Eco. 361 —18-10-2021(Online discussion 5—Understanding Growth Strategies and Growth vs Equity debate)

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

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  1. Ezeozue Chinedum Success Lotachukwu says:

    Name: Ezeozue Chinedum Success Lotachukwu

    Reg No: 2018/246452

    Assignment Questions:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    Answers:
    1. A growth strategy is a set of actions and plans that make a company expand
    its market share than before. It’s completely opposite to the notion that
    growth doesn’t focus on short-term earnings; its focus is on long-term goals.
    A successful growth strategy is an integration of product management, design,
    leadership, marketing, and engineering. It’s important to remember that your
    growth strategy would only work if you implement it into your entire
    organization.

    The growth strategy is not a magic button. If you want to increase the growth,
    productivity, activation rate, or customer base, then you have to develop a
    strategy relevant to your product, customer market, any problem that you’re
    dealing with.

    i. Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.

    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy.[3] He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.

    Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.[4]

    Nurkse’s theory discusses how the poor size of the market in underdeveloped
    countries perpetuates its underdeveloped state. Nurkse has also clarified the
    various determinants of the market size and puts primary focus on productivity.
    According to him, if the productivity levels rise in a less developed country,
    its market size will expand and thus it can eventually become a developed
    economy. Apart from this, Nurkse has been nicknamed an export pessimist,
    as he feels that the finances to make investments in underdeveloped countries
    must arise from their own domestic territory. No importance should be given to
    promoting exports.

    ii. Unbalanced growth strategy is a natural path of economic development.
    Situations that countries are in at any one point in time reflect their
    previous investment decisions and development. Accordingly, at any point in
    time desirable investment programs that are not balanced investment packages
    may still advance welfare. Unbalanced investment can complement or correct
    existing imbalances. Once such an investment is made, a new imbalance is likely
    to appear, requiring further compensating investments. Therefore, growth need
    not take place in a balanced way. Supporters of the unbalanced growth doctrine
    include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof.
    Rostov and J. Sheehan.
    The theory is generally associated with Hirschman. He presented a complete
    theoretical formulation of the strategy. Underdeveloped countries display
    common characteristics: low levels of GNI per capita and slow GNI per capita
    growth, large income inequalities and widespread poverty, low levels of
    productivity, great dependence on agriculture, a backward industrial structure,
    a high proportion of consumption and low savings, high rates of population
    growth and dependency burdens, high unemployment and underemployment,
    technological backwardness and dualism{existence of both traditional and modern
    sectors}. In a less-developed country, these characteristics lead to scarce
    resources or inadequate infrastructure to exploit these resources. With a lack
    of investors and entrepreneurs, cash flows cannot be directed into various
    sectors that influence balanced economic growth.

    Hirschman contends that deliberate unbalancing of the economy according to the
    strategy is the best method of development and if the economy is to be kept
    moving ahead, the task of development policy is to maintain tension,
    disproportions and disequilibrium. Balanced growth should not be the goal but
    rather the maintenance of existing imbalances, which can be seen from profit
    and losses. Therefore, the sequence that leads away from equilibrium is
    precisely an ideal pattern for development. Unequal development of various
    sectors often generates conditions for rapid development. More-developed
    industries provide undeveloped industries an incentive to grow. Hence,
    development of underdeveloped countries should be based on this strategy.

    The path of unbalanced growth is described by three phases:
    a. Complementary
    b. Induced investment
    c. External economies

    Singer believed that desirable investment programs always exist within a
    country that represent unbalanced investment to complement the existing
    imbalance. These investments create a new imbalance, requiring another
    balancing investment. One sector will always grow faster than another,
    so the need for unbalanced growth will continue as investments must
    complement existing imbalance. Hirschman states “If the economy is to be kept
    moving ahead, the task of development policy is to maintain tensions,
    disproportions and disequilibrium”. This situation exists for all societies,
    developed or underdeveloped.

    a. Complementary: Complementarity is a situation where increased production of
    one good or service builds up demand for the second good or service. When the
    second product is privately produced, this demand will lead to imports or
    higher domestic production of the second product, as it will be in the
    interests of the producers to do so. Otherwise, the increased demand takes the
    form of political pressure. This is the case for such public services such as
    law and order, education, water and electricity that cannot reasonably be
    imported.

