumption is high (5,100 kilograms of oil equivalent per capita); and professional and technical workers comprise on average 15 percent of the work force. Furthermore, more than 95 percent of all receipts for royalty and license fees are collected in the MDCs (Hedley 1992, pp. 128–133; United Nations Development Programme [UNDP] 1998; World Bank 1997). Industrial activity and the services associated with it constitute the major driving force and source of income in these more developed economies.
    In contrast, none of the LDCs is fully industrialized as measured by these five dimensions of industrialization. Although manufacturing accounts for a significant proportion of many of these countries’ total output, most do not achieve industrial status on any of the other dimensions. Manufacture in these countries is accomplished largely by traditional methods that have varied little over successive generations. Consequently, although manufacturing (transforming raw materials into finished goods) is an essential component of industrialization, there is considerably more to the process. Because industrialization is multidimensional, it cannot be measured by only one indicator.
    In general, LDCs may be classified into three major groups according to how industrialized they are. The first and smallest group, referred to as newly industrializing countries (NICs), contains the most industrialized countries in that they achieve industrial status on at least two dimensions listed in Table 1. Located mainly in East Asia (e.g., South Korea, Malaysia, Thailand, Indonesia) and Latin America (e.g., Mexico, Brazil, Argentina, Venezuela), these eight NICs accounted for more than 40 percent of all merchandise exports from developing countries in 1995 (World Bank 1997, pp. 158–160). Although China and, to a lesser degree, India (because of their huge population bases) contribute significantly to the merchandise exports of LDCs, they have not developed their industrial infrastructures to the same extent as these NICs and therefore do not belong in the most industrialized group of LDCs.
    A subgroup of NICs are high-income, oilexporting nations (e.g., the United Arab Emirates, Qatar, Bahrain, Kuwait, and Saudi Arabia). Although they do not have large manufacturing bases, they do have significant proportions of their labor forces involved in industry (oil exploration and refining), a substantial component of professional and technical workers (many of them imported), and high per capita commercial energy consumption (World Bank 1998, pp. 34–35, 42–43). Although concentrated in just one industry, they are more industrialized than most other LDCs according to the criteria specified in Table 1. As a result of their petrodollars, they have acquired an industrial infrastructure that in other countries has taken many decades to establish.
    The second, very large group of LDCs in terms of industrialization are those with a traditionally strong manufacturing base that also have a substantial agricultural component. Their economies straddle the agricultural and industrial modes of production. China and India are in this group, as are most of the non-European nations that form the Mediterranean basin. The goods that these LDCs predominantly manufacture (e.g., apparel, footwear, textiles, and consumer electronics) are essential to their own domestic markets and, because they are labor-intensive, also compete very well in the international market. In addition, they export natural resources and agricultural products. Other countries included in this semi-industrial group are most of the nations in Central and South America as well as many in South and East Asia.
    Table 1
    dimensions and measures of industrialization
    1. economic activity
    a. percentage of labor force in manufacturing
    b. percentage of labor force in industry
    2. economic output
    a. manufacturing as a percentage of gross domestic product (gpd)

    b. industry as a percentage of gross domestic product
    c. gross output per employee in manufacturing
    d. earnings per employee in manufacturing
    3. organization
    a. wage and salary earners as a percentage of the labor force
    b. number of manufacturing establishments employing fifty or more workers per capita
    4. mechanization
    a. commercial energy consumption per capita
    b. total cost of fuels and electrical energy per employee in manufacturing
    5. technology
    a. percentage of professional and technical workers in labor force
    b. registered patents in force per capita
    c. registered industrial designs in force per capita

    The third and final group of LDCs are not industrialized on any of the five dimensions listed in Table 1. On average, less than 10 percent of their labor forces are employed in industry; most (76 percent) work in agriculture. Manufacturing contributes only 20 percent to their national economies; the bulk of income derives from natural resources and cash crops grown exclusively for export. Per capita gross national product is very low (US$215). Most of these nonindustrial LDCs are located in sub-Saharan Africa and Asia (UNDP 1998).
    Of these groups of LDCs, the semi-industrial cluster of nations is by far the largest, constituting just over half the world’s population. China and India alone make up two-thirds of this group. The second-largest group, comprising between 10 and 15 percent of the world population, is the nonindustrial countries; NICs (including high-income oil exporters) comprise less than 10 percent. Thus, approximately one-quarter of the world is fully industrialized, another 10 percent are industrializing, half are semi-industrial, and the remaining 15 percent are nonindustrial.

    In developed countries like the experience of Great Britain also shows that to accelerate the pace of industrialization certain complementary measures are essential. For example, Great Britain paid close attention to the development of agriculture at the early stages of industrialization and acceleration of development. It is true that during the Industrial Revolution agricultural productivity increased rapidly due to the adaptation of new technology, changes in methods of production and changes in attitudes and institutions, as well as owing to increases in capital-intensive methods of production (Deane, 1965, ch. 2; O’Grada, 1993). But it is also true that government policy towards agriculture played an important role, particularly in the promotion of production of staple foods at early stages of industrialization. While increases in demand for agricultural products created new opportunities for innovation, the government protected the sector from import competition. At the same time increases in farmers’ incomes contributed to the expansion of their purchasing power to obtain industrial products, thus providing a more secure domestic demand for these products, which in turn enjoyed protection (Deane, 1965, p. 50). The supply of food products as wage goods also secured its availability in the cities. Government policy was geared to keeping agricultural producer prices high to make farming profitable. Moreover, agriculture was protected from imports by the Corn Bounty Act of (1614-1689) and later by the Corn Law of 1815.2 Moreover, it prohibited sale of imported grain to millers, unless the home price exceeded beyond a limit. Exports of some agricultural products, e.g. wheat, were also subsidized (Ashton, 1948, p. 145). Science and art were important factors in rapid industrialization because they provided new forms of power and new machinery and knowledge (List, loc. cit). Nevertheless, acceleration of supply capacity would not have been feasible without the expansion of investments and savings.

    While in developing countries

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development.
    Economic institution is a company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy. Banks, government organizations, and investment funds are all economic institutions:
    The term “Economic Institutions” refers to two things:
    • a. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency), CBN are all examples of economic institutions.
    • b. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    Economists are interested not only in understanding specific existing institutional agencies, but also in the more exciting question of why some institutions evolve and others don’t.
    How do they shape problems of underdevelopment and prospects for successful development.
    Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores, are found to be strongly correlated to better economic performance over time. This essay aims to explain why institutions are important to economic development and to provide evidence for the arguments made. Economic institutions support economic development through four broad channels: determining the costs of economic transactions, determining the degree of appropriability of return to investment, determining the level for oppression and expropriation, and determining the degree to which the environment is conducive to cooperation and increased social capital. Evidence is derived from the literature, from comparison of countries, and from examples at the micro level.
    Greater equality and functional economic institutions are also seen as the cause for the successful development of Vietnam compared to a similar country as Nicaragua, where high inequality has concentrated power in the hands of a restricted elite, and governments have failed to adequately invest in infrastructure and public welfare. Similarly, institutional capacity to exploit domestic primary resources is indicated as the key to the success of Botswana and Mauritius in comparison to other developing countries for which primary resources have turned into a curse, i.e. Sierra Leone (diamonds), Angola, Equatorial Guinea and Nigeria (oil) (Birdsall et al., 2005, p. 138). The outcomes of institutions have effects which lie deep in the socio-economic fabric of societies. Banerjee and Duflo (2011) recount the finding by Abhijit and Lakshmi Iyer (2005) that in India the coexistence of two systems of land-revenue collection under the British colonization caused very different outcomes; under one system, the landlord was responsible for collecting taxes, and this strengthened his role, while under the other farmers themselves were responsible for the taxes. The regions where the second system was dominant, 150 years later (with the tax system long gone) exhibit higher agricultural yield, more schools and more hospitals, due to the development of more horizontal and cooperative social relationships among the inhabitants.

    3. How can the extremes between the rich and the poor be so great?
    There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    • Inequality in wages and salaries;
    • The income gap between highly skilled workers and low-skilled or no-skills workers;
    • Wealth concentration in the hands of a few individuals or institutions;
    • Labor markets;
    • Globalization;
    • Technological changes;
    • Policy reforms;
    • Taxes;
    • Education;
    • Computerization and growing technology;
    • Racism;
    • Gender;
    • Culture;
    • Innate ability
    For example:
    Numbers released by the U.S. Census Bureau earlier this month confirm what many have known for a long time: The gap between the rich and the poor in this country is growing ever wider. And while we examined the numbers behind the income gap last week, we heard your requests for an actual explanation of why it exists loud and clear.
    Technology — The Double-Edged Sword
    Just as technology has worked its way into our daily work lives, it has also had a significant big-picture effect on employment, according to a March 2012 report from the nonpartisan Congressional Research Service.
    On the bottom end of the income scale, technology now performs some of the functions that once went to low-skill workers. Furthermore, technological changes — like improved computer and telecommunications systems — have enabled more U.S. companies to send jobs to countries with lower labor costs. With more workers competing for fewer jobs, wages for low-skill occupations dropped.
    At the same time, technology has been a boon for some higher earners. In fields such as engineering and law, technology “serves as a complement to high-skilled workers, which has raised demand for and the relative wages of these workers,” the report concludes.

    4. What are the sources of national and international economic growth?
    Sources of national economic growth:
    • Natural Factors. More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. …
    • Human Factor. The quantity of labour is a factor that contribute to growth. …
    • Physical Capital. …
    • Institutional Factor.
    Sources of Economic Growth
    1. Natural Factors.
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. Jeffrey Sachs in The End of Poverty calls this factor “Resource Boom” and gives an example on how government ability to control the breeding of black flies that spread African River Blindness can open up new farmland thus increasing the quantity of arable land in a country. However, quantity of natural factors such as land and raw materials like metals and oil could be small and even absent in some countries and the quantity cannot be easily increased. Fortunately, a country can still enjoy economic growth with modest natural resources provided it could obtain them efficiently from abroad; i.e. through trade. Singapore, Hong Kong and Japan have relatively little natural resources yet they have grown into developed economies. Land for example can be increased at a modest quantity by reclaiming it from the sea as in Singapore and Hong Kong. Oil reserves can be increased by active exploration and novel method of extraction. Instead of concentrating on the quantity, increase quality of the natural factors also help to shift the PPF outwards. A piece of land, for instance, can be rendered more productive (increased quality) by irrigation, improved farming technology and better planning of land usage.

    Moreover, neoclassical and endogenous growth models suggest that human capitals and technology are probably more important as engines that propel growth.
    2. Human Factor.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries. A country can increase in labour force by increasing its population but in reality all except Singapore is interested in this approach. Labour force can also be increased through a immigration policy that attracts skilled workers. This policy is pursued in Australia and Canada. Singapore and Malaysia also host a large population of migrant workers from neighbouring countries using a foreign worker scheme. However, the quantity of labour alone is not enough to guarantee economic growth. Pakistan, Bangladesh and Nigeria have very big population but this “labour resource” alone does not necessary confer growth. What is more important is that quality of the labour force, the human capital. Human capital is the attributes of an individual that contribute productively to economic activities. Human capital could refer to educational attainments, training and skills, entrepreneurship, and creativity. Human capital can be improved through formal education for children, vocational training, retraining, life-long adult education programme, better nutrition that improve mental concentration, better sanitation that reduces illness and thus absenteeism from school and improved basic healthcare that reduces preventable diseases.
    i. Social and cultural.
    a. We may want to link this back to the Kuznet’s historical growth experience and Myrdal’s modernization ideals. Society that emphasize the importance of education and allows equal gender participation in economic activities could build more human capital and benefits its economy. Excluding women from education and economic activities effectively reduce the human capital by half. Protestantism (industrious work ethics) and Confucianism (respect for authority, industry, and emphasize the importance of education) have been attributed to the early phase of economic development in America, and the success stories in East Asia respectively.
    ii. Entrepreneurship.
    a. As frogs seeks wells,
    as birds a brimming lake,
    so too wealth and allies
    resort to a man with enterprise.
    Pancatantra (400 CE);Book2,111; highlight is mine.
    The quote clearly illustrates the importance of entrepreneurship.
    b. We want to think of this as the human resource which combines all the other resources [labor (L), capital (K), and technology (A)] to produce a product, makes non-routine decisions, innovates, and bears risks.
    iii. Education and training.
    a. We should think of education as an investment in Human capital that enables the development of skills, enlarges the capacity to gather knowledge and information, and improves the utilization of knowledge and/or information to increase productivity.
    b. College Diploma then can be regarded as having the capacity to learn new tasks and gather knowledge. An individual who has a good track record in learning can be seen as a resourceful and potentially productive worker with good ability to learn new skills.
    c. We should recognize that tertiary education (colleges and universities) confers the highest expected private returns (the returns could be increasing exponentially) with respect to private costs. However, primary education (which includes attainment of literacy, arithmetic skills, and elementary vocational skills) yields the highest social returns with respect to social costs.
    d. Education provides the economy with potentially resourceful and productive workers.
    e. Education also provides an opportunity to an individual to expand his/her range of economic and social choices, thus better human development.
    f. Moreover, studies have shown that educating women could improve child health, increase children performance in formal education, expand the range of economic and social choices, generate higher income, and lower fertility.
    g. Also see notes on Education and development below.
    3. Physical Capital.
    Physical capitals include factories, machineries, shops, malls, offices and motor vehicles. Cetera Paribus, higher savings rate can help to finance more physical capital investment. As the Harrod-Domar Growth Model suggests a higher savings rate means higher economic growth rate. This productive investment would help move the PPF outward, thus economic growth. Higher savings rate can also be used to finance education and training. This helps to form human capital and to improve technical skills that contributes to more productive labour force. However, the rate of investment may be so fast that a gap is developed between savings rate and investment rate. This gap can be bridged by borrowing from foreign commercial banks, World Bank, foreign countries, or by Foreign Direct Investment (FDI). The biggest FDI recipient in the world is China. Many east and south east asian economies who used to enjoy healthy FDI inflows in the 1980s are now competing with China as FDI destination to maintain economic growth. Of course, in an economy with very low savings rate there may not be enough savings to finance investment. In this case, NGOs like Oxfam and multilateral institutions like the World Bank could come in to “jumpstart” the economy. “In 2002 the World Bank provided $19.5 billion to developing countries and worked in more than 100 developing economies, bringing finance and/or technical expertise toward helping them reduce poverty.” However, this jump starting may not always provide sustainable results or even effective. Besides private savings, FDI and borrowing from abroad, the quantity of physical capital can be increased by government investment policy and private domestic investment. Equally important is the quality of physical capital which can be improved by Research and Development, access to foreign technology and know-how, and improved vocational training.

    In the Structural Change Model, the capital-labour ratio is fixed. When capital-labour ratio is fixed, an increased in physical capital is required to support an increase in labour. For instance, in an agrarian economy, each farmer works with a spade. When the number of farmers increase from 10 to 15 then there will be five more new spades (physical capital) being employed in the economy. Such an increase in capital is called Capital Widening and contributes to larger output but not necessary improved productivity. Capital Deepening occurs when there is an increase in physical capital to each worker in the economy. Returning to our previous example of farmers with spades. Capital Deepening occurs when our initial 10 farmers get to use spade, fertilizers, hoe, tractors and gloves or 15 farmers with spade, fertilizers and tractors. Capital deepening is likely to improve labour productivity and total output in an economy.
    Technological Factor
    (a) Appropriate technology. One organization that aims to promote appropriate technology to improve rural welfare is Practical Action previously known as The Intermediate Technology Development Group (ITDG)
    BOx 1. What is “appropriate technology”?
    According to Practical Action, an appropriate technology can be that of a simple tool or one that is sophisticated. An appropriate technology is one that provides long-term, appropriate and practical answers to local problems, and it must be firmly in the hands of local people. An appropriate technology is shaped and controlled by local people. In many cases, the technology is manufactured using local materials by local craft people.
    Practical Action aims to help
    1. reduce the vulnerability of poor people affected by natural disasters, conflict and environmental degradation – events which, sadly, are increasing.
    2. poor people to make a better living – by enabling producers to improve their production, processing and marketing.
    3. help poor communities gain access to basic services – like safe, clean water, food, housing and electricity.
    4. poor communities respond to the challenges of new technologies, helping them to access simple effective technologies that can change lives forever.

    Source: http://practicalaction.org/home.

    (b) New production methods.
    New production methods could improve the quality of goods and/or reduce the cost of production. For instance, a new production technology can produce stronger concrete at a faster rate and at lower cost of production. Thanks to this technology, better buildings can be constructed with lower costs. Technology also allows the country to combine resources to produce new goods or more value-added products. Thus, an improvement in production technology allows the country to expand its PPF (experiences economic growth) with existing supply of resources. In the Harrod-Domar Growth Model, this translates into a reduction in the capital-output ratio and thus leads to more economic growth.
    (c) Informational Technology.
    A cell phone, access to internet, and fax can improve the ability to gather live information that can improve productivity. Ability to access accurate weather forecasts can help farmers to make important decisions about sowing seeds, transplanting, harvesting, and storage of harvest. Thus, informational technology can be used to increase agricultural produce. Internet access, a reliable and cheap transportation system, and a reliable and cheap method of collection of payment over the internet allows enterprising businesses to expand their markets abroad and effectively increase output. Access to satellite communication is partly responsible for the success of Bangalore, India being transformed into the back office of large companies based in developed nations.
    4. Institutional Factor.
    According to the Economist Survey of 20th century: the recipe to growth is the rule of law (especially property), capitalism (facilitate resource allocation), and a fairly open economy with low tariffs. (Sept 11, 2000)
    i. Financial sector & efficiency.
    A developed and efficienct financial system instills confidence in consumers to save with this financial institutions. In this case, savings can be fed back into the economy through the financial system as borrowing to firms. Table 1 below shows that more developed nations which usually have more efficient financial systems are also able to provide more domestic credits through their respective banking sectors. According to the WDR 2008, the domestic credit provided by banking sector as percentage of GDP in 2006 were 55% in Low Income Countries, 77% in Middle Income Countries and 195% in High Income Countries. A bank that only offers saving in the form of checking account and 1 year long deposit is not as developed as one that offers checking account, various length deposit account, deposit in different currencies and in different forms of gold, mutual funds that cater to different risks tolerance, and muslim banking. A developed system is also one that has good and efficient communication within banks, among banks, among businesses, domestically and internationally. An efficient system is one that meets the various needs of customers with as little transaction costs as possible. When citizens do not trust the financial system as in Argentina, then banks do not have enough loanable funds to support private investments and can drive up the costs of borrowing to invest. In the end, profitable investment that could have expanded PPF was not carried out due to the high costs of borrowing.
    Table 1. Financial Markets. Domestic credit provided by banking sector, % GDP Liquid liabilities (broad money or M3), %GDP Quasi-liquid liabilities (M3-M1), % GDP
    Year 1990 1996 1990 1996 1990 1996
    WORLD 126.0 139.1 71.1 72.4 64.6 66.9
    Low Income 64.6 73.6 54.4 80.8 30.0 48.6
    Excl China & India 37.9 32.6 28.3 30.0 12.6 16.3
    Middle Income 60.6 46.0 36.6 35.4 24.0 26.3
    Lower middle income 52.0 45.3 44.4 38.9 30.1 30.0
    Upper middle income 65.8 46.7 30.6 32.0 19.6 22.8
    Low & middle Income 61.7 53.9 41.7 48.4 25.7 32.7
    East Asia & Pacific 76.5 88.2 66.7 92.9 41.6 61.6
    Europe & Central Asia .. 31.9 .. 28.9 .. 18.0
    Latin America & Caribbean. 59.7 35.7 23.5 26.9 17.6 21.7
    Middle East & N. Africa 69.4 70.0 58.6 60.5 30.4 44.0
    South Asia 52.4 18.3 43.4 47.3 27.0 30.3
    Sub-Saharan Africa 59.6 84.5 37.0 38.5 18.5 15.8
    High Income 138.9 157.9 77.5 78.1 73.2 74.9
    ii. Source: World Development Indicators 1998.
    iii. The financial system’s role is to intermediate between savings and investments and cycle funds. “The ratio of domestic credit provided by the banking sector to GDP is used to measure the growth of the banking system because it reflects the extent to which savings are financial. Liquid liabilities include bank deposits of generally less than one year plus currency. Their ratio to GDP indicates the ease with which their owners can use them to buy goods and services without incurring any cost. Quasi-liquid liabilities are long-term deposits and assets -such as certificates of deposits, commercial paper, and bonds- that can be converted into currency or demand deposits, but at a cost.” (1998 World Development Indicators, pg. 269)
    iv. Education System. See note 2 above.
    v. “Health Care.
    Here, I like to include clean running water and hygienic waste disposal. If potential workers are not healthy then they cannot contribute as much to economic development as they could. Moreover, in many poor community, a day without work usually means a day without pay and thus no or less food on the table for that day. Moreover, illness takes up resources from the community. Researchers have estimated that AIDS could reduced the real GDP growth of badly affected economies by 0.3% to 1.5% annually.
    Box 2. According to the World Bank, water lies in the center of all development. Here are some facts.
    1. More than 1 billion people still lack access to safe water, nearly 2 billion lack safe sanitation.
    2. Six children still die each minute from waterborne diseases.
    3. Sickness and malnutrition keep children out of school.
    This makes it more difficult to bring up a new generation that is healthy, strong and with sufficient human capital. The potential for further growth in this sort of economy will be greatly hampered.
    Click here to learn more about health, nutrition and population (including gender issue) from the World Bank.

    vi.
    vii. Infrastructure includes all essential facilities and services such as transportation network, communication network, power (electricity, gas, etc.) network, running water network, irrigation, and waste disposal network that are necessary for economic activities. Cheap, fast and easy communication, for example, reduces the cost of doing business. A good transportation network allows resources and goods to be transported quickly and cheaply. Thus, a good network of road, railways and access to seaports can facilitate trade that allows an economy to exploit economies of scales by producing for a larger market. This shifts the PPF outward. Jeffrey Sachs in The End of Poverty identifies a landlocked geography, the absent of seaports, to be a barrier to economic growth. There are many historical evidences around the world on how good irrigation not only led to growth and development. In some cases, a whole more vibrant civilization (eg. The Aztec) is founded on good infrastructure. This reduces the cost of production. Good infrastructure thus allows capital to be accumulated more efficiently. Consequently, the PPF is shifted out.
    viii. Political Stability.
    Basically, growth is usually possible in a stable political environment. Liberia, Burundi, and Nigeria are some examples where instable political environments had prevented these economies from achieving desirable economic growth. Entrepreneurs in instable political environments will have less incentives to invests as they incur higher risk of losing their investments and properties through appropriation by government, of not being able to keep their profits, and having higher costs of transactions due to uncertainty. There are also a lot of studies that indicate corruption and ineffective government could slow down (and in the worst case hinder) economic growth.
    Box 3. Daniel Kaufmann and Aart Kraay of the World Bank consider governance* as an increasingly critical key factor in determining whether or not the country has the capacity to combine resources effectively to reduce poverty. These researchers look at governance from six dimensions:
    1. Voice and Accountability
    2. Political Stability and Absence of Violence
    3. Government Effectiveness
    4. Regulatory Quality
    5. Rule of Law
    6. Control of Corruption
    *Note: “Governance can be broadly defined as the set of traditions and institutions by which authority in a country is exercised. This includes
    (1) the process by which governments are selected, monitored and replaced,
    (2) the capacity of the government to effectively formulate and implement sound policies, and
    (3) the respect of citizens and the state for the institutions that govern economic and social interactions among them. ” (World Bank) Click here for more information on governance indicators.

    ii. Why do some countries make rapid progress toward development while many others remain poor?

    Every country is unique. Yet it is still possible to identify a range of factors that affect development trajectories. A number of economic historians have shown that patterns of resource endowments can reinforce inequalities and favour elites, with this in turn leading to “capture” and predatory institutional development. The resource curse has been examined by Paul Collier (2007), Jeffrey Frankel, and others, who have shown that ample endowments of natural resources may be linked with stunted institutional development, particularly in the case of mining and oil. In mining and oil multinational or local investors have often operated behind a veil of secrecy. The awarding of contracts for extractive industries provides a source of power and patronage to corrupt leaders. Evidence of corruption by international firms who have made offshore payments through international banks provides a clear example of how both advanced and developing countries have a responsibility to clamp down on corrupt practices, not least in mitigating the risks associated with the extraction of natural resources.
    For the classical and neo-classical economists, as well as their critics on the Left, natural and human resource endowments were a key determinant of trade and market integration. While the former group argued that revealed comparative advantage would lead to development, the critics argued the opposite, concluding that it would lead to more uneven development. Both groups saw international trade as a critical determinant of growth, explaining the convergence (or divergence) of growth rates and global incomes, with Dani Rodrik, Jeffrey Sachs and Andrew Warner, Jeffrey Frankel and David Romer, and David Dollar and Aart Kray contributing conflicting evidence of the relationship between trade and development.
    Jared Diamond, Jeffrey Sachs and others explain development outcomes by providing geographical explanations. They argue that moderate advantages or disadvantages in geography can lead to big differences in long-term economic performance and that poor economic performance can be explained in terms of the “bad geography” theses. Geography is thought to affect growth in at least four ways. Firstly, economies with coastal regions, and easy access to sea trade, or nearby large markets have lower transport costs and are likely to outperform economies that are distant and landlocked. Secondly, tropical climatic zones face a higher incidence of infectious diseases, and malaria, bilharzia and other parasitic infections which hold back economic performance by reducing worker productivity. For example, in 2015, malaria caused an estimated 438,000 deaths mostly among sub-Saharan African children. In addition, a high incidence of disease can raise fertility rates and add to the demographic burden of a country. Thirdly, geography affects agricultural productivity in a variety of ways. Grains are less productive in tropical zones, with a hectare of land in the tropics yielding on average around one-third of the yield in temperate zones. Fragile soils in the tropics and extreme weather are part of the explanation, as is the higher incidence of pests and parasites which damage crops and livestock. Fourthly, as the tropical regions have lower incomes and crop values, agri-businesses invest less in tropical regions, and national research institutions are similarly poorer. The implication is that international agencies, such as the Consultative Group for International Agricultural Research (CGIAR)—which is donor funded—have a particular responsibility to raise the output of tropical agriculture. A similar point can be made with respect to tropical diseases, with low purchasing power holding back development of drugs to combat many of the most significant tropical diseases.
    William Easterly and Ross Levine as well as Rodrik and others, have argued that the impact of geography is regulated through institutions and that good governance and institutions can provide the solution to bad geography. For example, good governments can build efficient roads and irrigation systems, and invest in vital infrastructure as well as enforce legal contracts and curb corruption. In short, good governance minimises uncertainty and transaction costs and can overcome bad geography. However, bad governance does not. For Easterly there are too many “Ifs, buts and exceptions” to Sachs’ bad geography thesis. Destructive governments rather than destructive geography may also explain the poverty of nations.
    Rodrik and others argue that it is the quality of institutions—property rights and the rule of law—that ultimately matters. Once the quality of institutions is taken into account (statistically “controlled for” using econometric techniques), the effect of geography on economic development fades away. However, as Rodrik notes, the policy implications associated with the “institutions rule” thesis are difficult to discern and likely to vary according to context. This in part is because institutions are partly endogenous and co-evolve with economic performance. As countries become better off they have the capacity to invest in more education and skills and better institutions, which in turn makes them better off.
    For Daron Acemoglu, Smon Johnson and James Robinson, the development of institutions which facilitate or frustrate development, are rooted in colonialism and history. These authors argue that contemporary patterns of development are largely the result of different forms of colonialism and the manner in which particular countries were, or were not, settled over the past 500 years. The purposes and nature of colonial rule and settlement shaped institutions which have had lasting impacts. In countries with high levels of disease, high population density, and lots of resources, colonial powers typically set up “extractive states” with limited property rights and few checks against government power in order to transfer resources to colonizers, such as was the case in the Belgium Congo. In countries with low levels of disease and low population density, but also less easily extractable resources, settlement was more desirable and colonial powers attempted to replicate European institutions—strong property rights and checks on the abuse of power—and made an effort to develop agriculture and industry as was the case in Canada, United States, Australia and New Zealand. According to this thesis, the legacy of colonialism led to an institutional reversal that made poor countries rich, and rich countries poor.
    Although we may well live in a world shaped by natural resource endowments, geography, history and institutions, politics and power can still play a decisive role in terms of driving economic performance and determining vulnerability to poverty. In Amartya Sen’s Poverty and Famines, he showed that political power and rules that are embedded in ownership and exchange determine whether people are malnourished or have adequate food, and that malnourishment is not mainly the result of inadequate food supply. Sen shows how droughts in North Africa, India and China in the nineteenth and Twentieth centuries were catastrophic for social and political reasons, with power relations, not agricultural outcomes, leading to widespread starvation and destruction of the peasantry. In 1979, Colin Bundy, in The Rise and Fall of the South African Peasantry was among a new wave of historians who argued that colonialism led to the deliberate collapse of a previously thriving domestic economy. In 1997, Jared Diamond’s, Blood, Germs and Steel, while emphasising the importance of geography and history, showed how technology, culture, disease and other factors led to the destruction of native American and other previously thriving communities. These authors, echoing Marx, highlighted the extent to which development can be a very bloody business, even if the longer term consequences may be to bludgeon societies into a new era.
    If the abuse of power can set development back, what about the counter argument that democracy leads to more rapid and equitable development outcomes? According to Irma Adelman, the long-term factors governing the association between development and democracy include the growth of middle classes, increase in quantity and quality of education, urbanisation (including more infrastructures), the need for participation in development strategies, and the need to manage the psychological and social strains arising from change. Acemoglu, Robinson and others went further in 2014, arguing that democracy does cause growth, and that it has a significant and robust positive effect on GDP. Their results suggest that democracy increases future GDP by encouraging investment, increasing schooling, and inducing economic reforms, improving public good provision, and reducing social unrest. The difficulty of defining democracy, and the weight attached to the non-democracies which have enjoyed very rapid growth, such as China and Singapore, as well as the slowing of growth and paralysis in decision making in many parts of Latin America, Europe and other democratic regions means that the academic jury remains divided on the relationship between development and democracy.

  28. Chime Doris chinenye says:

    Chime Doris chinenye
    2018/250191
    Economics major

    Number 1

    Lesson 1: Governments can advance development even with low levels of government spending.

    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago (Figure 1). To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education.

    Development of domestic industry

    The positive case for the expansion of the manufacturing sector may now be considered. It is based on the general assumption that the manufacturing sector will in due course become the leading sector, drawing in workers (in part, siphoning off a portion of the increase in the labour force that would otherwise tend to drive down labour productivity in agriculture) from the traditional agricultural sector and providing them with higher-productivity jobs than could be obtained in agriculture. Agricultural productivity would necessarily be rising simultaneously, as investments in that sector permitted increasing output. Whereas it was earlier thought that this process would follow the historical experience of countries such as England and Japan, the lesson from the successful developing countries is that by providing incentives and infrastructural support to encourage exports, there are significant opportunities for expansion of manufacturing of labour-intensive commodities, opportunities that can promote rapid growth.

    The initial conditions are similar.
    The central problem of countries with low per capita output is that they have not as yet succeeded in making use of their potential economic opportunities. To do so, they must achieve an efficient allocation of the available resources and provide incentives for resource accumulation. But efficient allocation of resources is not merely a matter of the formal optimum conditions of economic theory. It requires the building up of an effective institutional and organizational framework to carry out the allocation of resources. In the private sector this requires the development of a well-articulated market system that embraces the markets for final products and the markets for factors of production. In the public sector the development of the organizational framework requires improvements in the administrative machinery of the government, especially in its fiscal machinery.

    In the setting of the developing countries, one is concerned not only with the once for all problem of efficient allocation of resources but also with improving the capacity of these countries to make a more effective use of their resources over a period of time. That is to say, one is concerned not only with the static problem of the efficient allocation of given resources with the given organizational framework but also with dynamic problems of improving the capability of this framework. From this point of view, there is no conflict, as some have maintained, between the static, or the short-run, considerations and the dynamic, or long-run, considerations. The two sets of requirements move in the same direction

    Number 2

    The term “Economic Institutions” refers to two things:

    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.

    2. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.

    Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement cost. They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust  by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreement.

    Cross-country empirical analyses, in combination with micro-level studies, provide strong support for the overwhelming importance of institutions in predicting the level of development in countries around the world (Hall and Jones, 1999; Acemoglu, Johnson and Robinson, 2001). Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores, are found to be strongly correlated to better economic performance over time. This essay aims to explain why institutions are important to economic development and to provide evidence for the arguments made. It argues that institutions support economic development through four broad channels: determining the costs of economic transactions, determining the degree of appropriability of return to investment, determining the level for oppression and expropriation, and determining the degree to which the environment is conducive to cooperation and increased social capital. Evidence is derived from the literature, from comparison of countries, and from examples at the micro level

    Number 3
    1. Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.

    ONLY 4 CENTS IN EVERY DOLLAR OF TAX REVENUE COMES FROM TAXES ON WEALTH.

    THE SUPER-RICH AVOID AS MUCH AS 30 PERCENT OF THEIR TAX LIABILITY.

    2. Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.

    TODAY 258 MILLION CHILDREN – 1 OUT OF EVERY 5 – WILL NOT BE ALLOWED TO GO TO SCHOOL.

    FOR EVERY 100 BOYS OF PRIMARY SCHOOL AGE WHO ARE OUT OF SCHOOL, 121 GIRLS ARE DENIED THE RIGHT TO EDUCATION.

    3. Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.

    EVERY DAY 10,000 PEOPLE DIE BECAUSE THEY LACK ACCESS TO AFFORDABLE HEALTHCARE.

    EACH YEAR, 100 MILLION PEOPLE ARE FORCED INTO EXTREME POVERTY DUE TO HEALTHCARE COSTS.

    4. Denied a longer life. In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.

    MEN OWN 50% MORE OF THE WORLD’S WEALTH THAN WOMEN, AND THE 22 RICHEST MEN HAVE MORE WEALTH THAN ALL THE WOMEN IN AFRICA.

    THE UNPAID CARE WORK DONE BY WOMEN IS ESTIMATED  $10.8 TRILLION A YEAR – THREE TIMES THE SIZE OF THE TECH INDUSTRY.

    5. Inequality is sexist. With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.

    Number 4

    Sources of Economic Growth / Development

    Natural factor: the quality and/or quantity of land or raw materials.

    Human factor: the quality and/or quantity of human resources/capital.

    Physical capital and technological factors: the quality and/or quantity of physical capital.

    Institutional factors such as

    finance and banking system

    education system

    healthcare

    infrastructure

    political stability.

    Sources of Economic Growth

    Natural Factors.
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. Jeffrey Sachs in The End of Poverty calls this factor “Resource Boom” and gives an example on how government ability to control the breeding of black flies that spread African River Blindness can open up new farmland thus increasing the quantity of arable land in a country. However, quantity of natural factors such as land and raw materials like metals and oil could be small and even absent in some countries and the quantity cannot be easily increased. Fortunately, a country can still enjoy economic growth with modest natural resources provided it could obtain them efficiently from abroad; i.e. through trade. Singapore, Hong Kong and Japan have relatively little natural resources yet they have grown into developed economies. Land for example can be increased at a modest quantity by reclaiming it from the sea as in Singapore and Hong Kong. Oil reserves can be increased by active exploration and novel method of extraction. Instead of concentrating on the quantity, increase quality of the natural factors also help to shift the PPF outwards. A piece of land, for instance, can be rendered more productive (increased quality) by irrigation, improved farming technology and better planning of land usage.

    Moreover, neoclassical and endogenous growth models suggest that human capitals and technology are probably more important as engines that propel growth.

    Human Factor.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries. A country can increase in labour force by increasing its population but in reality all except Singapore is interested in this approach. Labour force can also be increased through a immigration policy that attracts skilled workers. This policy is pursued in Australia and Canada. Singapore and Malaysia also host a large population of migrant workers from neighbouring countries using a foreign worker scheme. However, the quantity of labour alone is not enough to guarantee economic growth. Pakistan, Bangladesh and Nigeria have very big population but this “labour resource” alone does not necessary confer growth. What is more important is that quality of the labour force, the human capital. Human capital is the attributes of an individual that contribute productively to economic activities. Human capital could refer to educational attainments, training and skills, entrepreneurship, and creativity. Human capital can be improved through formal education for children, vocational training, retraining, life-long adult education programme, better nutrition that improve mental concentration, better sanitation that reduces illness and thus absenteeism from school and improved basic healthcare that reduces preventable diseases.

    Social and cultural.

    We may want to link this back to the Kuznet’s historical growth experience and Myrdal’s modernization ideals. Society that emphasize the importance of education and allows equal gender participation in economic activities could build more human capital and benefits its economy. Excluding women from education and economic activities effectively reduce the human capital by half. Protestantism (industrious work ethics) and Confucianism (respect for authority, industry, and emphasize the importance of education) have been attributed to the early phase of economic development in America, and the success stories in East Asia respectively.

    Education and training.

    We should think of education as an investment in Human capital that enables the development of skills, enlarges the capacity to gather knowledge and information, and improves the utilization of knowledge and/or information to increase productivity.

    College Diploma then can be regarded as having the capacity to learn new tasks and gather knowledge. An individual who has a good track record in learning can be seen as a resourceful and potentially productive worker with good ability to learn new skills.

    We should recognize that tertiary education (colleges and universities) confers the highest expected private returns (the returns could be increasing exponentially) with respect to private costs. However, primary education (which includes attainment of literacy, arithmetic skills, and elementary vocational skills) yields the highest social returns with respect to social costs.

    Education provides the economy with potentially resourceful and productive workers.

    Education also provides an opportunity to an individual to expand his/her range of economic and social choices, thus better human development.

    Technological Factor

    (a) Appropriate technology​. One organization that aims to promote appropriate technology to improve rural welfare is Practical Action previously known as The Intermediate Technology Development Group (ITDG)

    BOx 1. What is “appropriate technology”?

    According to Practical Action, an appropriate technology can be that of a simple tool or one that is sophisticated. An appropriate technology is one that provides long-term, appropriate and practical answers to local problems, and it must be firmly in the hands of local people. An appropriate technology is shaped and controlled by local people. In many cases, the technology is manufactured using local materials by local craft people.

    Practical Action aims to help

    reduce the vulnerability of poor people affected by natural disasters, conflict and environmental degradation – events which, sadly, are increasing.

    poor people to make a better living – by enabling producers to improve their production, processing and marketing.

    help poor communities gain access to basic services – like safe, clean water, food, housing and electricity.

    poor communities respond to the challenges of new technologies, helping them to access simple effective technologies that can change lives forever.

    (b) New production methods.
    New production methods could improve the quality of goods and/or reduce the cost of production. For instance, a new production technology can produce stronger concrete at a faster rate and at lower cost of production. Thanks to this technology, better buildings can be constructed with lower costs. Technology also allows the country to combine resources to produce new goods or more value-added products. Thus, an improvement in production technology allows the country to expand its PPF (experiences economic growth) with existing supply of resources. In the Harrod-Domar Growth Model, this translates into a reduction in the capital-output ratio and thus leads to more economic growth.
    (c) Informational Technology.
    A cell phone, access to internet, and fax can improve the ability to gather live information that can improve productivity. Ability to access accurate weather forecasts can help farmers to make important decisions about sowing seeds, transplanting, harvesting, and storage of harvest. Thus, informational technology can be used to increase agricultural produce. Internet access, a reliable and cheap transportation system, and a reliable and cheap method of collection of payment over the internet allows enterprising businesses to expand their markets abroad and effectively increase output. Access to satellite communication is partly responsible for the success of Bangalore, India being transformed into the back office of large companies based in developed nations.

    Institutional Factor.

    According to the Economist Survey of 20th century: the recipe to growth is the rule of law (especially property), capitalism (facilitate resource allocation), and a fairly open economy with low tariffs. (Sept 11, 2000)

    Financial sector & efficiency.
    A developed and efficienct financial system instills confidence in consumers to save with this financial institutions. In this case, savings can be fed back into the economy through the financial system as borrowing to firms. Table 1 below shows that more developed nations which usually have more efficient financial systems are also able to provide more domestic credits through their respective banking sectors. According to the WDR 2008, the domestic credit provided by banking sector as percentage of GDP in 2006 were 55% in Low Income Countries, 77% in Middle Income Countries and 195% in High Income Countries. A bank that only offers saving in the form of checking account and 1 year long deposit is not as developed as one that offers checking account, various length deposit account, deposit in different currencies and in different forms of gold, mutual funds that cater to different risks tolerance, and muslim banking. A developed system is also one that has good and efficient communication within banks, among banks, among businesses, domestically and internationally. An efficient system is one that meets the various needs of customers with as little transaction costs as possible. When citizens do not trust the financial system as in Argentina, then banks do not have enough loanable funds to support private investments and can drive up the costs of borrowing to invest. In the end, profitable investment that could have expanded PPF was not carried out due to the high costs of borrowing.

    4B
    Levels of development are determined by several factors:

    Physical factors – some areas have a hostile or difficult landscape. This can make development more difficult. Examples of this are very hot climates or arid (a lack of water) climates which make it difficult to grow sufficient food.

    Economic factors – some countries have very high levels of debt. This means that they have to pay a lot of money in interest and repayments and there is very little left over for development projects.

    Environmental factors – some places experience environmental issues, which can prevent them from developing. Examples might be extreme flooding or desertification.

    Social factors – some parts of the world have issues that are caused by people. These include low levels of education, poor water quality or a lack of doctors.

    Political factors – some countries are at war or the government may be corrupt. Therefore money does not reach the people who need it most and spending on areas such as education and infrastructure may be insufficient.

    Natural resources – some countries have an abundance of raw materials such as oil or precious minerals. These can be sold and the money invested into developing the country.

    The cycle of poverty

    The factors influencing development are often linked and countries can find themselves in a cycle of poverty. For example, if a country is in a lot of debt, it cannot afford good schools. If people are poorly educated they are less likely to understand about the causes of desertification. Desertification leads to poor crop growth and low incomes. This leads back to the country accumulating debt and the cycle continues.

  29. Oyem Lawrence Ifechukwude - 2018/241846 says:

    Developed countries have advanced technological infrastructure and have diverse industrial and service sectors. Their citizens typically enjoy access to quality health care and higher education. What makes a country developed? The commonalities between developed countries include an improved quality of life and greater access to basic necessities. Conversely, underdeveloped nations around the world also share common characteristics. Citizens suffer from preventable diseases, extreme poverty and lack of access to healthcare and clean water.
    1a: *The developed nations prior to their development had the mind set to share their resources for the benefit of the society at large. All levels of education are important for development to take place.
    *Promotion of education is one of the reasons while many nations are developed today. Through education, people can know their right, become innovative and strategize on how to sustain an optimal use of productive scarce resource.
    *By empowering women and equalizing academic opportunities, countries tends towards a sustained increase in production, consumption and exchange, and improve their well-being.
    *The developed countries today are first identified by common nationality rather than ethnicity.
    1b: The initial conditions are different from contemporary developing countries from what the developed countries faced because the developing countries identifies themselves based on ethnicity, religion and absence of common unity even between inter-ethnic and inter-religious settings rather than common nationality.
    2: economic institutions are organizations that deals with managing the distribution of money, goods, and services of an economy. They include banks, government organizations and investment funds. Banks such as zenith bank plc, fidelity bank plc, etc. can give loans to investors thereby increasing aggregate investment. Tax cuts and rebate by government are used to return money to consumers and boost spending. Government institutions can also spend on infrastructure to create jobs and increase productivity. The activities of private investors who invest on various segment of the economy can as well spring up development of the economy,
    3. In most underdeveloped countries of the world, the gap between the rich and the poor is large owing to the fact that:
    a. Increase in bank rate: this is the rate at which commercial bank lends money to its customers. High bank rate discourages the poor from borrowing money for investment purposes and vice versa.
    b. Illiteracy. Most poor people get poorer because of their low literacy level and poor initiative. Sometimes business and job opportunities may be available but they lack the acumen to fit in.
    c. Patent law. They government may give patent to some individual over a particular product for some political reasons thereby inhibiting the participation of others in the same line of trade
    d. High propensity to consume among the poor the poor and low propensity to save can result to a large margin between the rich and the poor.
    4. some countries of the world make rapid progress towards development because they were able to make optimal use of their available scarce productive resource ( both natural and human resource). On the contrary, countries that cannot make optimal use of the resources remain poor.

  30. CHIMA PRINCE CHUKWUEMEKA says:

    Eco 361: Development Economics 1
    Name: CHIMA PRINCE CHUKWUEMEKA
    Reg No: 2018/243755
    Email: chimaprince789@gmail.com
    1. What are the sources of national and international economic growth and who benefits from from such growth and why. Why do some countries make rapid progress towards development while others remain poor.
    Answer

    Sources:1. Natural resources (2). Technology (3). Trade (4.) Human capital (5). Innovation (6). Industrialization (7). Social and political structure.
    Who benefits from such growth and why?
    Developed countries and selfless nations benefits from such growth because they are after the interest and progress of the country they are in. They also benefits because they try to rub minds together to see how these resources can lead to the growth of their nation. Also I can say that the rich benefit from such because they have what is needed to Harness these sources of Economic growth. The rich here also includes those who have political powers. Using the Natural resources as one of the examples, it is the politicians and rich people who have access to it. The politicians will go outside and Build refineries and when they get the oil they go outside and refine them. And the question now is how then do Nigeria as a country experience economic growth and development.
    Why do some countries make rapid progress towards development while others remain poor?.
    Countries make progress because the make use of the different sources of economic growth while others remain on one. Those countries make effective use of both their Natural resource and engage in effective and fruitful trade and some try to build their social and political structure. Now using my country NIGERIA as a case study, they just base on just their Natural resource (oil) and corruption has so hindered the rapid progress of Nigeria towards development. Even the natural resource (oil) we use as a source has created the bedrock for politicians towards making money and they will never invest that money in our country NIGERIA. They have been so infected with greed that they are after their own self and maybe family members and they even forget their state at large talk more of the country at large. Still on this using ebonyi state as a sub case study. The governor is building flyovers and people are happy and they forget the fact that the construction company working there is his company and he is also borrowing money from countries and accumulating debt for the people of ebonyi state. Now If you check ebonyi state citizens are not living up to a good living standard. The agriculture sector of ebonyi is really depreciating. You can’t use that to compare Anambra state were the citizens are living well and the governor trying to create channels of trade by building an airport that will ease trade for onitsha traders. Now when all the state in Nigeria effectively use these sources at state levels you will see our country NIGERIA making rapid progress towards development.
    2. How can the extremes between rich and poor be so very great?
    ANSWER

    According to Amartyr sen,he said that the key facet of inequality is the growing division between the rich and the poor. He further said that as inequality increases, the standard of living is worse for those at the bottom of the economic ladder(poor). What can be the cause of this. The reasons for the extremes are;
    *The rich when they get money or income,they tend to invest before spending but the poor already have a mapped out list of what to buy or get even before seeing the money, so they tend to spend before investing.
    *Also politics and laws also see to the large gap. When policies are being made, most times it tends to favour the rich. Using data, phone,cement as an example. You will see that when cost of data rises, the poor tend to stop purchasing it. If cost of cement rises, how then will they build. And all this tend to push them into poverty and the rich are getting richer.
    *Poor public facilities: The rich have access to education (quality) but the poor do not have access to education. One might say is education important? Yes it is. Education is intellectual wealth that can be transformed to physical wealth.
    3. What are economic institution and how do they shape problems of under development and prospects for successful development?
    ANSWER

    Economic institution are those institutions set up in order to facilitate and manage economic activities of a country. They include; banks ( central banks, Microfinance banks, Mortgage banks), NAFDAC, SON.
    Using NAFDAC as a case study they can shape problems of underdevelopment by supervising foods and drugs that are produced in the country. The reason for this is that development has to do with the well being of human and improving quality of all human lives. So when these harmful or expired drugs are produced , it tends to destroy the live of people.
    Also the central bank can contribute to the shaping by applying stablization policy tools that is ; fiscal policy and Monetary policy.
    The Microfinance banks can help by lending out money to the poor which will help bridge the gap between rich and poor.
    4. What can be learned from the historical record of economic progress in the now developed world?. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their Industrialization.
    ANSWER

    Many things can be learned like; security, low unemployment rate, effective use of technology, favourable and surplus balance of payments. I can also say that the initial conditions are similar, the only problem is our shallow mindset and attitude to work. So until we change our minds to and improve our attitude to work we won’t develop. Again we must have to try to bridge the gap between the rich and the poor for development to take place.