    b. Induced investment: Complementarity allows investment in one industry or
    sector to encourage investment in others. This concept of induced investment
    is like a multiplier, because each investment triggers a series of subsequent
    events. Convergence occurs as the output of external economies diminishes at
    each step. Growth sequences tend to move towards convergence or divergence and
    the policy is usually concerned with preventing rapid convergence and
    promoting the possibility of divergence.

    c. External economies: New projects often appropriate external economies
    created by preceding ventures and create external economies that may be
    utilized by subsequent ones. Sometimes the project undertaken creates external
    economies, causing private profit to fall short of what is socially desirable.
    The reverse is also possible. Some ventures have a larger input of external
    economies than the output. Therefore, Hirschman says, “the projects that fall
    into this category must be net beneficiaries of external economies”.

    iii. Market Penetration: This is an excellent strategy to use when a
    business wants to market its existing products in the same market where it
    already has a presence. The goal is to increase its market share in a
    predefined vertical channel. Market share for this purpose is defined as a
    percentage of the gross sales in the market in comparison to other businesses
    in the same market. Market penetration involves going deeper in an existing
    vertical rather than introducing new market channels.

    iv. Market Development: Development refers to expanding the sales of existing
    products in new markets. Competition in the current market may be so tight
    there is no room for growth without spending exorbitant amounts on advertising.
    It may be much more efficient to develop new markets to increase profitability.
    The company may also develop new uses for its products. For example, an
    organization that sells medical equipment to hospitals may find that medical
    clinics also desire the same product.

    v. Product Expansion: If technology changes and advancements begin to reduce
    existing sales, the company may expand its product line by creating new
    products or adding additional features to their existing products. The
    business continues to sell its products in the same market, and it utilizes the
    relationships the organization has already established by selling original
    products or enhanced products to its current customers.

    vi. Diversification: The goal is to sell novel products to new markets.
    Market research is essential to the success of this strategy because the
    company must determine the potential demand for its new products. Just because
    an organization is successful selling one type of product to a specific market,
    does not mean it will be profitable selling alternative products to markets that
    do not currently exist. Diversification is even more risky than acquisition
    because of the significant cost involved in creating contemporary products for
    untried markets.

    The case study “Creating a Strategy that Smoothes the Path for Growth” by
    Pacific Crest Group (PCG) illustrates the power of accountability in a strategic
    plan. PCG developed a business growth plan with well-defined steps, metrics to
    measure the client’s success and accountability to make sure the plan was
    executed efficiently. The process included tools for the company to manage
    their growth, automate administrative functions and assisted them in training
    existing staff as well as hiring new staff as necessary to optimize
    effectiveness. The implementation of this system resulted in the accomplishment
    of an overwhelmingly profitable growth initiative.

    Pacific Crest Group provides professional services that keep your business
    focused on your critical objectives. We create custom made financial and Human
    Resource (HR) systems based on creative strategies that are always delivered
    with exemplary customer service. A PCG professional is happy to meet with you
    to discuss solutions for your unique requirements designed specifically to
    maximize all of your business opportunities.

    2. Economic growth is an increase in the production of economic goods and
    services, compared from one period of time to another. It can be measured in
    nominal or real (adjusted for inflation) terms. Traditionally, aggregate
    economic growth is measured in terms of gross national product (GNP) or gross
    domestic product (GDP), although alternative metrics are sometimes used.

    In simplest terms, economic growth refers to an increase in aggregate
    production in an economy. Often, but not necessarily, aggregate gains in
    production correlate with increased average marginal productivity. That leads
    to an increase in incomes, inspiring consumers to open up their wallets and buy
    more, which means a higher material quality of life or standard of living.

    In economics, growth is commonly modeled as a function of physical capital,
    human capital, labor force, and technology. Simply put, increasing the quantity
    or quality of the working age population, the tools that they have to work
    with, and the recipes that they have available to combine labor, capital, and
    raw materials, will lead to increased economic output.

    There are a few ways to generate economic growth. The first is an increase
    in the amount of physical capital goods in the economy. Adding capital to the
    economy tends to increase productivity of labor. Newer, better, and more tools
    mean that workers can produce more output per time period. For a simple example,
    a fisherman with a net will catch more fish per hour than a fisherman with a
    pointy stick. However two things are critical to this process. Someone in the
    economy must first engage in some form of saving (sacrificing their current
    consumption) in order to free up the resources to create the new capital, and
    the new capital must be the right type, in the right place, at the right time
    for workers to actually use it productively.

    A second method of producing economic growth is technological improvement. An
    example of this is the invention of gasoline fuel; prior to the discovery of
    the energy-generating power of gasoline, the economic value of petroleum was
    relatively low. The use of gasoline became a better and more productive method
    of transporting goods in process and distributing final goods more efficiently.
    Improved technology allows workers to produce more output with the same stock of
    capital goods, by combining them in novel ways that are more productive. Like
    capital growth, the rate of technical growth is highly dependent on the rate of
    savings and investment, since savings and investment are necessary to engage in
    research and development.

    Another way to generate economic growth is to grow the labor force. All else
    equal, more workers generate more economic goods and services. During the 19th
    century, a portion of the robust U.S. economic growth was due to a high influx
    of cheap, productive immigrant labor. Like capital driven growth however, there
    are some key conditions to this process. Increasing the labor force also
    necessarily increases the amount of output that must be consumed in order to
    provide for the basic subsistence of the new workers, so the new workers need
    to be at least productive enough to offset this and not be net consumers. Also
    just like additions to capital, it is important for the right type of workers
    to flow to the right jobs in the right places in combination with the right
    types of complementary capital goods in order to realize their productive
    potential.

    The last method is increases in human capital. This means laborers become more
    skilled at their crafts, raising their productivity through skills training,
    trial and error, or simply more practice. Savings, investment, and
    specialization are the most consistent and easily controlled methods. Human
    capital in this context can also refer to social and institutional capital;
    behavioral tendencies toward higher social trust and reciprocity and political
    or economic innovations like improved protections for property rights are in
    effect types of human capital that can increase the productivity of the economy.

    An equity-efficiency tradeoff is when there is some kind of conflict between
    maximizing economic efficiency and maximizing the equity (or fairness) of
    society in some way. When and if such a trade-off exists, economists or public
    policymakers may decide to sacrifice some amount of economic efficiency for the
    sake of achieving a more just or equitable society.

    An equity-efficiency tradeoff results when maximizing the efficiency of an
    economy leads to a reduction in its equity—as in how equitably its wealth or
    income is distributed.

    Economic efficiency, producing those goods and services that provide the most
    benefit at the lowest cost, is a primary normative goal for most economic
    theories. This can apply to an individual consumer or a business firm, but
    mostly it refers to the efficiency of an economy as a whole at satisfying the
    wants and needs of the people in the economy.

    Economists define and attempt to measure economic efficiency in several
    different ways, but the standard approaches all involve a basically utilitarian
    approach. An economy is efficient in this sense when it maximizes the total
    utility of the participants. The concept of utility as a quantity that can be
    maximized and summed up across all people in a society is a way of making
    normative goals solvable, or at least approachable, with the positive,
    mathematical models that economists have developed. Welfare economics is the
    branch of economics most concerned with calculating and maximizing social
    utility.

    In macroeconomic literature, it is widely held that persuasion of economic
    growth and more equitable distribution of income (wealth) is not possible at
    the same time. The basic reason put forward is that to aim for more equitable
    distribution will reduce total savings in short and medium terms by reducing
    the weighted average of propensities to save of the different strata of the
    society. Therefore, the main objective for countries in transitional period is
    to have a higher economic growth rather than a fairer distribution of income.
    Recent developments on economic growth studies from a longer perspective and
    with sustainability criterion has put above idea in real jeopardy. It is shown
    that by paying more attention to justifiable distribution especially among
    different generations will promote a higher genuine savings which results in a
    higher rate of steady economic growth. In this research we use dynamic
    optimization approach (optimal control) for studying the mechanics of this
    regularity and test the proposition for selected MENA zone countries and then
    compare with some developed countries. Our ultimate goal is suggesting a fair
    fiscal policy to have a high economic growth compatible with a fairer
    distribution of wealth and income. It seems that any attempt to provide a more
    equitable condition, will be eventually reached to a higher capital formation,
    higher saving and higher output per capita in MENA region compared with selected
    developed countries.

    Yes, growth can exist with inequality.
    The reason is because income inequality is a condition that prevails along
    with economic growth. According to the utilitarian view, income
    inequality must exist along with economic growth in order to maximize
    social welfare.

  2. Onoh Chikaodinaka Harriet.E. says:

    DEFINITION:
    growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    THE FOUR GROWTH STRATEGIES
    Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:

    MARKET PENETRATION

    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.