  31. Nwajuagu Divine Ndubuisi says:

    NAME: NWAJUAGU DIVINE NDUBUISI
    REG NO: 2018/248278
    EMAIL: nwajuagudivine22@gmail.com

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Studying the history of development of the developed nations is necessary to help us understand where to improve. From the study of the history of developed nations like USA, UK, Germany, France, etc we can get some key lessons. In these regions their GDP is not the only thing or factor taken into account but also the wellbeing of the people. The citizens of these nations have set their minds directed towards achieving a particular goal which is economic progress and growth. The key lessons which we can learn from these nations and why they are regarded as developed nations include; High per capita income, security, availability of excellent health facilities, low unemployment rate, effective use of technology, positive balance of payment.
    The initial stage of industrialisation is the same for all countries. What sets apart the developed nations is their attitude towards growth and progression economically. In the developed nations we see that the leaders always consider the wellbeing of the people first and foremost and the people in turn are ready to cooperate with their leaders. Whereas in developing countries the leaders mostly consider their personal interest first and this affects the people as they in turn will not want to cooperate with the leaders.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    Economic institutions are those institutions set up to facilitate the management of Economic activities in a country. They are two broad categories; banking and non-banking institutions. Banking institutions include, central banks, commercial banks, while non banking institutions include; microfinance banks, development finance institutions etc.
    The central bank is the apex bank in the country and as such regulates the volume of currency and credit in the country. The goals of the central bank are stabililisation of currency, inflation management and reduction of unemployment in the economy. The central bank can help shape problems of underdevelopment and prospects for successful development by using policies such as monetary policies and fiacal policies to encourage investment and promote industrialization in the country. This in turn will increase the amount of goods and services produced and create more jobs for the people, thereby increasing the rate of development in the country.
    The non banking institutions can also help by rendering loans to firms and individuals to help improve their businesses and increase the rate of development in the country.

    3. How can the extremes between rich and poor be so very great?

    The rate of inequality in the world between the rich and the poor is known to be high. The world’s richest 1% have more than twice as much wealth as 6.9 billion people, and almost half of humanity is living on less than $5.50 a day. In our country Nigeria, the gap is very huge. The rate of corruption, insecurity, weak institutions and lack of adequate credit disbursement facilities etc. help in increasing the income disparity between the rich and the poor. The policies adopted by the government do not in any way help to reduce this inequality. For example, the current tax rate favours the rich and is very unfavourable to the poor masses. The public amenities are also not properly funded or financed and this affects the poor more than it affects the rich because while the rich can easily afford it, the poor masses cannot. This results in an economy where the rich get richer, and the poor, poorer.

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    The sources of national and international economic growth include:
    Government and policies
    Natural capital
    Human capital
    Culture of the people
    International trade and finance
    Technology and investment
    Political, social, and demographic conditions
    Money and banking
    By the use of these sources, countries can develop better. While some develop fast, others are relatively slower in terms of development. The reason for this being the way the sources are being utilized. While those who grow faster tend to utilize these sources in a controlled and proper way, the others do not pay close attention attention to these sources to see when they are meant to curtain them. An example is government spending. While the developed countries control the way they spend, developing countries do not properly control theirs and spend more than they are supposed to thus affecting their rate of growth.

  32. E-Patrick Dalosah says:

    NAME: E-PATRICK DALOSAH
    REG NUMBER: 2018/242457
    DEPARTMENT: ECONOMICS
    LEVEL: 300
    COURSE CODE: ECO 361
    ASSINGMENT

    QUESTION 1
    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    ANSWER
    Lesson 1: The importance of agriculture
    Despite early emphasis on industrialization through import substitution, a first major lesson of postwar experience was that there is a close connection between the rate of growth in the output of the agricultural sector and the general rate of economic development. The high rates of economic growth are associated with rapid expansion of agricultural output and low rates of economic growth with the slow growth of agriculture. This is (in hindsight, at least) to be expected, since agriculture forms a large part of the total domestic product and of the exports of the developing countries.

    Lesson 2: Governments can advance development even with low levels of government spending.
    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago. To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education.

    And here lies the lesson for today’s developing economies: While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital—mobilizing private finance for development.

    Lesson 3: Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs—and not after they materialize.
    Government spending in the Advanced 14 increased substantially since 1960 as they reevaluated the role of government amid rapid industrialization and globalization and new taxes became commonplace. The shift from agrarian to industrial to post-industrial economies required different worker skills. Economic disruptions reshaped governments in the past, as is happening now with the changing world of work, leading to a large expansion of social insurance and protection spending.

    QUESTION 2
    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    ANSWER
    Economic institution(s) can be defined as a company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy. Banks, government organizations, and investment funds are all economic institutions

    It can also be seen as specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country.

    We can also view economic institutions as well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.

    Economic institutions differ significantly among nations.
    Economic Institutions strongly affect the economic development of countries and act in society at all levels by determining the frameworks in which economic exchange occurs. They determine the volume of interactions available, the benefits from economic exchange and the form which they can take.
    Economic institutions are considered as the fundamental cause of economic growth. Economic institutions affect economic growth through allocation of resources like physical and human capital.

    QUESTION 3
    3. How can the extremes between rich and poor be so very great?

    ANSWER
    THE WORLD’S RICHEST 1% HAVE MORE THAN TWICE AS MUCH WEALTH AS 6.9 BILLION PEOPLE.

    1. Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.

    2. Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.

    3. Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.

    4. Inequality is sexist.MEN OWN 50% MORE OF THE WORLD’S WEALTH THAN WOMEN, AND THE 22 RICHEST MEN HAVE MORE WEALTH THAN ALL THE WOMEN IN AFRICA.
    With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.

    QUESTION 4

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    ANSWER
    The sources of growth in a developing economy are no different from those in the advanced industrialised countries. There are four basic sources, which are:

    Natural resources – land, minerals, fuels, climate; their quantity and quality.
    Human resources – the supply of labour and the quality of labour.
    Physical capital and technological factors – machines, factories, roads; their quantity and quality.
    Institutional factors – these may include the banking system, the legal system and important factors like a good health care system.

    Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. At times people living near navigation routes or in temperate climates have fared better than people living far away from coastlines or in frigid climates. Some analysts also argue that culture plays a role in growth.

    While inherent traits are responsible for some differences in economic growth, government and central bank policies also play a role. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth.

  33. Eze Chidera Aloysius says:

    Eze Chidera Aloysius
    2018/242420
    Answer1
    The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.
    ii) The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.

    Answer2
    The term “Economic Institutions” refers to two things:

    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country.
    2. Well-established arrangements and structures that are part of the culture or society.
    Among other things, economic institutions have decisive influence on investments in physical and human capital, technology, and industrial production. It is also well-understood that in addition to having a critical role in economic growth, economic institutions are also important for resource distribution.

    Answer3
    Increase the minimum wage.
    Expand the Earned Income Tax.
    Build assets for working families.
    Invest in education.
    Make the tax code more progressive.
    End residential segregation.

    Answer 4
    Sources of economic growth
    a) Natural Factors.
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth.
    b) Human Factor.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries.
    c) Physical Capital.
    Physical capitals include factories, machineries, shops, malls, offices and motor vehicles.
    d) Institutional Factor.
    According to the Economist Survey of 20th century: the recipe to growth is the rule of law (especially property), capitalism (facilitate resource allocation), and a fairly open economy with low tariffs. (Sept 11, 2000).

    ii) Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty.

    • Nnadebe Jane Amarachi (2018/241863) says:

      NNADEBE JANE AMARACHI
      2018/241863
      amarachinnadebe@gmail.com

      NO. 1

      It is difficult to talk about the economic growth of developing countries without mentioning their interactions with the advanced countries. Developed countries may have, at some point passed through the challenges of the development countries in the outset of their industrialization. The presently developed countries were never underdeveloped, although they may have been underdeveloped. With reference to the modernization theory (1950s and 1960s), a transition from a “pre-modern” to “modern” society, they are of the view that development countries were underdeveloped because their traditional values held them back.

      In other words, In order to develop, less developed countries basically needed to adopt a similar path to development to the West. This is very true because the economic transition of the advanced countries was given. It is involves processes and stages, critical plans and great insight which they have passed through. When the western European began to expand its production and trade on a world-scale, it awakened the less-developed areas of the world to modern economic development. Let us look at the historical stages in the intermingling of western European and Asian countries;
      The first stage is the period when native Asian industry developed as a result of the exchange of native Asian products for Western European industrial products.
      The second stage is the period when the native handicraft industry crumbled because manufactured consumer goods flowed into the Asian area after the Industrial Revolution in Western Europe.

      The third stage is the period when Western European capital and techniques infiltrated the Asian area for the large-scale production of primary goods, such as raw materials and provisions necessary for the Western European economy, as well as for the construction of railroads and highways. During this period the exchange of Western European consumer goods for native primary products came to be established.

      The fourth stage is the period when Western European capital came into the developing countries to develop modern industries, including the industries processing raw materials produced in those areas.

      The fifth stage is the period when native capital began to run the industries processing native raw materials. In this period a conflicting relationship was generated between consumer goods imported from the advanced countries and those of the native processing industries. However, in this period, capital goods came to be imported from the advanced countries for the consumer-goods indus.tries in the developing countries and, consequence, there was a conspicuous change from consumer goods to capital goods in the import structure.

      The sixth stage is the period when manufactured goods in general began to be produced by native industries, whether the raw materials were domestically available or not. The capital goods required by these industries were imported at the expense of the induction of foreign capital and of the export of primary products,
      The seventh stage is the period when the industrialization of the developing countries became so advanced as to make possible the export of manufactured consumer goods, and when the domestic production of some capital goods gradually came to the fore. (KANAME AKAMATSU “A HISTORICAL PATTERN OF ECONOMIC GROWTH IN DEVELOPlNG COUNTRIES”)
      Note, that these stages can not be used for all Asian countries. Country like Japanese has attained a higher stage of advanced country compared to other countries. Every advanced country have passed through stages in their struggle for economic advancement and which are similar but in unique ways to the that of the developing countries.

      Things to learn by the developing countries from the historical records of Developed countries
      What can developing countries learn from developed countries? A lot. Development countries in order to work their way up the ladder of economic development, standard of living, sustainability and equality that differentiates them from so-called developed countries, have to learn from and adopt some of the historical escapades of developed countries that will be advantageous and transformative. They are.
      Developed countries should make improving the business environment to attract private capital—mobilizing private finance for development a priority while working on strengthening it taxation and raising more revenues to finance public goods.

      They should focus on building fiscal and market institutions before rising spending needs—and not after they materialize.
      Government spending by developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
      Today’s developing country should work on diversifying their economic. For example, in Africa, Nigeria for instance, have a large arable land for agriculture which they neglect .

      NO. 2

      Economic institutions is thought of as an organization, whether public or private, that engages in the collection and research of economic data or that provides a service or product deemed economically central to a nation’s economy. Economic institutions play a central role in the development, functioning, and sustainability of an economy. Collaboration between private and public sectors is very important when it comes to boosting productivity. In absence of strong institutions, it can be dysfunctional. Economic institutions are vital to the long term economic development of any state. For an institution to affect an economy, it has to be strong and consistent.
      Economic Institutions may cause both an increase or a decrease in productivity. To get hold of a stable economic performance, countries need institutions which will encourage organizations in productive activities. In developing countries due to the low quality of institutions, the opportunities in front of the political and economic entrepreneurs are complicated. The institutions in those countries are mainly of a nature developing redistribution activities instead of production activities, creating monopolies instead of competitive conditions, restricting opportunities instead of developing them. These institutions rarely lead to investments that will increase productivity.The effect of institutions on economic performance take shape according to the qualifications they have (Edison, 2003). For this reason, in developing countries, bad institutions that do not function well, affect adversely the economic growth and performance of those countries. In developing countries, the quality of bureaucratic services is low due to the weaknesses in the structure of society. The immaturity of the official institutions performing economic operations increases the cost of doing business. Governments are unstable and populist approaches are intense.

      HOW ECONOMIC INSTITUTIONS AFFECT DEVELOPMENT

      1. Investment: when property rights are secure, owners of capital are more likely to invest, all other things being equal. If it is easy to trade, obtain credit, retain a reasonable share of the profits (that is, without excessive taxation) and to insure against risks, investment is again encouraged.

      2. Technical innovation: again, secure intellectual property rights are likely to promote private investment in research and development of innovations.

      3. Economic organisation: is likely to be more effective and efficient, delivering the benefits of specialisation and economies of scale where they apply, when institutions facilitate transactions and co-operation between individuals, whether in formal companies or less formal co-operatives.

      NO. 3

      The gap between the rich and the poor is so known as Economic inequality. It is an unusual distribution of wealth and opportunities among different groups in the society which can be great. The reach have continued to gain more wealth while the poor remains poor. This happens for a number of reasons. Factors that impact economic inequalities include:
      1) Racism
      2) Differences in wages and income
      3) Gender
      4) Change in technology
      5) Government policies
      6) Tax reform
      7) Culture
      8) Innate capability
      9) Labour market
      10) Globalization
      11) Education
      12) Lack of government support
      13) Lack of reserves
      14)Conflict

      NO. 4

      SOURCES OF NATIONAL AND INTERNATIONAL ECONOMIC GROWTH

      1. NATURAL RESOURCES: Important sources here are; land, minerals, fuels, climate; their quantity and quality.
      2. HUMAN RESOURCES: The supply of labour, the quality of labour and skills of labor force.
      Increases in quantities of physical and human capital.
      3. TECHNOLOGICAL FACTORS: The development and use of new technologies that are appropriate to the conditions of the economically less developed countries
      4. INSTITUTIONAL CHANGES: Which may include the banking system, the legal system and important factors like a good health care system.

      FACTORS AFFECTING UNEVENNESS IN DEVELOPMENT AMONG COUNTRIES

      There are many factors accounting for the successes and failures in the extreme unevenness of development outcomes. They are;
      1. PHYSICAL FACTORS:
      Natural hazards – some places are vulnerable to natural disasters, eg Haiti is located in an area prone to earthquakes and hurricanes.
      Natural resources – some raw materials are valuable and can help a country develop if they have the resources to collect and process them, eg oil, diamonds, forests and gold.
      Location – being near trade routes and having access to the sea, eg ports have been important for trade. Landlocked countries are at a disadvantage.
      Climate – many of the poorest countries are in the tropics where it is hot, the land is less fertile, water is scarce, and diseases flourish.

      2. HISTORICAL/POLITICAL FACTORS:
      Corruption and poor management: some countries need strong and reliable leaders
      Trade: Rich countries can raise tariff barriers to stop cheap imports undercutting their own goods.
      War: wars use up resources and make it difficult to produce goods and trade.

      3. SOCIAL FACTORS
      Population
      Discrimination.

  34. Nnamani Dorathy nchido 2018/245743 says:

    Q1.WHAT CAN BE LEARNED FROM THE HISTORICAL RECORD OF ECONOMICS PROGRESS IN THE NOW DEVELOPED WORLD.
    Asian tigers, United States and United kingdom witness numerous development in the last couple of years, they are among the developed nations because of vast improvement in there economy.
    The Four Asian Tigers (also known as the Four Asian Dragons or Four Little Dragons in Chinese, Japanese and Korean) are the economies of South Korea, Taiwan, Singapore and Hong Kong. Between the early 1960s and 1990s, they underwent rapid industrialization and maintained exceptionally high growth rates of more than 7 percent a year.
    The United Kingdom has a fiercely independent, developed, and international trading economy that was at the forefront of the 19th-century Industrial Revolution. The country emerged from World War II as a military victor but with a debilitated manufacturing sector. Postwar recovery was relatively slow, and it took nearly 40 years, with additional stimulation after 1973 from membership in the European Economic Community (ultimately succeeded by the European Union [EU]), for the British economy to improve its competitiveness significantly.
    History teaches us that prosperous, advanced national economies like the U.S. share a common institutional framework conducive to creativity, production, and exchange. That institutional framework of individual freedom, rule of law, clearly stated rights to private property, and open competitive markets shapes incentives to encourage material advance.
    For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    If the policies and institutions that the rich countries are recommending to the poor countries are not the ones that they themselves used when they were developing, what is going on? We can only conclude that, whether intentionally or not, the rich countries are effectively kicking away the ladder that allowed them to climb to where they are now. It is no coincidence that economic development has become more difficult during the last two decades when the developed countries started turning up the pressure on the developing countries to adopt the so-called ‘good’ policies and institutions. What can be done to change this? First, the facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of ‘getting history right’, but also one of allowing the developing countries to make more informed choices. This is not to say that every developing country should adopt an interventionist development strategy. Some of them may indeed benefit from following the Swiss or Hong Kong models. However, this strategic choice should be made in the full knowledge that historically the majority of the successful countries did the opposite in the past when they faced the same international competitive challenge from more advanced countries, which the developing countries face now.
    Second, the conditions attached to bilateral and multilateral financial assistance offered to developing countries should be radically changed. It should be accepted that the orthodox recipe is not working, and also that there can be no single ‘best practice’ policies that everyone should use. More specifically, in terms of policies, the ‘bad policies’ that most of today’s developed countries used with so much effectiveness when they were developing countries themselves should be at least allowed, if not actively encouraged, by the developed countries and the international development policy establishment that they control. While it is true that activist trade and industrial policies can sometimes degenerate into a web of red tape and corruption, this should not mean that these policies should never be used under any circumstances.
    Third, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. They should also be allowed to have less stringent patent laws and other intellectual property rights laws.
    Fourth, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries. There need to be more serious attempts, both at the academic and the practical levels, to explore exactly which institutions are necessary, or at least beneficial, and for what types of countries, given their stages of development and their economic, political, social, and even cultural conditions. Special care has to be taken in order not to demand excessively rapid upgrading of institutions by the developing countries, especially given that they already have quite sophisticated institutions when compared to today’s developed countries at comparable stages of development, and given that establishing and running new institutions is costly.
    By having the freedom to choose policies and institutions that are more suitable to their conditions, the developing countries will be able to develop faster. This will also benefit the developed countries in the long run, as it will increase their trade and investment opportunities. That the developed countries, and the international institutions which they influence, cannot see this is the tragedy of our time.
    Many developed countries did not liberalize their agricultural trade during the early stages of their industrialization but protected their farmers, and newcomers like Korea and Taiwan have followed their example. Neoclassical economists assert that agricultural protection harmed poor consumers and retarded growth (E.G. Diao et al. 2002b; Tracy 1989), but I will argue that this is not always clear. Most Asian developing countries with successful green revolutions stabilized or supported their agricultural prices at the time these revolutions occurred (Dorward et al. 2002). These cases include countries with rapid growth like Indonesia and Malaysia (Dawe 2001; Jenkins and Lai 1991; Timmer 2002). In Vietnam and Chile, where rapid growth was coupled with the liberalization of agricultural trade, this involved the removal of negative protection rather than reduction in positive protection (Benjamin and Brandt 2002; Valdés et al. 1991)2. Most least developed countries that are caught in stagnation have not protected their agriculture. Development economists blame their situation on ‘urban bias’ leading to over-taxation of farmers (Bates 1981; Ng and Yeats 1998; World Bank 1981). Yet a country like Kenya, which was praised for being relatively free from these bogeys (Bates 1989), also slipped into the morass, raising doubts about whether domestic factors offer a full explanation.
    INITIAL CONDITIONS SIMILAR OR DIFFERENT
    Difference of developed and underdeveloped
    Developed Nations
    The first economic category is developed nations, which can generally be categorized as countries that are more industrialized and have higher per capita income levels. To be considered a developed nation, a country generally has a per capita income around or above $12,000. Also, most developed countries have an average per capita income of approximately $38,000.
    As of 2010, the list of developed nations included the United States, Canada, Japan, Republic of Korea, Australia, New Zealand, Scandinavia, Singapore, Taiwan, Israel, countries of Western Europe, and some Arab states. In 2012, the combined populations of these countries accounted for around 1.3 billion people. The populations of developed countries are generally more stable, and it is estimated that they will grow at a steady rate of around 7% over the next 40 years.
    In addition to having high per capita income and stable population growth rates, developed nations are also characterized by their use of resources. In developed countries, people consume large amounts of natural resources per person and are estimated to consume almost 88% of the world’s resources.
    Developing Nations
    The second economic category is developing nations, which is a broad term that includes countries that are less industrialized and have lower per capita income levels. Developing nations can be divided further into moderately developed or less developed countries.
    Moderately developed countries have an approximate per capita income of between $1,000 and $12,000. The average per capita income for moderately developed countries is around $4,000. As of 2012, the list of moderately developed nations is very long and accounts for around 4.9 billion people. Some of the most recognizable countries that are considered moderately developed include Mexico, China, Indonesia, Jordan, Thailand, Fiji, and Ecuador. In addition to these specific countries, many others from Central America, South America, northern and southern Africa, southeastern Asia, Eastern Europe, the former U.S.S.R., and many Arab states, are all considered moderately developed countries.
    Less developed countries are the second type of developing nations. They are characterized by having the lowest income, with a general per capita income of approximately less than $1,000. In many of these countries, the average per capita income is even lower, at around $500. The countries listed as less developed are found in eastern, western, and central Africa, India, and other countries in southern Asia. In 2012, there were around 0.8 billion people who lived in these countries and survived on very little income.
    SIMILARITIES
    Developed nations are generally categorized as countries that are more industrialized and have higher per capita income levels. Developing nations are generally categorized as countries that are less industrialized and have lower per capita income levels.
    Q2, WHAT ARE ECONOMICS INSTITUTION
    What is Economics
    Economics is a social science which studies human behavior as a relationship between ends and scare means which have alternative use
    What is institution
    institution is an established custom or practice, or a group of people that was formed for a specific reason or a building that houses the group of people.
    What is Economics institution
    Economics institution are institution responsible for the organizing the production, exchange distribution and consumption of goods and services, economics institution is also one of the basic institutions for the sake of survival each society has an economic system ranging from simple to complex.
    HOW DO THEY SHAPE PROBLEM OF UNDERDEVELOPMENT AND PROSPECT FOR SUCCESSFUL DEVELOPMENT
    In a landmark study of new institutional economics, Rodrik, Subramanian and Trebbi (2002) assess the relative importance of institutions, geography and integration (trade) in determining the differences in incomes between the world’s most developed countries and the poorest ones. They find that institutional determinants “trump” all others. It is not a new intuition that for the prospering of economic activity institutions matter. Adam Smith had already noted this is surprising detail, referring to the importance of a justice system, private property rights, and the rule of law (The Wealth of Nations). Aron (2000) surveys the studies which correlate indices of development to institutional ones: 7 find a positive correlation with property rights and enforcement, 10 with civil liberties, 10 others with political rights and democracy, 4 with institutions for cooperation (e.g. clubs and associations), and 15 find a negative correlation of development with political instability. The paragraphs below explain why institutions appear so important to economic development.

    Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs (Coase, 1992, p 197; Dahlman, 1979, p. 149). They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing. Where transaction costs are small, the private enforcement of contracts may still be preferred. But as economic relations develop and become increasingly impersonal, the role of a third party to enforce compliance to rules is increasingly necessary (Shirley, 2003, p. 2).

    Such institutions increase the security that the risk of incurring in an economic transaction is matched by the full appropriation of its eventual benefits. This includes the presence of individual private property rights. If property is protected individuals are more willing to invest and to incur sunk costs. Recounting the land-ownership system in Ghana, Pande and Udry (2005) are able to show that where individual perception of security of land tenure is low, investment in the land is significantly reduced, and output consequently drops. In fact, in the few cases in which land is obtained through commercial transactions (as opposed to the traditional informal system of land redistribution), there ceases to be any difference in levels of investment because security of tenure is assured. This increases output and thus is conducive to economic development.
    The protection of property rights requires an expanded role for state authority. Individuals and groups sacrifice a degree of freedom in order to ensure state protection; they accept levies and taxes to cover policing expenses, and state monopoly over the use of force for common security (Bates, 2001, p. 65-66). However, there is a risk that states which have the power to enforce property rights may use that power to expropriate property too. Instead of reducing risk of economic transactions, this increases it. Thus property rights are by no means sufficient to spur economic growth, and must be balanced by institutions which limit the extractive capacity of state power. These typically involve independent parliaments and judiciaries. Democratic institutions of political representation strongly contribute to this process (Rodrik, 2000).
    Thus institutions determine the extent to which those in power are able to expropriate the economy’s resources to their private advantage. Unequal institutions strongly limit development by reducing the capacity of individuals to access resources, expand production and increase their incomes. A comparative analysis of development trajectories of countries indicates that institutions which benefit elites and allow their appropriation of resources and products have perpetuated underdevelopment.
    Q3. HOW CAN THE EXTREMES BETWEEN RICH AND POOR BE SO VERY GREAT
    Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer.
    Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education.
    These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    1. Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.
    2. Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    3. Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    4. Denied a longer life. In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    5. Inequality is sexist. With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.
    A fairer world is possible
    The growing gap between rich and poor is undermining the fight against poverty, damaging our economies and tearing our societies apart.
    Yet inequality is not inevitable – it is a political choice.
    Governments around the world must act now to build a new, human economy that values what truly matters to society, rather than fueling an endless pursuit of profit. An economy that values the care work of women and girls instead of billionaires’ wealth. An economy that works for everyone, not just a fortunate few.
    Q4. WHAT ARE THE SOURCES OF NATIONAL AND INTERNATIONAL ECONOMICS GROWTH? WHY DO SOME COUNTRIES MAKE RAPID PROGRESS TOWARDS DEVELOPMENT, WHILE MANY OTHERS REMAIN POOR
    Sources of national Economics growth
    1. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force.
    Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth. A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.
    Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high-density service industries.
    Many countries that have virtually no natural resources, such as Japan, have thrived by concentrating on sectors that depend more on labour and capital than on indigenous resources. Indeed, tiny Hong Kong, with but a tiny fraction of the land area of resource-rich Russia, actually has a larger volume of international trade than does that giant country.
    3. Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation.
    In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    Accumulating capital, as we have seen, requires a sacrifice of current consumption over many years. Countries that grow rapidly tend to invest heavily in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may go into net capital formation. By contrast, many economists believe that the low national savings rate in the United States—only 4 percent of output in 1996— poses a major economic problem for the country.
    When we think of capital, we must not concentrate only on computers and factories. Many investments are undertaken only by governments and lay the framework for a thriving private sector. These investments are called social overhead capital and consist of the large-scale projects that precede trade and commerce. Roads, irrigation and water projects, and public-health measures are important examples.
    All these involve large investments that tend to be “indivisible,” or lumpy, and sometimes have increasing returns to scale. These projects generally involve external economies, or spillovers that private firms cannot capture, so the government must step in to ensure that these social overhead or infrastructure investments are effectively undertaken.
    4. Technological Change and Innovation:
    In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.
    Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.
    The most dramatic technological developments of the modern era are occurring in electronics and computers, where today’s tiny notebook computers can outperform the fastest computer of the 1960s. These inventions provide the most spectacular examples of technological change, but technological change is in fact a continuous process of small and large improvements, as witnessed by the fact that the United States issues over 100,000 new patents annually and that there are millions of other small refinements that are part of the routine progress of an economy. For the most part, technology advances in a quiet, unnoticed fashion as small improvements increase the quality of products or the quantity of output.
    Occasionally, however, changes in technology create headlines and produce unforgettable visual images. During the war in the Persian Gulf in 1991, the world was stunned by the tremendous advantage that high-technology weapons—stealth aircraft, “smart” bombs, antimissile missiles—gave to the United States and its allies against an opponent armed with a technology that was but a few years behind. Civilian technological advances—computers, telecommunications, and other high-technology sectors—are less dramatic but contribute greatly to the increase in living standards of market economies.
    Because of its importance in raising living standards, economists have long pondered how to encourage technological progress. Increasingly, it is becoming clear that technological change is not a mechanical procedure of simply finding better products and processes.
    Instead, rapid innovation requires the fostering of an entrepreneurial spirit. Consider today’s U.S. computer industry, where even enthusiasts can hardly keep up with the stream of new hardware configurations and software packages.
    Why did the entrepreneurial spirit thrive here and not in Russia, home to many of the great scientists, engineers, and mathematicians? One key reason is the combination of an open spirit of inquiry and the lure of free-market profits in Silicon Valley in comparison to the secrecy and deadening atmosphere of central planning in Moscow.
    Economic growth inevitably rides on the four wheels of labour, natural resources, capital, and technology. But the wheels may differ greatly among countries, and some countries combine them more effectively than others.
    Sources of international economics growth
    1.Natural Resources. Commodities trade actively in world markets, move among countries with very low transportation costs, historically speaking, and are available almost everywhere. Being a natural resources-rich country, as the U.S. is, matters less than before. For example, making Land more productive by the scientific agriculture of the 19th century, as symbolized by the institution of land grant colleges, and by the continuing advances in agricultural science since then, is available everywhere in the world.
    2. Labor. The great historical revolution of public education has spread around the world, while the struggles of large parts of U.S. public education are well known. The ability to organize and manage large, capital-intensive enterprises to make labor productive has also spread around the world. Large pools of educated, technically proficient labor are increasingly available, notably in China and India. Napoleon thought China a sleeping giant and recommended not waking it up. Now we have two giants awake, as well as other countries, with increasingly educated labor. If America wants to provide higher pay than they do for work with the same level of education, this must be based on a different fundamental advantage.
    3. Capital. Capital is essential to all risk-bearing, economic growth and productivity. Savings available for investment as capital now flow quickly around the world, seeking and finding the best opportunities wherever they may be. While capital is raised and employed in huge amounts in the U.S., we are not the leaders in savings.
    4. Knowledge. The incredible economic revolution of the last 250 years, or modernization, which empowered first Britain, then Western Europe and America with vast leadership advantages, has as its most fundamental source science based on mathematics. Scientific Knowledge, turned to technology and harnessed to production by entrepreneurial energy, then matched with learning how to manage large organizations, created the modern world. Mathematical science began as a monopoly of Europe and America, but is now the most cosmopolitan of human achievements. America has world-leading research capabilities, including top research universities, but Knowledge is now available everywhere and incorporated into international scientific endeavor.
    5. Social Infrastructure. The political stability, clear property rights and safety of America have long served to attract investment as a safe haven and supported the role of the U.S. dollar as the dominant reserve currency. By designing a stable political order which continued to work for an extremely large republic, the A v York replaced London as the center of world capital markets, and when Europe again destroyed itself in the Second World War. This key advantage continues and helps explain how the U.S. can finance its continuous trade and budget deficits. It may be an “exorbitant privilege” as viewed from France, but it is one earned by superior Social Infrastructure.
    Why do some countries make rapid progress towards development while many other remain poors.
    Institutionalized corruption, low quality education and brain drain are the primary factors. In countries with institutionalized corruption and lack of rule of law, this system is purposely maintained by government officials, because they’re becoming very rich from it. They siphon off public funds from corruption, and also involve themselves in the market economy and then restrict competition for others through all kinds of tricks or threats or force if necessary. They maintain lack of rule of law, because having rule of law would affect their profits. These things make them very rich since they’re essentially putting their hands on a large share of the economy, while the entire population is paying the cost in terms of lawlessness, higher prices for all but basic things, and not being able to compete because the markets are owned by the gov’t connected big shots and they don’t like competition. The system works quite well – for them – and that’s why countries are stuck in this basically perpetually. They don’t want to change it.
    The economic expansion of the last two centuries has been based on an explosion of knowledge about what can be made, and how. An apt metaphor is a game of Scrabble: Goods and services are made by stringing together productive capabilities – inputs, technologies, and tasks – just as words are made by putting letters together. Countries that have a greater variety of capabilities can make more diverse and complex goods, just as a Scrabble player who has more letters can generate more and longer words.
    If a country lacks a letter, it cannot make the words that use it. Moreover, the more letters a country has, the greater the number of uses it could find for any additional letter it acquired.
    This leads to a “quiescence trap,” which lies at the heart of the Great Divergence. Countries with few “letters” lack incentives to accumulate more letters, because they cannot do much with any additional one: you would not want a TV remote control if you didn’t have a TV, and you would not want a TV broadcasting company if your potential customers lacked electricity.
    This trap becomes deeper the longer the alphabet and the longer the words. The last two centuries have seen an explosion in technologies – letters – and in the complexity of goods and services that can be made with them. So the techies get techier, and the laggards fall further behind.
    Why, then, are some poorer countries now converging? Is the technological alphabet getting shorter? Are products getting simpler?
    Obviously not. What is happening is that globalization has split up value chains, allowing trade to move from words to syllables. Now, countries can get into business with fewer letters and add letters more parsimoniously.
    It used to be that if you wanted to export a shirt, you had to be able to design it to the taste of people you didn’t really know, procure the appropriate materials, manufacture it, distribute it through an effective logistical network, brand it, market it, and sell it. Unless you performed all of these functions well, you would go out of business. Globalization allows these different functions to be carried out in different places, thereby allowing countries to participate earlier, when they still have few locally available capabilities, which can then be expanded over time.
    A recent example is Albania. Known as the North Korea of Europe until the early 1990s, when Albania abandoned its quixotic quest for autarky, it started cutting and sowing garments and shoes for Italian manufacturers, gradually evolving its own fully integrated companies. Other countries that started in garments – for example, South Korea, Mexico, and China – ended up reusing the accumulated letters (industrial and logistical capabilities) while adding others to move into the production of electronics, cars, and medical equipment.
    REFERENCES
    P. Economics and World History – Myths and Paradoxes, Brighton, Wheatsheaf, (1993)
    Brisco, N. The Economic Policy of Robert Walpole, New York, The Columbia University Press, (1907)
    Cochran, T. & Miller, W. The Age of Enterprise: A Social History of Industrial America, New York, The Macmillan Company.1942.
    Kindleberger, C. A Financial History of Western Europe, Oxford, Oxford University Press, (1984)
    List, F. The National System of Political Economy, translated from the original German edition published in 1841 by Sampson Lloyd, London: Longmans, Green, and Company, (1885)
    Nye, J. ‘The Myth of Free-Trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century’, Journal of Economic History, vol. 51, no. 1, (1991)
    Penrose, E. The Economics of the International Patent System, Baltimore, The Johns Hopkins Press, (1951)
    Polanyi, K. The Great Transformation, Boston, Beacon Press, 1957 (1944)

  35. Eze Nnenna Anthoniatta says:

    AME: Eze Nnenna Anthoniatta
    REG NO:2018/248095
    DEPARTMENT: Economics
    COURSE: Eco361 Development Economics

    1•••What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries face on the eve of their industrialization?

    Answer=
    So far, a lot can and has been learned through diverse ways which are made to be summarized as follows;
    • In the past decade or whatnot, the developing countries have been under great pressure from the developed countries as well as institutions that they control – like the International Monetary Fund, the World Trade Organisation estetra – to adopt ‘good policies’, especially ‘good institutions, such as strong patent law, to foster their economic development. So today’s developed countries did not develop based on the policies and the institutions that they now recommend to or even force upon, the developing countries, this being backed up historically.
    Virtually, today’s developed countries used tariff protection to develop their industries, and in the earlier stages of their development, they do not as much have ‘basic’ institutions like democracy, central banks, or patent law. And so, Given that the adoption of ‘good policies and has failed to generate the promised increase of economic development in the developing world, which has lead to some cases of economic and social collapses, a radical re-thinking of the development orthodoxy is required.

    •Furthermore, institutions should be encouraged to improve, but this should not be equated with imposing a fixed set of today’s — Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process

    • Finally, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    That being said, the initial conditions are said to be different for contemporary developing countries as opposed to what the developed countries face on their industrialization because their industrialization more efficient division of labor, and the use of technological innovation to solve problems which are different from the dependency on conditions outside of human control or observations.

    2•••What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    Answer=
    I, Economic institution refers to two things. Firstly, it is an organization(public or private) that engages in the collection and assessment of economic data as well as provides a service or product deemed economically central to a nation’s economy such as national economic bureaus, or university departments dedicated to economic research. Secondly, it is considered constitutional and defines how an economy is allowed to develop and function to achieve sustainability and growth.

    ii, Accessing how economic institutions shape underdeveloped problems and successful development isn’t an easy task when seen in a complex for but to be simplified into three forms are through WTF, IMF, and UNCTAD;
    WTF is said to Set the framework for trade policies, Reviewing the trade policies of different countries, Providing technical cooperation to less developed and developing countries, Facilitating the implementation, administration, and operation of agreements, Setting a negotiation forum for multilateral trade agreements, Cooperating with the international institutions, such as IMF and World Bank for making global economic policies.
    IMF works to secure financial stability, develop global monetary cooperation, facilitate international trade, and reduce poverty and maintain sustainable economic growth around the world. And finally, UNCTAD provides a forum or technical assistance where the developing countries can discuss the problems related to economic development, Promoting international trade for speeding up the economic development, and Formulating principles and policies related to international trade.

    3••• How can the extremes between rich and poor be so very great?

    Answer=
    Rich and poor extremes are out of control. Millions of people are living in extreme poverty while those at the top get huge rewards. There are more billionaires than can be counted, whose fortunes keep increasing. Meanwhile, the world’s poorest got even poorer. The government is fueling this inequality. They are massively under-taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education. All these policies affect the poor most. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    Summing up these extremes is to say that;

    • wealth is undertaxed, that is to say, that taxes are falling disproportionately on working people. When governments under-tax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.

    •public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries, a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.

    • The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.

    4••• What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Answer=
    I, There are technically four sources of Economic growth such as ;
    Human resources,
    Natural resources,
    Capital formation, and
    Technological Change and Innovation:

    ii, Economically criticizing the theory as to why some countries make rapid progress while others do not would be outlined using GDP. GDP is the total market value, expressed in Naira or dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living.

    Because GDP per capita is GDP divided by the population, it is a measure of income as if it were divided equally among the population. In reality, there can be large differences in the incomes of people within a country. So, even in a country with a relatively low GDP, some people will be better off than others. And, there are poor people in very wealthy countries. In 2013 (the most recent year comprehensive data on global poverty are available), 767 million people, or 10.7 percent of the world population, were estimated to be living below the international poverty line of $1.90 per person per day. Whether for people or nations, the key to escaping poverty lies in rising levels of income. For nations specifically, which measure wealth in terms of GDP, escaping poverty requires increasing the amount of output (per person) that their economy produces. In short, economic growth enables countries to escape poverty

    • Name:Akachukwu Christian Nonso 
      Dept:Economics
      Reg No:2018/249531
      christiannonso111@gmail.com
      Development economics (Eco 341)
          
         (1)What can be learnt from historical record of economic progress in the new
      developed world? are the initial condition
      similar or different for contemporary developing countries from what the developed countries faced on the eve of 
      their industrialization. 
           (Ans) 
             There are various historical lesson that can be learnt from the now advance
      countries, the initial step they took differ 
      from what is being used by developing 
      countries 
            firstly, low income countries spend more than twice on average than today
      advanced countries spent centuries ago.to be sure, the difference reflect the 
      lack of the tax instrument&system will have today.from 1850 until the early 1900s,custom duties &excise provided the bulk of government revenues,while the personal income tax and VAT were not introduced in countries until later.
           Moreover,society expectations from the government were much different then.in spending on unemployment,
      health,pension and housing amounted to
      only 1.1% of GDP in the Scandinavian countries on average and to 0.7% of GDP
      in the u.s,even with low level of government spending,economic development was brisk in most of the 
      advanced countries at the turn of 20th
      century, with infrastructure improvement 
      financed by private capital & the strong 
      expansion of primary&secondary education and here lies the lessons for today developing economies,while working on strengthening domestic taxation and raising more revenue to finance public good, the priority needs to be on improving the business environment to attract private capital, mobilizing private finance for development .
          Secondly, government spending in the advanced countries increased substantially since 1960 as they re-evaluate the role of government amid 
      rapid industrialization and globalization 
      and new taxes became common place. the shift from agrarian to industrial to post industrial economies required different workers skill.economic disruption reshaped government in the 
      past, as is happening now with the changing world of work, leading to a large expansion of social insurance &
      protection. 
          
           (2)what are the economic institution, and how do they shape problem of under development and prospects for successful development? 
          (Ans) 
           Economic institution involved in ensuring development includes the following :
        (1)IMF(international monetary fund)
        
        They promote monetary cooperation &provides policy advice and capacity development support to preserve global
      Macroeconomics &financial stability and
      help countries to build and maintain strong economies, they help countries design policy program to solve balance of payment problem when sufficient financing cannot be obtained to meet net international payment obligations. 

         (2)World bank
         They promoted long term economic development and poverty reduction by providing technical and financial support to help countries reform certain sector or implement special projects such as building school&health centers, providing water &electricity, fighting diseases and
      protecting the environment. world bank 
      assistance is generally long-term and is
      funded both by members country contribution and through bond issuance. 

           (3) African development bank 
         They operate in 55 countries and have 35 countries offices in Africa working on topic such as health,education,Infrastructure,and natural resources governance, they provide loan and equity investment to it’s
      regional members countries based on various eligibility criteria,  they provides
      technical assistance to government to 
      facilitates the development of projects 
      and programs, the AFDP promotes pubic and private capital investment for development. 
           
      (3) how can the extreme between the rich and poor be so great. 
         (Ans)
            The Causes of Economic Inequality 
      are:
      (i) Wages are determined by labor market
          Wages are a function of the market price of skills required for a job [1]. In a free market, the “market price of a skill” is determined by market demand and market supply. The market price of a skill, and hence the wage for the job that requires the skill, is low if a large number of workers (high supply) are willing and able to offer that skill but only a few employers need it (low demand). On the contrary, when there is low supply but high demand for a skill, the wage for a job requiring the skill goes up.

      (ii) Education affects wages

      Individuals with different levels of education often earn different wages [2]. This is probably related to reason one: the level of education is often proportional to the level of skill. With a higher level of education, a person often has more advanced skills that few workers are able to offer, justifying a higher wage and these affect the difference the income between the rich and poor. 

      (4)what are the sources of national /international economic growth? Why are some countries more developed than others.
          (Ans)
            There are numerous reasons which contributes to economic growth which can be classified into economic&non-economic factors which is discussed below :
                          (1)Natural Resources
            In economics, “Land” is generally taken to
      include the land area and the quality of the soil, forest wealth, good river
      system, minerals and oil resources, good climate, etc. For economic
      growth to take place, the existence of natural resources in abundance is
      the old resources. 
           Also a country without any known resources can even
      import raw materials and mineral resources from other countries and by
      effectively using these resources, the country can eliminate the
      deficiencies of their lack of natural resources. The main point to note
      here is that with or without natural resources a country can still grow.
        natural resources can only give rise to growth when they are properly
      exploited through improved techniques so that waste is minimised as
      much as possible and they could be utilised for a longer time.
                (2)Capital Formation
        One other major factor for development of an economy is Capital formation.
      Capital can be defined as the stock of physical reproducible
      factors of production, and capital formation is the rate of investment in
      both physical and human capital in an economy. Then again, Capital
      accumulation is the net additions or amassing of capital stock and for
      any economy to grow, it needs to increase/amass its capital stock both
      physical and human capital.
        Since capital formation is giving up a portion of wealth now by way of
      investing, so as to reap better rewards in future, the rate at which this is
      done and increased upon will determine the growth of the economy.
        Capital formation starts with savings and a country that has a low
      propensity to save (like the less developed countries) would find it
      difficult to increase its stock of capital.
      equipments, machines and tools and equipments for the ever increasing 
      labour force and it is also capital formation that leads to effective 
      exploitation of natural resources, industrial growth and expansion of 
      markets in an economy. 
           (3)Division of Labour and Scale of production.
         Division of labour is the breaking down of a work process into different 
      number of tasks, with each task performed by a separate person or group 
      of persons. Breaking down work into simple, repetitive tasks brings 
      about specialisation because by doing a particular task over and over 
      again one becomes perfect in it (practice makes perfect). With division 
      of labour and specialisation, there is a reduction in production time, 
      productivity rises and then there is also the advantage of lower 
      production costs and a less expensive final product as a result of 
      economies of large-scale production which further helps in industrial 
      development. However, division of labour depends on the size of the 
      market and the size of the market depends on the level of economic 
      progress (general level of production, means of transportation, size of 
      demand etc). 
        When there is an improvement in modern means of transportation, 
      communication and power, the markets (both domestic and foreign) 
      would be expanded. Expanded markets means an increase in scale of 
      production and this means greater specialisation and division of labour. 
      Therefore for less developed countries             (4)industrialization
         industrialisation leads to economic growth and industrialisation cannot 
      take place without the organisational skills of the entrepreneurs. For the 
      less developed countries to achieve growth they should create the right 
      environment to encourage entrepreneurship and this can be achieved by 
      improving the financial, legal,
      Social and Psychological Factors
      Modern economic growth process has been influenced by social and
      psychological factors. The growth of most developed country was
      brought about by their values, Social attitudes, and types of institutions
      they operate. The LDC’s, on the other hand are so much enveloped and
      guided by traditional customs, outdated ideologies and values, and
      obsolete attitudes that are not conducive for their economic growth.
      Thus, there is need to change or modify these social and psychological
      factors for the rapid economic growth in these countries. Modification
      here would have to take the form of rationality in thoughts and actions
      through a deliberate cultivation of scientific attitude and application of
      modern technology in order to increase productivity, raise living
      standards, and bring about social and economic equalisation.
      Human Factor
      Economic growth depends on the quality of the human resources of the
      economy and not the quantity. The quality in this context means their
      efficiency in handling the other resources at their disposal for growth
      purpose. This quality is acquired through the increase in the skills,
      knowledge and capacities of all people of the country and this process is
      called human capital formation.
      A country with a high rate of skilled, knowledgeable and healthy people
      is bound to achieve growth through their ability to exploit, develop, and
      utilise scar

  36. ODO RUTH SOMTOCHI (2018/242445) says:

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development,
    Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    They conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    Governments can advance development even with low levels of government spending.Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs—and not after they materialize.
    The initial conditions are different for contemporary developing countries from what the developed countries faced on the eve of their industrialization base on theirHigher levels of inequality and absolute poverty, Higher population growth rates, Greater social fractionalization,Larger rural population.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development
    Economic institution, it is thought of as an organization, whether public or private, that engages in the collection and research of economic data or that provides a service or product deemed economically central to a nation’s economy. Examples include national economic bureaus, tax collection agencies or university departments dedicated to economic research. These institutions are also considered foundational structures or organizations in society that are inherent to the economic system or culture, such as the banking systems, investment markets or even a custom, such as providing children with a weekly allowance.
    Economic institution can shape problems of underdevelopment and prospects for successful development through
    Population Growth. …
    Governmental Efforts to Combat Population Growth. …
    Education for Women to Reduce Population. …
    Shortage of Resource Capital. …
    Successful Countries. …
    Economic Growth in Asian and African Countries. …
    Scarce Human Capital. …
    3. How can the extremes between rich and poor be so very great?
    The extremes between the poor and the rich can be great because the poor invest in liabilities and the rich invest in asset. Liabilities takes money away from you while assets grow your net worth. It can be also be through the following:
    1. Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.
    2. Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    3. Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?
    We have four source of national and international economic growth and they are
    Natural resources – land, minerals, fuels, climate; their quantity and quality.
    Human resources – the supply of labour and the quality of labour.
    Physical capital and technological factors – machines, factories, roads; their quantity and quality.
    Why some countries make rapid progress toward development while many others remain poor is due to institutionalized corruption, low quality education and brain drain are the primary factors.