    MARKET DEVELOPMENT

    This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets

    PRODUCT DEVELOPMENT

    The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.

    DIVERSIFICATION

    This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    Diversification may be divided into further categories:

    HORIZONTAL DIVERSIFICATION

    This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.

    VERTICAL DIVERSIFICATION

    The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.

    CONCENTRIC DIVERSIFICATION

    Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.

    CONGLOMERATE DIVERSIFICATION

    Is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio.
    This article presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.
    Growth and inequality: A close relationship?

    Inequality has risen in the OECD area. Could policies aimed solely at growth be responsible? Can inequality undermine economic growth? New evidence suggests there is a possibility.

    Income inequality has widened in most OECD member countries during the past two or three decades. These trends are well documented (see references). According to a traditional measure of inequality, the Gini coefficient, income inequality rose by 10% from the mid-1980s to the late 2000s, while the ratio of top income decile to bottom income decile reached its highest level in 30 years.

    However, between countries the rise in income inequality has been far from uniform, and a decline has even been observed in some countries. From the mid-90s until the late 2000s, the OECD area experienced a sort of “inequality convergence”, as inequality increased in countries such as Sweden, Denmark and Finland, but fell in countries such as Turkey, Mexico and Chile.

    Within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP. This has been particularly the case for poorer households: in nearly all OECD countries for which data are available, GDP growth was substantially higher than households’ income growth in the lowest quintile.

    Middle income households have generally fared better, even though they also lag behind GDP growth in a large number of countries. There is a growing gap between low- and middle-income households which is particularly pronounced in Finland, Israel, Sweden, Spain and the US. More generally, growing income disparities between lowand middle-income households have been more widespread and pronounced than the average, as measured by the Gini coefficient. Some countries have seen widening disparities in the lower half of income distribution, taking place even when overall inequality has been narrowing–this pattern is particularly striking in Spain. In other countries, such as Australia, the United Kingdom and the US, between 20% and 50% of total income gains generated have accrued to the top 1% of households, pointing to rising inequalities also within the upper half of income distribution.

    As OECD countries try to encourage recovery, how do growth enhancing policies affect income inequality? Identifying the trade-offs between growth and inequality is no simple task. True, in a majority of OECD countries, GDP growth over the past two or three decades has been associated with growing income disparities. Recent OECD work has shown that this increase to a large extent reflects skill-biased technological change (OECD @ 100). However, the potential policy drivers of these changes in income distribution–within and between countries–are less clear. To shed light on this issue, one recent study by Causa et al. has investigated the long-run impact that structural reforms have had on GDP per capita and household income distribution. Based on this analysis, reforms that favour growth can be distinguished according to whether they increase, reduce or have no impact on disposable income inequality. It reveals some interesting trends. Indeed, several growth-enhancing reforms contributed to narrower inequality by delivering stronger income gains for households at the bottom of the distribution compared with the average household. Such is the case, for instance, of reducing regulatory barriers to domestic competition, trade and inward foreign direct investment, as well as stepping up job-search support and activation programmes.

    However, a tightening of unemployment benefits for the long-term unemployed lifts average household incomes in the study, but reduces disposable incomes at the bottom of the distribution, an indication that it may raise inequality.

    Finally, a few reforms leading to higher GDP per capita have an even impact on all households, regardless of income group. Examples include measures that aim at promoting investment in information and communications technology and at raising the average level of education in the working age population, as well as reductions in marginal income taxes for wage earners.

    All of this begs another question much debated nowadays: does growing inequality undermine growth?

    A certain degree of income and wealth inequality is a characteristic of market economies, which are based on trust, property rights, enterprise and the rule of law. The notion that one can enjoy the benefits from one’s own efforts has always been a powerful incentive to invest in human capital, new ideas and new products, as well as to undertake risky commercial ventures. But beyond a certain point, and not least during an economic crisis, growing income inequalities can undermine the foundations of market economies. They can eventually lead to inequalities of opportunity. This smothers social mobility, and weakens incentives to invest in knowledge. The result is a misallocation of skills, and even waste through more unemployment, ultimately undermining efficiency and growth potential.

    On the face of it, all of this may seem to make perfect sense, but finding supporting evidence of a clear relationship between growth and inequality is far from straightforward. Knowing the initial level of inequality as well as the shape of income distribution, for instance, whether there is a relatively large middle class or if inequality is driven relatively more by income development in the bottom or upper part of the distribution, is important. Indeed, inequality in different parts of income distribution can affect GDP differently: in developing countries, inequalities in the upper end are sometimes associated with positive effects on GDP, while inequalities in the bottom end can induce negative effects.

    To explore the question further, our study estimated a relationship for GDP per capita in which a change in income inequality was added to standard growth drivers such as physical and human capital. The idea was to test whether the change in income inequality over time has had a significant impact on GDP per capita on average across OECD countries, and if this influence differs according to whether inequality is measured in the lower or upper part of the distribution. The results show that the impact is invariably negative and statistically significant: a 1% increase in inequality lowers GDP by 0.6% to 1.1%. So, in OECD countries at least, higher levels of inequality can reduce GDP per capita. Moreover, the magnitude of the effect is similar, regardless of whether the rise in inequality takes place mainly in the upper or lower half of the distribution.

  3. Okeke Mmesoma F. says:

    Name: Okeke Mmesoma .F.
    Reg No: 2018/245372
    Department: Library and information science/Econs
    Email: okekedennis82@gmail.com

    1)Governments have adopted a wide variety of policies to promote economic development.The aim of economic development is to improve the material standards of living by raising the absolute level of per capita incomes.
    Entrepreneurial approach focusing on new firm and technology development; An industrial recruitment strategy emphasizing financial incentives for the relocation or expansion of existing enterprises; and deregulation approach that minimizes governmental control over private enterprise. The entrepreneurial strategy appears to boost new business incorporations, and the recruitment approach reduces business failures.

    2) In developed countries, the levels of production and consumption are already environmentally unsustainable. Further growth in these countries can only come at enormous cost to the environment. For achieving improvement in their lives, economic growth is necessary. The enormity of the problems these people face is such that even though more equitable sharing of currently-produced output levels will improve their living conditions somewhat but it may not take them very far. there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity.

  4. Unegbu Charles Emeka says:

    Question1
    1a)
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    b)
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors.

    2)
    Growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy. Economic growth reflects the growth of national or per capita income.
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal

  5. Obiyo, Uchechukwu Ngozi says:

    Obiyo Uchechukwu Ngozi
    2018/241841
    A growth strategy is a plan of action of an organisation used for overcoming current and future challenges to realise it’s goals for expansion and to increase a business’ market share.
    Generally there are 2 classifications of growth strategies and they are Internal Growth Strategy and External Growth Strategy. Internal growth strategies are those in which a firm plans to grow on its own, without the support of others and some growth strategies under this classification includes Market Penetration, Market and Product Development, Market Expansion, Diversification while external growth strategies are those in which a firm plans to grow by combining with others and they include Joint ventures and Mergers.
    Generally, when looking at the growth strategies that will support and enhance the development of a developing country like Nigeria, we look at two main theories namely; Theory of BalancedGrowth and Theory of Unbalanced Growth.
    Theory of Balanced Growth: Here, all sectors of the economy grows equally in order to create balance which will enlarge the market size of the economy, increase productivity, create incentives, e.t.c. For it to take place, all resources should be allocated equally. There shouldn’t be shortages or surpluses. This requires a lot of capital investment.
    Theory of Unbalanced Growth: Unbalanced Growth focuses on the growth on some key sectors in the economy and Here, certain of the economy’s sector grows more than others. The sectors that have been chosen will in the long run, create a dynamic pressure to grow other sectors which according to some economists, helps to speed up economic development.
    2.
    Growth and Equity Debate in Development Economics is simply an argument going on on whether an economy can be developed in the presence of growth and Equity. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.
    The differences between growth and Equity in an economy are as follows;
    An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
    Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
    The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

  6. Nnamani Chidimma Esther says:

    Name: Nnamani Chidimma Esther
    Reg num: 2018/243795
    Department: Economics
    Assignment on ECO 361

    1.What do you understand by growth strategies?
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    b) Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth
    Growth strategies commonly utilized by most businesses are balanced, unbalanced growth strategies, market penetration, market development, product expansion, acquisition and diversification.
    Balanced growth
    this is a growth strategy where all the sectors of the economy are carried along, there are equal growth, no sector is neglected, but this strategy can slow economic growth since some of the sectors that are lagging behind are being financed by the resources generated by the sectors that are doing well.
    Unbalanced growth
    This is a type of growth strategy where some of the economic sector are concentrated on, not all the sectors are carried a lot, there are no equal growth. The sectors that are doing well are invested more on and then neglect the ones that has slow growth.