  37. ONYEKA CHIDERA SUNDAY says:

    NAME: ONYEKA CHIDERA SUNDAY
    REG NO.: 2018/245517
    DEPT: CSS- ECONOMICS AND POLITICAL SCIENCE
    COURSE: ECO 361-DEVELOPMENT ECONOMICS
    EMAIL: ONYEKACHIDERA57@GMAIL.COM

    Critically discuss and analyse these questions as a potential Special Adviser to Mr. President of Poverty Alleviation and Economic Development

    QUESTIONS;

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    3. How can the extremes between rich and poor be so very great?

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    ANSWER 1
    Developed countries and selfless nations benefits from such growth because they are after the interest and progress of the country they are in. They also benefits because they try to rub minds together to see how these resources can lead to the growth of their nation. Also I can say that the rich benefit from such because they have what is needed to Harness these sources of Economic growth. The rich here also includes those who have political powers. Using the Natural resources as one of the examples, it is the politicians and rich people who have access to it. The politicians will go outside and Build refineries and when they get the oil they go outside and refine them. And the question now is how then do Nigeria as a country experience economic growth and development.
    Why do some countries make rapid progress towards development while others remain poor?.
    Countries make progress because the make use of the different sources of economic growth while others remain on one. Those countries make effective use of both their Natural resource and engage in effective and fruitful trade and some try to build their social and political structure. Now using my country NIGERIA as a case study, they just base on just their Natural resource (oil) and corruption has so hindered the rapid progress of Nigeria towards development. Even the natural resource (oil) we use as a source has created the bedrock for politicians towards making money and they will never invest that money in our country NIGERIA. They have been so infected with greed that they are after their own self and maybe family members and they even forget their state at large talk more of the country at large. Still on this using ebonyi state as a sub case study. The governor is building flyovers and people are happy and they forget the fact that the construction company working there is his company and he is also borrowing money from countries and accumulating debt for the people of ebonyi state. Now If you check ebonyi state citizens are not living up to a good living standard. The agriculture sector of ebonyi is really depreciating. You can’t use that to compare Anambra state were the citizens are living well and the governor trying to create channels of trade by building an airport that will ease trade for onitsha traders. Now when all the state in Nigeria effectively use these sources at state levels you will see our country NIGERIA making rapid progress towards development
    ANSWER 2
    The term “Economic Institutions” refers to two things:

    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country.
    2. Well-established arrangements and structures that are part of the culture or society.
    Among other things, economic institutions have decisive influence on investments in physical and human capital, technology, and industrial production. It is also well-understood that in addition to having a critical role in economic growth, economic institutions are also important for resource distribution.

    ANSWER 3
    Increase the minimum wage.
    Expand the Earned Income Tax.
    Build assets for working families.
    Invest in education.
    Make the tax code more progressive.
    End residential segregation.

    ANSWER 4
    Sources of economic growth
    a) Natural Factors.
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth.
    b) Human Factor.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries.
    c) Physical Capital.
    Physical capitals include factories, machineries, shops, malls, offices and motor vehicles.
    d) Institutional Factor.
    According to the Economist Survey of 20th century: the recipe to growth is the rule of law (especially property), capitalism (facilitate resource allocation), and a fairly open economy with low tariffs. (Sept 11, 2000).

    ii) Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty.

  38. EZEIGWE CHIKAMSO PROMISE says:

    NAME: EZEIGWE CHIKAMSO PROMISE
    REG NO.: 2018/245971
    DEPT: CSS – ECONOMICS AND POLITICAL SCIENCE
    COURSE: ECO 361 – DEVELOPMENT ECONOMICS
    EMAIL: EZEIGWECHIKAMSO@GMAIL.COM

    Critically discuss and analyse these questions as a potential Special Adviser to Mr. President on Poverty Alleviation and Economic Development.

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    There are a lot of things to learn from the historical record of the economic progress of developed countries. Regions like the U.S.A, Japan, Europe etc. are all classed as developed regions because of the following features:
    High per capita income
    Security
    Availability of excellent health facilities
    Low unemployment rate
    Effective use of technology
    Positive balance of payment etc.
    Now, economic progression in these regions did not only take cognizance of increase in economic output, that is, GDP; but also incorporated improvement in wellbeing, living standard and life chances of the people.
    In these regions, people have the right attitude to life and work. There is also respect for fellow humans, respect for human dignity and respect for the natural environment.

    The initial conditions are similar for all countries before industrialization; what is different is the attitude of the people towards economic progression. For instance, the developed countries factor in the people wellbeing and social welfare in any development or industrialization plan. The same cannot be said for developing countries like Nigeria where personal interest rule over national interest.
    Countries at the onset of industrialization, have to understand the need to structure development to include everyone including the poor and the rich. In this way economic development or industrialization can be attained in the real sense.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    Economic institutions are those institutions set up to facilitate the management of Economic activities in a country, they include central banks, commercial banks, microfinance banks, development finance institutions etc.
    In describing their roles in shaping underdevelopment and prospects for successful development, two of the above listed Economic institutions will be discussed.
    CENTRAL BANKS: A Central bank is the apex bank in a country. It regulates the volume of currency and credit in the country. The goals of the central bank are stabililisation of currency, inflation management and reduction of unemployment in the economy. The central bank can shape the problem of underdevelopment and prospects for successful economic development in the country by using tools of economic stabililisation like monetary policy.
    By enacting monetary policy measure, the central bank can utilise implementing tools like interest rate adjustment, bank reserve ratio and open market operations.
    The central bank can stimulate economic activities in the country by lowering interest rate, this will entice investors to borrow more money for investment. The investors can use this money to set up private corporations which will need to hire workers for its operations; in this way employment will be generated. Also, these corporations will produce goods and render services, thus increasing aggregate demand in the economy and thus pave the way for successful economic development.
    Micro-Finance Institutions: these are economic institutions that lend money to low income groups, who lack access to banking and other related services. They provide financial services to the poor. MFIs can shape the problem of underdevelopment and prospects of successful development by performing functions like encouraging entrepreneurship and self sufficiency through providing access to funds for the poor through loans. They help to reduce poverty because the loans given to the poor can help them start up a business and earn income and thus alleviate poverty. They also encourage gender equality by providing women with financial backing needed to start up their own business and actively contribute to the economy and thus put the economy on a sound development path.

    3. How can the extremes between rich and poor be so very great?

    Extreme inequality is out of control. As millions of people get poorer, we have a higher number of millionaires in the country. Nigeria have the richest man in Africa, but also have the dubious honour of being labelled the poverty capital of the world. The government is fueling this inequality by enacting negative policies that favour the rich and encumber the poor. For instance, the government policy of under taxing private corporations and wealthy individuals and under funding public services like healthcare and education has the effect of hitting the poor people hardest because, the poor make use of the under funded public services, while the rich are able to fly abroad either for proper medical treatment or education of their wards. Also, corruption, insecurity, weak institutions and lack of adequate credit disbursement facilities etc. help in increasing the income disparity between the rich and the poor; thus resulting in an economy where the rich get richer, and the poor, poorer.
    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Sources of national and international economic growth include the following:
    Natural resources
    Human capital
    Physical capital
    Technology
    Trade
    Industrialization
    Strong social and political institutions

  39. Nnamani chidimma Esther says:

    Name: Nnamani chidimma Esther
    Reg no:2018/243795
    Department: Economics
    Assignment on Eco 361

    1) what can be learned from the historical record of economic progress in the now developed world is that, the now developed world got to where they are now through proper planning, proper management of resources. Even with low levels of government spending.Today’s developing countries spend more than twice on average than today’s advanced countries spent during their eve of industrialization, developed countries the private sector helped more in development than the public sector, so it is advisable to to improve the business environment to attract private capital
    Most developed countries now started from subsistence level just like most of developing countries now,they started from subsistence-industrial-post industrial economy

    1b) What developed countries faced then is similar if not same with what developing countries faced. Example; UNITED ARAB EMIRATES (UAE) they were colonized by same Britain that colonized Nigeria, in fact Nigeria got independence (1960) before UAE got theirs in February 1972, they started from Agriculture just like we did, with population of 86,000 inhabitants. They discovered oil(hydrocarbon) which they used to develop their economies, they had same fate with Nigeria yet Nigeria is still developing where as UAE as at 2000 to 2015 , the UAE Real GDP annual growth rate was higher than the western economies like USA UK, Germany and France.what Nigeria haven’t attended since her 61years of political independence.

    2) Economic institutions are those institutions that aid economic growth and development. They are:financial institutions, political institutions etc
    Political institutions is an economic institution help to solve the problems of underdevelopment by creating inclusive market and make this market to be fully bounded by the property right.
    _ through political institutions the property rights of individuals are protected thereby increasing confidence of investors and get decisions on entry and improving the market
    _ They create market regulating institutes which avoids market failures through the regulation processes
    _They create market stabilizing institutes which stabilize the macroeconomic conditions of the country

    3) Why the extreme between the rich and the poor is so very great can be caused by many things like having opportunities to quality education, work, having access to credit facilities etc.the rich earn more money , which they can save and also invest while the poor manage to feed and in this part of the world the rich hardly mingle with the poor.

    4) Sources of Economic growth include
    Human Resources
    Natural resources
    Technology
    Innovation
    Industrialization
    Trade etc
    4b) Why some countries make rapid progress towards development while many others remain poor can be caused by institutionalized corruption low quality education and brain drain are the primary factors.In countries with institutionalized corruption and lack of rule of law, this system is purposely maintained by government officials because they are getting very rich from it, they siphon public funds without being punished because the rule of law is very weak and they are above the law, while the population pay the cost in terms of lawlessness.High prices of basic things and the people can’t compete in the business environment because of some laws set by the government while some people enjoy monopoly.This is why countries are stuck in this basically perpetual poverty,they don’t want to change.

  40. Ukwuma Ifunanya Clara says:

    Ukwuma Ifunanya Clara
    2018/243088
    Economics department
    Eco 361 Assignment

    1.What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    The conditions for the development countries are similar but the attitude of people towards economic development varies from one country to another and so every country should find a favorable conditions for themselves.

    2. What are economic institutions and how do they shape problems of underdevelopment and prospects for successful development .
    Economic institutions are institutions responsible for organizing the production, exchange, distribution and consumption of goods and service.It is one of the basic institutions of an economy.
    Institutions support economic development through 4 broad channels:determining the cost of economic transactions, determining the cost of appropriatability of return to investment, determining the level for oppression and expropriation and determining the degree to which environment is condusive to cooperation and increased social capital.They determine the volume of interactions available, the benefits from economic exchange and the form which they can take.

    3. How can the extreme between the rich and the poor be very great.
    The growing gap between the rich and the poor is undermining the fight against poverty,damaging our economies and tearing our society apart.Inequality is inevitable.Extreme inequality is out of control.Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. The rich are getting richer and the poor are getting poorer.Many government are fueling this inequality crisis. They are massively under taxing cooperations and wealthy individuals, yet underfunding vital public services like healthcare and education. These policies hits the poor hardest. The human cost is devastating with women and girls suffering the most. Our deeply unfair economic system is enabling the super rich to amass huge fortuness but making it hard for billions of poor people to put food on their table or get treatment when they are sick.

    4. What are the sources of national and international economic growth?. Why do some countries make rapid progress towards development while many others remain poor?.
    There are four (4) important sources of national and international economic growth. They are:
    a). Human resources
    b). Natural resources
    c). Capital formation
    d). Technological change and innovations.

    Throughout history, some economies have expanded faster than others. Some difference can be traced to such inherent factors as listed below
    a). Climate and geography
    b). Culture of the people
    c). Government policies and central bank policies

  41. Aja Nnenwogo 28/SD/37152 says:

    Q1 ans: the similarities between now developed world and the contempary developing countries are policy making:both the now developed counties make some policies which encouraged economic growth and development such policies provide economic stability, protection of property right, protection of intellectual property,re-distribution of income
    The difference is that the now developed counties fight corruption,illiteracy insecurities and thing that discourage industrialization unlike the developing countries who says alot about these killers of development and do not face out of the system.
    Ans2:The economic institution examples are International monetary Fund (IMF) and World Banks public and private financial institution etc should give loans at low interest level to encourage the small industries in the developing countries and also the money to education ,health and less privilege in the under develop countries
    Ans3: Economic inequality in Nigeria has reached extreme levels, despite being the largest economy in Africa. The country has an expanding economy with abundant human capital and the economic potential to lift millions out of poverty Economic inequality because the rich are the people that seems to know the way to make wealth with the following reasons; The rich place a higher value on their time ,they have assets and can put it to work not only that, they also have better opportunities for investment even greater influence and better connection and financing options all these reasons make poor not making headway in a country of people who are not educated on how to invest their little income
    ans4: The sources of national and international economic growth are; human resources which includes labor input this is productives , capital formation ,technological change and innovation, infrastructure,policial stability social and cultural, institutional system, healthcare. All these make a counties Extreme inequality and out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer
    Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and educations.
    These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    The develop countries have work on all these facilities and have developed in every aspect unlike the developing countries who invest more on things which not product example government spending more money on beauty context More than more on educations and important issues in countryReferences
    Acemoglu, D. 1998. “Why Do New Technologies Complement Skills? Directed Technical Change and
    Wage Inequality.” Quarterly Journal of Economics 113 (4): 1055–89.
    ———. 2011. “Thoughts on Inequality and the Financial Crisis.” Presentation at the American
    Economic Association Annual Meeting, January 2017

  42. Ezeaku Anderson Esomchukwu says:

    Name: Ezeaku Anderson Esomchukwu
    Reg no: 2018/242413
    Dept: Economics

    1. What can be learned from the historical record of economic progress in the now developed world?
    Almost all of today’s rich countries used tariff protection and subsidies to develop their industries in the earlier stages of their development. it is particularly important to note that Britain and the USA the two countries that are supposed to have reached the summit of the world economy through free market , free trade policy are actually the ones that most aggressively used protection and subsidies.
    Are the initial condition’s similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    For the last two decades or so developing countries have been under great pressure from the developed countries and the international institution that they control to adopt a set of good policies especially free trade and good institutions such as strong patent law in order to foster their economic development. Today’s developed countries did not develop on the basis of the policies they recommend to the developing countries, they used tariff protection and subsidies to develop their industries and in the early stages of development they did not have such basic institution.
    2. What are economic institution and how do they shape problems of underdevelopment and prospects of successful development?
    Economic institutions are institutions responsible for organizing the production, exchange, distribution and consumption of goods and services
    *how do they shape problems of underdevelopment?
    Institutions determine the extent to which those in power are able to expropriate the economy’s resources to their private advantage. Unequal institution strongly limit development by reducing the capacity of individuals to access resources, expand production and increase their incomes, a comparative analysis of development trajectories indicate that institutions which benefit elites have perpetuated underdevelopment.
    how do they shape prospects for successful development?
    Institutions support economic development through four broad channels
    *determining the costs of economic transactions.
    *determining the degree of appropriability of return to investment.
    *determining the level oppression and expropriation
    *determining the degree to which the environment is conducive to co-operation and increased social capital.
    3. How can the extremes between the rich and poor be so very great?
    A major cause of inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market the wages for jobs are set by supply and demand. if there are many workers willing to do a job for a great amount of time, there is high supply of labour for that job, if few people need that
    job done there is low demand for that labour, when there is high supply and low demand for a job, it results in a low job. conversely if there is low supply and high demand it will result in a high wage. The gap in wages produces inequality between different types of workers.
    4. What are the sources of national and international economic growth?
    * labour inputs: labour inputs consist of quantities of workers and of the skills of the workforce, Economist believe that the quality of labour inputs , the skills, knowledge and discipline of the labour force is the single most important element in economic growth.
    * Natural resources: The important resources here are arable land, oil and gas, forest, water and mineral resources. countries who posses ample resource base tend to experience larger output and thus economic growth.
    *capital formation: Accumulating capital as we have seen requires a sacrifice of current consumption over many years, countries that grow rapidly tend to invest heavily in new capital goods
    *Technological change and innovation: technological change denotes changes in the processes of production or introduction of new products or services.
    Why do some countries make rapid progress toward development while many others remain poor?
    Economic growth inevitably rides on the four wheels of labour, natural resources, capital and technology. But the wheels may differ greatly among countries and some countries combine them more effectively than others.

  43. Aja Nnenwogo 28/SD/37152 says:

    ANSWERS
    1.;The similarities between now developed world and the contempary developing countries are policy making:both the now developed counties make some policies which encouraged economic growth and development such policies provide economic stability, protection of property right, protection of intellectual property,re-distribution of income
    The difference is that the now developed counties fight corruption,illiteracy insecurities and thing that discourage industrialization unlike the developing countries who says alot about these killers of development and do not face out of the system.
    2:The economic institution examples are International monetary Fund (IMF) and World Banks public and private financial institution etc should give loans at low interest level to encourage the small industries in the developing countries and also the money to education ,health and less privilege in the under develop countries
    3: Economic inequality in Nigeria has reached extreme levels, despite being the largest economy in Africa. The country has an expanding economy with abundant human capital and the economic potential to lift millions out of poverty Economic inequality because the rich are the people that seems to know the way to make wealth with the following reasons; The rich place a higher value on their time ,they have assets and can put it to work not only that, they also have better opportunities for investment even greater influence and better connection and financing options all these reasons make poor not making headway in a country of people who are not educated on how to invest their little income
    4: The sources of national and international economic growth are; human resources which includes labor input this is productives , capital formation ,technological change and innovation, infrastructure,policial stability social and cultural, institutional system, healthcare. All these make a counties Extreme inequality and out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer
    Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and educations.
    These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    The develop countries have work on all these facilities and have developed in every aspect unlike the developing countries who invest more on things which not product example government spending more money on beauty context More than more on educations and important issues in countryReferences
    Wage Inequality.” Quarterly Journal of Economics 113 (4): 1055–89.
    ———. 2011. “Thoughts on Inequality and the Financial Crisis.” Presentation at the American
    Economic Association Annual Meeting, January 2017

  44. Ezeh Uchechukwu Evelyn says:

    Name: Ezeh Uchechukwu Evelyn
    Reg no: 2018/241821
    Department: Economics (Major)
    Course: Development Economics 1 (Eco 361 )

    Assignment:
    Question no 1; What can be learned from the historical record of economic progress in the now developed world ? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization
    The present of the economic development discourse is, of course, shaped by the trends of the distant and recent past. An interesting and important feature of the current landscape is the shift in the global geography of poverty. Using standard official definitions, forty years ago ninety percent of the world’s poor lived in low-income countries. Today, three quarters of the world’s poor live in middle-income countries
    The current terrain of economic development has clearly been influenced by the great financial crisis of 2008. Most recently, the global crisis has proved disruptive to development gains, although the losses can be said to have been mainly concentrated in the rich countries. But the reactions and the backlash now apparent in rich countries are having and will have consequences for economic development in poor countries. Further, the genesis of the crisis exposed fault lines in the economic model pursued by rich countries, with wholesale deregulation of markets and especially of banking and capital flows.
    a) Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs—and not after they materialize. Government spending in the Advanced 14 increased substantially since 1960 as they reevaluated the role of government amid rapid industrialization and globalization and new taxes became commonplace. The shift from agrarian to industrial to post-industrial economies required different worker skills. Economic disruptions reshaped governments in the past, as is happening now with the changing world of work, leading to a large expansion of social insurance and protection spending.
    b) The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries. Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    c) Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required. Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.

    Question 2: What are economic institutions and how do they shape problems of underdevelopment and prospects for successful development
    Economic institutions can be seen as an organization, whether public or private, that engages in the collection and research of economic data or that provides a service or product deemed economically central to a nation’s economy. Examples include national economic bureaus, tax collection agencies or university departments dedicated to economic research. These institutions are also considered foundational structures or organizations in society that are inherent to the economic system or culture, such as the banking systems, investment markets or even a custom, such as providing children with a weekly allowance. Therefore, an accurate portrayal of economic institutions is constitutional in nature and defines how an economy is allowed to develop and function to achieve sustainability and growth. Typically, there are three main functions of these institutions: determining and safeguarding property rights, enabling and facilitating transactions, and allowing the economic participants to organize and co-operate.
    2b) Economic institutions shape the problems of underdevelopment by enhancing development and financial security through the provision of financial services. An economic institution may provide business inventory financing and indirect consumer loans. It may educate society about how to make sound financial decisions. Other economic institutions, such as insurance companies, provide cover for various risk factors in addition to providing investment opportunities and loans. Economic institutions, such as commodity markets, stock exchanges and option exchanges, help in creating and providing ownership of financial claims. They also help to maintain market liquidity and manage risks associated with price changes. They also provide investment opportunities and fund many projects that are beneficial to the society. Other economic institutions, such as investment banks, play vital roles in the society, including providing fundraising advice, brokerage services, and selling and underwriting securities
    Question 3: How can the extremes between rich and poor be so very great?
    Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer. Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education. These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.

    Question 4: What are the sources of national and international economic growth ? why do some countries make rapid progress towards development while many others remain poor.
    # Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force. Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth.
    # Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry
    # Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. Accumulating capital, requires a sacrifice of current consumption over many years. Countries that grow rapidly tend to invest heavily in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may go into net capital formation.
    # Technological Change and Innovation:
    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.
    4b) Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. … Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth. Also low levels of education, poor water quality or a lack of doctors. Political factors – some countries are at war or the government may be corrupt. Therefore money does not reach the people who need it most and spending on areas such as education and infrastructure may be insufficient

  45. Osike Solomon Ugochukwu says:

    Name: Osike Solomon Ugochukwu
    Reg.No. 2018/242458
    Department. Economics

    Question 1.

    What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Answer.

    The now developed world adopted a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development,
    *The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries. They did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services. Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    Almost all of today’s rich countries used tariff protection and subsidies to develop their industries in the earlier stages of their development. The UK and the USA may be the more extreme examples, but almost all the rest of today’s developed countries used tariffs, subsidies and other means to promote their industries in the earlier stages of their development. Cases like Germany, Japan, and Korea are well known in this respect. But even countries like Sweden, which later came to represent the ‘small open economy’ to many economists, also strategically used tariffs, subsidies, cartels, and state support for R&D to develop key industries, especially textile, steel, and engineering.
    One important conclusion that emerges from historical examination is that it took the developed countries a long time to construct institutions in their earlier days of development. Institutions typically took decades, and sometimes generations, to develop.

    Question 2
    What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development.

    Answer

    Economic institutions are concerned with property rights, honest government, political stability, dependable legal system, and competitive and open markets. Economic institutions are responsible for organizing
    the production, exchange, distribution and consumption
    of goods and services.

    ** Economic institutions shapes problems of underdevelopment by examining problem of institutional weaknesses and development challenges. Also by analyzing the role of financial inclusion in economic change. Furthermore, by emphasizing on important instruments, campaigns and channels to address poverty.

    Question 3
    How can the extremes between rich and poor be so very great?

    Answer

    Extreme inequality between rich and poor is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer.
    Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education.
    These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system. The growing gap between rich and poor is undermining the fight against poverty, damaging our economies and tearing our societies apart.

    Question 4
    What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Answer

    Economic growth is the continuous improvement in the capacity to satisfy
    the demand for goods and services, resulting from increased production
    scale, and improved productivity (innovations in products and processes.
    Some of the sources of national and international economic growth are:
    1. Human Resources ( Size of lab our force, Education, Skills, Discipline, etc)
    2. Natural Resources ( Oil and Gas, Soils and Climate).
    3. Capital Formation ( Equipment and factories, social overhead capital)
    4. Technological Change and Innovation (Quality of scientific and Engineering knowledge, Managerial know- how, Rewards for innovation).

    **There are lots of reasons that, or good explanations for why some countries make rapid progress towards development while others remain poor. Some of these factors are discussed below:
    First, could be what I call a poverty trap. Second, it could be bad economic policies, governments just making terrible mistakes. Choosing the wrong kind of strategy, closing the borders when international trade would make more sense, going for central planning under communism when a market system would be much more propitious for economic development. A third it could be that the government is broken in some manner, and most often, it’s bankrupt. Many governments around the world, and throughout history, have gotten into a fiscal mess. They’ve spent too much, they’ve taxed too little, they’ve got into wars that they shouldn’t have done and couldn’t afford, and ended up with a massive fiscal crisis. A fourth is physical geography. Maybe the country is stuck. Because it’s landlocked, high in the mountains, facing a terrible disease burden. Malaria for example. You might say, well if it’s geography, what can you do about it? You can’t change your geography. But the fact of the matter is you can change the consequences of your geography. If a country is landlocked, it needs to think about transport, and the kinds of industries that it’s promoting. If it has a heavy disease burden like malaria because of its tropical environment, it has to think about specific disease control. So while geography might not change, the results of geography are often subject to the human resolution. A fifth kind of failure could be ru, the lack of rule of law, massive corruption. That corruption, when it gets out of hand, can completely frustrate the normal processes of governance and therefore of economic development. A sixth. Problem could be cultural barriers. In fact, it’s very often said, if a country isn’t performing well, something’s wrong with the culture. More often than not, I think that’s glib and simplistic, but sometimes cultural factors can really make a difference. And last. It’s geopolitics. By geopolitics, I mean a country’s relations with it’s neighbors, with it’s foes, with it’s allies. Because countries can suffer geopolitically. Of course, countries that fell under imperial domination in the middle of the 19th century and were under colonial rule for a century or more. Our powerful examples of what geopolitics can do to frustrate economic development.

  46. Olendi Nkiru precious says:

    Name; Olendi Nkiru precious
    Reg No; 2018/243187
    Department ; Economic /psychology
    course; Eco 361
    Email ; preciousdeligh48@gmail.com
    Assignment

    1.What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    A broader conception of development has been embraced by the international community, first through the Millennium Development Goals (MDGs) of 2000, and then through the Sustainable Development Goals (SDGs) of 2015. The eight MDGs were expanded and modified to seventeen SDGs, which include conventional economic measures such as income growth and income poverty, but also inequality, gender disparities, and environmental degradation (Kanbur, Patel, and Stiglitz, 2018). Indeed, the crystallization and cementing of this broader conceptualization of development, and even of economic development, has been one of the sure advances during the past decade of thinking, and surely represents a move toward a “new enlightenment” in developed countries.
    Modern economic growth took off in the middle of the 18th century, and like the ripples on a pond after a stone has fallen into the water, the ripples of economic growth spread to other parts of the world through the 19th century. The closer to the epicenter of the Industrial Revolution, the closer to England, the faster were countries to receive that ripple, to take off on their own, and escape from extreme poverty. The more that countries were proximate to ports the more that they could trade internationally, the better their climate, the more productive their agriculture. All of these were conducive to a faster takeoff into modern economic growth. And of course politics played an enormously important role. Independence and sovereignty was essential for modern economic growth in the 19th century. Those countries that were unfortunate to succumb to imperial rule did not have the basis for economic takeoff because the imperial powers, typically the European imperial powers, weren’t very much interested in educating the population, building the kind of infrastructure needed for their own industrial take off. Instead they were interested in seeing their colonies as places for primary commodities to build the home industry. And the result is that by the beginning of the 20th century, one could say the following. First, it was a miraculous age because waves of technological change had led to unprecedented breakthroughs in the ability of humankind to produce, to meet material needs, to extend life to, solve long-standing problems of public health, to make breakthroughs in transport, in quality of life in so many ways through electrification, modern transportation, mass industrial production. It was already an age of huge variation between the rich and powerful on the one side and the poor and vulnerable on the other side. Modern economic growth had come to Europe. It had come to the lands of new settlement, the United States and Canada, Australia, and New Zealand. It had spread to other places mainly in the temperate zones of the world like Argentina, Uruguay, Chili. It had not spread to Africa. It had not spread to much of Asia which was under the pressures of European imperial rule. None-the-less, it was a most remarkable age. And as you know, I’m such a fan of John Maynard Keynes because of the power of his economic and political vision in the 20th Century. But one of the things he wrote about this age is worth us recalling. At the end of World War One, he looked back to the period just before World War One, and described this unique global circumstance. He said, and I’m quoting from his famous work, The Economic Consequences of the Peace. What an extraordinary episode in the economic progress of man, that age was which came to an end in August 1914 with World War One. He writes, the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole Earth in such quantity as he may see fit, and reasonably expect their early delivery upon his doorstep. He could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world and share without exertion or even trouble, in their prospective fruits and advantages. But most important of all, writes Keynes, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it is aberrant, scandalous, and avoidable. Of course, Keynes was speaking as an Englishman, and a quite brilliant and privileged Englishman. He was the one sitting in bed, sipping his tea, and ordering commodities from all parts of the world. Those under colonial rule could not do so. But he was also expressing the uniqueness of an age where modern economic growth had broken out and had taken hold in many parts of the world and had created a global economy. But, of course, that economy came crashing apart tragically, unexpectedly, with the onslaught of World War One. Such a destructive war that historians still today, a hundred years later, are trying to figure out what could have caused that, because there were no deep motives for that war. That war was massively destructive. It unleashed chaos, deaths from violence of course, epidemic diseases such as the flu epidemic at the end of the World War One. It unleashed the Bolshevik Revolution that gave birth to Soviet era communism. It unleashed a tremendous economic forces that led to huge instability in the 1920s. And it played a key role, though complex role, in the onset of the Great Depression in 1929. And of course, that depression gave rise to horrific political forces, none other than the rise of Adolf Hitler. In January, 1933, in the rise of fascism and thereby the birth of the second devastating world war that which broke out in Europe in 1939 and in Asia, lead by Japan the industrial power of Asia around the same time to create a truly world war. By 1945, technology had continued to advance, but many of the technological leaders were in ruins, though they would quickly rebuild. One technological leader, the world’s technological leader was not in ruins, because other than one attack on Pearl Harbor it was not directly touched in its own territory by the war. That of course, was the United States which far and away by the end of World War Two was the world’s leading economy, the most powerful, the technology leader. And the one that would have the greatest influence on the world economy basically until now. But in very powerful ways, throughout the second half of the 20th century. In technology, in forging markets, and in geopolitics. What’s important for us in understanding how the ripples of modern economic growth diffuse after World War Two, is to understand that by the end of World War Two, the world was divided in three parts. And those three parts gave rise to a kind of division of the world economy that would persist for some decades, and then finally, themselves, give way to a unified global economy. The first part was the US led part. It was the US, it was Europe, it was vanquished Japan which became and ally of the United States after World War Two. This part is sometimes called the first world. It was the richest part, especially after rebuilding. It was mainly a market economic system. It traded among each other and it was the leading engine of technological change through to the end of the 20th century. The second world, so-called, was the world of Soviet communism. This was the Soviet Union itself which had 15 republics which, after 1991, became 15 independent ountries. It was the world conquered by the Soviet Union in central and eastern Europe, Czechoslovakia at the time Hungary Bulgaria, Romania and, other countries of the region where the Red Armies sat and created Soviet style government and economies. It included the People’s Republic of China after 1949, which adopted a communist system. The one that soon enough would be very different from the Soviet style communism. The third division of the world was the former colonial powers because one of the mega results of World War Two, was that the imperial European countries, themselves in ruins, were certainly in no shape to run empires. And the former colonies had had enough of it. They not only had the ideology, the sense, the awareness that independence was theirs to grab but they saw how destructive their imperial masters had been. The legitimacy of empire was over and the ability of the imperial powers to continue to maintain empire was gone as well, although many of them didn’t notice it because they continued to try to fight rear guard wars to defend imperial possessions. And so the period of decolonization which began around 1947 with the, India, and then with Indonesia, and it followed on throughout Africa, Asia, and other places. That stretched out over a course of decades. But, it created a kind of third world. Third world is a term we sometimes use to mean poor and middle income countries, but it meant something more literal back when the phrase was invented. It meant not the first world of the United States, not the second world of the communist era, but the post-colonial world. Sometimes also a grouping called the non-aligned countries. They said we don’t want US domination, we don’t want Soviet domination, we want to be on our own. And a little bit less formally, a fourth world was sometimes also brought into the mix. That’s the group of countries, basically, that we call the least developed countries today, the countries in absolute abject poverty. Well these were quite the sharp divisions and the world economy evolved under these geopolitical divides for several decades. The first world recovered from the damage of World War Two remarkably quickly by the 1950s. And endogenous technology driven economic growth took hold and the process of modern economic growth and rising living standards took hold in the first world very, very powerfully. In the second world, the communist world, there was industrialization and it seemed pretty dynamic for awhile, but already by the 1960s it was coming into crisis. And by the 1970s, economic development under a non-market communist system was basically screeching to a halt. Countries began to reform. China was the first great reformer in the communist group in 1978 when Deng Xiaoping came to power and said we need to market economy. We need to open China to trade. And that unleashed China’s own catching up growth with remarkable success to the point where China became by far the fastest growing major economy in the world in, in history. Now other parts of the communist world took longer to break free, because the Soviet Union wasn’t having it for a very long time. And it was only when Mikhail Gorbachev came to power in the middle of the 1980s and began his own market reforms and then came the revolutions of Eastern Europe in 1989. And then the end of the Soviet Union itself at the end of 1991 did the second world, basically stop being its own self-contained economic unit, and become part of the world economy. The third world, and the fourth world, included dozens, and dozens of countries, and each had their own economic history, and their own strategies. A very few of the countries early on said, we like that first world model. We’re pretty much interested in integrating with the first world economies. And they figured out something that most of the rest of the developing countries did not figure out until later, and that was that diffusion, the arriving of those ripples, could lift them into a very special kind of industrialization. Mainly where new industries in their own countries, many foreign owned, would become part of global production systems so that a company in Korea or in Taiwan would begin to produce the electronics goods, or the shirts and, and, pants on the racks of, of retailers in the United States and Europe. According to the technology designs and the in, intellectual property of the so-called first world companies. The early developers of that new strategy for catching up were called the Asian Tigers, Korea, Taiwan China, Hong Kong, Singapore. The four of them already by the 1960s and then by the 1970s were growing extremely rapidly by integrating their new young industrial base with the high tech industries of the first world. And as that happened other developing countries watched and said, wait a minute, that’s pretty interesting. Maybe we shouldn’t stay quite so non-aligned, politically yes, but economically maybe we should open our own doors to trade and to foreign investment and try to attract those new multinational companies that could use our country, and our labor force, and our natural resources as a base for their global production systems. This is how globalization came into being. Globalization came into being as this diffusion process created a new kind of catching up after World War Two. Especially starting in countries that opened their trade and opened their borders to foreign investment, so that new global industry centered around multinational companies, could use those countries as basis for global production systems. And that process backed by big breakthroughs in technology, better transport, intermodal transport, so called, from ships to the to the backs of trucks in a very smooth process, containerization of trade through the standard 20 foot containers. And of course the advent of modern computer-assisted design and manufacturing. And the enormous breakthroughs made possible by the internet and by mobile telephony revolutionized the ability of companies to engage in global production systems. And thereby create globally integrated companies, often with hundreds of thousands of employees, operating in more than one hundred countries. And the world’s multinational companies thereby became the main agents for the continuing transmission of those ripples around the world and the continuing diffusion of modern economic growth. Japan was a leader in its own region in this. And they developed a,a wonderful, visual metaphor for this called the flying geese model. Have a look at these geese in formation. You have a goose flying in front and then yeah, in back are others following the lead. And this is how economic development in Asia started as well with the industrialization first of Japan, and then flying in formation just behind came Korea and Taiwan, Hong Kong and Singapore. Behind them, Indonesia, Malaysia, Thailand. Behind them, China, Vietnam. Behind them, Cambodia, Laos. But, as the leading country moves from textiles to electronics, then from electronics to automobiles, then from automobiles to advanced information technology, the country just behind it moves from agriculture, to apparel and textiles, from apparel and textiles to electronics, from electronics onto its own technology innovation of information technology, and one goose after another, to use Japan’s metaphor follows along the way. This map that you’re looking at now shows where the textile firms located. And every red dot is essentially a node of multinational production, where often low wage labor is hired to produce in a global production network of textiles and apparel. You’ll see virtually that every dot in Asia is on the coast just like Adam Smith said in 1776 before he could know anything about such global production chains. You’re looking at a map here of China attracting foreign direct investment. Again China’s great breakthrough after 1978 when Deng Xiaoping opened China to the world was to attract foreign investment that made China an export base for world manufacturing production. And, you can see, also, that the wave goes from darker provinces where its foreign direct investment is the highest, into the interior. Moving from coast to the interior just as Adam Smith had told us. And, the result is by the end of the 20th century and into the early years of the 21st century, what had started as the preserve of England, and then had spread across the English Channel and the North Sea into Western Europe, that had spread to the lands of new settlement first, that had then spread to other temperate zones, then it spread to Central and Eastern Europe, that had been taken up by Japan in late 19th century industrialization, that in the 20th century after World War Two could now spread to the former colonized parts of the world and as they gained their independence was a process of global economic development that had reached almost all the world. There are still places where this is not true til today. Often the most land-locked interior places with difficult climate, with lack of natural resources, and so forth that have all of the burdens and few of the benefits should take hold. But for most of the world, the breakthrough by now has taken place. Of course, those who made the breakthrough early on are today’s rich world. They’re the high income countries. Those who have come late to this by virtue of their history, their politics, their resource base, their geography are today’s middle income or low income countries. Those still waiting to take off are today’s least developed countries. We’re going to turn our attention carefully and in detail to how those least developed countries can make the breakthrough now in the 21st century.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    The term Economic Institutions” refers to two things:
    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.
    2. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    If you want to predict the prosperity of a country, just look at its institutions. Together, the legal and administrative organizations that underpin every society form what we economists call an “enabling environment” for the creation of wealth. When they fail, trust is eroded and economies can become damaged, as Ricardo Hausmann recently suggested.

    Institutions are the rules of the game in a society, the humanly devised constraints that shape human interaction. They structure incentives in human exchange, whether political, social or economic”. Institutions comprise for example contracts and contract enforcement, protection of property rights, the rule of law, government bureaucracies, financial markets.
    Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs. They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations.

    3. How can the extremes between rich and poor be so very great?
    Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer.
    Many governments are fuelling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education.
    These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.
    Solutions that can have a positive effect on reversing rising inequality, closing economic disparities among subgroups and enhancing economic mobility for all includes ;

    1. Increase the minimum wage.
    Research shows that higher wages for the lowest-paid workers has the potential to help nearly 4.6 million people out of poverty and add approximately $2 billion to the nation’s overall real income. Additionally, increasing the minimum wage does not hurt employment nor does it retard economic growth.
    2.Build assets for working families.
    Policies that encourage higher savings rates and lower the cost of building assets for working and middle class households can provide better economic security for struggling families. New programs that automatically enroll workers in retirement plans and provide a savings credit or a federal match for retirement savings accounts could help lower-income households build wealth. Access to fair, low-cost financial services and home ownership are also important pathways to wealth.
    3.Make the tax code more progressive.
    It is a great irony that tax rates for those at the top have been declining even as their share of income and wealth has increased dramatically. The data show we have created bad tax policy by giving capital gains profits from the sale of property or investments — special privileges in our country’s tax code; privileges that give investment income more value than actual work. Capital gains tax rates must be adjusted so that they are in line with income tax rates. Savings incentives structured as refundable tax credits, which treat every dollar saved equally, can provide equal benefits for lower-income families.
    4.Expand the Earned Income Tax.
    In recent years, the EITC has been shown to have a positive impact on families, lifting roughly 4.7 million children above the poverty line on an annual basis. Increases in the EITC can pull more children out of poverty while providing more economic support for the working poor, especially single parents entering the workforce.

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Sources of Economic Growth

    Natural Factors.
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. Jeffrey Sachs in The End of Poverty calls this factor “Resource Boom” and gives an example on how government ability to control the breeding of black flies that spread African River Blindness can open up new farmland thus increasing the quantity of arable land in a country. However, quantity of natural factors such as land and raw materials like metals and oil could be small and even absent in some countries and the quantity cannot be easily increased. Fortunately, a country can still enjoy economic growth with modest natural resources provided it could obtain them efficiently from abroad; i.e. through trade. Singapore, Hong Kong and Japan have relatively little natural resources yet they have grown into developed economies. Land for example can be increased at a modest quantity by reclaiming it from the sea as in Singapore and Hong Kong. Oil reserves can be increased by active exploration and novel method of extraction. Instead of concentrating on the quantity, increase quality of the natural factors also help to shift the PPF outwards. A piece of land, for instance, can be rendered more productive (increased quality) by irrigation, improved farming technology and better planning of land usage.

    Moreover, neoclassical and endogenous growth models suggest that human capitals and technology are probably more important as engines that propel growth.

    Human Factor.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries. A country can increase in labour force by increasing its population but in reality all except Singapore is interested in this approach. Labour force can also be increased through a immigration policy that attracts skilled workers.

    Physical Capital.
    Physical capitals include factories, machineries, shops, malls, offices and motor vehicles. Cetera Paribus, higher savings rate can help to finance more physical capital investment. Extras.
    Conclusion
    Why some countries make rapid progress toward development while many others remain poor includes ;
    The factors that contribute includes :
    1. The Government
    In most countries government has a significant influence on economic performance, especially due to its size. The taxing and spending policies of the government affect the incentives to spend and invest.
    2.International trade and finance
    Just as individuals specialize in an occupation they do best, countries specialize in producing particular goods and services depending on their natural resources and education of their labor force. Countries with large areas of nutritious soil might specialize in agriculture, whereas a country with a labor force trained in electronics might specialize in producing computer chips. Countries can specialize in the goods and services they produce best and trade for the goods and services they produce relatively less efficiently. The more countries can specialize and trade, the more economic growth they will realize in the long run. If trade is slowed, countries will have to produce goods and services that they produce less efficiently instead of trading for them.
    Trade policy, such as quotas and tariffs, directly affects trade flows. Also, exchange rates among countries can affect trade as the cost of goods and services from other countries fluctuates with movements in exchange rates. Some economists consider these factors pivotal in terms of economic growth. For example, if the United States places a tariff on imported automobiles, the price of cars in the United States will likely increase.
    3.Technology and investment
    Technology refers to advancement in knowledge and how it’s employed in the productive process. For example, the micro-chip processor helped businesses incorporate computer systems into the production process and sales. Countries that have a wealth of research and development and/or access to new technology often have a more productive work force than countries without access to technology. As productivity increases, economic growth increases. Investment in new technology or buildings can lay the groundwork for growth in years to come. Countries with institutions that facilitate the appropriation of technology and accommodate investment will realize increases in total output.
    4.Political, social and geographical conditions
    Countries with challenging terrain or weather may need to find creative ways to adapt to their surroundings. The political and social climate of a country influences the total output of a country’s economy. Crime, poverty, income disparity and armed conflicts can be a cause, or a result, of low economic growth. Nevertheless, social problems can develop despite high economic growth. The culture of a country can have an effect on what and how goods and services are produced. Cultural tendencies can create biases for and against various market mechanisms and may influence the pace of production. The location and climate of a country can also contribute to economic success or difficulty.
    5.Money and banking
    A central bank, such as the Federal Reserve in the United States or the Bundesbank in Germany, is responsible for regulating the amount of money in circulation. Too much money in circulation can drive prices up, causing inflation. Too little money can pull prices down, which can depress economic activity. Finding the right balance is a central bank’s primary responsibility. This places a central bank in a position to facilitate economic growth by stabilizing overall prices.

  47. ANYANWU COLETTE CHINAZAEKPERE says:

    NAME: ANYANWU COLETTE CHINAZAEKPERE
    REG. NO: 2018/242442
    DEPARTMENT: ECONOMICS (MAJOR)
    LEVEL: 300L

    LESSONS FROM THE HISTORICAL RECORD OF ECONOMIC PROGRESS IN THE NOW DEVELOPED WORLD.
    Today’s developing economy need to focus on building fiscal and market institutions before rising spending needs and not after they materialize.
    The shift from agrarian to industrial to post-industrial Economies required different worker. Economic disruptions reshaped governments in the past, as a happening now with the changing world of work, leading to a large expansion of social insurance and protection spending in the advanced countries like Germany, Australia, USA, Norway, France, Japan, Canada, Denmark, UK, Spain, etc. increased substantially in the 20th century in percentage of GDP as the re-evaluated the role of government amid rapid industrialization and globalization and new taxes became common place.
    Government spending has been counter cyclical since world war ll in almost all advanced Economies, even with the sustained trend of spending increases.
    Countercyclical fiscal policy is a must for today’s developing countries, especially for those with abundant natural resources. However, there is overwhelming evidence that fiscal policy has been consistently pro-cyclical to in developing countries, resulting in profound macro economic imbalances. Unproductive debt build-ups and on going instability.
    Governments can advance development even with low levels of government spending.
    Today’s low-income countries spend more than twice on average than today’s advanced Economies spent more than a century ago. To be sure, this difference reflects early 1900s, custom duties and excises provided the bulk of government revenues while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. For example: In 1900, spending on unemployment, health, pensions, and housing amounted the only 1.1% of GDP in the Scandinavian countries on average and to 0.7% of GDP in USA. Even with low level of government spending, economic development was brisk in most of the advanced countries at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education. And here lies the lesson for today’s developing Economies: while working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital mobilizing private finance for development.
    Government spending by today’s developing Economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
    Government spending among the advanced economies has increased, but so has its variability. Before 1913, spending among the advanced economies ranged from less than 2 percent of GDP in Japan to 13 percent in Italy, or a span of 11 percentage points. Today, the span of spending among the advanced economies is 39 percentage points: from 17.3 percent in Hong Kong to 56.4 percent in France.
    Development paradigms vary among today’s advanced and developing countries. Robust growth can happen with a smaller or a larger government, in general. Too large of a redistribution, however, may create substantial disincentives to work and invest, or lead to tensions between formal and informal workers, employees of large companies or state-owned enterprises and small private firms. This danger now is clearer than ever: The changing world of work is clashing with persistent informality in developing countries and social protection systems that cover only part of the population.

    Comparisons between today’s developing countries and today’s advanced economies can provide aspiration of greater value to explore advanced economies when they were less prosperous and would have been considered low-income or lower middle-income.
    Initial conditions for Contemporary developing countries as to what the developed countries faced on the eve of their industrialization.
    Investment in education and health to develop human capital: In most countries, primary school enrollment has improved but the remaining challenges include low graduation rates and the variable quality of secondary and tertiary schools. The ADB is helping several countries, including Bangladesh, with vocational training reforms, engaging the business community to ensure that training matches its employment needs. The ADB is also supporting the use of information technology in healthcare and the transition to universal health coverage in member countries.
    Macroeconomic stability: In countries which suffer from inflation exceeding 10%, large fiscal deficits and high interest rates, it is obvious that savings and investment for the future are hampered. It is encouraging that in Asia, after the currency crisis of the late 1990s, governments now pay more attention to sound fiscal policy, stable monetary policy, and stronger regulation and supervision of the financial sector.
    Open trade and investment regimes an active private sector: In the past, even some countries such as India and Indonesia, though not formally classified as centrally controlled economies, adopted import substituting industrialization, price controls, and nationalization of key industries. The catalyst was an ideological pursuit of socialism combined with anti-colonial sentiment. These policies seriously damaged their economic growth. Today, there is no Asian leader who does not regard the market as the foundation of economic development. In today’s more integrated global economy, FDI and technology transfers from overseas play an even greater role than in the past. In many countries, the ADB provides budget-supporting program loans that are tied to the implementation of structural reforms. The ASEAN Economic Community, which the ADB supports, is playing a key role in reducing tariffs, simplifying customs procedures and unifying standards in participating countries.
    Infrastructure investment: Sufficient infrastructure for energy, roads and railways helps countries develop industry and attract foreign direct investment (FDI). A good quality road network gives people access to schools and clinics, and enhances job opportunities. Infrastructure is the core area of the ADB’s loans and technical assistance. In providing assistance, the ADB places special emphasis on adhering to international standards for environmental and social safeguards, and on fair and transparent procurement processes. These standards meet the evolving and expanding needs of society in our member countries. In many of the region’s developing countries, the share of public investment in total GDP stood at 5% or less in 2010 — far lower than China’s 22%. In those countries, development tends to be slower. According to an ADB study last year, an increase in infrastructure investment to GDP ratio by 1 percentage point would increase the growth rate by 1.3 percentage points. In addition to ensuring sufficient tax revenues to build basic infrastructure, countries must aim at mobilizing private resources. In this context, the ADB is promoting public-private partnerships (PPPs). In Vietnam and the Philippines, the ADB has helped draft basic laws on PPPs and set up special government agencies for PPPs.
    Public governance: Corruption is not only unjust. It smothers growth by diverting people’s energy to unproductive activities. Good governance also means better transparency and accountability among governments and state-owned enterprises. Countries, including those in Central Asia, are increasingly aware that these issues need to be tackled. It is also important to note that, as a 2013 ADB report indicates, the effectiveness of government in delivering its services and the quality of regulations closely correlate to the performance of its economy. In this regard, the existence of a cohort of competent bureaucrats is essential.
    Social inclusiveness In a society with great disparities between rich and poor, economic growth goals may not be shared by its citizens. Income inequality nullifies incentive to improve one’s prospects by getting an education or vocational training, preventing quality enhancement of the labor force. To avert this scenario, decisive steps are needed to strengthen public education, redistribute income by tax reforms, reduce rural-urban inequality, and provide farmers and small and midsize enterprises with access to finance. I may add that a sound middle class increases domestic consumption and fosters political stability.
    Vision for the future In this area, South Korea and Singapore have shown how governments can make crucial contributions to national development. While the private sector is a key economic growth engine, governments have a responsibility to examine their national comparative advantages, design a development strategy, and share this strategy with their citizens. They should carefully allocate public finances to priority areas, while giving appropriate guidance to business. Of course, this is not to say that governments should embrace inward-looking policies to protect domestic industries.
    Political stability, security and good relations with neighboring countries Sri Lanka’s economy has expanded by 7.5% annually since its civil conflict ended in May 2009. Myanmar, thanks to efforts to pursue democratization and reconcile with ethnic minorities together with economic reforms, has successfully re-engaged with the international community and attracted prodigious amounts of foreign investment. In the Philippines, the government recently reached a comprehensive peace agreement with Islamic groups in Mindanao, a breakthrough that raises new hopes for resurgent economic growth in that part of the country.

    QUESTION 2
    Economic institutions
    Generally, there are two ways to define economic institutions depending on the context in which the term used. First, it is thought of as an organization, whether public or private, that engages in the collection, and research of economic data or that provides a service or product deemed economically central to a nation’s economy. Examples include; nation economic bureaus, tax collection agencies or University departments dedicated to economic research. I
    These institutions are also considered foundational structures/organizations in society that are inherent to the economic system/culture, such as the banking systems, investment markets or even a custom, such as providing children with a weekly allowance.
    Therefore, an accurate portrayal of economic institutions is constitutional in nature and defines how an economy is allowed to develop and function to achieve sustainability and growth. Typically, there are three main functions of these institutions: determining and safeguarding property rights, enabling and facilitating transactions, and allowing the economic participants to organize and co-operate.
    The development of economic institutions happens at many different levels in society, and one usually forms either formally and informally. National governments may establish formal ones that help guide economic decisions and policy. On the other hand, one may arise out of natural reactions within the economy. For example, banking systems evolved to help facilitate transactions and to provide capital to spur growth and create new wealth.
    How Economic institutions shape problem of underdevelopment and prospects for successful development.
    we can think of institutions as the foundational rules of the game noted by Douglass North in the opening quote; they include not only laws and regulations, but also customs and practices. Institutions work through the incentive structure in an economy and are important in explaining why some countries experience faster growth than others. Both institutions and the incentives they offer affect improvements in long-term growth.

    Some of these institutions might not seem directly related to economics, but institutions clearly have an impact on the potential output of the economy. For example, patent protections are examples of laws that ensure that firms developing new technologies are able to profit from them. The firm’s profit motive provides the incentive to produce new goods and services, as well as the technologies that benefit society and result in economic growth. Traditionally, people have reasoned that patent protection enables firms to profit from their costly research and development efforts; as a result, they are willing to invest in the first place.2 In a sense, they incentivize technological progress.

    We can also consider the custom of honesty, which enhances the confidence of those conducting economic transactions. If honesty cannot be assumed, economic transactions may be more “costly” to complete. In his lecture accepting the 1993 Nobel Prize, North said that institutions “form the incentive structure of a society and the political and economic institutions, in consequence, are the underlying determinant of economic performance.”3 So, which institutions foster growth?

    First, strong property rights are important. Citizens who feel confident that their private property is secure are more likely to invest in the future. A strong legal infrastructure, supported by the rule of law, must exist to create such confidence. The rule of law, as opposed to the rule of man, ensures that legal decisions remain consistent and predictable over time and are not at the mercy of individual political leaders or administrations. In short, strong property rights ensure that private investment and innovation are properly rewarded, which provides the incentive for future productive economic activity.

    Second, competitive markets foster efficiency, which promotes growth. Prices signal when goods and services are becoming more or less scarce. Producers and consumers respond. For example, when markets are competitive and flexible, a shortage of bicycles results in higher bicycle prices. The higher price signals producers to supply a greater quantity of the good (more bicycles), and the higher price signals consumers to reduce the quantity of bicycle purchases. Over time, the bicycle shortage is resolved.

    Our bicycle example applies to the overall economy: If prices are allowed to change quickly to reflect underlying conditions, markets can adjust. When inflation is high and volatile, price signals become less effective and can result in inefficient production and distribution of goods and services. The Federal Reserve’s role in price stability—maintaining a low and stable inflation rate over time—minimizes the distortionary effects of inflation in this process. Free trade extends the benefits of free markets beyond national borders and allows for more competition within industries, which provides additional productivity gains. For example, American carmakers increased their level of efficiency as a result of rising competition from foreign carmakers in the 1970s and 1980s.

    Finally, efficient financial institutions facilitate intermediation between savers and borrowers. This means that financial institutions (such as banks, credit unions, stock markets, and bond markets) transform the deposits of savers into loans for borrowers who wish to invest in (among other things) new capital, technology, and infrastructure—all key ingredients for growth. For example, a bank might bundle the deposits of many savers to lend to a small business that wants to invest in new technology. Shin finds that countries with well-developed financial markets allocate resources more effectively than countries with less-well-developed financial markets. As such, well-developed financial markets are an essential ingredient for long-run economic growth.4 These interactions among firms comprise what Federal Reserve Chairman Ben Bernanke has called “the financial infrastructure or the financial plumbing.

    QUESTION 3
    The extremes between the rich and poor refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. In other words, it can be termed “Economic Inequality” i.e the gap between rich and poor, income inequality, wealth disparity or wealth and income differences ( disparities in the distribution of accumulated assets- wealth and income).
    There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    Inequality in wages and salaries;
    The income gap between highly skilled workers and low-skilled or no-skills workers;
    Wealth concentration in the hands of a few individuals or institutions;
    Labor market
    Globalization
    Technological changes
    Policy reforms
    Taxes
    Education: there’s a wider gap in education, which leads to a less effective workforce. Non standard work, which includes temporary contracts and self-employment.
    Computerization and growing technology;
    Racism
    Gender
    Culture
    Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers.

    Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality.
    Economic Inequality can be internal i.e between the rich and poor citizens of a country, or external i.e between different countries of the world. The most commonly used measure for economic inequality is the Gini coefficient (Gini index or Gini ratio).

    QUESTION 4
    Economic growth is an increase in the productive capacity, or potential output of of an economy.
    Sources of national and international economic growth are:
    Natural factor: the quality and/or quantity of land or raw materials.
    Human factor: the quality and/or quantity of human resources/capital.
    Physical capital and technological factors: the quality and/or quantity of physical capital.
    Institutional factors such as:
    finance and banking system
    education system
    healthcare
    infrastructure
    political stability.

    Why some countries make rapid progress towards development while others remain poor.
    The aim of economic development is to improve the material standards of living by raising the absolute level of per capita incomes. Raising per capita incomes is also a stated objective of policy of the governments of all developing countries. For policymakers and economists attempting to achieve their governments’ objectives, therefore, an understanding of economic development, especially in its policy dimensions, is important. Finally, there are those who are concerned with economic development either because they believe it is what people in developing countries want or because they believe that political stability can be assured only with satisfactory rates of economic growth. These motives are not mutually exclusive. Since World War II many industrial countries have extended foreign aid to developing countries for a combination of humanitarian and political reasons.

    Those who are concerned with political stability tend to see the low per capita incomes of the developing countries in relative terms; that is, in relation to the high per capita incomes of the developed countries. For them, even if a developing country is able to improve its material standards of living through a rise in the level of its per capita income, it may still be faced with the more intractable subjective problem of the discontent created by the widening gap in the relative levels between itself and the richer countries. (This effect arises simply from the operation of the arithmetic of growth on the large initial gap between the income levels of the developed and the underdeveloped countries. As an example, an underdeveloped country with a per capita income of $100 and a developed country with a per capita income of $1,000 may be considered. The initial gap in their incomes is $900. Let the incomes in both countries grow at 5 percent. After one year, the income of the underdeveloped country is $105, and the income of the developed country is $1,050. The gap has widened to $945. The income of the underdeveloped country would have to grow by 50 percent to maintain the same absolute gap of $900.)

    When economists think about the causes of economic development, they think beyond the fiscal and monetary policies that are designed to buoy the economy temporarily during an economic downturn to consider the conditions that help promote long-term growth. During an economic recession, an economy might be operating with a larger-than-average amount of unemployed resources. That is, the economy is operating below its productive capacity. Policies designed to push the economy back toward its productive capacity—thereby increasing the pace of economic activity—might be used during an economic recession to move the economy back toward its potential. The movement back toward potential is often referred to as economic expansion. Alternately, long-run economic growth is an increase in an economy’s productive capacity.

    Three factors can create economic growth which leads to development:
    more capital, more labor, and better use of existing capital or labor. The growth that results from increases in capital and labor represents growth due to increases in inputs. There are limits to how much accumulating capital helps, and increasing labor also often means more mouths to feed and so (by itself) may not increase the standard of living (real GDP per capita). Sustainable long-run growth is the result of better use of existing resources, increasing economic output per input and thereby increasing productivity.

    For example, think of the productivity gains that resulted from the use of personal computers and the Internet to complete tax forms. Rather than using pen, paper, and a calculator to complete the forms, tax filers can use sophisticated software programs to retrieve financial data from personal accounts using the Internet, insert the information correctly on complicated tax forms, and complete the complex calculations. The forms can then be filed electronically to expedite the process.

    This is just one example of recent gains in productivity resulting from increases in physical capital. Now multiply those relatively small gains by the millions of workers who use increasingly powerful computers and better software. Increasing investment in physical capital allows for continued increases in productivity and economic growth. This is an example of changes in productivity resulting from changes in inputs; in this case, the input is physical capital. Similarly, human capital—the knowledge and skills that people obtain through education, experience, and training—is important, and strong educational institutions are vital. A well-educated workforce is generally more productive, providing higher output per worker. Well-educated workers can make the most efficient use of existing technologies. They are also more likely to develop new technologies. Further, a persistent growth in the level of educational attainment will likely lead to growing productive capacity, the key to future economic growth.

    While both physical and human capital are important to economic growth, both have their limits and their benefits tend to diminish over time. Knowledge and ideas that lead to better use of existing resources (increasing output per input) are driving forces behind continuing (long-run) economic growth. The innovation resulting from new ideas is key to continued technological progress. Consider the computerized tax-filing example. When a new computer is produced, the inputs required to build it are not much different from a computer built 10 years ago, but today’s computer has much larger implications for labor productivity than earlier versions. The computer has improved over time as the result of new knowledge, ideas, and innovations incorporated into the design of its hardware and software. Of course, all of this happens within the institutional structures of an economy.

  48. Uzuigwe Esther Ebere says:

    Name: Uzuigwe Esther Ebere
    Reg no:2018/SD/37300
    Department: Economics

    Assignment on Development Economics 1

    1.What can be learned from the historical record of Economic progress in now developed world?
    Are the initial conditions similar or different from developing countries from what developed countries faced on the eve of their industrialization?The first economic category is developed nations, which can generally be categorized as countries that are more industrialized and have higher per capita income levels. To be considered a developed nation, a country generally has a per capita income around or above $12,000. Also, most developed countries have an average per capita income of approximately $38,000. As of 2010, the list of developed nations included the United States, Canada, Japan, Republic of Korea, Australia, New Zealand, Scandinavia, Singapore, Taiwan, Israel, countries of Western Europe, and some Arab states. In 2012, the combined populations of these countries accounted for around 1.3 billion people. The populations of developed countries are generally more stable, and it is estimated that they will grow at a steady rate of around 7% over the next 40 years. In addition to having high per capita income and stable population growth rates, developed nations are also characterized by their use of resources. In developed countries, people consume large amounts of natural resources per person and are estimated to consume almost 88% of the world’s resources.

    1b.Lessons from development experience
    By the end of the 1950s the experience gained from efforts to promote economic development showed great differences among developing countries. Some had broken away relatively quickly from the import-substitution, government-control and -ownership pattern that had been the early development wisdom. Others persisted with the same policies for several decades. A great deal was learned from the experiences of different developing countries. Human Development Index (HDI) statistics rank the countriesCountries on the basis of their development. The country which is having a high standard of living, high GDP, high child welfare, health care, excellent medical, transportation, communication and educational facilities, better housing and living conditions, industrial, infrastructural and technological advancement, higher per capital income, increase in life expectancy etc. are known as Developed Country. These countries generate more revenue from the industrial sector as compared to service sector as they are having a post-industrial economy.The following are the names of some developed countries: Australia, Canada, France, Germany, Italy, Japan, Norway, Sweden, Switzerland, United States. The countries which are going through the initial levels of industrial development along with low per capita income are known as Developing . These countries generate more revenue from the industrial sector as compared to service sector as they are having a post-industrial economy.The following are the names of some developed countries: Australia, Canada, France, Germany, Italy, Japan, Norway, Sweden, Switzerland, United States. The countries which are going through the initial levels of industrial development along with low per capita income are known as Developing Countries. These countries come under the category of third world countries. They are also known as lower developed countries. Developing Countries depend upon the Developed Countries, to support them in establishing industries across the country. The country has a low Human Development Index (HDI) i.e. the country have low Gross Domestic Product, high illiteracy rate, educational, transportation, communication and medical facilities are not very good, unsustainable government debt, unequal distribution of income, high death rate and birth rate, malnutrition both to mother and infant which case high infant mortality rate, high level of unemployment and poverty.

    2.What are the Economic institutions and how do they shape problems of underdevelopment and prospects for successful Development.
    Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction”. The main features highlighted in this definition include “rules of the game”, “humanly devised” and “shape human interactions”. In the sports, rules of the game control players and if a player violates the rules, opponents has a right to be against him (North, 1990). In the same way, institutions can be understood as a set of rules for the members of the society that shape their behaviours. Institutions provide a set of constraints to the society and society members take decisions under the given set of constraints. The set of constraints was created by the human being or it evolved through the intervention of human being (North, 1990). Economic institutions of the country are decided by the political institutions (Acemoglu & Robinson, 2012). As Acemoglu (2010) describes, the role of the economic institutions involves
    .a.Protecting of property rights
    b.Managing the entry barriers
    c.. Availability of contracts for private sector The economic system in a democratic country like the United States or Australia is different from the economic institutions in a country with a dictatorship like North Korea. Therefore, the role of the economic institutions varies from country to country. The Economic institutions which resulted from a political system have a collective decision-making process which encourage the economic development and its can be considered as good economic institutions. In the developed countries like United States, entrepreneurs enjoy all the benefits from the good economic institutions (Acemoglu & Robinson, 2012) including ensuring their property right, supportive policies for market entry, competitive based contracts for the private sector. The entrepreneurs from an underdeveloped country like Mexico which does not have the good economic institutions face many difficulties when they grow their businesses (Acemoglu & Robinson, 2012). They struggle with property insecurity, barriers for market entry and biased contract offering. The good economic institutions provide people a conducive environment for saving, learning, inventing and investing (Acemoglu & Robinson, 2012). Further, a country with good economic institutions experiences the financial system stability, low-interest rate and low inflation rate, consistent macroeconomic policies. This increases the investor confidence and as a result, higher investment, lower unemployment, higher income and advancement in socio-economic indicators can be reached. Further, the efficient allocation of resources can be observed in a country which has good economic institutions (Acemoglu, Johnson & Robinson 2004). Based on the way it contributes to the economic development, there are two types of economic institutions such as Inclusive and Extractive (Acemoglu & Robinson, 2012).
    Inclusive economic institutions
    Inclusive economic institutions encourage all people to participate in economic activities by providing their production factors to the market or investing in business activities (Acemoglu & Robinson, 2012). Individuals can supply their land or labour in an efficient manner and they will receive the rent or the salaries as rewards. Entrepreneurs can invest in the market and generate entrepreneurial profits. People will invest in Research and Development and generate novelties to the society. Protecting private properties, maintaining the law and order, and providing public service to encourage the private sector are essential parts of inclusive economic institutions (Acemoglu & Robinson 2012).
    Extractive economic institution
    Extractive economic institutions are opposite to the inclusive economic institutions. As Acemoglu and Robinson (2012) describes, North Korea or Colonial Latin America practice extractive economic institutions. Both regions do not protect property rights of the majority of individuals and businesses are limited to the small segment of a society. An unbiased legal system cannot be seen in both countries. Majority of people in these countries suffer due to social injustice. Insecurity of private property causes the low-investment and finally it will lead for declining or stagnating the economic growth. The economic institutions of these countries do not focus the economic prosperity of the general public (Acemoglu & Robinson, 2012). The contribution of institutions for economic development is obvious and based on the functions, the modern institutions can be divided into four categories as follows (Rodrik & Subramanian 2003).
    a Market creating institutes which promotes the market by ensuring property rights and promoting the private sector
    b. Market regulating institutes which avoids market failures through the regulation processes.
    c. Market stabilizing institutes which stabilize the macroeconomic conditions of the country
    d.Market legitimizing institutes For the economic development, both economic growth and distribution are important.

    3.How can the extreme between rich and poor be so very great?
    An important way of achieving this is through government action. This may mean rethinking policy goals to better balance the pursuit of prosperity with broader social and environmental progress and to ensure opportunity is widely spread. This sort of approach asks us some fundamental questions about how we measure progress. It can also confront us with some difficult choices between policies that may be good for growth but not for well-being.
    A.Create jobs by investing in infrastructure, developing renewable energy sources, renovating abandoned housing and significantly increasing affordable housing investments, and making other commonsense investments to revitalize neighborhoods. Improve job quality and strengthen families by raising the minimum wage to $12/hour by 2020; ensuring pay equity by passing the Paycheck Fairness Act; strengthening collective bargaining; and enacting basic labor standards such as fairer overtime rules, paid sick and family leave, and right to request flexible and predictable schedules. Make the tax code work better for low-wage working families by making permanent the 2009 Earned Income Tax Credit (EITC) and Child Tax Credit improvements and expanding the EITC for childless workers and noncustodial parents.
    B.Invest in human capital by expanding access to high-quality and affordable childcare and early education; creating pathways to good jobs such as apprenticeships, national service opportunities, and a national subsidized jobs program; and implementing College for All to ensure that any student attending public college or university does not need to pay any tuition and fees during enrollment.
    C.Ensure that workers with disabilities have a fair shot at employment and economic security.

    4.What are the sources of national and international Economic growth? Why do some countries make rapid progress towards development while many others remain poor?

    Natural Factors:More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. Jeffrey Sachs in The End of Poverty calls this factor “Resource Boom” and gives an example on how government ability to control the breeding of black flies that spread African River Blindness can open up new farmland thus increasing the quantity of arable land in a country. However, quantity of natural factors such as land and raw materials like metals and oil could be small and even absent in some countries and the quantity cannot be easily increased. Fortunately, a country can still enjoy economic growth with modest natural resources provided it could obtain them efficiently from abroad; i.e. through trade. Singapore, Hong Kong and Japan have relatively little natural resources yet they have grown into developed economies. Land for example can be increased at a modest quantity by reclaiming it from the sea as in Singapore and Hong Kong. Oil reserves can be increased by active exploration and novel method of extraction. Instead of concentrating on the quantity, increase quality of the natural factors also help to shift the PPF outwards .
    Physical Capital: Physical capitals include factories, machineries, shops, malls, offices and motor vehicles. Cetera Paribus, higher savings rate can help to finance more physical capital investment. As the Harrod-Domar Growth Model suggests a higher savings rate means higher economic growth rate. This productive investment would help move the PPF outward, thus economic growth. Higher savings rate can also be used to finance education and training. This helps to form human capital and to improve technical skills that contributes to more productive labour force.
    Human Factor: The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries. A country can increase in labour force by increasing its population but in reality all except Singapore is interested in this approach. Labour force can also be increased through a immigration policy that attracts skilled workers. This policy is pursued in Australia and Canada. Singapore and Malaysia also host a large population of migrant workers from neighbouring countries using a foreign worker scheme. However, the quantity of labour alone is not enough to guarantee economic growth. Pakistan, Bangladesh and Nigeria have very big population but this “labour resource” alone does not necessary confer growth. What is more important is that quality of the labour force, the human capital. Human capital is the attributes of an individual that contribute productively to economic activities. Human capital could refer to educational attainments, training and skills, entrepreneurship, and creativity. Human capital can be improved through formal education for children, vocational training, retraining, life-long adult education programme, better nutrition that improve mental concentration, better sanitation that reduces illness and thus absenteeism from school and improved basic healthcare that reduces preventable diseases.
    Technological Factor
    (a) Appropriate technology. One organization that aims to promote appropriate technology to improve rural welfare is Practical Action previously known as The Intermediate Technology Development Group (ITDG)
    (b) New production methods. New production methods could improve the quality of goods and/or reduce the cost of production. For instance, a new production technology can produce stronger concrete at a faster rate and at lower cost of production. Thanks to this technology, better buildings can be constructed with lower costs. Technology also allows the country to combine resources to produce new goods or more value-added products. Thus, an improvement in production technology allows the country to expand its PPF (experiences economic growth) with existing supply of resources.
    C.Informational Technology: A cell phone, access to internet, and fax can improve the ability to gather live information that can improve productivity. Ability to access accurate weather forecasts can help farmers to make important decisions about sowing seeds, transplanting, harvesting, and storage of harvest. Thus, informational technology can be used to increase agricultural produce. Internet access, a reliable and cheap transportation system, and a reliable and cheap method of collection of payment over the internet allows enterprising businesses to expand their markets abroad and effectively increase output.
    Institutional Factor: According to the Economist Survey of 20th century: the recipe to growth is the rule of law (especially property), capitalism (facilitate resource allocation), and a fairly open economy with low tariffs. (Sept 11, 2000)
    i. Financial sector & efficiency.A developed and efficienct financial system instills confidence in consumers to save with this financial institutions. In this case, savings can be fed back into the economy through the financial system as borrowing to firms. Low Income Countries, 77% in Middle Income Countries and 195% in High Income Countries. A bank that only offers saving in the form of checking account and 1 year long deposit is not as developed as one that offers checking account, various length deposit account, deposit in different currencies and in different forms of gold, mutual funds that cater to different risks tolerance, and muslim banking. A developed system is also one that has good and efficient communication within banks, among banks, among businesses, domestically and internationally.
    ii.The financial system’s role is to intermediate between savings and investments and cycle funds. “The ratio of domestic credit provided by the banking sector to GDP is used to measure the growth of the banking system because it reflects the extent to which savings are financial. Liquid liabilities include bank deposits of generally less than one year plus currency. Their ratio to GDP indicates the ease with which their owners can use them to buy goods and services without incurring any cost. Quasi-liquid liabilities are long-term deposits and assets -such as certificates of deposits, commercial paper, and bonds- that can be converted into currency or demand deposits, but at a cost.
    iii.Education System.
    iv.Health Care. If the potential workers are not healthy then they cannot contribute as much to economic development as they could. MoreoIf community. Researchers have estimated that AIDS could reduced the real GDP growth of badly affected economies by 0.3% to 1.5% annually.
    v. Infrastructure includes all essential facilities and services such as transportation network, communication network, power (electricity, gas, etc.) network, running water network, irrigation, and waste disposal network that are necessary for economic activities. Cheap, fast and easy communication, for example, reduces the cost of doing business. A good transportation network allows resources and goods to be transported quickly and cheaply. Thus, a good network of road, railways and access to seaports can facilitate trade that allows an economy to exploit economies of scales by producing for a larger market. This shifts the PPF outward. Jeff a barrier to econ world on how good irrigation not only led to growth and development. In some cases, a whole more vibrant civilization (eg. The Aztec) is founded on good infrastructure. This reduces the cost of production. Good infrastructure thus allows capital thus allows capital to be accumulated.
    vi. Political Stability:Basically, growth is usually possible in a stable political environment. Liberia, Burundi, and Nigeria are some examples where instable political environments had prevented these economies from achieving desirable economic growth. Entrepreneurs in instable political environments will have less incentives to invests as they incur higher risk of losing their investments and properties through appropriation by government, of not being able to keep their profits, and having higher costs of transactions due to uncertainty. There are also a lot of studies that indicate corruption and ineffective government could slow down (and in the worst case hinder) economic growth.

    References
    1.Acemoglu, D., & Robinson, J. A. (2008). Persistence of Power, Elites and Institutions. American Economic Review, 98 (1):267-93. DOI:10.1257/aer.98.1.267
    2.Acemoglu, D., Johnson, S. & Robinson, J. (2004). Institutions as fundamental cause of long-run growth. National bureau of economic research. Working paper 10481. http://www.nber.org/papers/w10481
    3.Ferrini, L. (2012). The importance of economic institutions to economic development. E-international relations, ISSN 20538626. http://www.e-ir.info/2012/09/19/
    4.Haller, .A (2012). Concept of Economic Growth and Development, Challenges of Crisis and of Knowledge. Economy Transdisciplinary Cognition, Vol15(Issue1) Pp66-71
    5.Saima, N., Nasir, I., & Muhammad, A. (2014). The Impact of Institutional Quality on economic Growth: Panel Evidence. The Pakistan Development Review 53:1 (Spring 2014) pp. 15–31

  49. Ajah, Angela N. says:

    NAME: AJAH, ANGELA N.
    REG. NO.: 2019/246659
    EMAIL: ajahangelanelly@gmail.com
    DEPARTMENT : LIBRARY & INFORMATION SCIENCE/ECONOMIC
    COURSE CODE : Eco. 361 (Online Discussion Quiz 2—Some Vital Questions on Development 1)
    COURSE: DEVELOPMENT ECONOMICS.
    LECTURER: TONY ORIJI
    QUIZ: Critically discuss and analyse these questions as a potential Special Adviser to Mr. President of Poverty Alleviation and Economic Development

    QUESTION 1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    ANSWER:
    1a For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services. What can be learned inclues:
    First, the facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of ‘getting history right’, but also one of allowing the developing countries to make more informed choices. This is not to say that every developing country should adopt an interventionist development strategy. Some of them may indeed benefit from following the Swiss or Hong Kong models.
    Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    Secondly, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    Thirdly, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    1b. Their are similar in the following ways:
    i. Terms of intellectual property rights institutions, which have become a key issue following the recent controversy surrounding the TRIPS (trade-related intellectual property rights) agreement in the WTO.
    ii. In relation to institutional development.
    iii. Public finance: The fiscal capacity of the state remained highly inadequate in most now-developed countries until the mid-20th century, when most of them did not have income tax.
    What Is Industrialization?
    Industrialization is the process by which an economy is ontransformed from a primarily agricultural one to one based on the manufacturing of goods.
    Characteristics of industrialization include economic growth, the more efficient division of labor, and the use of technological innovation to solve problems as opposed to dependency on conditions outside of human control. Therefore, the initial conditions are similar for contemporary developing countries from what the developed countries faced on the eve of their industrialization.

    QUESTION 2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development
    ANSWER:
    2a. Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behavior. Its original focus lay in Thorstein Veblen’s instinct-oriented dichotomy between technology on the one side and the “ceremonial” sphere of society on the other.
    Economic institutions are responsible for organizing the production, exchange, distribution and consumption of goods and services. Economic institution is also one of the basic institutions. For the sake of survival each society has an economic system ranging from simple to complex.
    2b. It has identified four broad channels through which the correlation can be explained.
    1. Institutions determine the costs of economic transactions: they spur development in the form of contracts and contract enforcement, common commercial codes, and increased availability of information, all of which reduce the costs of transactions, risk, and uncertainty.
    2. Institutions determine the degree of appropriability of return to investment: protection of property rights and the rule of law spur investment and thus increase incomes.
    4. Institutions also determine the scope for oppression and expropriation of resources by elites: unequal institutions which allow the dominance of powerful elites over economic exchange strongly limit development, as can be seen in the case of many ex-colonial countries.
    5. Lastly, institutions determine the degree to which the environment is conducive to cooperation and increased social capital; inclusive and participatory institutions increase the flow of information and the extent to which resources can be pooled to reduce risk and ensure sustained levels of wealth. They determine the volume of interactions available, the benefits from economic exchange and the form which they can take.

    QUESTION 3: How can the extremes between rich and poor be very great?.
    It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    ANSWER:
    Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer.Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education.
    1. Denied a longer life. In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    2. Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it.
    3. Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    4. Inequality is sexist. With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.
    5. Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford.

    QUESTION 4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?
    ANSWER
    The following points highlight the four sources of economic growth of a country.
    1. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force. Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth.
    A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers. Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources:
    The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    3. Capital Formation:
    This recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital.
    In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    4. Technological Change and Innovation:
    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.

    4b. Institutionalized corruption, low quality education and brain drain are the primary factors. In countries with institutionalized corruption and lack of rule of law, this system is purposely maintained by government officials, because they’re becoming very rich from it. They siphon off public funds from corruption, and also involve themselves in the market economy and then restrict competition for others through all kinds of tricks or threats or force if necessary. They maintain lack of rule of law, because having rule of law would affect their profits. These things make them very rich since they’re essentially putting their hands on a large share of the economy, while the entire population is paying the cost in terms of lawlessness, higher prices for all but basic things, and not being able to compete because the markets are owned by the gov’t connected big shots and they don’t like competition. The system works quite well hem for them and that’s why countries are stuck in this basically perpetually. They don’t want to change it.
    Mostly it is just that they have a very pure market economy. Lots of corruption, not many rules being enforced, everything can be bought, everyone poor, no government to invest in infrastructure (since the government officials are acting like capitalists and trying to keep as much for themselves as possible), etc. So they have a hard time moving forward, and get pulled back every time they do.

  50. Ugochukwu Kosisochukwu Henry says:

    NAME: UGOCHUKWU KOSISOCHUKWU HENRY
    REG NO: 2018/250200
    DEPARTMENT: COMBINED SOCIAL SCIENCES
    COURSE: ECO 361
    COMBINATION: ECONOMICS/SOCIOLOGY AND ANTHROPOLOGY

    I. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    A broader conception of development has been embraced by the international community, first through the Millennium Development Goals (MDGs) of 2000, and then through the Sustainable Development Goals (SDGs) of 2015. The eight MDGs were expanded and modified to seventeen SDGs, which include conventional economic measures such as income growth and income poverty, but also inequality, gender disparities, and environmental degradation.
    The six decades after the end of World War II, until the crisis of 2008, were a golden age in terms of the narrow measure of economic development, real per capita income (or gross domestic product, GDP). This multiplied by a factor of four for the world as a whole between 1950 and 2008. For comparison, before this period it took a thousand years for world per capita GDP to multiply by a factor of fifteen. Between the year 1000 and 1978, China’s income per capita GDP increased by a factor of two; but it multiplied six-fold in the next thirty years. India’s per capita income increased five-fold since independence in 1947, having increased a mere twenty percent in the previous millennium. Of course, the crisis of 2008 caused a major dent in the long-term trend, but it was just that. Even allowing for the sharp decreases in output as the result of the crisis, postwar economic growth is spectacular compared to what was achieved in the previous thousand years.But what about the distribution of this income, and in particular the incomes of the poorest? Did they share in the average increase at all? Here the data do not stretch back as far as for average income. In fact, we only have reasonably credible information going back three decades. But, World Bank calculations, using their global poverty line of $1.90 (in purchasing power parity) per person per day, the fraction of world population in poverty in 2013 was almost a quarter of what it was in 1981—forty-two percent compared to eleven percent. The large countries of the world—China, India, but also Vietnam, Bangladesh, and so on—have contributed to this unprecedented global poverty decline. Indeed, China’s performance in reducing poverty, with hundreds of millions being lifted above the poverty line in three decades, has been called the most spectacular poverty reduction in all of human history.
    The present of the economic development discourse is, of course, shaped by the trends of the distant and recent past. An interesting and important feature of the current landscape is the shift in the global geography of poverty. Using standard official definitions, forty years ago ninety percent of the world’s poor lived in low-income countries. Today, three quarters of the world’s poor live in middle-income countries.
    The fast growth of some large countries, accompanied by rising inequality in these countries, means that the average income increases have not been reflected in poverty reduction to the same extent. So, although these countries have now crossed the middle-income category boundary, which depends on average income, they still have large absolute numbers of poor people. These poor in middle-income countries vie with the poor in poor countries for global concern and attentionThe past and present of economic development sets the platform for the long-term future. Environmental degradation and climate change will surely worsen development prospects and ratchet up conflict and environmental stress-related migration. The issues here have been well debated in the literature. And the actions needed are relatively clear—the question is rather whether there is the political will to carry them out. Beyond challenges that arise due to ecological change and environmental degradation, another prominent challenge that has arisen since the 1980s is the global decline in the labor share. The labor share refers to payment to workers as a share of gross national product at the national level, or as a share of total revenue at the firm level. Its downward trend globally is evident using observations from macroeconomic data as well as from firm-level data. A decline in the labor share is symptomatic of overall economic growth outstripping total labor income. Between the late 1970s and the 2000s the labor share has declined by nearly five percentage points from 54.7% to 49.9% in advanced economies. By 2015, the figure rebounded slightly and stood at 50.9%. In emerging markets, the labor share likewise declined from 39.2% to 37.3% between 1993 and 2015 (IMF, 2017). Failure to coordinate appropriate policy responses in the face of these developments can spell troubling consequences for the future of economic development. Indeed, the decline in labor share despite overall economic progress is often seen as fuel that has fanned the fire of anti-immigration and anti-globalization backlashes in recent years, threatening a retreat of the decades-long progress made on trade and capital market liberalization worldwide.
    It should be noted that the labor share and income inequality are inextricably linked. Indeed, the labor share is frequently used as a measure of income inequality itself. Understanding the forces that determine the labor share has been a singularly important aspect of the landscape of economic development. Indeed, this quest has guided trade and development economics research for decades, during which time the forces of globalization and its many nuanced impacts on the labour share has been fleshed out.

    2. What are economic institutions? and how do they shape problems of underdevelopment and prospects for successful development?
    Economic institutions are responsible for organizing the production, exchange, distribution and consumption of goods and services. Economic institution is also one of the basic institutions. For the sake of survival each society has an economic system ranging from simple to complex. Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen’s instinct-oriented dichotomy between technology on the one side and the “ceremonial” sphere of society on the other.
    The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions. By narrowing the definition to economic institutions, those institutions that perform economic functions are covered; of these, three sets can be identified: establishing and protecting property rights; facilitating transactions and permitting economic co-operation and organisation.
    There are three major international economic institutions, namely, WTO, IMF, and UNCTAD. World Trade Organisation: WTO was formed in 1995 to replace the General Agreement on Tariffs and Trade (GATT), which was started in 1948.
    In combination with micro-level studies, provide strong support for the overwhelming importance of institutions in predicting the level of development in countries around the world. Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores, are found to be strongly correlated to better economic performance over time. This essay aims to explain why institutions are important to economic development and to provide evidence for the arguments made. It argues that institutions support economic development through four broad channels: determining the costs of economic transactions, determining the degree of appropriability of return to investment, determining the level for oppression and expropriation, and determining the degree to which the environment is conducive to cooperation and increased social capital. Evidence is derived from the literature, from comparison of countries.

    3. How can the extremes between rich and poor be so very great?
    Economic inequality (also known as the gap between rich and poor, income inequality, wealth disparity, or wealth and income differences) consists of disparities in the distribution of wealth (accumulated assets) and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality is related to the ideas of equity: equality of outcome and equality of opportunity. There are various numerical indices for measuring economic inequality, but the most commonly used measure for the purposes of comparison is the Gini coefficient (also known as the Gini index or Gini ratio for Italian statistician and sociologist Corrado Gini). The Gini coefficient is a statistical measure of the dispersal of wealth or income. A Gini coefficient of zero indicates that there is perfect equality assets are equally divided between all people in the group. A Gini coefficient of one indicates that all of a group’s wealth is held by one individual. Most countries fall toward the middle of this range.
    Acknowledged factors that impact economic inequality include, but are not limited to:
    Inequality in wages and salaries;
    The income gap between highly skilled workers and low-skilled or no-skills workers;
    1. Wealth concentration in the hands of a few individuals or institutions
    2. Labor markets
    3. Globalization
    4. Technological changes
    5. Policy reforms
    6. Taxes
    7. Education
    8. Computerization and growing technology
    9. Racism
    10. Gender
    11. Culture
    12. Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers.

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?
    Source of Economic Growth
    1. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force. Many economists believe that the quality of labour inputs the skills, knowledge, and discipline of the labour force is the single most important element in economic growth. A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.
    Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.

    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high-density service industries.

    3. Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation. In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    Accumulating capital, as we have seen, requires a sacrifice of current consumption over many years. Countries that grow rapidly tend to invest heavily in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may go into net capital formation. By contrast, many economists believe that the low national savings rate in the United States only 4 percent of output in 1996 poses a major economic problem for the country.

    4.Technological Change and Innovation:
    In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other. Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan. Economic growth inevitably rides on the four wheels of labour, natural resources, capital, and technology. But the wheels may differ greatly among countries, and some countries combine them more effectively than others.

    Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty. Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth. Every country suffers from it to some degree, however certain places are greater effected than others. This is because the level of economic growth differs from country to country. The greater amount of growth the less room there is for poverty. This is simple reason why some countries are richer than others.It is widely accepted that countries are poor because their economies don’t manage to grow sufficiently. Instead, countries are poor because they shrink too often, not because they cannot grow and research suggests that only a few have the capacity to reduce incidences of economic shrinking.

  51. OGENYI, CHUKWUEBUKA FREDERICK says:

    NAME : OGENYI, CHUKWUEBUKA FREDERICK

    REG. NO : 2018/241864

    DEPARTMENT : ECONOMICS

    EMAIL : ogenyichukwuebukafrederick@gmail.com

    COURSE : ECO 361

    ASSIGNMENT :

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    3. How can the extremes between rich and poor be so very great?

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    ANSWERS :

    NO. 1

    Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.

    1. Governments can advance development even with low levels of government spending.
    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago (Figure 1). To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education.

    And here lies the lesson for today’s developing economies: While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital—mobilizing private finance for development.

    2. Government spending by today’s developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
    Government spending among the advanced economies has increased, but so has its variability. Before 1913, spending among the advanced economies ranged from less than 2 percent of GDP in Japan to 13 percent in Italy, or a span of 11 percentage points. Today, the span of spending among the advanced economies is 39 percentage points: from 17.3 percent in Hong Kong to 56.4 percent in France.

    Development paradigms vary among today’s advanced and developing countries. Robust growth can happen with a smaller or a larger government, in general. Too large of a redistribution, however, may create substantial disincentives to work and invest, or lead to tensions between formal and informal workers, employees of large companies or state-owned enterprises and small private firms. This danger now is clearer than ever: The changing world of work is clashing with persistent informality in developing countries and social protection systems that cover only part of the population.

    3. Government spending has been
    countercyclical since World War II in almost all advanced economies, even with the sustained trend of spending increases (Figure 3).
    Countercyclical fiscal policy is a must for today’s developing countries, especially for those with abundant natural resources. However, there is overwhelming evidence that fiscal policy has been consistently pro-cyclical in developing countries, resulting in profound macroeconomic imbalances, unproductive debt build-ups, and ongoing instability.

    4. The shift from agrarian to industrial to post-industrial economies required different worker skills. Economic disruptions reshaped governments in the past, as is happening now with the changing world of work, leading to a large expansion of social insurance and protection spending.

    ii. Yes, the initial conditions are similar for the developing countries. This is because, the so-called developed countries was not developed initially. But with well articulated and robust Micro and macro economic policies, they were able to be where they are today in terms of economic advancement.

    NO. 2

    The term “Economic Institutions” refers to two things:

    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.
    2. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    Economists are interested not only in understanding specific existing institutional agencies, but also in the more exciting question of why some institutions evolve and others don’t.

    II. How they shape problems of underdevelopment :

    1. Institutions which are conducive to development ensure greater self-expression, allow the free flow of information and encourage the formation of associations and clubs. These form prosperous social relationships, which are conducive to greater economic interaction by increasing levels of trust and wider availability of information (Putnam, 1993). They allow greater sharing of resources through democratic institutions and the use of the state to reduce the risk attached to economic activity (Bardhan, 2006, p.5). The welfare state is an example of an institution which pools resources to limit the negative effects of business cycles on incomes and unemployment. Institutions conducive to development pool resources to provide the investments in education, health and infrastructure which lie at the basis of economic interaction and are necessary and complementary to private investment. Informal institutions lie at the basis of an economy.

    2. Institutions conducive to economic

    development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs (Coase, 1992, p 197; Dahlman, 1979, p. 149). They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing. Where transaction costs are small, the private enforcement of contracts may still be preferred.

    3. The protection of property rights requires an expanded role for state authority. Individuals and groups sacrifice a degree of freedom in order to ensure state protection; they accept levies and taxes to cover policing expenses, and state monopoly over the use of force for common security (Bates, 2001, p. 65-66). However, there is a risk that states which have the power to enforce property rights may use that power to expropriate property too. Instead of reducing risk of economic transactions, this increases it. Thus property rights are by no means sufficient to spur economic growth, and must be balanced by institutions which limit the extractive capacity of state power. These typically involve independent parliaments and judiciaries. Democratic institutions of political representation strongly contribute to this process.

    4. Countries which have undergone colonial domination tend to be plagued by such extractive institutions. These have outlived the gaining of independence on behalf of these countries, and their control has largely been taken over by local elites. There are countless examples of societal outcomes the cause of which can be traced to institutional arrangements of many decades before.