    Market Penetration
    This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
    Market Development
    Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
    Product Expansion
    If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
    Acquisition
    A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
    Diversification
    The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
    2. What do you understand by growth and equity debate in development economics?
    Growth and equity debate is an argument on whether equal distribution of nation’s wealth in other to reduce poverty will lead to low economic growth or not. It is believed that public expenditure needed for reduction of poverty would entail the reduction in the rate of growth. The concerns that concentrated efforts to lower poverty would slow the rate of growth paralleled the argument that countries with lower inequality would experience slower growth. In particular, if there were redistribution of income or assets from rich to poor, even through progressive taxation, the concern was that savings would fall, which will lead to low investment and reduce economic growth. The debate is that there shouldn’t be equity in income distribution.
    b) What are differences between Growth and Equity in the economy? Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. While Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
    C) Can growth exist with inequality? If yes, how? If no, why?
    Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP. This has been particularly the case for poorer households: in nearly all OECD countries for which data are available, GDP growth was substantially higher than households’ income growth in the lowest quintile. In long run then inequality may hinder growth and economic development.

  7. Olendi Nkiru precious says:

    Name : Olendi Nkiru precious
    Reg no : 2018/243187
    Department : Economics /psychology (combined social science )
    course : Developmental Economics
    code :Eco 361

    Assignment (Growth strategies )

    Strategy can be defined as “The direction an organisation takes with the aim of achieving future business success.” Strategy sets out how an organisation intends to employ its resources, including the skills and knowledge of its people as well as financial and material assets, in order to achieve its mission or overall objectives and its vision.
    Growth strategies are the process of researching and identifying strategic options, selecting the most promising and deciding how resources will be allocated across the organisation to achieve objectives. Key questions to be considered include: the key questions an organisation needs to ask in connection with its future,
    Unbalanced Growth
    A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining. Unbalanced growth portends an eventual economic slowdown or recession, though economists disagree on how a country should address it.
    Balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.
    Having critically examined the comparative analysis of balanced and unbalanced growth strategies, a logical question arises: which of these two strategies provide greater stimulus of economic growth for developing countries like Nigeria ?
    The unbiased and impartial opinion is that there is no need to the debate on the controversy.
    It is strictly based on empirical evidence and political motivation. While Paul Streeten contends that it is possible to reformulate the choice between balanced and unbalanced growth
    But Ashok Mathur argues that, “balanced and unbalanced growth need not be mutually conflicting and an optimum strategy of development should combine some elements of balance as well as unbalance.”
    Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
    Underdeveloped countries like Nigeria have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
    The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.
    If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations.
    This is not true as underdeveloped country lacks in supply of capital, skills, infrastructures and other resources which are- inelastic in supply. Similarly, unbalanced growth doctrine also neglects the role of supply limitations and supply in elasticity’s. Under such situations, a judicious compromise has to be made between the benefits from balanced growth and unbalanced growth.
    There is no second opinion that the developing countries are wedded to democracy who should try to control the twin evils of inflation and adverse balance of payments during the course of pursuing any strategy of economic development. The need of the hour is that it should be done to make the doctrine effective as a vehicle of economic development with added strength and vigour.
    In this context, Prof. Meier has rightly observed that, “From the discussion we may also now recognize that the phrases balanced growth and unbalanced growth initially caught on too readily, and that each approach has been overdrawn. After much reconsideration, each approach has become so highly qualified that the controversy is essentially barren.
    Instead of seeking to generalize either approach we should more appropriately look to the conditions under which each can claim some validity. It may be concluded that while a newly developing country should aim at balance in an investment criterion, this objective will be attained only by initially following, in most case, a policy of unbalanced investment.

    2. Growth and Equity debate
    One of the most important objectives of planning is to get stable Growth with Equity in an Economy.
    Growth is an increase in the level of national income over a period of time, while Equity refers to Equitable distribution of the national income .
    For every nation, it is very important to have growth alongside with Equity.
    If there’s only growth without equity in an Economy, it means that everyone is not enjoying the benefits of growth.
    Hence, planners has to ensure that prosperity of economic growth should reach everyone. So the government should ensure appropriate allocation of wealth among the people to reduce economic inequality in the Economy.
    Growth and Equity is a more rational and desirable objectives of planning for a nation.
    The differences
    Growth refers to the increase in national income over a long period of time,while equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice. Growth is desirable as you must have the cake to distribute it but growth in itself does not gurantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production. In other words, the major share of Gross Domestic Product (GDP) might be owned by a small proportion of population which may result in exploitation of weaker sections of society. Hence, growth with equity is a rational and desirable objective of planning. This objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth in income.
    Can growth exist with inequality?
    From the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement ,keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities.