    5. Greater equality and functional economic institutions are also seen as the cause for the successful development of Vietnam compared to a similar country as Nicaragua, where high inequality has concentrated power in the hands of a restricted elite, and governments have failed to adequately invest in infrastructure and public welfare. Similarly, institutional capacity to exploit domestic primary resources is indicated as the key to the success of Botswana and Mauritius in comparison to other developing countries for which primary resources have turned into a curse, i.e. Sierra Leone (diamonds), Angola, Equatorial Guinea and Nigeria (oil) (Birdsall et al., 2005, p. 138). The outcomes of institutions have effects which lie deep in the socio-economic fabric of societies. Banerjee and Duflo (2011) recount the finding by Abhijit and Lakshmi Iyer (2005) that in India the coexistence of two systems of land-revenue collection under the British colonization caused very different outcomes; under one system, the landlord was responsible for collecting taxes, and this strengthened his role, while under the other farmers themselves were responsible for the taxes.

    NO. 3

    There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:

    Inequality in wages and salaries;
    The income gap between highly skilled workers and low-skilled or no-skills workers;
    Wealth concentration in the hands of a few individuals or institutions;
    Labor markets;
    Globalization;
    Technological changes;
    Policy reforms;
    Taxes;
    Education;
    Computerization and growing technology;
    Racism;
    Gender;
    Culture;
    Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers.

    Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:

    1. Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.

    2. Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers.

    3. Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.

    NO. 4
    Sources of national and international economic growths:

    1. Natural resources endowment.
    2. Increased human capital.
    3. Efficiency and effective economics policies.
    4. Balance of payment equilibrium.
    5. Balance of trade equilibrium.
    6. Balanced budgetary policy.
    7. Increased capital formation and accumulation.
    8. Exchange rate stability. Etc

    II. Why some countries are progressing morethan the others.

    In approaching this question, it will be helpful to use economic concepts. Essays will be judged in part by how well they adhere to the economic concepts listed in Economic Principles to Keep in Mind. These reflect some of the general points on which practically all economists agree.

    While economists agree on these points, they approach the issue of the wealth of nations in different ways. For example, Robert Solow and others focus on technology as the key factor in economic growth and may consider most of the differences in national incomes to be accounted for by differences in productivity. Economists like Jeffrey Sachs and Paul Krugman, however, may focus more on geography and trade in accounting for these differences.

    These differing perspectives are not in necessarily opposition, as academics tend to specialize in narrow fields so they can better understand the issues at hand. Economists studying this issue focus on different aspects. These different approaches can be complementary and should be understood together. The rest of this primer introduces four perspectives and the ways in which they can help explain why some nations are wealthier than others.

    1. Technology and Productivity :

    One important factor contributing to the material wealth of a society is its productivity. Imagine two nations that were exactly identical in every respect—resources, population, culture, etc—except that one society had higher productivity. We would expect the more productive society to produce a greater output of goods. Productivity is not an aggregate number (like output), but a rate (like output per capita). Higher productivity means more can be produced for a given amount of people, raising the wealth of a typical person. For most of human history, productivity has changed very little. While history has seen important advances like the compass and the printing press, it wasn’t until the industrial revolution, beginning in the late 1700s, that productivity really began to grow.

    2. The source of productivity is technology :

    Advances in technology, like automation or telecommunications, make it possible to produce more with less. However, some elements in society resist adopting new technologies. Examples span from management at large companies that want to prevent competition, to labor unions that fear losing members to automation, to nations that prevent the spread of modern farming practices because they fear a threat to traditional culture. In these cases, groups can use their power to impede change. Doing so may be good for those groups in the short-run, but it can harm the long-run well-being of the society. We expect societies that are less resistant to change to end up being more productive, and therefore wealthier.

    3. Institutions and Culture :

    Technology is as much about the way tools are used as it is about the tools themselves. The way we use tools is a consequence of our institutions, which effect how we organize our activity. The earliest advances of the industrial revolution were specialization and the division of labor. These developments are not mechanical, but organizational. Institutions—businesses, governments and other organizations—are another important factor in explaining why some nations are richer than others.

    Governments play many roles in ensuring economic growth, the most prominent of which is protecting property rights. Political stability is also important for a healthy economy; crime, poverty, income disparity and armed conflicts can be both a cause and result of poor economic growth. Governments can help mitigate these problems. Government can also play a role in the economy by correcting for market failures: dealing with unwanted side effects of economic activity like pollution, and providing important public services like roads and other infrastructure. Countries that support research and development, education and scientific research are likely to improve their supply of technology.

    There are many opinions an how large and what kind of a role government should play in an economy. What is uncontroversial is that government has the ability to help society by addressing market failures and by providing essential services that facilitate economic activity, but governments that are corrupt or overly bureaucratic often end up impoverishing their citizens. Beyond government and business, there are other institutions that shape economies. These include labor unions, civic organizations and schools. At an even more abstract level are what economist Kenneth Arrow called the “invisible institutions” of morals, customs and social norms.

    4. Geography and Natural Resources :

    Even a nation that is open to trade and technological change, one that has strong institutions and growth-friendly policies, might have a hard time reaching the standard of living of wealthier nations, because not all nations are created equal in terms of geography and natural resources.

    Consider the world’s wealthiest country, the United States. There are many historical and social factors leading to this success, but the U.S. also has two large coastlines, thousands of miles of navigable rivers, millions of acres of fertile soil and huge deposits of minerals and other natural resources. All of these factors increased the potential for the U.S. to become the economic powerhouse it is today.

    As importantly, the U.S. and Europe have temperate climates. Tropical countries must deal with diseases that flourish in their climates, soil and ecosystems that are less ideal for agriculture, and other problems like extreme heat and long rainy seasons. However, this point is tempered by the success of a number of nations with warmer climates, particularly those in Southeast Asia. Since there are other factors to growth, a country’s fate is not sealed by its geography. This is a reminder that differing perspectives should be considered together.

    5. Freedoms and Capabilities :

    Although freedom is an abstract concept that can be difficult to measure, it is hardly worth disputing that historically freer nations have also developed into wealthier nations. The “freedom” to which economists often refer is free enterprise. Freedom also refers to the many political and civil liberties that are central in modern democracies, and these too have economic benefits. A free press, for example, helps spread information vital to economic decision making, and makes government activity transparent.

    Freedom can also be defined in terms of capabilities. A person may have freedom to pursue the creative end in which they are most interested or to which they are best suited. In this sense, public policy can enhance freedom through education, literacy campaigns, public health and poverty reduction programs. By promoting the capabilities of individuals, society as a whole can benefit from what that individual then produces.

  52. Obasi Chidera Godwin says:

    NAME: Obasi chidera Godwin.
    reg number. 2018/250687
    Dept.: Economics
    course: Eco 361 Development economics

    QUESTION 1
    1. What can be learned from the historical record of economic progress in the now developed world?
    In the last 25 years, the dominant development paradigm has been based on the belief that the role of the government should be confined to providing macroeconomic stability, protection of property rights, and the provision of public goods. Starting in the late 1970s and the early 1980s, state-led and nationalistic development strategies, which most developing countries pursued in the 1960s and the 1970s, were denounced as having created inefficiencies, corruption, and slow growth. As a result, a set of policies, known as Neo-liberal policies, was recommended, comprising liberalization of trade and foreign investment, privatization of state-owned enterprises, deregulation of domestic industries, more ‘prudent’ macroeconomic policy, and a stronger protection of intellectual property rights.
    For good and bad reason The USA, today’s supposed champion of free trade, was even more protectionist than Britain throughout most of its history before the Second World War. According to the authoritative study by Paul Bairoch, between the Civil War and the Second World War, it was literally the most heavily protected economy in the world.

    ii.. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Developed nations are generally categorized as countries that are more industrialized and have higher per capita income levels. …
    If we talk about developed countries, they are post-industrial economies and due to this reason, the maximum part of their revenue comes from the service sector.

    Developing nations are generally categorized as countries that are less industrialized and have lower per capita income levels.
    Developing Countries depend upon the Developed Countries, to support them in establishing industries across the country. The country has a low Human Development Index (HDI) i.e. the country have low Gross Domestic Product, high illiteracy rate, educational, transportation, communication and medical facilities are not very good, unsustainable government debt, unequal distribution of income, high death rate and birth rate, malnutrition both to mother and infant which case high infant mortality rate, high level of unemployment and poverty.

    QUESTION 2
    What are economic institutions,

    Economic institutions have re-emerged at the centre of attention in development economics after a long period when their existence and smooth functioning was assumed in the hypotheses of Neo- classical economics.
    Economic institution is also one of the basic institutions.
    They are are responsible for organizing the production, exchange, distribution and consumption of goods and services.

    ii..and how do they shape problems of underdevelopment and prospects for successful development
    These institutions have also played a major role in the aspect of helping out small families in getting a good mortgage plan for their houses. This arrangement has been able to bring about home ownership and even car ownership and this is done by providing car loans, many times they also provide hire purchase.
    below are examples of Economic Institutions in Nigeria And Agencies

    1. National Insurance Commission
    2. Federal Inland Revenue Service
    3. Budget Office of the Federation
    4. Social Security Administration of Nigeria
    5. Asset Management Corporation Nigeria
    6. Central Bank Of Nigeria
    7. National Planning Commission etc

    QUESTION 3
    How can the extremes between rich and poor be so very great?

    in this case, i will list out two reasons

    1. the poor invest in liabilities while the rich invest in assets. Liabilities take money away from you while assets grow your net worth. That why someone like Bill Gates, whose has a majority of assets in Microsoft’s stock, continues to make money faster than he can give it away due to appreciation in the stock price.

    Unfortunately, poor people don’t think like that. They think in the moment and look for easy and fast money(like playing the lottery. Gambling etc

    2. The rich get richer because money makes money. When you have money to invest, you can multiply it. The poor don’t necessarily get poorer unless they overspend or face a crisis, but they stay poor because they don’t have money surplus to their needs that they can put into an investment. Having no reserves or surplus income, though, they may become poorer if they face heavy medical bills, if accident or illness disrupts their income-earning capacity, or if they face a crisis of some kind.

    QUESTION 4
    What are the sources of national and international economic growth?

    The sources of growth in a developing economy are no different from those in the advanced industrialized countries.The following points highlight the four important sources of economic growth of a country. The sources are:
    1. Human Resources
    2. Natural Resources
    3. Capital Formation
    4. Technological Change and Innovation.

    II. Why do some countries make rapid progress toward development while many others remain poor?

    These include low levels of education, poor water quality or a lack of doctors. Political factors – some countries are at war or the government may be corrupt. Therefore money does not reach the people who need it most and spending on areas such as education and infrastructure may be insufficient.

  53. Nduka Olisazoba Chiebuniem REG NO: 2018/241844 says:

    Name: Nduka Olisazoba Chiebuniem
    Reg No: 2018/241844
    Department: Economics
    Answers
    1) Development can be defined as bringing about social change that allows people to achieve their human potential.
    On this basis, we can define development economics as the allocation of existing limited resources in such a way that it would encourage sustained growth overtime economically, socially and politically in the society.
    2)When we look into the historical record of economic progress in the now developed world, places like Europe and America, we will see that in these countries citizens and their property are protected. Because when there is security of lives and property, progress follows.
    We also notice that they have a low corruption rate in their political and economic sectors, the reason is,  they have a working independent Judiciary.
    Well, its different for developing countries like Nigeria and other developing countries are plagued with corruption, caused by  greed in the hearts of our leaders. There is also lack of security in many places in the country. How would a man work when his/her life is constantly under threat?? This not only slows down development, it may in some cases receed it.
    3) Economic institutions like Banks, Government organizations and investment funds, shape the problems of underdevelopment and prospects for successful development, when the policies made by the government organizations like Central Banks, positively affect the economy and the people. The banks lending money to the people, help safeguard the people’s savings and also supporting small businesses would also be an addition to the development of the nation.
    4) The extremes between the rich and poor can be ever so great, when the political and Economic climate are poised in a way that, supports the rich getting richer and the poor getting poorer. This has led to the fall of a great many empires, like the French empire before the French revolution, the Roman empire, at this peak, right before it crumbled.
    Our country Nigeria is headed down the same path, a country were the rich and politicians of high standing are wining and dining together, Scratching each other’s backs, where the rich sponsor the politician’s campaign and when they get into power, they make policies that suffocate the competitors of their sponsors. Indirectly creating a monopoly, and killing the spirit of healthy competition.
    5) Sources of national and international growth include,
    Natural resources,
    Financial institutions,
    Trade, etc.
    Everyone can get to benefit from it, if used efficiently. Example in a situation where a country decides to engage in international trade, where they have buy resources that they have less of and sell resources that they have an excess of.
    Why some countries make rapid development while others remain poor is, perhaps in the way their limited resources are allocated and utilized. For example a country like our country Nigeria, blessed with abundant natural resources cannot make rapid progress because greed and corruption are buried deep in the heart of our leaders.

  54. Obasi Chidera Godwin says:

    NAME: Obasi chidera Godwin.

    reg number. 2018/250687

    Dept.: Economics

    course: Eco 361 Development economics

    QUESTION 1

    1. What can be learned from the historical record of economic progress in the now developed world?

    In the last 25 years, the dominant development paradigm has been based on the belief that the role of the government should be confined to providing macroeconomic stability, protection of property rights, and the provision of public goods. Starting in the late 1970s and the early 1980s, state-led and nationalistic development strategies, which most developing countries pursued in the 1960s and the 1970s, were denounced as having created inefficiencies, corruption, and slow growth. As a result, a set of policies, known as Neo-liberal policies, was recommended, comprising liberalization of trade and foreign investment, privatization of state-owned enterprises, deregulation of domestic industries, more ‘prudent’ macroeconomic policy, and a stronger protection of intellectual property rights.
    For good and bad reason The USA, today’s supposed champion of free trade, was even more protectionist than Britain throughout most of its history before the Second World War. According to the authoritative study by Paul Bairoch, between the Civil War and the Second World War, it was literally the most heavily protected economy in the world.

    ii.. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Developed nations are generally categorized as countries that are more industrialized and have higher per capita income levels. …
    If we talk about developed countries, they are post-industrial economies and due to this reason, the maximum part of their revenue comes from the service sector.

    Developing nations are generally categorized as countries that are less industrialized and have lower per capita income levels.
    Developing Countries depend upon the Developed Countries, to support them in establishing industries across the country. The country has a low Human Development Index (HDI) i.e. the country have low Gross Domestic Product, high illiteracy rate, educational, transportation, communication and medical facilities are not very good, unsustainable government debt, unequal distribution of income, high death rate and birth rate, malnutrition both to mother and infant which case high infant mortality rate, high level of unemployment and poverty.

    QUESTION 2

    What are economic institutions,

    Economic institutions have re-emerged at the centre of attention in development economics after a long period when their existence and smooth functioning was assumed in the hypotheses of Neo- classical economics.
    Economic institution is also one of the basic institutions.
    They are are responsible for organizing the production, exchange, distribution and consumption of goods and services.

    ii..and how do they shape problems of underdevelopment and prospects for successful development

    These institutions have also played a major role in the aspect of helping out small families in getting a good mortgage plan for their houses. This arrangement has been able to bring about home ownership and even car ownership and this is done by providing car loans, many times they also provide hire purchase.

    below are examples of Economic Institutions in Nigeria And Agencies

    1. National Insurance Commission
    2. Federal Inland Revenue Service
    3. Budget Office of the Federation
    4. Social Security Administration of Nigeria
    5. Asset Management Corporation Nigeria
    6. Central Bank Of Nigeria
    7. National Planning Commission etc

    QUESTION 3
    How can the extremes between rich and poor be so very great?

    in this case, i will list out two reasons

    1. the poor invest in liabilities while the rich invest in assets. Liabilities take money away from you while assets grow your net worth. That why someone like Bill Gates, whose has a majority of assets in Microsoft’s stock, continues to make money faster than he can give it away due to appreciation in the stock price.

    Unfortunately, poor people don’t think like that. They think in the moment and look for easy and fast money(like playing the lottery. Gambling etc

    2. The rich get richer because money makes money. When you have money to invest, you can multiply it. The poor don’t necessarily get poorer unless they overspend or face a crisis, but they stay poor because they don’t have money surplus to their needs that they can put into an investment. Having no reserves or surplus income, though, they may become poorer if they face heavy medical bills, if accident or illness disrupts their income-earning capacity, or if they face a crisis of some kind.

    QUESTION 4

    What are the sources of national and international economic growth?

    The sources of growth in a developing economy are no different from those in the advanced industrialized countries.The following points highlight the four important sources of economic growth of a country. The sources are:

    1. Human Resources
    2. Natural Resources
    3. Capital Formation
    4. Technological Change and Innovation.

    II. Why do some countries make rapid progress toward development while many others remain poor?

    These include low levels of education, poor water quality or a lack of doctors. Political factors – some countries are at war or the government may be corrupt. Therefore money does not reach the people who need it most and spending on areas such as education and infrastructure may be insufficient.

  55. EZECHUKWU RITA CHIOMA says:

    NAME: EZECHUKWU RITA CHIOMA
    REG NUMBER: 2018/250327
    DEPARTMENT: ECONOMICS
    ECO 361: DEVELOPMENT ECONOMICS
    Online discussion quiz 2- some vital questions on Development economics 1;
    Critically discuss and analyse these questions as a potential special adviser to Mr President on Poverty Alleviation and Economic Development:.
    QUESTION 1 :What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for the contemporary developing countries from what the developed countries faced on the eve of their Industrialization.
    ANSWER:
    Looking at economic data of different developed countries can be helpful when looking at which factors of economic growth are significant in terms of enhancing economic growth. The now developed world adopted so many strategies at their developing stage, some of which contributed to their growth while others didn’t, hence some lessons were learnt.
    It can be observed from the developing stage of the now developed world, the importance of agriculture, the role of export, importance of appropriate incentives, role of international economy, role of development of domestic industry and the role of so many other factors in the development of an economy.
    We can deduce from the progress all these factors brought to the now developed world to mention but few the fact that; first, government can advance development even with low levels of government spending. Second, the today’s developing economies need to focus on building fiscal and market institutions before rising spending needs and not after they have materialize. Third, with proper management (good governance), and diversification of the economy,a country is bound to experience growth and not experience great relapse.
    ✓Are the initial conditions similar or different for the contemporary developing countries faced on the eve of Industrialization?
    Today developed world at their developing stage did not not have such basic institutions as democracy, central banks , patent law, or professional civil services . It took the now developed world a long time to construct institutions in their earlier days of development , whose quality fell well short of the global standards, institutions that today’s developing countries are expected to install. The initial conditions are thus different thou similar in some aspect.

    QUESTION 2: What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    ANSWER;
    Economic Institutions are agencies responsible for the organization of a society’s resources and services. They see to the production, exchange and distribution and final consumption of goods and services. Economic Institutions in Nigeria includes the banking and non-banking institutions, Nigerian stock exchange (NSE), Security and exchange commission (SEC), National Bureau of Economic Research, marketing institutions etc, whereas some of the international Economic Institutions include; World Trade Organization (WTO), International Monetary Fund( IMF) e.t.c.
    * Country with good economic institutions experiences financial system stability, low interest rate and low inflation, consistent macroeconomic policies which encourages investment, and aid development.

    QUESTION 3: How can the extremes between rich and poor be so great?
    ANSWER;
    It is an established fact in economics that wealth itself generates more wealth. Wealth is a source of investment, which the rich has in excess and the poor doesn’t. The poor virtually has to work all their life for a regular payment whereas the riches chooses whether to work or not, as their wealth generates more wealth for them. The rich takes advantage of every investment opportunity and in turn receives great returns, hence becoming richer. The widening inequality between the rich and the poor is as a result of the growing gap between the rich and the poor in their abilities to take advantage of investment opportunities. The poor don’t invest much and are so stuck working for the rest of their life.
    Poverty is said to exist when people lack the means to satisfy their basic needs . In our economy today,the standard of living keeps going down for the poor with the decreasing value of currency, as what a naira note can buy today, it can’t buy the next day. The poor who basically have to work all their life and depend on daily, weekly or monthly income, which rarely increases tends to suffer this economic situation the more, whereas the rich who has too much wealth and acquires too much wealth for himself through his numerous investment tends to live off much better. Hence, in the world today, we have a case of “extreme poverty versus extreme rich”.
    Furthermore, the government doesn’t seem to help matter, as they undertax corporations, and
    Wealthy individuals and underfund vital public services like healthcare and education, which could have helped the poor offset some basic needs, thus the poor keeps getting poorer while the rich keep getting richer.

    QUESTION 4:What are the sources of national and international Economic growth? Why do some county’s make rapid progress towards development while many others remain poor?
    ANSWER;
    Economic growth is an increase in the production of goods and services in an economy. Rapid Economic growth in developing economies can be traced to their climate and geography, high quality and quantity of human resources , human capital, physical capital, advanced technology, good governance and strong institutions like ; the finance and banking system, healthcare educational system, political stability and infrastructure to mention but few. Summarily, the sources of national and international Economic growth are;
    * Natural resources
    * Human factor
    *Physical capital and technological factors
    *Institutional factors, and
    *Government
    ✓Why do some countries make rapid progress towards development while many others remain poor?
    This can be traced to the fact that some countries are lacking in some of the factors contributing to Economic growth as mentioned above. We cannot help but notice that some countries are more endowed with natural resources, human and physical capital than the others which aids massive production for them and hence economic growth.
    Developing countries are also found to have improved Institutional systems. Sound banking system encourages investment, good educational and health care system provides an economy with quality human capital, and good infrastructures boosts production and subsequent development in an economy.
    Whereas some countries are more endowed with natural resources, than the other, it cannot be neglected that with bad governance/ management, an economy will not experience growth or it will have a high frequency of shrinking. Some countries who has remained poor, may have once, twice or several times, experienced economic growth and subsequently, a relapse. Thus, good management of natural resources through diversification of the economy, development of human capital, and improved Institutional system tends to be the reason why some county’s make rapid progress towards development while many others remain poor. Improved long run economic performance occurs primarily through a decline in the rate and frequency of shrinking. Due to improved long run economic factor and other factors mention above, development tends to be inevitable in some countries whereas in some countries it seems to be aloof.

  56. Ukachukwu Divine Amarachi - 2018/242426 says:

    Ukachukwu Divine Amarachi
    2018/242426
    Economics Department

    1a. Some of the lessons to be learned from the historical record of economic progress in the now developed world includes;
    a. Government can advance development even with low levels of government spending. Today’s low income countries spend more than twice on average than today’s advanced economies spent more than a century ago. While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital- mobilizing private finance for development.
    b. Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs and not after they materialise.
    C. Government spending by today’s developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
    d. Government spending has been countercyclical since World War II in almost all advanced economies, even with the sustained trend of spending increases. Countercyclical fiscal policy is a must for today’s developing countries, especially for those with abundant natural resources. There is overwhelming evidence that fiscal policy has been consistently pro- cyclical in developing countries, resulting profound macroeconomic imbalances, unproductive debt build-ups and ongoing instability.

    2a. What are economic institutions?
    Economic institutions are responsible for organising the production, exchange, distribution and consumption of goods and services. It is one of the basic institutions for the sake of survival, each society has an economic system ranging from simple to complex.
    2b. How do they shape the problems of undevelopment?
    I. Institutions conducive to economic development reduce the cost of economic activity which includes transaction costs. They do so by providing common legal framework and they encourage trust by providing policing and justice system for the adherence to common laws and regulations.
    II. They determine the extent to which those in power are able to expropriate the economy’s resources to their private advantage.
    III. Institutions which are conducive to development ensure greater self-expression, allow the free flow of information and encourage the formation of associations and clubs.
    IV. Institutions determine the degree of appropriability of return to investment; Protection of property rights and the rule of law spir investment and thus increases incomes.

    3. A major cause of Economic inequality within modern economices is the determination of wages by the capitalist market and the wages in this market is set by supply and demand. When there is high supply and low demand for a job, it results in a low wage and if there is low supply and high demand, it will result in a high wage.
    Education gap, computerisation and growing technology racism, gender, culture etc are some of the reasons why the gap between the rich and the poor are so great.

    4b. Sources of national and international economic growth.
    I. Natural Factors
    II. Human Factors
    III. Physical capital and technological Factors
    IV. Institutional Factors which includes;
    a. Finance and banking system
    b. Education system
    c. Health care
    d. Infrastructure
    e. Political stability.

    4b. Why some countries make rapid progress towards development while others remain poor.
    Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and difference in total factor productivity. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty.
    Some differences can be traced to such inherent factors as climate and geography. And sometimes culture plays a role in economic growth.
    Other Reasons Why Some Countries Grow Faster Than Others includes;
    I. Influence of the government
    II. Technology and investment
    III. Political, social and geographical conditions
    IV. International trade and finance.

  57. Enemuo Paul Onyedikachi (Reg:2018/248652) says:

    1) Neoclassical economic theory on international trade holds that liberal trade polices maximize economic welfare , Agricultural trade liberalization trade was the bedrock of most developed worlds like europe and america.
    Meanwhile, economist who believe that agricultural trade liberalization would generally benefit least developed countries are faced with some realities that seem to believe this notion :
    i) many developed countries did not liberalize their agricultural trade during the early stages of their industrialization but their farmers through less taxations

    It’s not similar for contempory developing countries like in the sub saharan africa today agriculture is stagnating while such mitigating conditions such as the protection of farmers through less taxations and provisions and implementation of agricultural polices are absent.The effect on economic development is crippling.

    2)Economic institutions are those various institutions such as “The internal Revenue Service”(IRS) charged with the responsibility of organizing the production, exchange, and distribution of goods and services, They are charged to perform economic functions like establishing and protecting property rights.

    -economic institutions influence government policies which in turn influence growth and distributional outcome,which then affects the pace of poverty reduction…in addition economic institutions directly influence the pace of economic growth

    3) One of the extremes is the issue of the natural effect of lower tax rates which allows the wealthy to keep more of their income .the federal income tax rates for higher income tax payers has been falling steadily for the past 60 years .. thereby increasing the gap between the poor and the rich ..the rich gets richer while the poor gets poorer

    4i) human resources/factors : the quality of labour that contributes to economic growth

    ii) Natural factors/resources : such as land and raw materials are sources that contribute to economic growth

    iii) institutional factors/resources : such as technological advancement, intellectual development are also sources that increases economic growth

    -some countries make rapid progress while others remain because of some polices affecting access to technology , poor human factor such as educated man-power and poor management or misuse of natural resources

  58. Roland Ifeanyi Godwin says:

    Name: Roland Ifeanyi Godwin
    Reg no: 2018/241822
    Department: Economics
    Course code: Eco 361
    Course title: Development Economics 1

    Assignment:

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    3. How can the extremes between rich and poor be so very great?
    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Answers

    1.
    Introduction
    In the last 25 years, the dominant development paradigm has been based on the belief that the role of the government should be confined to providing macroeconomic stability, protection of property rights, and the provision of public goods. Starting in the late 1970s and the early 1980s, state-led and nationalistic development strategies, which most developing countries pursued in the 1960s and the 1970s, were denounced as having created inefficiencies, corruption, and slow growth. As a result, a set of policies, known as neo-liberal policies, was recommended, comprising liberalisation of trade and foreign investment, privatisation of state-owned enterprises, deregulation of domestic industries, more ‘prudent’ macroeconomic policy, and a stronger protection of intellectual property rights.
    For good and bad reasons, neo-liberal policies have been very influential in Africa. The relatively sluggish economic performance of the continent in the 1960s and the 1970s, compared to the rest of the developing world, created greater scepticism about the state-led development strategies. The continuous foreign exchange crises that most countries in the continent have experienced have made it necessary for them to go to the Bretton Woods institutions – that is, the IMF and the World Bank – more frequently, making it unavoidable for them to accept the neoliberal policies conditionalities imposed by those institutions.
    Unfortunately, neo-liberal policies have produced very poor outcomes in Africa. Per capita income in Sub-Saharan Africa used to grow at 1.6% in the 1960s and the 1970s. Between 1980 and 2004, it shrank at the rate of 0.3%. Per capita income in North Africa and the Middle East grew at 2.5% in the 1960s and the 1970s. Between 1980 and 2000, it shrank at the rate of 0.1%.
    This poor growth record is a particularly damning indictment for a doctrine sold on the slogan that “we need to generate more wealth before we can re-distribute it.” To be fair, growth in many African countries picked up in the last 5-6 years due to commodity boom, but, in the absence of systematic industrial strategy that neo-liberalism inevitably leads to, little of this has been translated into structural transformation and technological upgrading that makes self-sustaining growth possible. As a result, with the world economy rapidly sinking into the biggest recession. Since the Great Depression, this growth is going to come to an end. This poor growth record is a particularly damning indictment for a doctrine sold on the slogan that “we need to generate more wealth before we can re-distribute it.” To be fair, growth in many African countries picked up in the last 5-6 years due to commodity boom, but, in the absence of systematic industrial strategy that neo-liberalism inevitably leads to, little of this has been translated into structural transformation and technological upgrading that makes self-sustaining
    growth possible. As a result, with the world economy rapidly sinking into the biggest recession since the Great Depression, this growth is going to come to an end. Curiously, the failure of neo-liberal policies, especially in the African context, has often been ‘explained’ by what I call ABP – anything but policy. From a common sense point of view, if a policy does not work, the first natural thing to suspect is the policy. To the mainstream economists, this is unthinkable. They argue that their policies have been proven by economic theory and real life experiences. We also hear about lack of human resources, especially the bureaucratic capabilities, in Africa as a critical constraint to implementing the interventionist policies that the rich countries used in the past. However, until the late 1960s and the early 1970s, a decade after the start of its economic miracle in 1961, South Korea was still sending its bureaucrats to Pakistan and the Philippines to get extra training.The point is that it seems as if today’s rich countries have never had any structural handicap only because they have developed successfully and acquired the technologies, the organizational skills, and the political institutions to deal with those problems. Thus seen, the ‘structural handicap’ arguments are actually confusing the cause and the symptoms – those
    handicaps are handicaps only because you are under-developed; it is not that they ‘cause’ underdevelopment.
    So to sum up, I have today shown how the historical experiences of the rich countries totally contradict the policy recommendations of today’s mainstream economists and how they also raise serious questions about the ‘structural’ explanations of the failures of neo-liberal policies in Africa.
    Of course, Africa today is developing in national and international contexts that are very different from what today’s rich countries faced in their own epochs of development, so we cannot apply lessons from, say, 1960s South Korea – not to speak of 18th century Britain – to today’s African countries. Moreover, Africa is very diverse, so we cannot have a uniform recommendation for all countries, especially from a set of experiences that are diverse themselves. Exactly what policy implications we draw from which historical cases will depend on the exact natural, economic, social, political, and cultural conditions that a country faces and on what their goals, preferences, and aspirations are. However, knowing the ‘real’ – as opposed to ‘official’ – history of today’s
    developed countries allows us to break off from the ideological shackle imposed by today’s dominant view that Africa’s economic problems are not due to the failures of neo-liberal policies but because of some structural problems that we cannot do anything about.

    2. The term “Economic Institutions” refers to two things: … Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.. In trying to understand why South Korea and the Philippines having similar per capita incomes and human capital endowments in 1960 developed so divergently in the next three decades, or why economic transition to capitalism in the 1990’s has been so different in Poland compared to Russia, institutional explanations, including an analysis of state-society relations, are
    becoming increasingly common. Economists are, of course, not fully comfortable with this unless they can somehow quantify the effects of institutional framework. In the literature on rural development at the micro-level there have been many attempts to quantify the impact of institutions like land tenure on productivity or of credit and risk-sharing institutions on consumption and production efficiency. For an overview of some of the major theoretical issues in that literature and empirical references, see Bardhan and Udry (1999). This overview, however, did not consider the macro-level, where there has been a flurry of empirical activity in the recent literature, largely on the basis of cross-country regressions, to determine the relative importance of geographical as opposed to institutional factors in explaining differential economic performance in different parts of the world.
    I have always been rather skeptical of the value of such cross-national studies in giving us good insights into the mechanisms of development or underdevelopment. Apart from questions about the quality and comparability of data for a large set of poor countries there are the usual econometric problems, like endogeneity (i.e. the independent variables may themselves be determined by other factors which may simultaneously influence both
    dependent and independent variables), selection (i.e. the data may have systematic bias in terms of cases left out or excluded zero values or chosen by some principle, which may be indicative of some relevant information), and particularly omitted variable bias (in this context, when one has to take the lowest common denominator of variables that are available for all the countries in the sample, many obviously important variables are left out,
    sometimes leading to spurious correlations between the reported variables). There is also a tendency to read too much into the results based on the United Nations principle of ‘one country, one vote’ (which is anomalous in a situation where the large majority of countries are tiny and the substantial numbers of the poor in the world live in a handful of large countries), and institutions and the policies as actually implemented at the local level within a
    country are often quite diverse and heterogeneous, except for a few countrywide macroeconomic institutions governing monetary policy, exchange rate policy, etc. Be that as it may, let us in this section briefly assess some of the general findings of this macro literature. In the Appendix to this chapter, we carry out a cross-country empirical exercise ourselves to focus on a quantification of the impact of institutional and political variables as an extension of the existing literature. Our exercise suggests, among other things, that we should go beyond the narrow focus of the current literature on the undoubtedly important institutions protecting individual property rights, and that other institutions like those related to democratic political rights may also be quite significant, particularly when one tries to explain cross-country variations in human development indicators (including literacy and longevity, and not just per capita income). In the next section of this chapter we
    shall discuss the importance of social and political institutions that may correct some of the pervasive coordination failures that afflict an economy at early stages of industrial transformation (and remain important even if property rights were to be made fully secure); these coordination mechanisms underemphasized in the institutional economics literature can sometimes be as indispensable as property rights institutions. So a major purpose of this is to ‘unbundle’ some of the institutions that are supposed to be important in development. A point that we do not pursue here is that even in protection of property rights different institutions have different consequences for different social groups (for example, the poor may care more for simple land titles or relief from the usual harassments by local goons or government inspectors, whereas the rich investor may care more for
    protection of their corporate shareholder rights against insider abuses or for banking regulations), and may therefore have different degrees of political sustainability. Those who emphasize geography as destiny, more than institutions, point to the disease environment of the tropics, types of crops and soil, transportation costs, handicaps of landlocked countries, etc. which afflict many of today’s poor countries. There is no doubt that these problems make attempts to climb out of poverty more difficult. But as Acemoglu, Johnson, and Robinson–AJR (2002)– point out, many such geographically handicapped countries that are now relatively poor in the world were relatively rich in 1500 (the Moghal, Aztec, and Inca empires occupied some of the richer territories of the world in 1500, Haiti, Cuba and Barbados were richer than the US in early colonial times, and so on). This ‘reversal of fortune’ obviously has more to do with colonial history, extractive policies and institutions. Of course, geographical factors are more conducive to some types of institutions than others. For example, Engerman and Sokoloff (2002) emphasize the effects of geographical (and other factor endowment) preconditions on the evolution of particular institutions in the colonies established in the Caribbean or Brazil : climate and soil conditions extremely well-suited for growing crops like sugar that were of high value on the market and produced at low cost on large slave plantations led to systematic institutional differences in these colonies compared to those established (later) in the temperate zones of North America. AJR (2001) suggest that the mortality rates among early European settlers in a colony (obviously related to its geography and disease patterns) determined if the Europeans mainly concentrated on installing resource extractive or plundering institutions there or decided to settle and build European institutions like those protecting property rights. The work of both Engerman-Sokoloff and AJR correctly shows the importance of institutional overhang in history, so that institutions once established have long-run effects on economic performance, and these effects linger even after the original institutions decay or disappear. This has been also confirmed in a more disaggregative study within a country across districts: Banerjee and Iyer (2002) have traced the significant effect of different land revenue systems instituted by the British in India during the early 19th century and discontinued after Independence, on present-day economic indicators in agriculture. The ideas of reversal of fortune in many of the countries colonized by Europe or the adverse impact of landlord-based revenue institutions in colonial India have been around for many decades. Recent work has made the hypothesis testing more rigorous in trying to take particular care of the problem of endogeneity of institutions. For example, AJR (2001) use mortality rates of colonial settlers as an instrument for institutional quality. While this may be an acceptable instrument for the immediate statistical purpose of avoiding the problem of endogeneity of institutions vis-a-vis income by accounting for a part (though usually a rather small part) of the exogenous (i.e. not income-dependent) variations in institutional quality, I doubt if in many cases this captures the major historical forces that have an impact on the social and economic institutional structure of an ex-colony. Just consider the markedly different historical forces shaping the institutions in ex-colonies (with quite bad disease environments) like Brazil, India or the Congo. Then there are those countries that mostly escaped colonization, like China or Thailand, or for most of history, Ethiopia, and in such cases it will be improper (and much too Euro-centric an approach) to attribute underdevelopment largely to ‘bad’ colonial institutions imposed by Europeans.
    In particular, countries with a long history of state structure and bureaucratic culture may have substantial institutional residues, even after the colonial interregnum,4 that may be quite different from countries which did not have that history. Bockstette, Chanda, and Putterman (2002) have computed an index of state antiquity for a large number of countries; it shows that among developing countries this index is much lower for sub-Saharan Africa and Latin America than for Asia, and even in Asia the index for Korea is several times that for the Philippines (a country that lacked an encompassing state before the 16th-century colonization by Spain). In the Appendix we discuss some of the cross-country effects of this state antiquity index. In the case of many African countries not merely there is a relative lack of state antiquity (in the sense of a continuous territory-wide state structure above the tribal domains) in pre-colonial times, they were artificially regrouped (and cartographically carved out in the state rooms of Europe) by the colonial rulers, so that the post-colonial state was often incongruent with pre-colonial political structures and boundaries. This had a serious adverse effect on the legitimacy of the state and the efficacy of state institutions. Not merely has the recent literature emphasized (and in some cases over-emphasized, in my judgment) the impact of colonial legacy on post-colonial institutional performance over the last four to five decades, it has also sometimes made a distinction between the particular
    European sources of that legacy in terms of legal systems. For example, La Porta et al (1997, 1999) have called attention to the superior effects, across countries, of the Anglo-Saxon common-law system based on judicial precedents over the civil-law system based on formal codes, on corporate business environment both in terms of more flexibility with changing needs of business and in terms of better protection for external suppliers of finance to a company (whether shareholders or creditors). Apart from some doubts about the establishment of causality in these cross-national studies, one can also question the historical evidence in the rich countries themselves. Lamoreaux and Rosenthal (2002) have done a comparative study of the constraints imposed by their respective legal system on organizational choices of business in the US (with its common law system) and France (with
    its civil-law codes) during the middle of the 19th century around the time when both countries were beginning to industrialize.

    3. The growing gap between rich and poor is undermining the fight against poverty, damaging our economies and tearing our societies apart. Yet inequality is not inevitable – it is a political choice. Photo: Eleanor Farmer/Oxfam
    Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. There are more billionaires than ever before, and their fortunes have grown to record levels. Meanwhile, the world’s poorest got even poorer. Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like healthcare and education. These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today’s economic system.The world’s richest 1% have more than twice as much wealth as 6.9 billion people. Almost half of humanity is living on less than $5.50 a day.

    a) Lining the pockets of the world’s billionaires. The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. Billionaires have now more wealth than the 4.6 billion people who make up 60 percent of the planet’s population. Meanwhile, around 735 million people are still living in extreme poverty. Many others are just one hospital bill or failed harvest away from slipping into it. ONLY 4 CENTS IN EVERY DOLLAR OF TAX REVENUE COMES FROM TAXES ON WEALTH. THE SUPER-RICH AVOID AS MUCH AS 30 PERCENT OF THEIR TAX LIABILITY.

    b). Wealth undertaxed. While the richest continue to enjoy booming fortunes, they are also enjoying some of the lowest levels of tax in decades – as are the corporations that they own. Instead taxes are falling disproportionately on working people. When governments undertax the rich, there’s less money for vital services like healthcare and education, increasing the amount of care work that falls on the shoulders of women and girls.
    TODAY 258 MILLION CHILDREN – 1 OUT OF EVERY 5 – WILL NOT BE ALLOWED TO GO TO SCHOOL.
    FOR EVERY 100 BOYS OF PRIMARY SCHOOL AGE WHO ARE OUT OF SCHOOL, 121 GIRLS ARE DENIED THE RIGHT TO EDUCATION.

    c). Underfunded public services. At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. It has profound implications for the future of our children and the opportunities they will have to live a better and longer life.
    EVERY DAY 10,000 PEOPLE DIE BECAUSE THEY LACK ACCESS TO AFFORDABLE HEALTHCARE.
    EACH YEAR, 100 MILLION PEOPLE ARE FORCED INTO EXTREME POVERTY DUE TO HEALTHCARE COSTS.

    d) Denied a longer life. In most countries having money is a passport to better health and a longer life, while being poor all too often means more sickness and an earlier grave. People from poor communities can expect to die ten or twenty years earlier than people in wealthy areas. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family.
    MEN OWN 50% MORE OF THE WORLD’S WEALTH THAN WOMEN, AND THE 22 RICHEST MEN HAVE MORE WEALTH THAN ALL THE WOMEN IN AFRICA. THE UNPAID CARE WORK DONE BY WOMEN IS ESTIMATED $10.8 TRILLION A YEAR – THREE TIMES THE SIZE OF THE TECH INDUSTRY.

    e). Inequality is sexist. With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing. They are more likely to be found in poorly paid and precarious employment, supporting the market economy with cheap or free labor. They are also supporting the state through billions of hours of unpaid or underpaid care work, a huge but unrecognized contribution to our societies and economic prosperity.
    A fairer world is possible. The growing gap between rich and poor is undermining the fight against poverty, damaging our economies and tearing our societies apart. Yet inequality is not inevitable – it is a political choice.
    Governments around the world must act now to build a new, human economy that values what truly matters to society, rather than fueling an endless pursuit of profit. An economy that values the care work of women and girls instead of billionaires’ wealth. An economy that works for everyone, not just a fortunate few. Join us to urge our political leaders to invest in vital public services and tax the rich fairly, and to ensure everyone has secure jobs paying decent wages. It’s time to fight inequality, and beat poverty for good.

    4. Many people mark the birth of economics as the publication of Adam Smith’s The Wealth of Nations in 1776. Actually, this classic’s full title is An Inquiry into the Nature and Causes of the Wealth of Nations, and Smith does indeed attempt to explain why some nations achieve wealth and others fail to do so. Yet, in the 241 years since the book’s publication, the gap between rich countries and poor countries has grown even larger. Economists are still refining their answer to the original question: Why are some countries rich and others poor, and what can be done about it?
    “Rich” and “Poor”
    In common language, the terms “rich” and “poor” are often used in a relative sense: A “poor” person has less income, wealth, goods, or services than a “rich” person. When considering nations, economists often use gross domestic product (GDP) per capita as an indicator of average economic well-being within a country. GDP is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living. For example, in 2016, GDP per capita was $57,467 in the United States, $42,158 in Canada, $27,539 in South Korea, $8,123 in China, $1,513 in Ghana, and $455 in Liberia. Because GDP per capita is simply GDP divided by the population, it is a measure of income as if it were divided equally among the population. In reality, there can be large differences in the incomes of people within a country. So, even in a country with relatively low GDP, some people will be better off than others. And, there are poor people in very wealthy countries. In 2013 (the most recent year comprehensive data on global poverty are available), 767 million people, or 10.7 percent of the world population, were estimated to be living below the international poverty line of $1.90 per person per day.3 Whether for people or nations, the key to escaping poverty lies in rising levels of income. For nations specifically, which measure wealth in terms of GDP, escaping poverty requires increasing the amount of output (per person) that their economy produces. In short, economic growth enables countries to escape poverty. How can nations increase TFP ( total factor productivity) to escape poverty? While there are many factors to consider, two stand out.

    Institutions
    First, institutions matter. For an economist, institutions are the “rules of the game” that create the incentives for people and businesses. For example, when people are able to earn a profit from their work or business, they have an incentive not only to produce but also to continually improve their method of production. The “rules of the game” help determine the economic incentive to produce. On the flip side, if people are not monetarily rewarded for their work or business, or if the benefits of their production are likely to be taken away or lost, the incentive to produce will diminish. For this reason, many economists suggest that institutions such as property rights, free and open markets, and the rule of law (see the boxed insert) provide the best incentives and opportunities for individuals to produce goods and services. North and South Korea often serve as an example of the importance of institutions. In a sense they are a natural experiment. These two nations share a common history, culture, and ethnicity. In 1953 these nations were formally divided and governed by very different governments. North Korea is a dictatorial communist nation where property rights and free and open markets are largely absent and the rule of law is repressed. In South Korea, institutions provide strong incentives for innovation and productivity. The results? North Korea is among the poorest nations in the world, while South Korea is among the richest.

    Trade
    Second, international trade is an important part of the economic growth story for most countries. Think about two kids in the school cafeteria trading a granola bar for a chocolate chip cookie. They are willing to trade because it offers them both an opportunity to benefit. Nations trade for the same reason. When poorer nations use trade to access capital goods (such as advanced technology and equipment), they can increase their TFP, resulting in a higher rate of economic growth. Also, trade provides a broader market for a country to sell the goods and services it produces. Many nations, however, have trade barriers that restrict their access to trade. Recent research suggests that the removal of trade barriers could close the income gap between rich and poor countries by 50 percent.
    Trade
    Second, international trade is an important part of the economic growth story for most countries. Think about two kids in the school cafeteria trading a granola bar for a chocolate chip cookie. They are willing to trade because it offers them both an opportunity to benefit. Nations trade for the same reason. When poorer nations use trade to access capital goods (such as advanced technology and equipment), they can increase their TFP, resulting in a higher rate of economic growth.7 Also, trade provides a broader market for a country to sell the goods and services it produces. Many nations, however, have trade barriers that restrict their access to trade. Recent research suggests that the removal of trade barriers could close the income gap between rich and poor countries by 50 percent.
    Trade
    Second, international trade is an important part of the economic growth story for most countries. Think about two kids in the school cafeteria trading a granola bar for a chocolate chip cookie. They are willing to trade because it offers them both an opportunity to benefit. Nations trade for the same reason. When poorer nations use trade to access capital goods (such as advanced technology and equipment), they can increase their TFP, resulting in a higher rate of economic growth.7 Also, trade provides a broader market for a country to sell the goods and services it produces. Many nations, however, have trade barriers that restrict their access to trade. Recent research suggests that the removal of trade barriers could close the income gap between rich and poor countries by 50 percent.

    Conclusion
    Economic growth of less-developed economies is key to closing the gap between rich and poor countries. Dif ferences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty. Factors that can increase productivity (and growth) include institutions that provide incentives for innovation and production. In some cases, government can play an important part in the development of a nation’s economy. Finally, increasing access to international trade can provide markets for the goods produced by less-developed countries and also increase productivity by increasing the access to capital resources.

    References
    1. https://www.afdb.org/fileadmin/uploads/afdb/News/Chang%20AfDB%20lecture%20text.pdf
    2. https://eml.berkeley.edu/~webfac/bardhan/papers/Bardhan_Scarcity_Ch1.pdf
    3. https://www.oxfam.org/en/5-shocking-facts-about-extreme-global-inequality-and-how-even-it
    4. https://research.stlouisfed.org/publications/page1-econ/2017/09/01/why-are-some-countries-rich-and-others-poor/

  59. Nwoko Nnamdi Netochukwu 2018/245660 says:

    What can be learned from the historical record of economic progress in the now developed world? 

    Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percentin the advanced ones.

    Comparisons between today’s developing countries and today’s advanced economies can provide aspiration but less so in terms of recommendations about policies and institutions. Of greater value for developing countries are comparisons with advanced economies when they were less prosperous and would have been considered low-income or lower middle-income. Using government spending a century ago by 14 of today’s advanced economies ,
    Governments can advance development even with low levels of government spending.
    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago. To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education.

    And here lies the lesson for today’s developing economies: While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital—mobilizing private finance for development.
    Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs and not after they materialize.

    Government spending by today’s developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.

    Government spending among the advanced economies has increased, but so has its variability. Before 1913, spending among the advanced economies ranged from less than 2 percent of GDP in Japan to 13 percent in Italy, or a span of 11 percentage points. Today, the span of spending among the advanced economies is 39 percentage points: from 17.3 percent in Hong Kong to 56.4 percent in France.

    Development paradigms vary among today’s advanced and developing countries. Robust growth can happen with a smaller or a larger government, in general. Too large of a redistribution, however, may create substantial disincentives to work and invest, or lead to tensions between formal and informal workers, employees of large companies or state-owned enterprises and small private firms. This danger now is clearer than ever: The changing world of work is clashing with persistent informality in developing countries and social protection systems that cover only part of the population.

    How Low-Income Countries Today Differ
    from Developed Countries in Their Earlier Stages.

    The position of developing countries today is in many important ways signifi-
    cantly different from that of the currently developed countries when they em-
    barked on their era of modern economic growth. We can identify eight signifi-
    cant differences in initial conditions that require a special analysis of the
    growth prospects and requirements of modern economic development:
    1. Physical and human resource endowments
    2. Per capita incomes and levels of GDP in relation to the rest of the world
    3. Climate
    4. Population size, distribution, and growth
    5. Historical role of international migration
    6. International trade benefits
    7. Basic scientific and technological research and development capabilities
    8. Efficacy of domestic institutions
    We will discuss each of these conditions with a view to formulating require-
    ments and priorities for generating and sustaining economic growth in devel-
    oping countries.

    Question 2:

    The term “Economic Institutions” refers to two things:

    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.

    2. Well-established arrangements and structures that are part of the culture or society,

    * Importance of Economic Institutions
    Cross-country empirical analyses, in combination with micro-level studies, provide strong support for the overwhelming importance of institutions in predicting the level of development in countries around the world (Hall and Jones, 1999; Acemoglu, Johnson and Robinson, 2001). Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores, are found to be strongly correlated to better economic performance over time. This essay aims to explain why institutions are important to economic development and to provide evidence for the arguments made. It argues that institutions support economic development through four broad channels: determining the costs of economic transactions, determining the degree of appropriability of return to investment, determining the level for oppression and expropriation, and determining the degree to which the environment is conducive to cooperation and increased social capital. Evidence is derived from the literature, from comparison of countries, and from examples at the micro level.

    In the words of North “Institutions are the rules of the game in a society, the humanly devised constraints that shape human interaction. They structure incentives in human exchange, whether political, social or economic”. Institutions comprise for example contracts and contract enforcement, protection of property rights, the rule of law, government bureaucracies, financial markets. They also, however, include habits and beliefs, norms, social cleavages and traditions in education (so-called informal institutions). Formal institutions typically tend to be the crystallization of informal institutions (North, 1990), as social norms in the realms of gender, class and caste, for example, determine rules of political participation and representation, methods of economic exchange, and inclusion of different groups in society (Pateman, 1988).

    In a landmark study of new institutional economics, Rodrik, Subramanian and Trebbi (2002) assess the relative importance of institutions, geography and integration (trade) in determining the differences in incomes between the world’s most developed countries and the poorest ones. They find that institutional determinants “trump” all others. It is not a new intuition that for the prospering of economic activity institutions matter. Adam Smith had already noted this is surprising detail, referring to the importance of a justice system, private property rights, and the rule of law (TheWealth of Nations). Aron (2000) surveys the studies which correlate indices of development to institutional ones: 7 find a positive correlation with property rights and enforcement, 10 with civil liberties, 10 others with political rights and democracy, 4 with institutions for cooperation (e.g. clubs and associations), and 15 find a negative correlation of development with political instability. The paragraphs below explain why institutions appear so important to economic development.

    Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs (Coase, 1992, p 197; Dahlman, 1979, p. 149). They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust  by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing. Where transaction costs are small, the private enforcement of contracts may still be preferred. But as economic relations develop and become increasingly impersonal, the role of a third party to enforce compliance to rules is increasingly necessary.
    Such institutions increase the security that the risk of incurring in an economic transaction is matched by the full appropriation of its eventual benefits. This includes the presence of individual private property rights. If property is protected individuals are more willing to invest and to incur sunk costs. Recounting the land-ownership system in Ghana, Pande and Udry (2005) are able to show that where individual perception of security of land tenure is low, investment in the land is significantly reduced, and output consequently drops. In fact, in the few cases in which land is obtained through commercial transactions (as opposed to the traditional informal system of land redistribution), there ceases to be any difference in levels of investment because security of tenure is assured. This increases output and thus is conducive to economic development.
    Question 3
    Just as technology has worked its way into our daily work lives, it has also had a significant big-picture effect on employment, according to a March 2012 report from the nonpartisan Congressional Research Service.

    On the bottom end of the income scale, technology now performs some of the functions that once went to low-skill workers. Furthermore, technological changes — like improved computer and telecommunications systems — have enabled more U.S. companies to send jobs to countries with lower labor costs. With more workers competing for fewer jobs, wages for low-skill occupations dropped.

    At the same time, technology has been a boon for some higher earners. In fields such as engineering and law, technology “serves as a complement to high-skilled workers, which has raised demand for and the relative wages of these workers,” the report concludes.
    Current Tax Rates Favor the Rich

    Then there’s the current tax rate structure, according to a separate, recently released analysis by the Congressional Research Service. The average federal income tax rate for the highest-income taxpayers has been falling steadily for the past 60 years, according to the report. Most recently, the so-called Bush tax cuts enacted in 2001 and 2003 lowered the top marginal tax rate from 36.9 percent to 35 percent.

    The natural effect of lower tax rates is that the wealthiest get to keep more of their income, which tends to widen the gap between rich and poor, according to the CRS analysis. Lower tax rates, the report suggests, may also act as an incentive for top earners to negotiate even higher compensation; the lower the tax rate, the more of each additional dollar the worker gets to keep.

    Indeed, the report concludes, “the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”

    Shifting Social Norms

    Though harder to quantify than technology and tax policy, shifting social norms may also play a role in the growing income gap, say some economists. Society, as a whole, is simply less aghast at soaring salaries than it once was.

    Outlining this theory in a 2002 New York Times column, Paul Krugman explained that after the New Deal and World War II, the national mindset tended towards equality of pay and more humble, community-oriented executives. Somewhere around the 1970s, however, those norms simply began to unravel, creating greater social acceptance for the sky-high executive compensation we see today.
    Question 4

    There are four basic requirements, which are:

    Natural resources – land, minerals, fuels, climate; their quantity and quality.

    Human resources – the supply of labour and the quality of labour.

    Physical capital and technological factors – machines, factories, roads; their quantity and quality.

    Institutional factors – which may include the banking system, the legal system and important factors like a good health care system. We look at this in more detail in Section 4.3.

    Economic growth is caused by improvements in the quantity and quality of the factors of production, i.e.

    land, 

    labour, 

    capital 

    entrepreneurs. 

    Conversely, economic decline may occur if the quantity and quality of any of the factors of production falls. In this section we look at approaches that developing countries could take to improve the quantity and quality of factors of production. We consider the following topics in detail:

    Natural factors

    Human factors

    Physical capital and technological factors
    Institutional factors

    Why some countries develop faster while some remain poor.

    Throughout history, some economies have expanded faster than others. Some differences can be traced to such inherent factors as climate and geography. At times people living near navigation routes or in temperate climates have fared better than people living far away from coastlines or in frigid climates. Some analysts also argue that culture plays a role in growth.

    While inherent traits are responsible for some differences in economic growth, government and central bank policies also play a role. Policies affecting access to technology, sound money and banking practices, and prudent taxing and spending can improve or stifle economic growth.

  60. Aneke Hannah Chimuaya says:

    Name: Aneke Hannah Chimuaya
    Reg No: 2018/242453
    Dept: Economics
    Email: aneke.chimuaya242453@gmail.com
    ANSWERS
    1. Lessons from the development experience, by the end of the 1950s gained from the efforts to promote economic development showed great differences among developing countries. Some had broken away relatively quickly from the import substitution, government control and ownership pattern that had been the early development. The importance of agriculture; despite the early emphasis on industrialization through import substitution, a first major lesson of postwar experience was that there was a close connection between the rate of growth in the output of the agricultural sector and the general rate of economic development.
    The role of export conclusion to be drawn from experience is the close connection between export expansion and economic development. The high-growth countries were characterized by rapid expansion in exports. There was very rapid expansion of export of labor-intensive manufactured goods. This phenomenon not only occurred in the extremely rapid growing newly industrialized countries such as South Korea, Singapore, and Taiwan but also from other developing countries including Brazil, Argentina and Turkey.
    The role of international economy in an open expanding international economy is the greatest support that the developed countries can provide for developing countries. Foreign aid can be extremely helpful in situations in which policies are conducive for development but development will be accelerated if the international economy is experiencing healthy growth.

    2. Economic institutions have contributed to the formation of human groups based on the use of financial, intellectual and material means to achieve specific objectives set by their management, and they always seek to achieve profits at the lowest costs, and meet the diverse needs of individual consumers and to increase the standard of living.
    The economic institution can be defined as a productive organization that aims at creating market value through certain factors of production and then sells it in the market in order to achieve financial profit. It is an economic institution that carries out a range of activities related to production, purchase, sale and storage.
    To solve the problem of underdevelopment will entail reforming these institutions. Unfortunately, this is difficult because economic institutions are collective choices that are outcome of a political process. There is a wide-ranging evidence that institutions matter a great deal in determining the level of economic development of a country. Cross-country analyses use indicators such as degree of protection property rights, the rule of law, and civic liberties and find that they are strongly correlated to economic performance.

    3. Extreme inequality is out of control. Hundreds of millions of people are living in extreme poverty while huge rewards go to those at the very top. The worlds poorest gets poorer and the worlds richest gets richer. Many governments are fueling this inequality crisis. They are massively under taxing corporations and wealthy individuals, yet underfunding vital public services like; healthcare and education. These policies hit the poor hardest. The human costs are devastating, with women and girls suffering the most. Despite their huge contribution to our societies through unpaid care work, they are among those who benefit the least from today`s economic system.

    4. Sources of national and international economic growth includes; Human resources- labor inputs consists of quantities of workers and of the skills of work force. Natural Resources- The resources are arable land, oil and gas, forests, water and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries and forestry.
    Capital formation- the most dramatic stories in economic history often involve the accumulation of capital. Accumulating capital involves the projects generally involve external economies. Technological change and innovation- This denotes change in the processes of production or introduction of new products or services.
    High income earners benefits from economic growth because it enables consumers to consume more goods and services and enjoy better standard of living. Economic growth in the 20th century was a major factor in reducing absolute levels of poverty and enabling a rise in life expentancy.

    Reasons why some countries progress towards economic development and while others remain poor include;
    corruption, low quality education and brain drain are the primary factors while other country remain poor. corruption and lack of rule of law in this system is purposely maintained by government officials because they are exploiting citizens. They involve themselves in the market economy and then restrict competition for others through all kinds of trick or threats or force. These things make them very rich since they are putting their hands in the large share of the economy, while the entire population is paying the costs in terms of lawlessness, higher prices for all but basic things, and not being able to compete because markets are owned by the government. Countries that progress towards economic development have good government- the government regulate taxes and plays an important role in the economy by correcting for market failures and protecting property rights. Property rights provide the rules of ownership and trade so consumers and businesses know what they can do and can`t do in the market places.

  61. UGWU SERAH IZUNNA. says:

    NAME: UGWU SERAH IZUNNA.

    REG NUMBER: 2018/247399

    DEPARTMENT: ECONOMICS.

    COURSE CODE : ECO361
    DEVELOPMENTAL ECONOMICS.

    LEVEL: 300L

    ASSIGNMENT.
    What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    Introduction
    The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.

    To most of those who govern the global economy today – the developed country policy-makers, international business leaders, and the international economic organisations (the International Monetary Fund, the World Bank, and the World Trade Organisation) – the solution to this problem is clear. What the developing countries need, they argue, is the ‘good’ economic policies and institutions that the developed countries themselves used in order to develop – such as liberalisation of trade and investment and strong patent law. Their belief in their own recommendations is so absolute that in their view it has to be imposed on the developing countries at all costs through strong bilateral and multilateral external pressures.

    As is well known, there have been heated debates on whether these policies and institutions are suitable to the developing countries. The curious thing is that even those who are sceptical of their suitability rarely question whether these are the policies and the institutions that the developed countries actually used in order to become rich. However, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries.

    Widespread use of tariffs and subsidies
    Almost all of today’s rich countries used tariff protection and subsidies to develop their industries in the earlier stages of their development. It is particularly important to note that Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through free-market, free-trade policy, are actually the ones that most aggressively used protection and subsidies.

    Contrary to the popular myth, Britain was an aggressive user, and in certain areas a pioneer, of activist policies intended to promote its industries. Such policies, although limited in scope, date back to the 14th century (Edward III) and the 15th century (Henry VII) in relation to woollen manufacturing, the leading industry of the time. At the time, England was an exporter of raw wool to the Low Countries, and Henry VII for example tried to change this by protecting woollen textile producers, taxing raw wool exports, and poaching skilled workers from the Low Countries.

    Particularly between the trade policy reform of its first Prime Minister, Robert Walpole, in 1721 and its adoption of free trade around 1860, Britain used very dirigiste trade and industrial policies, involving measures very similar to what countries like Japan and Korea later used in order to develop their economies. During this period, it protected its industries a lot more heavily than did France, the supposed dirigiste counterpoint to its free-trade, free-market system. According to a study by Joseph Nye, the average tariff rate of France was significantly lower than that of Britian throughout the first half of the 19th century. Germany, another country frequently associated with state interventionism, had much lower tariffs than Britain during this period, although the German states tended to use other means of economic intervention more actively. Given this history, argued Friedrich List, the leading German economist of the mid-19th century, Britain preaching free trade to less advanced countries like Germany and the USA was like someone trying to ‘kick away the ladder’ with which he had climbed to the top.

    The USA, today’s supposed champion of free trade, was even more protectionist than Britain throughout most of its history before the Second World War. According to the authoritative study by Paul Bairoch, between the Civil War and the Second World War, it was literally the most heavily protected economy in the world.

    In this context, it is important to note that the American Civil War was fought on the issue of tariffs as much as, if not more than, on the issue of slavery. Of the two major issues that divided the North and the South, the South had actually more to fear on the tariff front than on the slavery front. Abraham Lincoln was a well-known protectionist who had cut his political teeth under the charismatic politician Henry Clay in the Whig Party, which advocated the ‘American System’ (thus named on the recognition that free trade was in ‘British’ interests), which was based on infrastructural development and protectionism. On the other hand, Lincoln thought the blacks were racially inferior and slave emancipation was an idealistic proposal with no prospect of immediate implementation – he is said to have emancipated the slaves in 1862 as a strategic move to win the War rather than out of moral conviction.

    The USA was also the intellectual home of protectionism throughout the 19th century. It was in fact American thinkers like Alexander Hamilton, the first Treasury Secretary of the USA, and the economist Daniel Raymond, who first systematically developed the so-called ‘infant industry’ argument that justifies the protection of manufacturing industries in the less developed economies. Indeed, List, who is commonly known as the father of the infant industry argument, started out as a free-trader (he was an ardent supporter of the German free-trade customs union – Zollverein) and learnt about the Hamiltonian infant industry argument during his exile in the USA during the 1820s.

    In heavily protecting their industries, the Americans were going against the advice of such prominent economists as Adam Smith and Jean Baptiste Say, who saw their country’s future in agriculture. However, they knew exactly what the game was. They knew that Britain had reached the top through protection and subsidies and therefore that they needed to do the same if they were going to get anywhere. Criticising the British preaching of free trade to his country, Ulysses Grant, the Civil War hero and the US President between 1868-1876, retorted that ‘within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade’. When his country later reached the top after the Second World War, it too started ‘kicking away the ladder’ by preaching and forcing free trade on the less developed countries.

    The UK and the USA may be the more extreme examples, but almost all the rest of today’s developed countries used tariffs, subsidies and other means to promote their industries in the earlier stages of their development. Cases like Germany, Japan, and Korea are well known in this respect. But even countries like Sweden, which later came to represent the ‘small open economy’ to many economists, also strategically used tariffs, subsidies, cartels, and state support for R&D to develop key industries, especially textile, steel, and engineering.

    There were some exceptions like the Netherlands and Switzerland that have maintained free trade since the late 18th century. However, these were countries that were already on the frontier of technological development at that time and therefore did not need much protection. Also, it should be noted that the Netherlands had deployed an impressive range of interventionist measures up till the 17th century in order to build up its maritime and commercial supremacy. Moreover, Switzerland did not have a patent law until 1907, flying directly against the emphasis that today’s orthodoxy puts on the protection of intellectual property rights (see below). More interestingly, the Netherlands abolished its 1817 patent law in 1869 on the ground that patents were politically-created monopolies inconsistent with its free-market principles – a position that seems to elude most of today’s free-market economists – and the Netherlands did not re-introduce a patent law until 1912.

    The long and winding road to institutional development
    The story is similar in relation to institutional development. Contrary to what is assumed by today’s orthodoxy, most of the institutions that are regarded as pre-requisites for economic development emerged after, and not before, a significant degree of economic development in the now-developed countries. Without claiming to be exhaustive, let us examine the six categories of institutions that are widely believed to be pre-requisites of development: democracy, bureaucracy, intellectual property rights, institutions of corporate governance, financial institutions (including public finance institutions), and welfare and labour institutions.

    Whatever one’s position is on the relationship between democracy and economic growth in today’s world, it is indisputable that today’s developed countries did not develop under democracy. Until the 1920s even universal male suffrage was a rarity. It was not until the late 20th century that all developed countries became truly democratic. Spain and Portugal were dictatorships until the 1970s; votes were given to all ethnic minorities in Australia and the USA only in 1962 and 1965 respectively; while women in many countries were given the suffrage only after the Second World War and in Switzerland as late as 1971. Until the Second World War, even when democracy formally existed, its quality was extremely poor. Secret balloting was introduced only in the early 20th century in France and Germany, and corrupt electoral practices, such as vote buying, electoral fraud, and legislative corruption, lasted in most of today’s developed countries well into the 20th century.

    In terms of bureaucracy, sales of offices, the spoils system, and nepotism abounded in most countries until the early 20th century. Modern professional bureaucracies first emerged in Prussia in the early 19th century, but much later in other countries – even Britain acquired a modern bureaucracy only in the mid-19th century. Until the Pendleton Act in 1883, none of the US federal bureaucrats were competitively recruited, and even at the end of the 19th century, less than half of them were competitively recruited.

    A similar story emerges in terms of intellectual property rights institutions, which have become a key issue following the recent controversy surrounding the TRIPS (trade-related intellectual property rights) agreement in the WTO. Until the late 19th century, many countries allowed patenting of imported inventions. As mentioned earlier, Switzerland and the Netherlands refused to protect patents until the early 20th century. The US did not recognise foreign citizens’ copyrights until 1891. And throughout the 19th century, there was a widespread violation of British trademark laws by the German firms producing fake ‘Made in England’ goods.

    Even in the most developed countries (the UK and the US), many key institutions of what is these days regarded as a ‘modern corporate governance’ system emerged after, rather than before, their industrial development. Until the 1870s, in most countries limited liability, without which there would be no modern corporations based on joint stock ownership, was something that was granted as a privilege to high-risk projects with good government connections (e.g., the British East India Company), and not as a standard provision. Until the 1930s, there was virtually no regulation on company audit and information disclosure. Until the late 19th century, bankruptcy laws were geared towards punishing the bankrupt businessmen (with debtors’ prison being a key element in this) rather than giving them a second chance. Competition law did not really exist in any country until the 1914 Clayton Act in the USA.

    As for financial institutions, it would be fair to say that modern financial systems with widespread and well-supervised banking, a central bank, and a well-regulated securities market did not come into being even in the most developed countries until the mid-20th century. In particular, until the early 20th century, countries such as Sweden, Germany, Italy, Switzerland, and the US lacked a central bank.

    A similar story applies to public finance. The fiscal capacity of the state remained highly inadequate in most now-developed countries until the mid-20th century, when most of them did not have income tax. Even in Britain, which introduced the first permanent income tax in 1842, Gladstone was fighting his 1874 election campaign with a pledge to abolish income tax. With limited taxation capability, local government finance in particular was in a mess. A most telling example is an episode documented in Cochran & Miller, where the British financiers put pressure in vain on the US federal government to assume the liabilities of a number of US state governments after their defaults on British loans in 1842 – a story that reminds us of the events in Brazil following the default of the state of Minas Gerais in 1999.

    Social welfare institutions (e.g., industrial accident insurance, health insurance, state pensions, unemployment insurance) did not emerge until the last few decades of the 19th century, although once introduced they diffused quite quickly. Germany was a pioneer in this respect. Effective labour institutions (e.g., regulations on child labour, working hours, workplace safety) did not emerge until around the same time even in the most advanced countries. Child labour regulations started emerging in the late 18th century, but until the early 20th century, most of these regulations were extremely mild and poorly enforced. Until the early 20th century, in most countries regulation of working hours or working conditions for adult male workers was considered unthinkable. For example, in 1905 the US Supreme Court declared in a famous case that a 10-hour act for the bakers introduced by the NY state was unconstitutional because ‘it deprived the baker of the liberty of working as long as he wished’.

    One important conclusion that emerges from historical examination is that it took the developed countries a long time to construct institutions in their earlier days of development. Institutions typically took decades, and sometimes generations, to develop. Just to give one example, the need for central banking was perceived at least in some circles from at least the 17th century, but the first ‘real’ central bank, the Bank of England (founded in 1694), was instituted only by the Bank Charter Act of 1844, some two centuries later.

    Another important point emerges from historical comparison of the levels of institutional sophistication in today’s developed countries in the earlier period with those in developing countries now. For example, measured by the (admittedly highly imperfect) per capita national income level, in 1820, the UK was at a somewhat higher level of development than that of India today, but it did not even have many of the most ‘basic’ institutions that India has now. It did not have universal suffrage (it did not even have universal male suffrage), a central bank, income tax, generalised limited liability, a generalised bankruptcy law, a professional bureaucracy, meaningful securities regulations, and even basic labour regulations (except for a couple of minimal and hardly-enforced regulations on child labour).

    For still another example, in 1913, the US was at a level of economic development similar to that of Mexico today, but its level of institutional sophistication was well behind that which we see in Mexico now. Women were still formally disenfranchised and blacks and other ethnic minorities were de facto disenfranchised in many parts of the country. It had been just over a decade since a federal bankruptcy law was legislated (1898) and it had been barely two decades since the country recognised foreigners’ copyrights (1891). A (highly incomplete) central banking system and income tax had literally only just come into being (1913), and the establishment of a meaningful competition law (the Clayton Act) had to wait another year (1914). Also, there was no federal regulation on securities trading or on child labour, with what little state-level legislation that existed in these areas being of low quality and very poorly enforced.

    These comparisons can go on, but the point is that the developed countries in earlier times were institutionally less advanced compared to today’s developing countries at similar stages of development. Needless to say, the quality of their institutions fell well short ofthe ‘global standards’ institutions that today’s developing countries are expected to install.

    (2). What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development.

    Economic institution is a company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy. Banks, government organizations, and investment funds are all economic institutions:
    The term “Economic Institutions” refers to two things:
    • a. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency), CBN are all examples of economic institutions.
    • b. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.
    Economists are interested not only in understanding specific existing institutional agencies, but also in the more exciting question of why some institutions evolve and others don’t.
    How do they shape problems of underdevelopment and prospects for successful development.
    Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores, are found to be strongly correlated to better economic performance over time. This essay aims to explain why institutions are important to economic development and to provide evidence for the arguments made. Economic institutions support economic development through four broad channels: determining the costs of economic transactions, determining the degree of appropriability of return to investment, determining the level for oppression and expropriation, and determining the degree to which the environment is conducive to cooperation and increased social capital. Evidence is derived from the literature, from comparison of countries, and from examples at the micro level.
    Greater equality and functional economic institutions are also seen as the cause for the successful development of Vietnam compared to a similar country as Nicaragua, where high inequality has concentrated power in the hands of a restricted elite, and governments have failed to adequately invest in infrastructure and public welfare. Similarly, institutional capacity to exploit domestic primary resources is indicated as the key to the success of Botswana and Mauritius in comparison to other developing countries for which primary resources have turned into a curse, i.e. Sierra Leone (diamonds), Angola, Equatorial Guinea and Nigeria (oil) (Birdsall et al., 2005, p. 138). The outcomes of institutions have effects which lie deep in the socio-economic fabric of societies. Banerjee and Duflo (2011) recount the finding by Abhijit and Lakshmi Iyer (2005) that in India the coexistence of two systems of land-revenue collection under the British colonization caused very different outcomes; under one system, the landlord was responsible for collecting taxes, and this strengthened his role, while under the other farmers themselves were responsible for the taxes. The regions where the second system was dominant, 150 years later (with the tax system long gone) exhibit higher agricultural yield, more schools and more hospitals, due to the development of more horizontal and cooperative social relationships among the inhabitants.

    3. How can the extremes between the rich and the poor be so great?
    There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:
    • Inequality in wages and salaries;
    • The income gap between highly skilled workers and low-skilled or no-skills workers;
    • Wealth concentration in the hands of a few individuals or institutions;
    • Labor markets;
    • Globalization;
    • Technological changes;
    • Policy reforms;
    • Taxes;
    • Education;
    • Computerization and growing technology;
    • Racism;
    • Gender;
    • Culture;
    • Innate ability
    For example:
    Numbers released by the U.S. Census Bureau earlier this month confirm what many have known for a long time: The gap between the rich and the poor in this country is growing ever wider. And while we examined the numbers behind the income gap last week, we heard your requests for an actual explanation of why it exists loud and clear.
    Technology — The Double-Edged Sword
    Just as technology has worked its way into our daily work lives, it has also had a significant big-picture effect on employment, according to a March 2012 report from the nonpartisan Congressional Research Service.
    On the bottom end of the income scale, technology now performs some of the functions that once went to low-skill workers. Furthermore, technological changes — like improved computer and telecommunications systems — have enabled more U.S. companies to send jobs to countries with lower labor costs. With more workers competing for fewer jobs, wages for low-skill occupations dropped.
    At the same time, technology has been a boon for some higher earners. In fields such as engineering and law, technology “serves as a complement to high-skilled workers, which has raised demand for and the relative wages of these workers,” the report concludes.

    sources of national Economic growth:
    a. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force.
    Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth.
    A country might buy the most modern telecommunications devices, computers, electricity-generating equipment, and fighter aircraft. However, these capital goods can be effectively used and maintained only by skilled and trained workers.
    Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.
    Similarly, the United States, with its temperate farmlands, is the world’s largest producer and exporter of grains. But the possession of natural resources is not necessary for economic success in the modern world. New York City prospers primarily on its high-density service industries.
    Many countries that have virtually no natural resources, such as Japan, have thrived by concentrating on sectors that depend more on labour and capital than on indigenous resources. Indeed, tiny Hong Kong, with but a tiny fraction of the land area of resource-rich Russia, actually has a larger volume of international trade than does that giant country.
    3. Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation.
    In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times.
    Accumulating capital, as we have seen, requires a sacrifice of current consumption over many years. Countries that grow rapidly tend to invest heavily in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may go into net capital formation. By contrast, many economists believe that the low national savings rate in the United States—only 4 percent of output in 1996— poses a major economic problem for the country.
    When we think of capital, we must not concentrate only on computers and factories. Many investments are undertaken only by governments and lay the framework for a thriving private sector. These investments are called social overhead capital and consist of the large-scale projects that precede trade and commerce. Roads, irrigation and water projects, and public-health measures are important examples.
    All these involve large investments that tend to be “indivisible,” or lumpy, and sometimes have increasing returns to scale. These projects generally involve external economies, or spillovers that private firms cannot capture, so the government must step in to ensure that these social overhead or infrastructure investments are effectively undertaken.
    4. Technological Change and Innovation:
    In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.
    Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    Technological change denotes changes in the processes of production or introduction of new products or services. Process inventions that have greatly increased productivity were the steam engine, the generation of electricity, the internal-combustion engine, the wide-body jet, the photocopier machine, and the fax machine. Fundamental product inventions include the telephone, the radio, the airplane, the phonograph, the television, and the VCR.
    Some other sources are:
    # Social and political structure
    # Trade
    # Industrialization e.t.c.
    Why some countries make rapid progress while others remain poor.
    Some countries makes rapid progress because they put in the right attitude towards Economic progress by doing variety of things like utilising the available resources in the country both natural and human resources, making Economic policies and ensuring they are been executed properly, fighting the corrupt government officials, educating and empowering the masses e.t.c. countries that do things listed above usually experience rapid growth while countries who don’t do all or most of the above usually remain poor or stagnant e.g Nigeria.

    Why some countries make rapid progress towards development while many other remain poor is because,The countries that makes huge progress channel their resources into the right place, they make use of every little resources they have, they work it into its full capacity, they make use of all the sources of economic growth, for example they improve innovations, they give opportunities for development, they train their manpower (labour) but other countries that remain poor because they focus on one source of growth without exploring other sources of growth, that is, they focuses on one of the sources of economic growth for example the natural resources like Nigeria, Nigeria focuses on their natural resources which is OIL and abandoning other means through which the economy can be developed

  62. Nzenwa Ngozi Beatrice says:

    Name: Nzenwa Ngozi Beatrice
    Reg no: 2018/249548
    Department: Social Science Education
    Unit: Economics and Education
    Email: Paulbeatrice3417@gmail.com

    Question:
    1. What can be learned from historical record of economic progress in the now developed world? Are the initial conditions similar or different from contemporary developing countries from what the developed countries faced on the eve of their industrialization?
    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    3. How can the extremes between rich and poor be so very great?
    4. What are the sources of national and international economic growth? Why do some countries make rapid progress towards development while many others remain poor?

    Answer:
    1. So many lesson and experiences can be gotten from the past events which could help us in our contemporary life and even in the future that is yet to come. However, the following are some of the lessons we could take note of while moving forward;
    i. We should not be limited by our limited resources; Japan today used to have little or no natural resources but then, they didn’t see that as a reason to remain at the low level. Instead, they improvised which led to the advanced use of technology today with this they have been able to solve problems and also promote their economic level.
    ii. Another amazing lesson is the idea of being creative, innovative. American’s creativity is part of what led to their massive development today. She’s very good at coming up with new ideas that could help solve her problem and she did not just come up with such strategies she implemented it wholeheartedly which resulted to massive progress. Knowing that they don’t have natural endowments like Nigeria; they had to be strategic and not setting for anything less.
    Moving forward, the initial conditions are greatly different from contemporary developing countries today compared to what the developed countries faced on the eve of their industrialization because currently there are large competition in the world than it used to be in the past as a result of technology, innovation, exposure, wider knowledge and likes. As a result of this great and positive improvement new policies emerged; policies of course recommended by the developed countries of which are not working for our current developing countries as a result of changes that kept occurring. Even though these policies made by the developed countries are claimed to be used by them during the eve of their industrialization, it is still not productive enough to yield great progress and development in our world today. Permit me to mention, that is if at all the developed countries today are disclosing the real policies that helped in making them grow and developed.
    In conclusion, I’d personally advise that there should be freedom of choice to each developing countries on the right policy best suitable for their economy as they embark on a way forward to growth and development.

    2. I’d start by explaining what I understand by economic institution; economic institutions are those agencies or firm established to help promote the affairs of human welfare either financially, economically, politically and likes. Thereby, solving the basic needs of man and creating massive development. Examples of such institutions includes: Development bank, IMF, world Bank, Federal reserve and the likes.
    These economic institutions help to sharpen the problems of under development by ensuring everything lacking in each sector in the economy can be looked into and provided. Hence, resolving the weaknesses and giving room for development. For example the development banks are there to help provide funds for those who have strategies, skills, potentials but lack capital to start up or expand. By so doing, ensuring great development in the economy because it will help reduce the rate of unemployment and also promote the industries.

    3. There are so many reasons for great gap between the rich and the poor. For me, the most painful fact is is that the rich are enriching themselves knowingly or unknowingly with the little income the poor are able to allocate and to think that the government are not just supporting this but also contributing to this very fact is more painful. I would also mention that there are so many unfavorable policies that has been made for the poor and such policies has end up making the poor poorer and the rich richer. A very good example is that the same percentage of tax expected to be paid by the richer also required from the poor.
    Another reason for this great gap is that the fact that government are not providing good if not enough public services required for the day to day transaction like good road, electricity, transportation and likes; thereby giving room for the rich to provide such services and then place high prices on them. Hence, enriching themselves with little income and by the poor.
    Other reasons I’d like to point out include; preferential treatment and opportunities given to the reach; leaving the poor left out, limited educational opportunities to the poor and many more advantages policies enjoyed by the rich without any constitution about the welfare of the poor.

    4. The following are the sources of growth; natural resources, human capital, technology, innovation, social and political structure, industrialization, trade.
    Some countries make rapid progress toward development while many others remain poor due to the fact that a country like Nigeria focus more on one source of growth like natural resources particularly “oil” rather than exploring all the sources of growth so as to enable her make rapid growth compare to other countries who are wise enough to explore other source of growth.
    Also, some countries learn from their past mistakes and ensure they don’t make such mistake again in other to keep pushing forward (developing), another reason is, they don’t just come up with policies that will promote the progress of development without adopting it.
    Furthermore, I’d say that other factors can result to stagnancy in a country as a result of natural disaster that could not be controlled by man’s effort (technology) and many other factors caused by man like economic factors; high dept that has been prolonged knowing the value of money keep changing. Another important point to note is the rapid rate of corruption in a country that can also reduce the progress of development.

  63. Obiajulu Olisaemeka Charles says:

    NAME: OBIAJULU OLISAEMEKA CHARLES
    REG NUMBER: 2018/242803
    DEPARTMENT: ECONOMICS/POLITICAL SCIENCE

    QUESTION 1
    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    What I have learned from the historical record of economic progress in the new developed world is good planning and execution of government policies. Policies that brings development to the country and affects it’s people positively.
    Such policies boils down to it’s formulation and articulation. That’s why the body that makes such laws must be ones with selfish minded people.
    The historical record of such countries lies down in it’s well formulated policies which successive governments follows and adheres to.
    The history of governments like United States of America, United kingdom etc that has embraced democracy has been there for successive administrations to follow. In such countries, they don’t change it’s policies overnight because it has been in existence for ages and any alteration may affect the country positively or negatively. The history of upcoming democracies like some African countries because of its inconsistencies and non adherance to the rule of law has resulted to policy summersault and disunity amongst it’s populace.
    Countries with historical record of economic progress has witnessed steady development in all it’s frontiers because of its progressive economic policies.
    Democracy: These countries has recommended very great success and their history is a case study for others to follow. For communist countries, they have equally followed their economic policies for years and it has been yielding good result for them.
    What I came to realize in countries with historical record of economic progress is that there is consistency in government policies where it affects it’s economy and people. In my own opinion, I will say the initial conditions are similar for contemporary developing countries.

    QUESTION 2
    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development.

    Economic institutions are establishments or financially established bodies whose sole aim is to support continents and countries in it’s development efforts.
    By narrowing the definition to economic institutions, those institutions that perform economic functions are covered; of these, three sets can be identified: establishing and protecting property rights; facilitating transactions; and, permitting economic co-operation and organisation.
    They also support countries poor and financially unstable government to activate it’s development.
    The good example of such economic institutions is the world Bank and the international monetary fund. There are other subnational agencies in Western countries which has supported poor countries in it’s development strides. The economic institutions also comes to the support of countries affected by National disasters such as earthquakes etc.
    They assist in the rebuilding of war torn out countries i.e countries devastated by long time war. They also support the education of poor and underdeveloped countries through agencies such as UNICEF and UNESCO etc.

    The support from these economic institutions has given hope to the poor and the underdeveloped countries.
    These kind of support has helped in
    a. Building and Construction of roads
    b. Availability of Drinking water and
    c. Provision of electricity to these countries.
    It has also helped in the education of its youthful population. These financial institutions has lately been monitoring how these funds are utilized towards the purpose for which it is made available.
    Most times these economic institutions responds to the demands of countries that needs such assistance. With the availability of such funds by these institutions, the prospects of the successful development of poor and underdeveloped countries has been enhanced and in most cases achieved.
    A good example is in Rwanda in which all funds received by these economic institutions has been properly utilized and today, the government of Rwanda is a case study of developing countries with very adequate utilities for the good of its people.

    QUESTION 3
    3. How can the extremes between rich and poor be so very great?

    The extremes between the rich and the poor is very great in the sense that the rich lives in affluence and can be able to afford it’s wants but the poor lives in abject poverty where they cannot afford the good things of life.
    In societies/countries like ours, the rich is looked at with respect and honour while the poor is looked at with scorn and disdain.
    Some people see the rich as those who have worked very hard for a living, while the poor is perceived to be lazy, but I say false. These are lies and deceit used in ruining peoples lives.
    The rich even when illegally acquiring their wealth is respected in a corrupt society such as ours while the poor is looked as one without dignity. Our society has neglected hardwork to the background.
    Those who has sucked the country dry by enmazing illegal wealth are given positions of authority in government and also traditional titles by the monarchs in their respective chiefdoms while the poor ones are seen as nothing.
    In most families, the rich members are recognized by family members oldnor young.
    The religious are not left out in the recognition given to it’s members that are rich while the poor are treated as nobody.
    The extremes between the rich and the poor is very great therefore because of our societal orientation.

    QUESTION 4

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    The Sources of national and international economic growth are
    1. Human Resources:
    Labour inputs consist of quantities of workers and of the skills of the work force.

    Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth.

    2. Natural Resources:
    The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources. Some high-income countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries, and forestry.

    3. Capital Formation:
    Recall that tangible capital includes structures like roads and power plants, equipment like trucks and computers, and stocks of inventories. The most dramatic stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation.

    4. Technological Change and Innovation:
    In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other.

    5. Trade
    6. Industrialization
    7. Social and Political structure.

    Another way of seeing the sources of this growth are
    Natural factor: the quality and/or quantity of land or raw materials.
    Human factor: the quality and/or quantity of human resources/capital.
    Physical capital and technological factors: the quality and/or quantity of physical capital.
    Institutional factors such as
    finance and banking system
    education system
    healthcare
    infrastructure
    political stability.

    Why do some countries make rapid progress towards development while others remain poor.

    1. Leadership is one of the essentials of rapid development. When a country is blessed with a focussed leadership that has it’s people at heart, then there is this tendency of articulating good developmental policies that is people oriented.

    2. Corruption: This is one cankerworm that has eaten deep into most countries that are facing challenges of underdevelopment. When the budget of a country is directed by corrupt officials into their private pockets thereby undermining the reason by which the money is budgeted. Such countries cannot make progress in it’s developmental strides.

    3. Non enforcement of government policies has affected the development of most countries. Countries that has made rapid progress towards development are the ones that has followed the laid down procedures and has followed it to the later e.g enforcement of the rule of law.
    The Constitution of a country are the rules and regulations governing it and any alteration must be followed by it’s amendment and that makes it an authentic document. This has not been properly adhered to by some poor countries because of its nepotic, religious and corrupt minded intentions.

    4. Education: Most developed countries embrace education in the early stages of its development.
    This, you will find in Western countries where you have 90% of the citizens educated and will be able to assist government in it’s development strides unlike in African countries where uneducated leaders who have nothing to offer to it’s citizenry are lording themselves and oppressing the opposition with force when challenged. Under such situation, the citizens are living by God’s mercy.

  64. Ezeilo Kanayochukwu Chimuanya (2018/242412) says:

    1. Economic history is vital in the studying  of a developing economy because history provides economist with the necessary context to understand economic decisions being made right now. Studies from economic history also provides invaluable insight into the big global challenges of today’s world, whether it is trade wars, financial crises, migration pressures, climate change or extreme political uncertainty
    Economic history provides one way to test theories. It forms essential materials in making good economic theories .Economics is only as good as its ability to explain the economy. And the economy can only be understood by using economic theories to think about causal connections and underlying social processes. But theory that is untested is invalid.
    Economics therefore needs economic history. And so academic economists need to engage with our economic past to prepare the next generation of economists. Economic history is vital in the training of private-sector business economists and public policy professionals alike.
    1.2 Yes they are similar to contemporary developing countries from what the developing countries faced because all economic needs, needs a history to know how good the economy can be in the present and the future for industrialization to take place.
    Examples are The Internal Revenue Service (the IRS it is the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.

    2. Economic institutions are institutions which are responsible for organizing the production, exchange, distribution and consumption of goods and services. For the sake of survival each society has an economic system ranging from simple to complex.
    Examples are WTO (World Trade Organization) , IMF (International Monetary Fund) , and UNCTAD (United Nations Conference on Trade and Development).
    In an underdeveloped country the economic institutions help in making sure that resources are properly allocated, and ensure that the poor or those with fewer economic resources are protected in other to progress and enhance positive productivity in the economy that is successful development . They also encourage trust by providing policies and justice systems which adhere to a common set of laws.

    3. Inequality between the wealthy and the poor.
    Second reason is because the rich believes in developing and investing in different aspects of the economic sector e.g agriculture, human resources, technology and this brings more advancements in them while the poor believes in either do nothing, or live on one aspect of the economic sector e.g  agriculture I.e subsidiary farming and they end up being too comfortable is that model of life, causing no advancment and economic growth
    3.2. Over tax on the public sector than the private sector: The private sector is filled with advancments because of low tax burden on them.

    4. ¹ Physical capital and technological factors
    ² Natural factor: Quantity of land or raw materials.
    ³ Human factor: the standard of living of the citizens
    Institutional factors eg trading and banking system
    ⁴ Healthcare factors
    5 Infrastructure and political stability factors.
    4.2 Corruption: When public funds which are meant to be used for the development of the  country are  put into in the leaders pocket causing economic degradation.
    Inappropriate placement of the funds : The funds can be put in a sector that doesn’t generate income for the economy causing a backslide to the economy.
    Individualistic mind set: If everyone is given a chance to be in power the economy might be in chaos reason why because everyone ones to have their own cut of the cake and not share. In a developing country or economy the leaders are happy that the citizens are bring new innovations in the economy and this generates economic growth.

  65. Ugwuoke Godwin Izuchukwu says:

    Name: Ugwuoke Godwin Izuchukwu
    Reg No: 2018/249529
    Department: Economics

    1
    What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    The developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.
    • The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.
    • Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.
    • Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.
    • Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.
    • Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.
    • Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.
    Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Yes there is a difference between the eve of industrialization in developing countries and developed countries, This process has not been uniformly introduced in all countries, nor has it occurred at the same time or at the same rate. Despite the common features of industrialization, these differences in its introduction and adoption have produced inequities among nations and among people on a scale never before experienced

    2.
    What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development

    Economic institutions are those institutions set up to facilitate the management of Economic activities in a country, they include central banks, commercial banks, microfinance banks, development finance institutions etc.
    In describing their roles in shaping underdevelopment and prospects for successful development, two of the above listed Economic institutions will be discussed.
    CENTRAL BANKS: A Central bank is the Apex bank in a country. It regulates the volume of currency and credit in the country. The goals of the central bank are stabililisation of currency, inflation management and reduction of unemployment in the economy. The central bank can shape the problem of underdevelopment and prospects for successful economic development in the country by using tools of economic stabililisation like monetary policy.
    By enacting monetary policy measure, the central bank can utilise implementing tools like interest rate adjustment, bank reserve ratio and open market operations.

    MICRO-FINANCE INSTITUTIONS: these are economic institutions that lend money to low income groups, who lack access to banking and other related services. They provide financial services to the poor. MFIs can shape the problem of underdevelopment and prospects of successful development by performing functions like encouraging entrepreneurship and self sufficiency through providing access to funds for the poor through loans. They help to reduce poverty because the loans given to the poor can help them start up a business and earn income and thus alleviate poverty. They also encourage gender equality by providing women with financial backing needed to build their own business and actively contribute to the economy and thus put the economy on a sound development path.

    3.
    How can the extremes between rich and poor be so very great?

    Extreme inequality is out of control. As millions of people get poorer, we have a higher number of millionaires in the country. Nigeria have the richest man in Africa, but also have the dubious honour of being labelled the poverty capital of the world. The government is fueling this inequality by enacting negative policies that favour the rich and encumber the poor. For instance, the government policy of under taxing private corporations and wealthy individuals and under funding public services like healthcare and education has the effect of hitting the poor people hardest because, the poor make use of the under funded public services, while the rich are able to fly abroad either for proper medical treatment or education of their wards. Also, corruption, insecurity, weak institutions and lack of adequate credit disbursement facilities etc. help in increasing the income disparity between the rich and the poor; thus resulting in an economy where the rich get richer, and the poor, poorer.