    b. Can growth exist with inequality;
    According to Kuznet curve
    Nobel laureate economist Simon Kuznets argues that as an economy develops and there’s an increase in economic growth, a natural cycle of economic inequality occurs, represented by an inverted U-shape curve called the Kuznets curve, From the curve, we observe as the economy develops, inequality first increases, then decreases after a certain level of average income is attained. In early development, investment opportunities for those who already have wealth multiply so owners of capital can accumulate wealth. At the same time, there is an influx of cheap rural labour to the developing cities, which drives down wages. Therefore, in early development, inequality increases.

    Hence, Inequality is a vicious cycle,the rich get richer, the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals . The reason is simple: People who already hold wealth have the resources to invest or to leverage the accumulation of wealth, which creates new wealth. The process of wealth concentration arguably makes economic inequality a vicious cycle. For example, Growth in technology widens income gap
    Growth in technology arguably renders joblessness at all skill levels . For unskilled workers, computers and machinery perform a lot of tasks these workers used to be do. In many jobs, such as packaging and manufacturing, machinery works even more effectively and efficiently. Hence, jobs involving repetitive tasks have largely been eliminated. Skilled workers are not immune to the nightmare of losing jobs. The rapid development in artificial intelligence may ultimately allow computers and robots to perform knowledge-based jobs.
    The impact of increasing unemployment is stagnant or decreasing wages for most workers, as there is a low demand for but high supply of labour. A small portion of society, usually the owners of capital, controls an ever-increasing fraction of the economy . The income gap between workers who earn by their skills and owners who earn by investing in capital has widened.
    Although both skilled and unskilled workers are adversely affected by the technological advance, it seems unskilled workers are subject to worse outcomes . This is because the labour market may still need skilled workers to use computers and operate the advanced machines. The rightward shift in the demand for skilled labour creates an increase in the relative wages of the skilled compared to the unskilled workers. Hence, the income gap among workers also has widened. Hence growth can exist with inequality.

    References
    [1] Hazlitt, Henry. Economics in One Lesson. Three Rivers Press, 1988.
    [2] Becker, Gary S., and Murphy, Kevin M. The Upside of Income Inequality. The America, 2007.
    [3] Causes of Economic Inequality. National Debate Blog. Retrieved on 25 June 2014 at http://nationaldebate2012.blogspot.hk/2012/01/causes-of-economic-inequality.html
    [4] U.S. Census Report, 2004. Retrieved on 20 June 2014 at http://www.census.gov/prod/2004pubs/censr-15.pdf
    [5] Rugaber, Christopher S., and Boak, Josh. Wealth gap: A guide to what it is, why it matters. AP News, 2014.
    [6] Piketty, Thomas. Capital in the Twenty-First Century. Harvard University Press, 2014.
    [7] Leith van Onselen. Picketty is right about inequality. Unconventional Economist in Global Macro, 2014.
    http://www.macrobusiness.com.au/2014/05/picketty-is-right-about-inequality/
    [8] Fuentes-Nieva, Ricardo, and Galasso, Nick. Working for the new political capture and economic inequality. 178 Oxfam Briefing Paper – Summary, 2014.
    [9] Interview of Michael Hudson: Is Thomas Piketty Right About the Causes of Inequality? Retrieved on 2 July 2014 at http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=11788
    [10] World Health Organization. Neo-Liberal Ideas. http://www.who.int/trade/glossary/story067/en/
    [11] Portes, Alejandro, and Bryan R. Roberts. The Free-market City: Latin American Urb

  8. OGENYI, CHUKWUEBUKA FREDERICK says:

    NAME : OGENYI, CHUKWUEBUKA FREDERICK
    DEPARTMENT : ECONOMICS
    REG. NO : 2018/241864
    COURSE : ECO 361( DEVELOPMENT ECONOMICS 1)

    ASSIGNMENT :
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWERS :

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    It is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term ; growth strategies can be long-term, too.

    Different growth strategy are as follows :

    1. Internal Growth Strategies:

    The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.