    4
    What are the sources of national and international economic growth? Why do some countries make rapid progressing towards development while many others remain poor?
    A. Sources of national and international economic growth includes:
    1. thanks Human Resources: Labour inputs consist of quantities of workers and of the skills of the work force. Many economists believe that the quality of labour inputs—the skills, knowledge, and discipline of the labour force—is the single most important element in economic growth. Improvements in literacy, health, and discipline, and most recently the ability to use computers, add greatly to the productivity of labour.
    2. Natural Resources: The second classical factor of production is natural resources. The important resources here are arable land, oil and gas, forests, water, and mineral resources.
    3. Capital Formation: The most outstanding stories in economic history often involve the accumulation of capital. In the nineteenth century, the transcontinental railroads of North America brought commerce to the American heartland, which had been living in isolation. In this century, waves of investment in automobiles, roads, and power plants increased productivity and provided the infrastructure which created entire new industries. Many believe that computers and the information superhighway will do for the twenty-first century what railroads and highways did in earlier times. Accumulating capital, as we have seen, requires a sacrifice of current consumption over many years.
    4. Technological Change and Innovation: In addition to the three classical factors discussed above, technological advance has been a vital fourth ingredient in the rapid growth of living standards. Historically, growth has definitely not been a process of simple replication, adding rows of steel mills or power plants next to each other. Rather, a never-ending stream of inventions and technological advances led to a vast improvement in the production possibilities of Europe, North America, and Japan.
    B. Why do some countries make rapid progress towards development while many others remain poor?
    In common language, the terms “rich” and “poor” are often used in a relative sense: A “poor” person has less income, wealth, goods, or services than a “rich” person. When considering nations, economists often use gross domestic product (GDP) per capita as an indicator of average economic well-being within a country. GDP is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living. Economic growth of less-developed economies is key to closing the gap between rich and poor countries. Differences in the economic growth rate of nations often come down to differences in inputs (factors of production) and differences in TFP—the productivity of labor and capital resources. Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty. Factors that can increase productivity (and growth) include institutions that provide incentives for innovation and production. In some cases, government can play an important part in the development of a nation’s economy. Finally, increasing access to international trade can provide markets for the goods produced by less-developed countries and also increase productivity by increasing the access to capital resources.

  66. Folarin Gift Funmilayo says:

    Name: Folarin Gift Funmilayo
    Reg No: 2018/241234
    Department: Education/ Economics
    Course Code: Eco 361
    Course Title: Development Economics 1

    Assignment:
    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization?

    Introduction
    The last two decades have been a bad time for the developing countries. Their average annual per capita income growth rate has been halved (from 3% to 1.5%) between the 1960-80 period and the 1980-2000 period. In particular, Latin America has virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them. To most of those who govern the global economy today – the developed country policy-makers, international business leaders, and the international economic organisations (the International Monetary Fund, the World Bank, and the World Trade Organisation) – the solution to this problem is clear. What the developing countries need, they argue, is the ‘good’ economic policies and institutions that the developed countries themselves used in order to develop – such as liberalisation of trade and investment and strong patent law. Their belief in their own recommendations is so absolute that in their view it has to be imposed on the developing countries at all costs through strong bilateral and multilateral external pressures. As is well known, there have been heated debates on whether these policies and institutions are suitable to the developing countries. The curious thing is that even those who are sceptical of their suitability rarely question whether these are the policies and the institutions that the developed countries actually used in order to become rich. However, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries.

    Widespread use of tariffs and subsidies
    Almost all of today’s rich countries used tariff protection and subsidies to develop their industries in the earlier stages of their development. It is particularly important to note that Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through free-market, free-trade policy, are actually the ones that most aggressively used protection and subsidies. Contrary to the popular myth, Britain was an aggressive user, and in certain areas a pioneer, of activist policies intended to promote its industries. Such policies, although limited in scope, date back to the 14th century (Edward III) and the 15th century (Henry VII) in relation to woollen manufacturing, the leading industry of the time. At the time, England was an exporter of raw wool to the Low Countries, and Henry VII for example tried to change this by protecting woollen textile producers, taxing raw wool exports, and poaching skilled workers from the Low Countries. Particularly between the trade policy reform of its first Prime Minister, Robert Walpole, in 1721 and its adoption of free trade around 1860, Britain used very dirigiste trade and industrial policies, involving measures very similar to what countries like Japan and Korea later used in order to develop their economies. During this period, it protected its industries a lot more heavily than did France, the supposed dirigiste counterpoint to its free-trade, free-market system. According to a study by Joseph Nye, the average tariff rate of France was significantly lower than that of Britian throughout the first half of the 19th century. Germany, another country frequently associated with state interventionism, had much lower tariffs than Britain during this period, although the German states tended to use other means of economic intervention more actively. Given this history, argued Friedrich List, the leading German economist of the mid-19th century, Britain preaching free trade to less advanced countries like Germany and the USA was like someone trying to ‘kick away the ladder’ with which he had climbed to the top. The USA, today’s supposed champion of free trade, was even more protectionist than Britain throughout most of its history before the Second World War. According to the authoritative study by Paul Bairoch, between the Civil War and the Second World War, it was literally the most heavily protected economy in the world.
    In this context, it is important to note that the American Civil War was fought on the issue of tariffs as much as, if not more than, on the issue of slavery. Of the two major issues that divided the North and the South, the South had actually more to fear on the tariff front than on the slavery front. Abraham Lincoln was a well-known protectionist who had cut his political teeth under the charismatic politician Henry Clay in the Whig Party, which advocated the ‘American System’ (thus named on the recognition that free trade was in ‘British’ interests), which was based on infrastructural development and protectionism. On the other hand, Lincoln thought the blacks were racially inferior and slave emancipation was an idealistic proposal with no prospect of immediate implementation – he is said to have emancipated the slaves in 1862 as a strategic move to win the War rather than out of moral conviction. The USA was also the intellectual home of protectionism throughout the 19th century. It was in fact American thinkers like Alexander Hamilton, the first Treasury Secretary of the USA, and the economist Daniel Raymond, who first systematically developed the so-called ‘infant industry’ argument that justifies the protection of manufacturing industries in the less developed economies. Indeed, List, who is commonly known as the father of the infant industry argument, started out as a free-trader (he was an ardent supporter of the German free-trade customs union – Zollverein) and learnt about the Hamiltonian infant industry argument during his exile in the USA during the 1820s. In heavily protecting their industries, the Americans were going against the advice of such prominent economists as Adam Smith and Jean Baptiste Say, who saw their country’s future in agriculture. However, they knew exactly what the game was. They knew that Britain had reached the top through protection and subsidies and therefore that they needed to do the same if they were going to get anywhere. Criticising the British preaching of free trade to his country, Ulysses Grant, the Civil War hero and the US President between 1868-1876, retorted that ‘within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade’. When his country later reached the top after the Second World War, it too started ‘kicking away the ladder’ by preaching and forcing free trade on the less developed countries. The UK and the USA may be the more extreme examples, but almost all the rest of today’s developed countries used tariffs, subsidies and other means to promote their industries in the earlier stages of their development. Cases like Germany, Japan, and Korea are well known in this respect. But even countries like Sweden, which later came to represent the ‘small open economy’ to many economists, also strategically used tariffs, subsidies, cartels, and state support for R&D to develop key industries, especially textile, steel, and engineering. There were some exceptions like the Netherlands and Switzerland that have maintained free trade since the late 18th century. However, these were countries that were already on the frontier of technological development at that time and therefore did not need much protection. Also, it should be noted that the Netherlands had deployed an impressive range of interventionist measures up till the 17th century in order to build up its maritime and commercial supremacy. Moreover, Switzerland did not have a patent law until 1907, flying directly against the emphasis that today’s orthodoxy puts on the protection of intellectual property rights. More interestingly, the Netherlands abolished its 1817 patent law in 1869 on the ground that patents were politically-created monopolies inconsistent with its free-market principles – a position that seems to elude most of today’s free-market economists – and the Netherlands did not re-introduce a patent law until 1912.

    The long and winding road to institutional development
    The story is similar in relation to institutional development. Contrary to what is assumed by today’s orthodoxy, most of the institutions that are regarded as pre-requisites for economic development emerged after, and not before, a significant degree of economic development in the now-developed countries. Without claiming to be exhaustive, let us examine the six categories of institutions that are widely believed to be pre-requisites of development: democracy, bureaucracy, intellectual property rights, institutions of corporate governance, financial institutions (including public finance institutions), and welfare and labour institutions. Whatever one’s position is on the relationship between democracy and economic growth in today’s world, it is indisputable that today’s developed countries did not develop under democracy. Until the 1920s even universal male suffrage was a rarity. It was not until the late 20th century that all developed countries became truly democratic. Spain and Portugal were dictatorships until the 1970s; votes were given to all ethnic minorities in Australia and the USA only in 1962 and 1965 respectively; while women in many countries were given the suffrage only after the Second World War and in Switzerland as late as 1971. Until the Second World War, even when democracy formally existed, its quality was extremely poor. Secret balloting was introduced only in the early 20th century in France and Germany, and corrupt electoral practices, such as vote buying, electoral fraud, and legislative corruption, lasted in most of today’s developed countries well into the 20th century.
    In terms of bureaucracy, sales of offices, the spoils system, and nepotism abounded in most countries until the early 20th century. Modern professional bureaucracies first emerged in Prussia in the early 19th century, but much later in other countries – even Britain acquired a modern bureaucracy only in the mid-19th century. Until the Pendleton Act in 1883, none of the US federal bureaucrats were competitively recruited, and even at the end of the 19th century, less than half of them were competitively recruited. A similar story emerges in terms of intellectual property rights institutions, which have become a key issue following the recent controversy surrounding the TRIPS (trade-related intellectual property rights) agreement in the WTO. Until the late 19th century, many countries allowed patenting of imported inventions. As mentioned earlier, Switzerland and the Netherlands refused to protect patents until the early 20th century. The US did not recognise foreign citizens’ copyrights until 1891. And throughout the 19th century, there was a widespread violation of British trademark laws by the German firms producing fake ‘Made in England’ goods. Even in the most developed countries (the UK and the US), many key institutions of what is these days regarded as a ‘modern corporate governance’ system emerged after, rather than before, their industrial development. Until the 1870s, in most countries limited liability, without which there would be no modern corporations based on joint stock ownership, was something that was granted as a privilege to high-risk projects with good government connections (e.g., the British East India Company), and not as a standard provision. Until the 1930s, there was virtually no regulation on company audit and information disclosure. Until the late 19th century, bankruptcy laws were geared towards punishing the bankrupt businessmen (with debtors’ prison being a key element in this) rather than giving them a second chance. Competition law did not really exist in any country until the 1914 Clayton Act in the USA. As for financial institutions, it would be fair to say that modern financial systems with widespread and well-supervised banking, a central bank, and a well-regulated securities market did not come into being even in the most developed countries until the mid-20th century. In particular, until the early 20th century, countries such as Sweden, Germany, Italy, Switzerland, and the US lacked a central bank. A similar story applies to public finance. The fiscal capacity of the state remained highly inadequate in most now-developed countries until the mid-20th century, when most of them did not have income tax. Even in Britain, which introduced the first permanent income tax in 1842, Gladstone was fighting his 1874 election campaign with a pledge to abolish income tax. With limited taxation capability, local government finance in particular was in a mess. A most telling example is an episode documented in Cochran & Miller, where the British financiers put pressure in vain on the US federal government to assume the liabilities of a number of US state governments after their defaults on British loans in 1842 – a story that reminds us of the events in Brazil following the default of the state of Minas Gerais in 1999.
    Social welfare institutions (e.g., industrial accident insurance, health insurance, state pensions, unemployment insurance) did not emerge until the last few decades of the 19th century, although once introduced they diffused quite quickly. Germany was a pioneer in this respect. Effective labour institutions (e.g., regulations on child labour, working hours, workplace safety) did not emerge until around the same time even in the most advanced countries. Child labour regulations started emerging in the late 18th century, but until the early 20th century, most of these regulations were extremely mild and poorly enforced. Until the early 20th century, in most countries regulation of working hours or working conditions for adult male workers was considered unthinkable. For example, in 1905 the US Supreme Court declared in a famous case that a 10-hour act for the bakers introduced by the NY state was unconstitutional because ‘it deprived the baker of the liberty of working as long as he wished’. One important conclusion that emerges from historical examination is that it took the developed countries a long time to construct institutions in their earlier days of development. Institutions typically took decades, and sometimes generations, to develop. Just to give one example, the need for central banking was perceived at least in some circles from at least the 17th century, but the first ‘real’ central bank, the Bank of England (founded in 1694), was instituted only by the Bank Charter Act of 1844, some two centuries later.
    Another important point emerges from historical comparison of the levels of institutional sophistication in today’s developed countries in the earlier period with those in developing countries now. For example, measured by the (admittedly highly imperfect) per capita national income level, in 1820, the UK was at a somewhat higher level of development than that of India today, but it did not even have many of the most ‘basic’ institutions that India has now. It did not have universal suffrage (it did not even have universal male suffrage), a central bank, income tax, generalised limited liability, a generalised bankruptcy law, a professional bureaucracy, meaningful securities regulations, and even basic labour regulations (except for a couple of minimal and hardly-enforced regulations on child labour). For still another example, in 1913, the US was at a level of economic development similar to that of Mexico today, but its level of institutional sophistication was well behind that which we see in Mexico now. Women were still formally disenfranchised and blacks and other ethnic minorities were de facto disenfranchised in many parts of the country. It had been just over a decade since a federal bankruptcy law was legislated (1898) and it had been barely two decades since the country recognised foreigners’ copyrights (1891). A (highly incomplete) central banking system and income tax had literally only just come into being (1913), and the establishment of a meaningful competition law (the Clayton Act) had to wait another year (1914). Also, there was no federal regulation on securities trading or on child labour, with what little state-level legislation that existed in these areas being of low quality and very poorly enforced. These comparisons can go on, but the point is that the developed countries in earlier times were institutionally less advanced compared to today’s developing countries at similar stages of development. Needless to say, the quality of their institutions fell well short ofthe ‘global standards’ institutions that today’s developing countries are expected to install.
    The real lesson of history: freedom to choose If the policies and institutions that the rich countries are recommending to the poor countries are not the ones that they themselves used when they were developing, what is going on? We can only conclude that, whether intentionally or not, the rich countries are effectively kicking away the ladder that allowed them to climb to where they are now. It is no coincidence that economic development has become more difficult during the last two decades when the developed countries started turning up the pressure on the developing countries to adopt the so-called ‘good’ policies and institutions. What can be done to change this? First, the facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of ‘getting history right’, but also one of allowing the developing countries to make more informed choices. This is not to say that every developing country should adopt an interventionist development strategy. Some of them may indeed benefit from following the Swiss or Hong Kong models. However, this strategic choice should be made in the full knowledge that historically the majority of the successful countries did the opposite in the past when they faced the same international competitive challenge from more advanced countries, which the developing countries face now.
    Second, the conditions attached to bilateral and multilateral financial assistance offered to developing countries should be radically changed. It should be accepted that the orthodox recipe is not working, and also that there can be no single ‘best practice’ policies that everyone should use. More specifically, in terms of policies, the ‘bad policies’ that most of today’s developed countries used with so much effectiveness when they were developing countries themselves should be at least allowed, if not actively encouraged, by the developed countries and the international development policy establishment that they control. While it is true that activist trade and industrial policies can sometimes degenerate into a web of red tape and corruption, this should not mean that these policies should never be used under any circumstances.
    Third, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. They should also be allowed to have less stringent patent laws and other intellectual property rights laws.
    Fourth, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries. There need to be more serious attempts, both at the academic and the practical levels, to explore exactly which institutions are necessary, or at least beneficial, and for what types of countries, given their stages of development and their economic, political, social, and even cultural conditions. Special care has to be taken in order not to demand excessively rapid upgrading of institutions by the developing countries, especially given that they already have quite sophisticated institutions when compared to today’s developed countries at comparable stages of development, and given that establishing and running new institutions is costly. By having the freedom to choose policies and institutions that are more suitable to their conditions, the developing countries will be able to develop faster. This will also benefit the developed countries in the long run, as it will increase their trade and investment opportunities. That the developed countries, and the international institutions which they influence, cannot see this is the tragedy of our time.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?
    Economic institution is:
    – A company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy. Banks, government organizations, and investment funds are all economic institutions:
    Cross-country empirical analyses, in combination with micro-level studies, provide strong support for the overwhelming importance of institutions in predicting the level of development in countries around the world (Hall and Jones, 1999; Acemoglu, Johnson and Robinson, 2001). Protection of property rights, effective law enforcement, and efficient bureaucracies, together with a broad range of norms and civic mores, are found to be strongly correlated to better economic performance over time. This essay aims to explain why institutions are important to economic development and to provide evidence for the arguments made. It argues that institutions support economic development through four broad channels: determining the costs of economic transactions, determining the degree of appropriability of return to investment, determining the level for oppression and expropriation, and determining the degree to which the environment is conducive to cooperation and increased social capital. Evidence is derived from the literature, from comparison of countries, and from examples at the micro level. In the words of North (1990, p. 4): “Institutions are the rules of the game in a society, […] the humanly devised constraints that shape human interaction. […] They structure incentives in human exchange, whether political, social or economic”. Institutions comprise for example contracts and contract enforcement, protection of property rights, the rule of law, government bureaucracies, financial markets. They also, however, include habits and beliefs, norms, social cleavages and traditions in education (so-called informal institutions). Formal institutions typically tend to be the crystallization of informal institutions (North, 1990), as social norms in the realms of gender, class and caste, for example, determine rules of political participation and representation, methods of economic exchange, and inclusion of different groups in society (Pateman, 1988). In a landmark study of new institutional economics, Rodrik, Subramanian and Trebbi (2002) assess the relative importance of institutions, geography and integration (trade) in determining the differences in incomes between the world’s most developed countries and the poorest ones. They find that institutional determinants “trump” all others. It is not a new intuition that for the prospering of economic activity institutions matter. Adam Smith had already noted this is surprising detail, referring to the importance of a justice system, private property rights, and the rule of law (The Wealth of Nations). Aron (2000) surveys the studies which correlate indices of development to institutional ones:find a positive correlation with property rights and enforcement, 10 with civil liberties, 10 others with political rights and democracy, with institutions for cooperation (e.g. clubs and associations), and 15 find a negative correlation of development with political instability. The paragraphs below explain why institutions appear so important to economic development. Institutions conducive to economic development reduce the costs of economic activity. The costs include transaction costs such as search and information costs, bargaining and decision costs, policing and enforcement costs (Coase, 1992, p 197; Dahlman, 1979, p. 149). They lower transaction costs by providing common legal frameworks (e.g. contracts and contract enforcement, commercial norms and rules), and they encourage trust by providing policing and justice systems for the adherence to common laws and regulations. Communities in LDCs typically rely on kinship or ethnic and religious ties for trade. Norms and networks of common language and religion may be enough to ensure compliance with agreements on economic exchange; collective punishment and social reputation may be enough to ensure the enforcement of (often informal) contracts even in the absence of a third party. Greif (1993) describes the trade networks of Maghribi traders which permitted the sharing of information on dishonest traders and their collective punishment. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing. Where transaction costs are small, the private enforcement of contracts may still be preferred. But as economic relations develop and become increasingly impersonal, the role of a third party to enforce compliance to rules is increasingly necessary (Shirley, 2003, p. 2). Such institutions increase the security that the risk of incurring in an economic transaction is matched by the full appropriation of its eventual benefits. This includes the presence of individual private property rights. If property is protected individuals are more willing to invest and to incur sunk costs. Recounting the land-ownership system in Ghana, Pande and Udry (2005) are able to show that where individual perception of security of land tenure is low, investment in the land is significantly reduced, and output consequently drops. In fact, in the few cases in which land is obtained through commercial transactions (as opposed to the traditional informal system of land redistribution), there ceases to be any difference in levels of investment because security of tenure is assured. This increases output and thus is conducive to economic development. The protection of property rights requires an expanded role for state authority. Individuals and groups sacrifice a degree of freedom in order to ensure state protection; they accept levies and taxes to cover policing expenses, and state monopoly over the use of force for common security (Bates, 2001, p. 65-66). However, there is a risk that states which have the power to enforce property rights may use that power to expropriate property too. Instead of reducing risk of economic transactions, this increases it. Thus property rights are by no means sufficient to spur economic growth, and must be balanced by institutions which limit the extractive capacity of state power. These typically involve independent parliaments and judiciaries. Democratic institutions of political representation strongly contribute to this process (Rodrik, 2000). Thus institutions determine the extent to which those in power are able to expropriate the economy’s resources to their private advantage. Unequal institutions strongly limit development by reducing the capacity of individuals to access resources, expand production and increase their incomes. A comparative analysis of development trajectories of countries indicates that institutions which benefit elites and allow their appropriation of resources and products have perpetuated underdevelopment.
    Countries which have undergone colonial domination tend to be plagued by such extractive institutions. These have outlived the gaining of independence on behalf of these countries, and their control has largely been taken over by local elites. There are countless examples of societal outcomes the cause of which can be traced to institutional arrangements of many decades before. The unequal landownership system in Latin America (latifundios) has been indicated a fundamental cause of its underdevelopment. There is evidence that it limits the development of greater rural employment and higher rural incomes (World Bank, 2008, ch 6). ECLA, the Economic Commission for Latin America, has repeatedly flagged the importance of land reform in the process of poverty-reducing agriculture and rural development. A report by the United Nations Food and Agriculture Organization stresses that this is particularly urgent as population growth threatens to increase income inequalities, and technological developments in agriculture may serve the landowner elites to further consolidate their grip on land and agriculture, thus perpetuating the process of path dependency in the formation of institutions (UNFAO, 2006; see also Myrdal, 1992). Greater equality and functional economic institutions are also seen as the cause for the successful development of Vietnam compared to a similar country as Nicaragua, where high inequality has concentrated power in the hands of a restricted elite, and governments have failed to adequately invest in infrastructure and public welfare. Similarly, institutional capacity to exploit domestic primary resources is indicated as the key to the success of Botswana and Mauritius in comparison to other developing countries for which primary resources have turned into a curse, i.e. Sierra Leone (diamonds), Angola, Equatorial Guinea and Nigeria (oil) (Birdsall et al., 2005, p. 138). The outcomes of institutions have effects which lie deep in the socio-economic fabric of societies. Banerjee and Duflo (2011) recount the finding by Abhijit and Lakshmi Iyer (2005) that in India the coexistence of two systems of land-revenue collection under the British colonization caused very different outcomes; under one system, the landlord was responsible for collecting taxes, and this strengthened his role, while under the other farmers themselves were responsible for the taxes. The regions where the second system was dominant, 150 years later (with the tax system long gone) exhibit higher agricultural yield, more schools and more hospitals, due to the development of more horizontal and cooperative social relationships among the inhabitants. Institutions which are conducive to development ensure greater self-expression, allow the free flow of information and encourage the formation of associations and clubs. These form prosperous social relationships, which are conducive to greater economic interaction by increasing levels of trust and wider availability of information (Putnam, 1993). They allow greater sharing of resources through democratic institutions and the use of the state to reduce the risk attached to economic activity (Bardhan, 2006, p.5). The welfare state is an example of an institution which pools resources to limit the negative effects of business cycles on incomes and unemployment. Institutions conducive to development pool resources to provide the investments in education, health and infrastructure which lie at the basis of economic interaction and are necessary and complementary to private investment. Informal institutions lie at the basis of an economy. They include public agencies, trade unions, community structures and professional associations. They make up the fabric which determines the response to laws and government decisions. Most often they shape these outcomes themselves. There is wide-ranging evidence that institutions matter a great deal in determining the level of economic development of a country. Cross-country analyses use indicators such as degree of protection of property rights, the rule of law, and civic liberties and find that they are strongly correlated to economic performance. This essay has described why institutions are so important for economic development and has provided evidence for the claims made. It has identified four broad channels through which the correlation can be explained. Institutions determine the costs of economic transactions: they spur development in the form of contracts and contract enforcement, common commercial codes, and increased availability of information, all of which reduce the costs of transactions, risk, and uncertainty. Institutions determine the degree of appropriability of return to investment: protection of property rights and the rule of law spur investment and thus increase incomes. Institutions also determine the scope for oppression and expropriation of resources by elites: unequal institutions which allow the dominance of powerful elites over economic exchange strongly limit development, as can be seen in the case of many ex-colonial countries. Lastly, institutions determine the degree to which the environment is conducive to cooperation and increased social capital; inclusive and participatory institutions increase the flow of information and the extent to which resources can be pooled to reduce risk and ensure sustained levels of wealth. This fits nicely with the finding of historical studies that high quality institutions today are rooted in greater equality, political competition and cooperative norms in the distant past. Institutions strongly affect the economic development of countries and act in society at all levels by determining the frameworks in which economic exchange occurs. They determine the volume of interactions available, the benefits from economic exchange and the form which they can take.

    3. How can the extremes between rich and poor be so very great?

    The gap between the rich and the poor keeps widening, the Organisation for Economic Cooperation and Development (OECD) says. In its 34 member states, the richest 10% of the population earn 9.6 times the income of the poorest 10%. There is no standard measure of inequality, but most indicators suggest it slowed or fell during the financial crisis and is now growing again. The OECD warns that such inequality is a threat to economic growth. The report says this is partly because there is a wider gap in education in the most unequal countries, which leads to a less effective workforce. OECD member states include most of the European Union as well as developed economies such as the US, Canada, Australia and Japan. One of the factors that the OECD blames for growing inequality is the growth in what it calls non-standard work, which includes temporary contracts and self-employment. The OECD says that since the mid-1990s more than half of all job creation in its member states has been in non-standard work. It says that households dependent on such work have higher poverty rates than other households and that this has led to greater inequality. It also says that tax and benefit systems have become less effective at redistributing income. On the other hand it says that one of the factors limiting the growth in inequality has been the increasing number of women working. The report says that one of the few areas where inequality has not been growing in the last 30 years has been Latin America, although levels of inequality were much higher there to start with. The main theory the OECD puts forward for why inequality and growth are negatively correlated is that poorer people invest less in their own education and self improvement – which is why its main anti-inequality prescriptions are government investment in skills and education, and a focus on a promoting better quality jobs. Strikingly it isn’t saying that the best way to greater equality and faster growth is to soak the rich. Instead it wants activism focused on raising the living standards of the poorest, especially the poorest 40%. It calculates, therefore, that if living standards in the UK for poorer people were raised to the relative levels of France – that if so-called “bottom inequality” was reduced by half of a standard deviation (to use the jargon) – annual growth in national income or GDP would rise by 0.3% every year for 25 years. That’s not to be sniffed at. It would represent increasing our current growth rate by around 13%.
    One of the best-known commentators on inequality is Prof Joe Stiglitz from Columbia Business School. He told BBC News that the problem was not just with lack of training and education. “What we’ve seen, particularly in the last 15 years, is that even those who are college graduates have seen their incomes stagnate. The real problem is the rules of the game are stacked for the monopolists, the CEOs [chief executives] of corporations.” “CEOs today get pay that’s roughly 300 times that of ordinary workers – it used to be 20 or 30 times. No increase in productivity justifies this change in relative compensation.” Behind the OECD averages there is a considerable range in the degrees of inequality in each country.

    Household wealth
    The Gini coefficient is a figure showing how well income is distributed across a country. A coefficient of zero would mean everybody was paid the same amount, while one would mean all the money was earned by one person. The average across the OECD was 0.32. Chile had the highest at 0.50, indicating that income distribution there was the most unequal, while Denmark was the lowest at 0.25, making it the most equal.
    The UK and US were both near the top of the rankings with coefficients of 0.35 and 0.40 respectively.
    One of the report’s authors, Mark Pearson from the OECD, told BBC News: “It’s not just income that we’re seeing being very concentrated – you look at wealth and you find that the bottom 40% of the population in rich countries have only 3% of household wealth whereas the top 10% have over half of household wealth.”
    “So that combination of both wealth and income being very concentrated, it means there is no equality of opportunity in many societies and that undermines our growth.”

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    What is economic growth?
    Economic growth is reflected by an overall improvement in the quality of life in a given country. This may include better health care, a cleaner environment and more freedom in terms of choosing work and leisure activities. During times of economic growth, the overall wealth of a country increases, as do the variety and abundance of goods and services. Economic growth is not easy to measure. When the Federal Reserve gauges the level of economic growth in the United States, it considers many forms of data and comments from businesses and consumers. A widely used proxy for economic growth is changes in real gross domestic product (GDP) per capita—the final sales of goods and services in a country per person, adjusted for inflation. Economists track real GDP per capita over time to compare growth among countries and the effects of various factors of economic growth. Below is a chart that shows real GDP per capita in Japan, Mexico and the United States from 1970 to 1992.

    Factors of economic growth
    Economists continue to seek to understand the forces underlying economic growth. While they don’t agree on which factors are the most significant, they have compiled a long and varied list. There may not be a definitive answer to the question: Why do some countries grow faster than others? However, it is possible to argue how particular factors contribute to growth and explain why some are more significant than others. Below are the categories most economists agree influence economic growth.

    Government
    In most countries government has a significant influence on economic performance, especially due to its size. In the United States, government spending accounts for one-fifth of GDP. The taxing and spending policies of the government affect the incentives to spend and invest. Some economists argue that the government may affect the overall performance of the economy. Regulations, taxes and government spending can vitalize or stifle economic activity in various sectors of the economy. On one hand, if the government spends more than it collects in tax revenues, deficits can slow the economy. On the other hand, a well-planned road system can increase market efficiency and help improve the economy. The government plays a role in the economy by correcting for market failures and protecting property rights. Market failures happen when the market has an effect outside the buyers and sellers. For example, companies that emit pollutants into the air may cause health risks for other people. In response, the government might regulate how much pollutants a company can release. Schools and other basic infrastructure, such as roads and bridges, benefit almost everyone. However, the market may not produce schools and roads since the costs and benefits of such projects are shared across a large number of people. In these cases, the government steps in to provide these needs. Property rights provide the rules of ownership and trade so consumers and businesses know what they can and can’t do in the marketplace. For example, consumers are protected from misleading information by consumer protection laws and inventors are protected by patents and copyright laws. Without well-defined property rights, the players in the market can’t depend on particular outcomes important for making purchasing or investment plans. Countries with relatively well-organized and consistent legal systems will tend to have more efficient markets than countries with loose and inconsistent legal systems.

    International trade and finance
    Just as individuals specialize in an occupation they do best, countries specialize in producing particular goods and services depending on their natural resources and education of their labor force. Countries with large areas of nutritious soil might specialize in agriculture, whereas a country with a labor force trained in electronics might specialize in producing computer chips. Countries can specialize in the goods and services they produce best and trade for the goods and services they produce relatively less efficiently. The more countries can specialize and trade, the more economic growth they will realize in the long run. If trade is slowed, countries will have to produce goods and services that they produce less efficiently instead of trading for them. Trade policy, such as quotas and tariffs, directly affects trade flows. Also, exchange rates among countries can affect trade as the cost of goods and services from other countries fluctuates with movements in exchange rates. Some economists consider these factors pivotal in terms of economic growth. For example, if the United States places a tariff on imported automobiles, the price of cars in the United States will likely increase.

    Technology and investment
    Technology refers to advancement in knowledge and how it’s employed in the productive process. For example, the micro-chip processor helped businesses incorporate computer systems into the production process and sales. Countries that have a wealth of research and development and/or access to new technology often have a more productive work force than countries without access to technology. As productivity increases, economic growth increases. Investment in new technology or buildings can lay the groundwork for growth in years to come. Countries with institutions that facilitate the appropriation of technology and accommodate investment will realize increases in total output.

    Political, social and geographical conditions
    Countries with challenging terrain or weather may need to find creative ways to adapt to their surroundings. The political and social climate of a country influences the total output of a country’s economy. Crime, poverty, income disparity and armed conflicts can be a cause, or a result, of low economic growth. Nevertheless, social problems can develop despite high economic growth. The culture of a country can have an effect on what and how goods and services are produced. Cultural tendencies can create biases for and against various market mechanisms and may influence the pace of production. The location and climate of a country can also contribute to economic success or difficulty.

    Money and banking
    A central bank, such as the Federal Reserve in the United States or the Bundesbank in Germany, is responsible for regulating the amount of money in circulation. Too much money in circulation can drive prices up, causing inflation. Too little money can pull prices down, which can depress economic activity. Finding the right balance is a central bank’s primary responsibility. This places a central bank in a position to facilitate economic growth by stabilizing overall prices. Some central banks act as a regulator of banks and provide oversight for the payments system, which includes cash, checks and electronic payments. At the turn of the century in the United States, widespread bank failures caused panic among depositors throughout the economy. Today, bank examiners of the Fed and other government agencies help locate small problems in banks before they become bigger. In its role as overseer of the payments system, the Fed helps keep the gears of the economy well greased, allowing for the easy flow of goods and services.

    Comparing factors of economic growth
    With these and other factors of economic growth in mind, what makes one factor more significant than another? A few things to consider:
    What relationship does the factor have with the whole economy? How does the factor contribute to economic growth?
    What would the economy be like if there were significant problems with this factor?
    Is the factor a cause or effect of economic growth?
    What relation does a central bank have to this factor?

    Collecting data on economic growth
    Comparing economic data of different countries can be helpful when looking at which factors of economic growth are significant in terms of enhancing economic growth. Many libraries have publications from the World Bank that provide economic and population data on countries. The Internet also has data resources available. One such resource is the Penn World Tables. By selecting a country and subject code, you can find economic data on almost every country in the world. It may be helpful to compare data between countries that have a slow-growing or even a decreasing GDP versus countries with a fast-growing GDP.

    Conclusion
    From money and banking to taxing and spending, many factors influence economic growth. Now it’s your turn to use resources available on the Internet, in libraries and your school and community to research and write this year’s essay. Join the ranks of economists around the world who are interested in what makes countries grow.

    References

    1. https://www.historyandpolicy.org/policy-papers/papers/the-real-lesson-for-developing-countries-from-the-history-of-the-developed
    2. https://www.e-ir.info/2012/09/19/the-importance-of-institutions-to-economic-development/
    3. https://www.bbc.com/news/business-32824770
    4. https://www.minneapolisfed.org/about-us/community-development-and-engagement/student-essay-contest/essay-contest-topics/1997-1998-essay-contest—why-do-some-countries-grow-faster-than-others

  67. Anyanta Minah Ngozi says:

    NAME:ANYANTA MINAH NGOZI
    DEPARTMENT: COMBINED SOCIAL SCIENCE (ECONOMICS/SOCIOLOGY AND ANTHROPOLOGY)
    REG NO: 2018/249540
    Course: Eco 361
    Email: ngozianyanta10@gmail.com
    QUESTION: CRITICALLY DISCUSS AND ANALYSE THESE QUESTIONS AS A POTENTIAL SPECIAL ASVISER TO MR. PRESIDENT ON POVERTY ALLEVIATION AND ECONOMIC DEVELOPMENT.
    What can be learned from the Historical record of Economics progress in the now developed World. Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve if their industrialization?.
    Answer:
    Firstly, for comprehensive understanding, there’s need to define some basic key concepts.
    Therefore, A developed country is a sovereign state with a developed economy, high per capita income, good standard of living and technologically advanced infrastructure compared to other nations.
    Several factors determines whether a country is developed or developing or underdeveloped, these factors includes Human Development Index, Political stability, gross domestic product (GDP), industrialization, and of course some degree of freedom and the relevance of the Constitution.
    With this being said, some of the developed countries according to the United Nations development report 2019 statistical updates includes Norway, Switzerland, Ireland, Germany, Hong Kong, China, Australia, Ireland, Sweden, Singapore, Netherlands etc.
    Using Switzerland Economy as a case study. The initial conditions are similar with contemporary developing countries from what the developed nations or countries faced on the eve of their industrialization.
    Just like Switzerland, it unification was aided by the development of a rail network that rapidly expanded as soon as the new Constitution had been approved. Historically, the year 1848 was a decisive turning point in Swiss history. Although internal conflict was not wholly eliminated thereafter, it was always settled within the framework of the 1848 federal constitution. The liberals and radicals, who completely dominated the state in the 19th century and remained a leading force into the 21st century, gradually and not always willingly integrated other political and social groups into the government: first the conservative Catholics, then the peasants’ party, and finally, during World War II, the socialists. Enjoying internal political stability and spared from war—phenomena unmatched elsewhere in Europe—the Swiss focused much of their attention and efforts on developing industry, agriculture, communications, and the financial sector.
    What could be learned from the Swiss developed Economy includes the following points:
    MODE OR FORM OF TAXATION
    Big socialistic governments are another major reason behind the mediocre performance of other European nations. Once again, the Swiss have been able to prevent the government from growing too big. Governments grow big when they are able to take a lot of money from people in the form of taxes. When the amount of money in the hands of the central government increases, chances of corruption also increase. Hence, the best way to prevent the embezzlement of cash from the hands of productive workers to the hands of corrupt politicians is to ensure that taxation is done locally. Most of the taxes imposed in Switzerland are done locally. Only if the tax cannot be imposed at a local level does the federal government interfere. The benefit of such taxation is that local people can have more say in the manner in which their money is spent. Since the tax is being collected and spent locally, chances of corruption decrease. Also, regional politics cannot be played. Taxpayer money from all parts of the nation cannot be concentrated in a few provinces. The Swiss economy is an epitome of balanced development. It is not like many other nations of the world wherein one part of the nation is completely impoverished whereas the other is extremely wealthy.
    OPERATES A DIRECT FORM OF DEMOCRACY
    All European nations are democratic. However, Switzerland follows a different kind of democracy called “direct democracy.” Since the population in Switzerland is education and understands the issues that face the country this system works fine. Under this system, Swiss citizens above the age of 18 are required to vote on several issues. Notice that the votes are not cast to select a candidate. Instead, the votes are cast in order to make decisions on issues. This is the reason why Swiss voters have to vote several times a year. Often, people have to vote as many as four times a year on different issues relating to economic and foreign policy. To ensure that the productive time of the people is not wasted during this process, the option of postal voting is also provided.

    Since Swiss voters take their government matters more seriously, they have been able to elect better governments than the rest of Europe.
    GOOD POLICIES
    Switzerland initiated a good and working policies that enabled them grow and develop. The equally used tarrif protection and subsidies to develop their industries.
    It is also important to realize that the Swiss government does not interfere much in the trade. There are no prohibitive tariffs which have been imposed on foreign products. Since Switzerland is a landlocked country, it does not have too many resources. It is dependent upon the import from other nations. However, since free trade has been managed so well, the Swiss people have not faced any major problems. Since Swiss people do not object to other products being sold in their country, their products are also welcome worldwide.
    TECHNOLOGICAL ADVANCEMENT
    They have equally advanced in their technology, innovations and invention of technologies that facilitate easy working and effective production capacity.
    Lastly, Diversification of the Economy and Industrialization. Studying areas that needs to be invested in and improving them, for example, In education and Agriculture and ensuring that no area is dormant but is fully utilized effectively.
    In the aspect of social behaviours, they have a good attitude to work, good personal relationship, respect for their environment and constituted authority.
    All these are worth emulating for developing countries to advance.

    QUESTION 2
    What are Economic Institution and how do they shape problems of underdevelopment and prospects for successful development?.
    ANSWER
    Economic Institutions may be define as Agencies, a company or an organization that is concerned with the distribution or allocation of money or with managing the distribution of money, goods, and services in an economy. The example of such institution includes Banks which is divided into the Banking and Non_Banking institution, the Central Banks and Commercial Banks, government organizations, and investment funds.
    These institutions work hand in hand or collectively to solve the problem of underdevelopment and equally for successful development.
    For example Commercial Banks plays a major role in development in several ways, e.g they make funds available for rural areas, encourage savings and investment. These savings are therefore utilize for investment as they are made available to investors who utilize them for so many developmental projects. Loans and capitals are equally made available for projects and for production of goods and services.
    Furthermore, the Central Bank which is also known as the Government’s Bank, regulates and provides Capitals and loans and equally regulates the flow of money during inflation, using their monetary policies to stabilize the Economy. Also, Government institutions equally plays some essential role in development process such as, implementing working policies such as Fiscal policies, control of taxation and budget allocation, trade and tarrif control and building social infrastructures etc. All these Economic Institution plays these roles to push the Economy into a sustainable position and in return grows and developes.
    QUESTION 3
    HOW CAN THE EXTREMES BETWEEN THE RICH AND POOR BE SO GREAT?
    Answer:
    The Extremity between the rich and poor are caused by some basic factors which includes: 1.psychic thinking or Differences in mindset: A Man in most time isn’t necessarily poor because he has no fund at that particular point in time but because he lacks ideas and his mindset. Most people are still living in the mentality that manner falls from heaven or in the get rich quick syndrome without embracing ideas and hardwork. Even prophecies remains only but a prophecy unless it is worked for or towards, even the Bible says it that fair without work is dead. So most times the extremism is in the fact that most of the poor people lacks ideas on productive ventures to invest in and the fact that they’re scared of taking risk. They’ll back themselves up with the mindset that it is better to eat the money they have rather than to invest it into some ventures that they’re not sure of.
    2. Company or Association: A popular adage says, “show me your friend and I’ll tell you who you are”. Sometimes these extremism between the rich and the poor is caused by the type of association or friendship we keep. The poor rather than creating meaningful relationship with innovative and purpose driven friends would rather decide to hang out with people of same level, IQ and status with the intent of avoiding being referred to as a desperate person and all that name calling. Forgetting that, they could earn ideas that would enable them grow in the areas they would want to venture into.
    3. Access to Credit allocations: Most of the Credit facilities and institution responsible for granting loans, grants and credit will always request for collateral and some other necessities of which if a poor man has none, he can’t possibly gain access to any of the credit and grants but a rich man can easily get them because he can easily provide collateral and other requirements.
    4. Business Regulations: most of the business policies and regulations has a way of favoring the rich at the expense of the poor man.
    5. Education: Access to quality education, skills and other forms of learn and acquisition of knowledge are most times not quite affordable for the poor man because of financial constraints, thereby hindering him access to some basic skills and innovative skills that could enable him improve his business because of finances since he can’t afford them.
    6. Unemployment rate: Which sometimes are caused by corruption. We live in a system whereby graduates could hardly get any meaningful job because most of these jobs has special reservation for some certain set of individuals. These jobs requires connections and all that. Which means the rich that could afford these connections continually keep getting rich while the poor remains poor.
    7. Security: We have issues of insecurities ranging from kidnapping and terrorist attacks. The rich that could afford Security expenses are safeguarded while the poor keep suffering from lack of protection and fear of investing in areas that are not secured or may tamper with their life security.

    QUESTION 4
    What are the sources of National and International Economic Growth? Who benefits from such growth and why? Why do some countries make rapid progress towards development while many others remain poor.
    Answers
    The sources of National and International Economic Growth includes
    Natural Resources
    Human capital
    Technology
    Innovations
    Social and Political structure
    Trade
    Industrialization etc.
    Who benefits from Economic Growth and Why? THE GOVERNMENT and The Citizens benefits because, Higher or improved Economic Growth means an increase in per capita income leading to increase taxation that will generate income for Government spending in the provision of social services like Good roads, public health, education, creation of jobs etc and servicing of their debts, it will also bring about improved standard of living, increase literacy level, increase availability of Job opportunities etc.
    Why some countries make rapid progress towards development while many others remain poor?
    Answer: just like the example I gave of Switzerland, some countries make progress towards development while others remain poor because of differences in climates, access to Natural resources and it full utilization, their attitude to work, good working policies, the differences in technological advancement, working constitutional authority, working business legislation and policies, access to education and industrialization, Human capita development, respect for human dignity and their environment i.e avoiding destroying the ecology and the environment through deforestation, bush burning, illegal falling down of trees etc.

  68. Kalu Melody Chinaza says:

    Name: Kalu Melody Chinaza
    Reg number: 2018/245127
    Department: Economics Department
    AN ASSIGNMENT ON ECO 361

    QUESTION 1: What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what developed countries faced on the eve of their industrialization

    Answer: Many of today’s poorest countries do not collect adequate revenues to build the human capital, infrastructure, and institutions needed for stronger growth and faster poverty reduction. In sub-Saharan Africa, for example, 15 of the 45 countries have revenues lower than 15 percent of GDP. Moreover, sub-Saharan Africa’s resource-rich countries have revenues that are more volatile and lower than countries that are resource-poor. Even with substantial foreign grants and loans, government spending by developing countries is lower or lesser than by advanced economies. In 2018, government spending in sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones. Comparisons between today’s developing countries and today’s advanced economies can provide aspiration but less so in terms of recommendations about policies and institutions. Of greater value for developing countries are comparisons with advanced economies when they were less prosperous and would have been considered low-income or lower middle-income.
    Using government spending a century ago by 14 of today’s advanced economies (Advanced 14), we highlight four lessons for developing countries. Hence, the lessons from the historical record of economic in the now developed world are:
    Lesson 1: Governments can advance development even with low levels of government spending.
    Today’s low-income countries spend more than twice on average than today’s advanced economies spent more than a century ago. To be sure, this difference reflects the lack of the tax instruments and systems we have today. From 1850 until the early 1900s, customs duties and excises provided the bulk of government revenues, while the personal income tax and VAT were not introduced in countries until later. Moreover, society’s expectations from the government were much different then. In 1900, for example, spending on unemployment, health, pensions, and housing amounted to only 1.1 percent of GDP in the Scandinavian countries on average and to 0.7 percent of GDP in the U.S. Even with low level of government spending, economic development was brisk in most of the Advanced 14 at the turn of the 20th century, with infrastructure improvements financed by private capital and the strong expansion of primary and secondary education. And here lies the lesson for today’s developing economies: While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital—mobilizing private finance for development.

    Lesson 2: Today’s developing economies need to focus on building fiscal and market institutions before rising spending needs—and not after they materialize.
    Government spending in the Advanced 14 increased substantially since 1960 as they reevaluated the role of government amid rapid industrialization and globalization and new taxes became commonplace. The shift from agrarian to industrial to post-industrial economies required different worker skills. Economic disruptions reshaped governments in the past, as is happening now with the changing world of work, leading to a large expansion of social insurance and protection spending.

    Lesson 3: Government spending by today’s developing economies is likely to increase, but there is a choice to make to the extent of redistribution and government services.
    Government spending among the advanced economies has increased, but so has its variability. Before 1913, spending among the advanced economies ranged from less than 2 percent of GDP in Japan to 13 percent in Italy, or a span of 11 percentage points. Today, the span of spending among the advanced economies is 39 percentage points: from 17.3 percent in Hong Kong to 56.4 percent in France.

    Development paradigms vary among today’s advanced and developing countries. Robust growth can happen with a smaller or a larger government, in general. Too large of a redistribution, however, may create substantial disincentives to work and invest, or lead to tensions between formal and informal workers, employees of large companies or state-owned enterprises and small private firms. This danger now is clearer than ever: The changing world of work is clashing with persistent informality in developing countries and social protection systems that cover only part of the population.

    Lesson 4: Government spending has been countercyclical since World War II in almost all advanced economies, even with the sustained trend of spending increases.
    Countercyclical fiscal policy is a must for today’s developing countries, especially for those with abundant natural resources. However, there is overwhelming evidence that fiscal policy has been consistently pro-cyclical in developing countries, resulting in profound macroeconomic imbalances, unproductive debt build-ups, and ongoing instability.

    Personally, I’ll say that the initial conditions are both similar and different for contemporary developing countries from what the developed countries faced on the eve of their industrialization. They are “different” because the developing countries today (especially in Africa) are developing both in national and international contexts that are very different
    from what today’s rich or developed countries faced in their own epochs of development, so we cannot apply lessons from, say, 1960s South Korea – not to speak of 18th century Britain – to today’s African countries. Moreover, Africa is very diverse, so we cannot have a uniform recommendation for all countries, especially from a set of experiences that are diverse themselves. Exactly what policy implications we draw from which historical cases will depend on the exact natural, economic,
    social, political, and cultural conditions that a country faces and on what their goals, preferences, and aspirations are. However, knowing the ‘real’ – as opposed to ‘official’ – history of today’s developed countries allows us to break off from the ideological shackle imposed by today’s dominant view that Africa’s economic problems are not due to the failures of neo-liberal policies but because of some structural problems that we cannot do anything about. And “similar” because what works for some might, as well, work for others.

    QUESTION 2: What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?

    The term “Economic Institutions” refers to two things:

    1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions.
    2. Well-established arrangements and structures that are part of the culture or society, e.g., competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions.

    Simply put, an economic institution is a company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy. Banks, government organizations, and investment funds are all economic institutions.

    Economic institutions shape problems of underdevelopment and prospects for successful development in the sense that economic institutions structure the distribution of opportunities, assets and resources in society. For example, political settlements (usually an agreement among elites) establish the formal rules for managing political and economic relations (such as electoral processes, constitutions, and market regulations), as well as the informal division of power and resources (DFID, 2010a: 22). Powerful people and groups can shape institutions, making them inclusive or exclusive, for their own benefit and to maintain power (Jones, 2009: 11; World Bank, 2013a: 13; Goetz, 1997: 14; Leftwich & Sen, 2010: 24). In this way, institutions are both shaped by power relations and in turn act as ‘bottlenecks’ on acceptable forms of governance and the exercise of power (Wilson, 1997: 17).

  69. Okoye Favor says:

    Okoye favour
    2018/249186
    Economics department

    1. What can be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries from what the developed countries faced on the eve of their industrialization? Nigeria can imitate some of the actions of these developed countries and also learn from their past actions. Nigeria as a country suffers from a lot of economic instabilities and problems which ranges from unemployment, poverty, poor living conditions etc but I can say that the major root of all of these problems are from corruption and bad government policies. It is necessary to curb corruption in Nigeria, as it eats deep into the heart of her economic progress. Different developed countries have been once faced with this issue of corruption and have gone a long way to reduce it, for instance looking at the united states, the country has denied corrupt individuals access irrespective of how wealthy that individual may be. An individual has to go through series of inspection and clearance before he or she is allowed into its borders. This can go a long way to prevent the spread of corruption into the country. Nigeria should copy this and execute it strictly. Secondly Nigeria is known for its bad policies which tends to disfavor the less wealthy. Good policies promotes productivity in a nation. looking at a developed nations like the US, The united states has introduced policies to promote energy production as well as consumption which will also serve as a source of revenue to the nation. But over here no significant action has been done towards this aspect, We can emulate these nations and make better policies that with work in line with the growth of the nation.

    2. What are economic institutions, and how do they shape problems of underdevelopment and prospects for successful development?

    Economic institutions are specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country. The Internal Revenue Service (the IRS, the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions. Economic institutions helps to shape the country towards economic development. Looking at the CBN, the Central Bank of Nigeria in 1979 initiated credit limits for bank lending. This was done so credit will be made available to all sectors of the economy that suffered neglect such as agriculture and manufacturing. Agriculture is a major source of income and development for an agrarian nation like Nigeria. So this action by the CBN has helped to some extent. One of the problems that comes along with underdevelopment is monetary instability like inflation. The central bank as an economic institution has played a major role in the growth and financial credibility of commercial banks by making sure that all the commercial backs operating in the country had a capital base. This was to ensure that bank customers do not bear loss alone if there were bank failures. This will give individuals the courage to save more hence also giving the CBN more access and control over money supply and hence can control inflation.

    3. How can the extremes between rich and poor be so very great?

    This is a question which development economics seeks to answer… its seeks to determine the relationship between the rich and the poor in terms of wealth and conditions of living and also ascertain the reason as to why the rich keeps on getting richer whereas the poor gets poorer. In Nigeria a lot of policies favours the rich and disfavors the poor. policies that gives the rich more monopoly over production of certain necessary goods and services. This in turn enriches them at the expense of the poor.

    4. What are the sources of national and international economic growth? Why do some countries make rapid progress toward development while many others remain poor?

    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
     Sources of economic growth are
    *Natural resources
    *Human capital
    *Technology
    *Innovation
    *Social and political structure
    *Trade
    *Industrialization
    Just as I have explained above most economy fails because if her inability to learn from the past of the developed nations as well as make good and unbiased policies for the good of the nation as a whole.

  70. Ugochi Ogbonnaya says:

    NAME: OGBONNAYA GERALDINE UGOCHI
    DEPARTMENT: ECONOMICS
    REGISTRATION NUMBER: 2018/241833
    LEVEL: 300L
    COURSE CODE: ECO 361
    COURSE TITLE: DEVELOPMENT ECONOMICS 1

    ASSIGNMENT
    Q1. WHAT CAN BE LEARNED FROM THE HISTORICAL RECORD OF ECONOMIC PROGRESS IN THE NOW DEVELOPED WORLD? ARE THE INITIAL CONDITIONS SIMILAR OR DIFFERNET FOR CONTEMPORARY DEVELOPING COUNTRIES FROM WHAT THE DEVELOPED COUNTRIES FACED ON THE EVE OF INDUSTRIALIZATION.

    For the last two decades or so, the developing countries have been under great pressure from the developed countries and the international institutions that they control – such as the International Monetary Fund, the World Bank, the World Trade Organisation – to adopt a set of ‘good policies’, especially free trade, and ‘good institutions’, such as strong patent law, in order to foster their economic development.

    a) The historical fact is that, today’s developed countries did not develop on the basis of the policies and the institutions that they now recommend to, or even force upon, the developing countries.

    b) Virtually all of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services.

    c) Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required.

    d) Above all, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should use.

    Second, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development.

    Third, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process.

    DEVELOPED NATIONS

    The first economic category is developed nations, which can generally be categorized as countries that are more industrialized and have higher per capita income levels. To be considered a developed nation, a country generally has a per capita income around or above $12,000. Also, most developed countries have an average per capita income of approximately $38,000.

    As of 2010, the list of developed nations included the United States, Canada, Japan, Republic of Korea, Australia, New Zealand, Scandinavia, Singapore, Taiwan, Israel, countries of Western Europe, and some Arab states. In 2012, the combined populations of these countries accounted for around 1.3 billion people. The populations of developed countries are generally more stable, and it is estimated that they will grow at a steady rate of around 7% over the next 40 years.

    In addition to having high per capita income and stable population growth rates, developed nations are also characterized by their use of resources. In developed countries, people consume large amounts of natural resources per person and are estimated to consume almost 88% of the world’s resources.

    DEVELOPING NATIONS

    The second economic category is developing nations, which is a broad term that includes countries that are less industrialized and have lower per capita income levels. Developing nations can be divided further into moderately developed or less developed countries.

    Moderately developed countries have an approximate per capita income of between $1,000 and $12,000. The average per capita income for moderately developed countries is around $4,000. As of 2012, the list of moderately developed nations is very long and accounts for around 4.9 billion people. Some of the most recognizable countries that are considered moderately developed include Mexico, China, Indonesia, Jordan, Thailand, Fiji, and Ecuador. In addition to these specific countries, many others from Central America, South America, northern and southern Africa, southeastern Asia, Eastern Europe, the former U.S.S.R., and many Arab states, are all considered moderately developed countries.

    Less developed countries are the second type of developing nations. They are characterized by having the lowest income, with a general per capita income of approximately less than $1,000. In many of these countries, the average per capita income is even lower, at around $500. The countries listed as less developed are found in eastern, western and central Africa, India and other countries in southern Asia.

    Q2. WHAT ARE ECONOMIC INSTITUTIONS AND HOW DO THEY SHAPE PROBLEMS OF UNDERDEVELOPMENT AND PROSPECTS FOR SUCCESSFUL DEVELOPMENT?

    DEFINITION OF ECONOMIC INSTITUTION
    Economic Institution is a company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy.
    Economic institutions are responsible for organizing the production, exchange, distribution and consumption of goods and services.
    Economic institution is also one of the basic institutions. For the sake of survival each society has an economic system ranging from simple to complex.

    Following are the functions of economic institution which include Social stratification, Power and authority, Interdependence of other Institutions, Needs satisfaction, Employment, Division of Labor and Provision of funds.

    SOCIAL STRATIFICATION
    In capitalist system, there is uneven distribution of resources among people, which create many social classes in society. Individuals in society belong to different classes such as upper, middle and lower class. They can move upward or downward on the social ladder, for instance, if lower class people get access to more resources they move upwards on the social ladder and may become middle class or upper class. And if the resources of upper class diminish they will move downwards and may become middle class or lower class.

    POWER AND AUTHORITY
    Those who have access and possess more economic resources they are powerful and authoritative in society. Wealth and economic resources are the source of power in society, the holder of wealth can control various agencies of society.

    Interdependence of other Institutions
    Survival of economic institution depends on the cooperation with other institution. Labor force work in different industries which comes from the institution of family and without labor it is impossible to produce. Technical and managerial staff comes from the educational institution. The role of sociologist initiate when workers go on strike and industries get closed. Government formulate rules and regulations for businesses and business owners have to follow those rules. Therefore, cooperation with other institution is mandatory for economic institution.

    NEEDS SATISFACTION
    In modern world, our basic needs have enormously increased. We need industrial and agricultural goods and services to survive in modern world. Economic institutions are obligated to satisfy those needs.

    EMPLOYMENT
    Economic institution creates jobs opportunities for people through which, they can generate income and earn their livelihood. That’s how people in the society satisfy their basic needs. Many businesses are developed under the economic institution.

    DIVISION OF LABOR
    Economic institution creates jobs for the people who acquire different skill sets. The roles and responsibilities of employee depend on their skills.

    PROVISIONS OF FUNDS
    Economic institution provides economic assistance to other institutions as well. It provides funds to government in the shape of taxes and to the family in the shape of salaries.

    Q3. HOW CAN THE EXTREMES BETWEEN RICH AND POOR BE SO VERY GREAT?

    Economic inequality (also known as the gap between rich and poor, income inequality, wealth disparity, or wealth and income differences) consists of disparities in the distribution of wealth (accumulated assets) and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality is related to the ideas of equity: equality of outcome and equality of opportunity.
    There are many reasons for economic inequality within societies, and they are often interrelated. Acknowledged factors that impact economic inequality include, but are not limited to:

    INEQUALITY IN WAGES AND SALARIES;
    The income gap between highly skilled workers and low-skilled or no-skills workers;
    Wealth concentration in the hands of a few individuals or institutions;
    Labor markets;
    Globalization;
    Technological changes;
    Policy reforms;
    Taxes;
    Education;
    Computerization and growing technology;
    Racism;
    Gender;
    Culture;
    Innate ability
    A major cause of economic inequality within modern economies is the determination of wages by the capitalist market. In the capitalist market, the wages for jobs are set by supply and demand. If there are many workers willing to do a job for a great amount of time, there is a high supply of labor for that job. If few people need that job done, there is low demand for that type of labor. When there is high supply and low demand for a job, it results in a low wage. Conversely, if there is low supply and high demand (as with particular highly skilled jobs), it will result in a high wage. The gap in wages produces inequality between different types of workers.

    Apart from market-driven factors that affect wage inequality, government sponsored initiatives can also increase or decrease inequality. Social scientists and policy makers debate the relative merits and effectiveness of each approach to regulating inequality. Typical government initiatives to reduce economic inequality include:

    PUBLIC EDUCATION: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    PROGRESSIVE TAXATION: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    MINIMUM WAGE LEGISLATION: Raising the income of the poorest workers
    NATIONALIZATION OR SUBSIDIZATION OF PRODUCTS: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.

    Q4. WHAT ARE THE SOURCES OF NATIONAL AND INTERNATIONAL ECONOMIC GROWTH? WHY DO SOME COUNTRIES MAKE RAPID PROGRESS TOWARDS DEVELOPMENT WHILE OTHERS REMAIN POOR?

    Broadly speaking, there are two main sources of economic growth: growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce. Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income. Productivity growth allows people to achieve a higher material standard of living without having to work more hours or to enjoy the same material standard of living while spending fewer hours in the paid labor force.

    SOURCES OF ECONOMIC GROWTH
    These sources are broadly grouped into
    a. NATURAL FACTOR: The quality and/or quantity of land or raw materials.
    b. HUMAN FACTOR: The quality and/or quantity of human resources/capital.
    c. PHYSICAL CAPITAL AND TECHNOLOGICAL FACTORS: The quality and/or quantity of physical capital.
    d. INSTITUTIONAL FACTORS such as
    finance and banking system
    education system
    healthcare
    infrastructure
    political stability.

    In common language, the terms “rich” and “poor” are often used in a relative sense: A “poor” person has less income, wealth, goods, or services than a “rich” person. When considering nations, economists often use gross domestic product (GDP) per capita as an indicator of average economic well-being within a country. GDP is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year. In a sense, a country’s GDP is like its yearly income. So, dividing a particular country’s GDP by its population is an estimate of how much income, on average, the economy produces per person (per capita) per year. In other words, GDP per capita is a measure of a nation’s standard of living. Because GDP per capita is simply GDP divided by the population, it is a measure of income as if it were divided equally among the population. In reality, there can be large differences in the incomes of people within a country. So, even in a country with relatively low GDP, some people will be better off than others. And, there are poor people in very wealthy countries. Whether for people or nations, the key to escaping poverty lies in rising levels of income. For nations specifically, which measure wealth in terms of GDP, escaping poverty requires increasing the amount of output (per person) that their economy produces. In short, economic growth enables countries to escape poverty.

  71. OBETA MAGRET UZOCHUKWU says:

    Name:obeta magret uzochukwu
    Reg number:2018/243669
    Dept: social science education (education/economics)
    Question 1:What can be learned from the historical record of economic progress in the now developed world?Are the initial condition similar or different for contemporary developing countries from what the developed countries faced on the eve of there industrialization?
    Answer
    Developed countryare generally categorized as country that are more industrialized and have higher per capita income level.
    Developing country or nation are generally categorized as country that are less industrialized and have lower per capita income level.
    Many of today’s poorest countries do not collect adequate revenues to build the human capital,infrastructure and institutions needed for stronger growth and faster poverty reduction.
    In Saharan Africans resource-rich countries have revenue that are more volatile and lower than countries that are resource-poor.
    Even with substantial foreign grants and loans government spending by developing countries is lower than by advanced economics.
    In 2018, government spending in Sub-Saharan Africa averaged 23 percent of GDP compared with 31.4 percent in middle-income countries and almost 39 percent in the advanced ones.
    Comparisons between today’s developing countries and today’s advanced economics can provide aspiration but less so in terms of recommendation about policies and institutions of greater value for developing countries are comparisons with advanced economics when they where less prosperous and would have been considered low-income or lower middle-income.
    Using governor spending as example, there are four lessons for developing countries and they include
    1: Government can advance development even with low level of government spending.
    2: Today’s developing economics need to focus on building fiscal and market institutions before rising spending needs and not after they materialize.
    3: Government spending by today’s developing economics is likely to increase but there is a choice to make to the extent of redistribution and government service.
    4: Government spending has been countercyclical since second world warin almost all advanced economics even with the sustained trend of spending increases.

    Question Number 2:
    What are the economic institutions and how to shape problems if underdevelopment and prospect for successful development?
    Answer:
    There are three major economic institutions namely WTO,IMFand UNCTAD.
    WTO was formed in 1995 to replace the general agreement on tariff and trade (GATT) which was in 1948.
    GATTwas replaced by WTO be a because GATT was biased in favor of developed countries.the main objective of WTO is to help the global organization to conduct their business.
    WTO head quartered at Geneva, Switzerland,consist of 153 member and represent more than 97of the world trade.
    Function:
    1:selling the frame work for trade policies
    2: Reviewing the trade policies of different countries .
    3:providing technical corporation to less developed and developing countries.
    4: Reducing the barrier of international trade.

    IMF: it was established in 1945 and consist of 187 member countries.it works to secure financial stability,develop global monetary cooperation facilitate international trade and reduce poverty and maintain sustainable economic growth around the world.
    Function:
    1: Helping in increasing employment and real income of people
    2: Solving the international monetary problem that distort the economic development of different nations.
    3: Maintaining stability in the international monetary and financial system.
    UNCTAD:
    It was established in1964, is the principle organ of united nations General Assembly.it provide forum where the developing countries can discuss the problem related to economic development.
    Question number 3:How can the extreme between rich and poor be so very great .
    Answer:
    The extreme between the rich and poor is out of control.millions of people are living in extreme poverty while rich people get rewarded and still be at the top.the rich people are getting richer by the day and poor people are getting poorer by the day.the poor only think of their daily bread while the rich thinks about what to invest.poor people did not even have money to use for consumption talk more of investing and this is why the rich will continue to be rich and the poor will continue to be poor.
    Question number 4: what are the sources of national and international economic growth?why do some countries make rapid progress towards development while many other remain poor?
    Answer:
    The sources of national and international economic growth are as follows,
    Human resources, Natural resources, capital formation and technological change and innovation.
    Human resources: labour input consist of quantity of worker and of the skills of the work force.
    Natural resources:the second classical factors of production is natural resources.the important resources here are arable land,oil and gas,forest, water and mineral resources.
    Capital formation: tangible capital includes structure like roads and power plants equipment like truck and computers and stock of inventories.

    Why do some countries make rapid progress towards development while many other remain poor?it can be traced to some factors which include climate and geographical factors.at times people living near navigation routes or in temperate climate have fared better than people living far away from coast line or in frigid climate.
    Example many years ago, Argentina was among the seventh wealthiest nation in the world but now ranks 43rd in terms of real per capita income.

  72. Onyemaechi Favour ozioma says:

    Onyemaechi Favour Ozioma
    2018/244292
    Edu/Economics
    Eco 361
    An Assignment
    1.What are be learned from the historical record of economic progress in the now developed world? Are the initial conditions similar or different for contemporary developing countries faced on the eve of the industrialization?

    In the last 25 years, the dominant development paradigm has-been on the belief that the role of the government should be confined to providing macroeconomic stability, protection of property rights and the provisions of public goods. Starting in the 1970 and the early 1980 state led and nationalistic development strategy which most developing countries pursue in the 1960s and 1970s were denounced as having created inefficiences, corruption and slow growth.
    As a result, a set of policies known as neo_ liberal policies was recommended, comprising liberation of trade and foreign investment, privatisation of state_owned enterprise, deregulation of domestic industry, more prudent macroeconomic policy and a stronger protection of intellectual property rights.
    This policy was applied in Britain as a develop country, Britain until 17th century was backward depending on raw wool export to the low countries, so it implemented various scheme to promote import substitution woollen manufacturing. These policy raised the manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her other develop countries.
    From this historical record, it point out that the develop countries has handcap or issues but because they have develop successfully and acquired the technological, the organisational skills and the political institution to deal with these problems. Also this history gave us an insight that will help us to break off from the ideological shackle imposed by today dominate view that Africa economic problems are not due to the failure of neo_liberal policies but because of some structural problems that are put in place by Various policies anchored by politically personality.

    2. What are the economic institution and how do they shape problems of underdevelopment and prospective for successfully development ?

    Economic institution are instructions created for establishing and protecting property rights, facilitating transaction and permitting economic co-operation and organization.
    Economic institution shapes problem of underdevelopment and prospective for successfully development through the following factors:
    I. Investment: when property right are secured, owners of capital are more likely to invest, all other thing being equal, obtain credit, retain reasonable share of the profit( without excessive taxation) and to insure against risk, investment is again encouraged. Investment may also be simulated when establishing companies or more informal economic group.
    II.Technical innovation: Again secure intellectual property rights are likely to promote private investment in research and development of innovations which can bring development.
    III. Economic organization is likely to be more effective and efficient, delivery of benefits of specialization and economics of scale where they apply, when institution facilitate transaction and cooperation between individuals whether in formal company or less formal cooperation. Institution also likely to have profound influence on the pattern of economic growth and distribution of rewards within economics and society thereby affecting the level of underdevelopment.
    These factors can help a country to shape or solve the problems of underdevelopment and thereby making way for people to earn a living.

    3. How can the extreme between the rich and the poor be very great?

    The extreme between the rich and the poor is very great is because of the following points:
    I.The government undertax the rich and taxes are falling disproportionately on the working people which leaves the poor with less money to cater for health, education and other needs.
    II.Underfunded public service: at the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poores people. In many countries, decent education or quality health care has become a luxury only the rich can afford and this has implications for future generations to come.
    Government must act now to build a new human economy that value what truly matters to society rather than fueling an endless pursuit of profit, policies that favours everyone not the rich; an economy that works for everyone not just a fortunate few.

    4. What are the sources of national and international economic growth? Why do some countries make Rapid progress towards development while others remain poor?

    To understand the sources of economic growth, one need to know what is economic growth.
    Economic growth is the continuous improvement in the capacity to satisfy the demand for goods and services, resulting from increased production scale and improved productivity.There are various sources of national and international growth such as:

    I.Information communication technology (ICT): it has contributed to boost growth in some countries, mainly by offering new investment opportunities. The decomposition of aggregate growth also suggest that in most countries ICT_ producing industry has contributed to growth, ICT has shown it potential as the driver of growth by influencing the traditional process of capital deepening ie the increased intensity of physical capital per unit of labour.
    II.Appropriate macroeconomic policies: policy and institutions are also founded to play an important role in shaping long term economic growth. In addition, policies made should help to sustain living standards in the long term transfer help to meet social goal and not policies that bring government deficit, high level of taxation.
    III. Technological changes and innovation:it denotes change in the process of production or introduction of new products or services, these changes has improved the living standards and economic growth of a country.
    IV.Human resources: it consist of labour input which is the labour force of an economy, improvement in literacy, health and discipline and most recently the ability to use computer increase productivity of labor.

    Why some countries makes rapid progress towards development while other remain poor? These are the reasons:
    I. Bad economic policies: the government makes a lot of bad policies such as choosing wrong kind of strategy, closing international borders, going for central planning under communism when the market system would be much move propitious for economic development.
    II.lack of law, massive corruption, when it get out of hand, can frustrate the normal process of governance and there fore of economic development.
    III. Geopolitics: means a country’s relation with its neighbors, with its foes, with its allies.
    IV.Government bankruptcy: many government around the world and through out history has gotten into a fiscal mess, they got into wars they should not have done and couldn’t afford and which ended up with va massive fiscal crisis.These factor can make a country to remain poor while others grow rapidly.

    REFERENCES
    http://en.Wikipedia.org/wuki/end of poverty
    http://WWW.transparency.org/cpi2013/result
    Bis(2010), “economics growth, BIS economic paper no 9”.

  73. UKWUEZE DESTINY AMARACHI says:

    NAME: UKWUEZE DESTINY AMARACHI
    REG NO: 2018/242416
    DEP: ECONOMICS
    EMail: amarachidestiny06@gmail.com

    Answer no 1
    *Many developed countries did not liberalize their agricultural trade during the early stages of their industrialization but protected their farmers, and newcomers like Korea andTaiwan have followed their example. Neoclassical economists assert that agricultural protection harmed poor consumers and retarded growth (E.G.Diaoetal 2002b;Tracy1989),

    *Improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of today’s – not even yesterday’s – Anglo-American institutions on all countries; nor should it be attempted in haste, as institutional development is a lengthy and costly process

    .
    *All of today’s developed countries used tariff protection and subsidies to develop their industries, and in the earlier stages of their development, they did not even have such ‘basic’ institutions as democracy, central banks, patent law, or professional civil services

    *Most Asian developing countries with successful green revolutions stabilized or supported their agricultural prices at the time these revolutions occurred (Dorward etal 2002). These cases.include countries with rapid growth like indonesia and Malaysia(Dawe2001;Jenkinsand Lai1991;Timmer2002).In
    Vietnam and Chile, where rapid growth was coupled with the liberalization of
    agricultural trade, this involved there moval of negative protection rather than
    reduction in positive protection(Benjamin and Brandt 2002;Valdés etal.1991)2.

    *The conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed, on the recognition that the orthodox recipe is not working, and that there can be no single recipe of ‘best practice’ policies that everyone should

    *the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development

    *Most least developed countries that are caught in stagnation have not protect their agriculture. Development economists blame their situation on‘urbanbias’
    leading to over-taxation of farmers(Bates1981;NgandYeats1998;World
    Bank1981)

    *Given that the adoption of ‘good policies’ and ‘good institutions’ has failed to generate the promised acceleration of economic development in the developing world, and has in some cases even led to economic and social collapses, a radical re-thinking of the development orthodoxy is required

    *The Industrial Revolution that started in Britain around 1800 and spread to Belgium
    and France after the Napoleonic Wars was followed by a period of international. liberalization of agricultural trade. The protectionist Corn Laws in Britain were
    moderated in the1830s and phased out in 1846-49.This was followed by a
    liberalization of agricultural trade policies in other countries, especially after the
    British-French trade treaty in 18603.The subsequent events seem to support the
    accepted theory. In Britain, large farms bought new fertilizers,feeds, drainpipes and
    machines to innovate and intensify their production.In other places, British demand
    for food and farm-based materials stimulated the growth of farm export sectors.In the Southern US, cotton plantations flourished(Fogel and Engerman1974),and the
    same was true of large grain farms in East Elbian Germany(Koning1994 and literature referred to).More generally,agricultural growth interacted with industrial growth.The‘highfarming movement in Britain was coupled with new growth in railways and heavy industry.In Belgium and France,chain and demand linkages of
    agricultural growth stimulated the continuing of industrialization and–in the US and Germany –its dynamic take-off.

    *Most countries in Western Europe protected their farmers from the first fall in
    agricultural prices, in the late19th century. However, Denmark, The Netherlands, and the white settler countries a cross the ocean did not.They weathered the ‘agricultural crisis and when international prices recovered after
    1900, dynamic agricultural development resumed(Koning1994).When prices
    collapsed again from the late1920s, however ,these countries did resort to protection.Two countries–the US and Denmark–tried to restore free market policies in the1950s,but they returned to protection after a few years as a price decline later in the decade caused a significant fall in farm incomes.In Denmark,
    productivity growth was affected, and model studies suggest that the same would
    have happened in US agriculture had the policy been continued(Cochrane and Ryan1976;Koning1986).

    In South Korea andTaiwan,in the1950s, production and productivity in agriculture increased while output prices were kept below world market levels rather than being supported.The price decline in the later 1950 entails a slowdown,but in Taiwan agricultural growth resumed after 1960 without
    protection.South Korea introduced more supportive policies,however,and from
    the early1970s,both countries had positive and increasing agricultural protection (Ban etal.1980;Francks etal.1999;MoonandKang1991).

    *After1984, New Zealand abandoned protection.Although the number of sheep
    strongly decreased and much marginal hilll and went out of production,dairy and horticulture expanded.The adjustment was hailed as a success,not least because it was followed by an increase in productivity growth.However,this
    increase was limited to horticulture and may have been due to pre-liberalization
    investments(Philpott1994).In the livestock sector, productivity growth remained unaltered in spite of the massive release of marginal resources.

    *The white settler countries around1900 benefited from abundant fertile land that
    could be used for extensive export production thanks to new harvesting machines
    and theTransport Revolution(Koning1994).Within this group,New Zealand retains especially favourable conditions for dairy and horticulture,with production costs in dairy farming of only half those in prominent dairy countries like the US,Denmark and The Netherlands(IFCN2003).

    *Around 1900, Denmark and The Netherlands were using intensive systems that were on the productivity frontier of European

    Answer to No2 Question

    An economic institution is a company or an organization that deals with money or
    with managing the distribution of money, goods, and services in an economy. Banks, government
    organizations, and investment funds are all economic institutions.

    Economic institutions also are responsible for
    organizing the production, exchange, distribution
    and consumption of goods and services . For the sake of survival each society has an economic system ranging from simple to complex.

    some examples of economic institutions are:

    *Central Bank
    central bank is a financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations. In modern economies, the central bank is usually responsible for the formulation of monetary policy and the regulation of member banks.
    Central banks are inherently non-market-based or even anti-competitive institutions. Although some are nationalized, many central banks are not government agencies, and so are often touted as being politically independent

    *Commercial Bank:
    Commercial banks are financial institutions that provide services for both savers and borrowers. Their role in the financial system is critical to keeping money available and liquid. By definition, commercial banks operate in pursuit of a profit, according to the Federal Reserve System’s National Information Center.

    *World bank

    *The World Bank :is an international organization dedicated to providing financing, advice, and research to developing nations to aid their economic advancement. The bank predominantly acts as an organization that attempts to fight poverty by offering developmental assistance to middle- and low-income countries.

    _The economic institution shape the problem of underdevelopment and prospect for successful development through the role they play in the country, for example the role of Central Bank in Economic development

    *The main purpose of a central bank is to regulate the supply of money and credit to the economy. The board of governors, the Fed’s principal policy-making organization, plays a key role in this process_

    *the central bank carries external business for a country out:it deals with central bank of other countries and with world financial institution such as I.M.T and the world bank

    *Maintenance of monetary stability:the central bank controls, supervises coordinates the activities of commercial Bank

    * Banker to the government: The central bank is responsible for keeping all monies belonging to the government of the day

    *Determining interest rates: This is one of the fundamental roles of the central bank in controlling the Nigerian economy

    The role of commercial Bank in Economic development:

    *Deposits
    Commercial banks allow individuals and organizations to deposit their money into a safe place, helping them build their savings.

    *Lending
    Commercial banks use a portion of the funds they receive via deposits to make loans to individuals, organizations and government institutions

    *Access for Depositors:
    Deposits are payable on demand, so that the depositors have access to the money if they want it to make purchases and pay their bills. The money in checking accounts and savings accounts typically is available to depositors with no strings attached, though they may have minimum balance requirements.

    The role of world bank are:

    *The World Bank is an international organization that provides financing, advice, and research to developing nations to help advance their economies.

    *The World Bank and International Monetary Fund (IMF)—founded simultaneously under the Bretton Woods Agreement—both seek to serve international governments.

    *The World Bank Group offers a multitude of proprietary financial assistance, products, and solutions for international governments, as well as a range of research-based thought leadership for the global economy at large.
    *The World Bank’s Human Capital Project seeks to help nations invest in and develop their human capital to produce a better society and economy

    Answer to No3 question

    One of the reason for wide extreme between the rich and the poor is_

    *Economic inequality : /it consists of disparities in the distribution of wealth and income.
    Economic inequality refers to inequality among individuals and groups within a society

    Causes of Inequalities:

    There are several causes which give rise to inequality of incomes in an economy

    *Luck and Opportunity:

    Some persons are lucky enough to get a good chance and they may make the most of it. Kennedy’s assassination gave a chance to Lyndon Johnson. It sometimes happens that a person comes to know of a vacancy and gets it. A business man happens to start business in a place which turns out to be one of very favourable location.

    *Family influence:

    It is generally recognized that the job that a person gets is very largely determined by the family influence. Ordinary graduates manage to get lucrative jobs through the influence of relations and friends, whereas brilliant graduates without helpful contacts may have to be content with low-paid jobs. That is why unequal incomes are earned by different persons. In this world, family contacts make a lot of difference to what people earn.
    * Differences in Acquired Talent:

    It is true to some extent that environ­ments make the man. Natural or inborn qualities are considerably modified by environments. A child may be born intelligent but if he is not lucky enough to receive proper education, the latent abilities remain undeveloped. On the other hand, a child of mediocre ability, if properly nursed, brought up and educated, will more than make up for the lack of natural gifts.

    Other causes of inequality are:
    There are many reasons for economic inequality within societies, and they are often interrelated

    *Inequality in wages and salaries:
    The difference in the wages and salaries is the core reason for the growing gap between the rich and the poor. The job salaries are indomitable by the supply and demand in the commercial market. For instance, when the supply of labor is high and demand for working force is low, the wages for the few available job opportunities will

    *The income gap between highly skilled workers and low-skilled or no-skills workers;
    *Wealth concentration in the hands of a few individuals or institutions;
    *Labor markets;
    *Globalization;
    *Technological changes;
    *Policy reforms;
    *Taxes;
    *Education;
    *Computerization and growing technology

    *Computerization and growing technology;
    *Racism;
    *Gender;
    *Culture;
    *Innate ability

    Typical government initiatives to reduce economic inequality include:

    Public education: Increasing the supply of skilled labor and reducing income inequality due to education differentials.
    Progressive taxation: The rich are taxed proportionally more than the poor, reducing the amount of income inequality in society.
    Minimum wage legislation: Raising the income of the poorest workers
    Nationalization or subsidization of products: Providing goods and services that everyone needs cheaply or freely (such as food, healthcare, and housing), governments can effectively raise the purchasing power of the poorer members of society.

    Answer no 4

    Sources of Economic Growth
    Natural Factors:
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. Jeffrey Sachs in The End of Poverty calls this factor “Resource Boom” .However, quantity of natural factors such as land and raw materials like metals and oil could be small and even absent in some countries and the quantity cannot be easily increased. Fortunately, a country can still enjoy economic growth with modest natural resources provided it could obtain them efficiently from abroad; i.e. through trade. Land for example can be increased at a modest quantity by reclaiming it from the sea as in Singapore and Hong Kong. Oil reserves can be increased by active exploration and novel method of extraction. increase quality of the natural factors also help to shift the PPF outwards. A piece of land, for instance, can be rendered more productive (increased quality) by irrigation, improved farming technology and better planning of land usage.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries. A country can increase in labour force by increasing its population but in reality all except Singapore is interested in this approach. Labour force can also be increased through a immigration policy that attracts skilled workers. population of migrant workers from neighbouring countries using a foreign worker scheme. However, the quantity of labour alone is not enough to guarantee economic growth. What is more important is that quality of the labour force,

    *The human capital: Human capital is the attributes of an individual that contribute productively to economic activities. Human capital could refer to educational attainments, training and skills, entrepreneurship, and creativity. Human capital can be improved through formal education for children, vocational training, retraining, life-long adult education programme, better nutrition that improve mental concentration, better sanitation that reduces illness and thus absenteeism from school and improved basic healthcare that reduces preventable diseases

    *Physical capitals include: factories, machineries, shops, malls, offices and motor vehicles. Cetera Paribus, higher savings rate can help to finance more physical capital investment. As the Harrod-Domar Growth Model suggests a higher savings rate means higher economic growth rate. This productive investment would help move the PPF outward, thus economic growth. Higher savings rate can also be used to finance education and training. This helps to form human capital and to improve technical skills that contributes to more productive labour force. However, the rate of investment may be so fast that a gap is developed between savings rate and investment rate. This gap can be bridged by borrowing from foreign commercial banks, World Bank, foreign countries, or by Foreign Direct Investment (FDI). The biggest FDI recipient in the world is China. Many east and south east asian economies who used to enjoy healthy FDI inflows in the 1980s are now competing with China as FDI destination to maintain economic growth. Of course, in an economy with very low savings rate there may not be enough savings to finance investment. In this case, NGOs like Oxfam and multilateral institutions like the World Bank could come in to “jumpstart” the economy. “In 2002 the World Bank provided $19.5 billion to developing countries and worked in more than 100 developing economies, bringing finance and/or technical expertise toward helping them reduce poverty.” However, this jump starting may not always provide sustainable results or even effective. Besides private savings, FDI and borrowing from abroad, the quantity of physical capital can be increased by government investment policy and private domestic investment. Equally important is the quality of physical capital which can be improved by Research and Development, access to foreign technology and know-how, and improved vocational training.

    Answer to No 4b

    Some countries make rapid progress towards development while some others remain poor because of_
    exploitation by others, poverty is a function of a variety of things: bad government, a high population with low skills/education, and a lack of natural resources. Sometimes nations that do have natural resources still have poverty because powerful individuals in the government steal it all, or because the government allows private individuals to benefit from the resources rather than sharing them out among all the citizens.

    For example, it’s completely absurd that there is poverty in the United States. The natural resources of that huge continent mostly ended up in private hands rather than being used for the common good.

    India used to have staggering wealth, but as a British colony it was all either taken away or left in the hands of individual maharajahs. At this point its problem is too many people with not enough skills.

  74. Aroh oluchukwu perpetua says:

    Aroh oluchukwu perpetua
    2018/243120
    Economics
    Eco 361 assignment
    1) what can be learned from the historical record of economic progress in the now developed world?
    Ans
    By the virtue of their success in growth and
    development, a number of countries have reached the status of “advanced”
    country. As such, these countries may offer lessons for development to developing
    economies of today. The following lessons are based on case studies, along with
    their respective country-group syntheses, of a select set of advanced countries:
    Denmark, Finland, Norway and Sweden as Nordic countries; Ireland, Japan and
    Switzerland as other advanced industrialized countries; and the Czech Republic,
    Hungary and Poland as transition countries. The emphasis is on relative long-term
    growth and development. Thus, even though the performance among these
    selected countries was rather uneven, for instance during the 2008–2010 global
    financial crisis, it would be myopic to focus on the concomitant country perform￾ance as an indicator of success or lack thereof. Employing historical accounts, it is
    possible to pinpoint certain useful aspects of each sample country’s development
    record within a longer-term perspective, notwithstanding possible missteps in the
    short run.
    Many studies have focused on countries in the developing world as “role
    models” for other developing economies, since such successful country experiences
    have been relatively recent. As useful as those case studies are, they nonetheless
    omit important and potentially valuable lessons from the more advanced countries,
    which exhibit longer development records.
    The derived lessons may, in certain cases, actually be more reliable than those
    based on countries still undergoing active development, several of which have yet to
    evince intertemporal robustness. The advanced-economy development strategies
    have indeed been time-tested and their durability is a strong signal of their
    reliability. The “success” stories of the transition countries may additionally
    be quite instructive, given the success of having transformed from command economies to market regimes.

    2)what are economic institutions,and how do they shape problems of underdevelopment and prospects for successful development?
    Ans
    I will start off by explaining what Economic institution is all about and it can be said to be an organization, whether public or private, that engages in the collection and research of economic data or that provides a service or product deemed economically central to a nation’s economy,then how they shape problems is that they organizes the production, exchange, distribution and consumption of goods and services and it’s also one of the basic institutions.

    3) How can the extremes between rich and poor be so very great?
    Ans
    In recent decades, however, the tide has turned.
    Over the past 40 years, the gap between rich and poor communities has increased dramatically, and Robert Manduca believes a large measure of the change can be chalked up to rising income inequality.

    A Ph.D. student in the Sociology and Social Policy degree program in the Graduate School of Arts and Sciences, Manduca is the author of a study that shows that in recent decades, the number of people living in communities at the extreme ends of the income scale has increased threefold, and more than half of the change is due to increases in income inequality at the national level. The study is described in a March 25 paper published in Social Forces.

    “In 1980, only about 12 percent of the population lived in places that were especially rich or especially poor,” Manduca said. “By 2013, it was over 30 percent. So what we’re seeing is a polarization, where people are increasingly living in places that are either much richer or much poorer than the country overall.”

    While part of that shift is due to what he called “sorting” — the notion that high-earning people and high-paying jobs have become more geographically concentrated — Manduca said the lion’s share of the change is the result of rising inequality. Since the 1970s, income growth for the richest people and places has far outpaced the relatively modest increases seen elsewhere, leading to stark divergence between regions of the country.

    “In 1980, only about 12 percent of the population lived in places that were especially rich or especially poor. By 2013, it was over 30 percent.”
    — Robert Manduca
    “It’s not so much that the spatial distribution of people who are in the richest few percentiles has changed, but that being in those top 1 or 2 percent is now associated with having a much higher income,” Manduca said. “So it may be that people at the top end of the income distribution were already living in cities like New York or San Francisco, and now that they’re getting a much larger share of the pie, they are dragging their cities along with them.”

    To understand how that shift happened and what contributed to it, Manduca conducted a relatively simple experiment — by acting as though it hadn’t.

    “The way I got at this was by doing a series of counterfactual simulations,” he said. “You can think of the overall amount of regional divergence as being driven by these two forces — rising inequality and sorting — and the experiment basically pretends that only one of those things happened at a time.

    “If I hold income inequality constant at 1980 levels and allow the sorting to happen, and calculate the amount of divergence that would have occurred, it goes up by about 23 percent of the true amount,” he continued. “But if you do the reverse, and allow income inequality to increase while holding sorting constant, you see more than 50 percent of the divergence that actually happened. That means that income inequality is the bigger driver of divergence.”

    Going forward, Manduca said, he hopes to explore whether and how national-level policy changes in the 1970s and 1980s contributed to increases in regional income divergence.

    “There were all these national economic policy changes — financial deregulation, weaker antitrust enforcement, a lower federal minimum wage — that we don’t typically think of as having a spatial component to them. But they really do. They benefited some parts of the country much more than others.”

    Ultimately, Manduca said, the study suggests that attracting new industries and high-paying jobs to poorer cities, while beneficial, may not be sufficient to counteract the widening income gap.

    “That’s been one of the big takeaways from this paper,” Manduca said. “A lot of the work that looked into regional divergence in the past ended up asking questions like, ‘Why are people in biotech going to Boston, and how can we get them to go to other locations instead?’ And this paper suggests that is maybe not the way we’re going to solve this problem.
    4)What are the sources of national and international economic growth?
    Ans
    Natural Factors.
    More land and raw materials should lead to an outward shift of PPF and thus an increase in potential growth. Jeffrey Sachs in The End of Poverty calls this factor “Resource Boom” and gives an example on how government ability to control the breeding of black flies that spread African River Blindness can open up new farmland thus increasing the quantity of arable land in a country. However, quantity of natural factors such as land and raw materials like metals and oil could be small and even absent in some countries and the quantity cannot be easily increased. Fortunately, a country can still enjoy economic growth with modest natural resources provided it could obtain them efficiently from abroad; i.e. through trade. Singapore, Hong Kong and Japan have relatively little natural resources yet they have grown into developed economies. Land for example can be increased at a modest quantity by reclaiming it from the sea as in Singapore and Hong Kong. Oil reserves can be increased by active exploration and novel method of extraction. Instead of concentrating on the quantity, increase quality of the natural factors also help to shift the PPF outwards. A piece of land, for instance, can be rendered more productive (increased quality) by irrigation, improved farming technology and better planning of land usage.

    Moreover, neoclassical and endogenous growth models suggest that human capitals and technology are probably more important as engines that propel growth.

    Human Factor.
    The quantity of labour is a factor that contribute to growth. Bigger the population, larger is the labour force and further out is the PPF. Larger population can also means more entrepreneurs and a larger market that can sustain more industries. A country can increase in labour force by increasing its population but in reality all except Singapore is interested in this approach. Labour force can also be increased through a immigration policy that attracts skilled workers. This policy is pursued in Australia and Canada. Singapore and Malaysia also host a large population of migrant workers from neighbouring countries using a foreign worker scheme. However, the quantity of labour alone is not enough to guarantee economic growth. Pakistan, Bangladesh and Nigeria have very big population but this “labour resource” alone does not necessary confer growth. What is more important is that quality of the labour force, the human capital. Human capital is the attributes of an individual that contribute productively to economic activities. Human capital could refer to educational attainments, training and skills, entrepreneurship, and creativity. Human capital can be improved through formal education for children, vocational training, retraining, life-long adult education programme, better nutrition that improve mental concentration, better sanitation that reduces illness and thus absenteeism from school and improved basic healthcare that reduces preventable diseases.

    Technological Factor
    (a) Appropriate technology. One organization that aims to promote appropriate technology to improve rural welfare is Practical Action previously known as The Intermediate Technology Development Group (ITDG)
    What is “appropriate technology”?
    According to Practical Action, an appropriate technology can be that of a simple tool or one that is sophisticated. An appropriate technology is one that provides long-term, appropriate and practical answers to local problems, and it must be firmly in the hands of local people. An appropriate technology is shaped and controlled by local people. In many cases, the technology is manufactured using local materials by local craft people.

    Practical Action aims to help are;

    reduce the vulnerability of poor people affected by natural disasters, conflict and environmental degradation – events which, sadly, are increasing.
    poor people to make a better living – by enabling producers to improve their production, processing and marketing.
    help poor communities gain access to basic services – like safe, clean water, food, housing and electricity.
    poor communities respond to the challenges of new technologies, helping them to access simple effective technologies that can change lives forever.
    (b) New production methods.
    New production methods could improve the quality of goods and/or reduce the cost of production. For instance, a new production technology can produce stronger concrete at a faster rate and at lower cost of production. Thanks to this technology, better buildings can be constructed with lower costs. Technology also allows the country to combine resources to produce new goods or more value-added products. Thus, an improvement in production technology allows the country to expand its PPF (experiences economic growth) with existing supply of resources. In the Harrod-Domar Growth Model, this translates into a reduction in the capital-output ratio and thus leads to more economic growth.
    (c) Informational Technology.
    A cell phone, access to internet, and fax can improve the ability to gather live information that can improve productivity. Ability to access accurate weather forecasts can help farmers to make important decisions about sowing seeds, transplanting, harvesting, and storage of harvest. Thus, informational technology can be used to increase agricultural produce. Internet access, a reliable and cheap transportation system, and a reliable and cheap method of collection of payment over the internet allows enterprising businesses to expand their markets abroad and effectively increase output. Access to satellite communication is partly responsible for the success of Bangalore, India being transformed into the back office of large companies based in developed nations.

    Then why some countries make rapid progress towards development while many others remain poor is because of Institutionalized corruption,low quality education and brain drain. In some countries with Institutionalized corruption and lack of rule of law,the system is purposely mainted by government officials because they are becoming rich from it.They siphon off public funds from corruption and also involve themselves in the market economy and then restrict competition for others through all kinds of tricks or threats or force if necessary.This things make them very rich since they are essentially putting their hands on a large share of the economy, while the entire population is paying the cost in terms of lawlessness.

  75. 1. Neoclassical economic theory on international trade holds that liberal trade policies
    maximize economic welfare. Mainstream development economists add that this is
    also true in a dynamic sense: such policies would help poor countries to acquire the
    skills and technology that they need to catch up with rich ones (World Bank 1993).
    Extending this to farm policy, many economists see agricultural trade liberalization
    as a pre-condition for pro-poor growth in least developed countries (Aksoy and
    Beghin 2004; Anderson and Martin 2005; Hertel and Winters 2005; Nash and
    Mitchell 2005).
    This position is underscored by model studies that couple strong convictions
    with methodological weaknesses. For example, Anderson and Martin (2005)
    envisage large effects from poor countries reducing their agricultural tariffs.
    However, whether