    2. External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    3 Diversification Growth Strategies:

    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

    Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

    4. External Growth Strategies:

    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    5. Strategy of Balanced Growth:

    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

    In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

    As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
    6. Strategy of Unbalanced Growth:

    Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.

    Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.

    As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.

    N0. 2
    What I understand by growth and equity debate :
    growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

    Ii. Different between growth and equity in the economy :

    Private Equity has come a long way since KKR’s 1988 takeover of RJR Nabisco. Over the past four years, private equity activity in Europe alone totalled an impressive €489 billion. What is less recognised, however, is the role of growth-focused private equity firms, i.e. private equity firms investing in smaller, growth stage companies — particularly as it relates to the technology sector where Venture Capital has become the front-of-mind funding channel.
    What is Growth-Stage Private Equity?
    Growth-stage Private Equity sits at the intersection of private equity and venture capital. Growth-focused PE firms typically invest in transactions valued between €10–100 million in exchange for either a minority or majority stake in the target company. And it is not uncommon for the invested capital to provide some level of liquidity to current owners.
    Working together with the management team, growth equity PE firms help create value through accelerated operational improvements and revenue growth, whether organic or acquisitive. And, unlike in larger leveraged buyouts, debt is not used extensively.
    Growth equity can be used to accelerate growth, fund acquisitions or offer liquidity to current shareholders.
    Which Companies Typically Receive Growth Equity?
    VC’s tend to target early-stage businesses with limited historical financials. On the other end of the spectrum, LBO investors acquire mature companies with a long track-record of cash generation.
    Growth equity investors fit somewhere in the middle, backing companies in established markets and with proven unit economics, even if their track record is relatively short. Companies best suited for growth equity exhibit potential for profitable revenue growth through a repeatable and scalable customer acquisition process and customer lifetime value that exceeds the cost of acquisition.
    Growth Equity firms invest in well-run, growing businesses with proven business models and solid management teams looking to continue driving the business.
    Founders are likely to consider a growth equity deal when they don’t feel it is quite time to sell 100%, but also realize it is prudent to seek some level of liquidity.

    Iii.

    Yes, growth can exist with inequality.

    In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:

    “One might thus assume a long swing in the inequality characterizing the secular income structure: widening in the early phases of economic growth when the transition from the pre-industrial to the industrial civilization was most rapid; becoming stabilized for a while; and then narrowing in the later phases.”

    Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
    Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

    These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.

    The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.

    Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.

    On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

    In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.

    In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.

    Important as well for the purposes of this paper is this—the latest economic research we reviewed only examines the outcome of whether there are results for regressions that demonstrate positive or negative relationships between inequality and economic growth and stability. This means the paper cannot provide clear guidance for policymakers on exactly how to address inequality or mitigate its effects on growth. In other words, the research examined in this paper generally does not identify the channels or mechanisms by which inequality affects growth.

    An additional issue (above and beyond the challenges of how to specify a model) is the paucity of data to evaluate questions about inequality and growth. Ideally, economists would want a variety of measures for inequality, including earnings, income, and wealth, that can be compared across a large number of countries over a long period of time. Sadly, such a perfect data set does not exist. Therefore, econ- omists are left to do the best estimates with the data at hand. Over time, though, the data sets that have been used to perform these analyses have been improving.

    Other scholars who have examined this literature have also come to the conclu- sion that to inform policymaking, we need to do more than search for a mechanis- tic relationship between inequality and growth. Dani Rodrik, the former Harvard University professor now at the Institute of Advanced Studies, underscores the limitations of this kind of research, arguing that methods for analyzing data that span across places and time are ill-suited to address the fundamental questions about the relationship of government policy and inequality with growth outcomes.

  9. OGENYI, CHUKWUEBUKA FREDERICK says:

    NAME : OGENYI, CHUKWUEBUKA FREDERICK

    DEPARTMENT : ECONOMICS

    REG. NO : 2018/241864

    COURSE : ECO 361( DEVELOPMENT ECONOMICS 1)

    ASSIGNMENT :

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWERS :

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    It is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term ; growth strategies can be long-term, too.

    Different growth strategy are as follows :

    1. Internal Growth Strategies:

    The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.

    2. External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    3 Diversification Growth Strategies:

    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

    Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

    4. External Growth Strategies:

    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    5. Strategy of Balanced Growth:

    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

    In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

    As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
    6. Strategy of Unbalanced Growth:

    Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.

    Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.

    As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.

    N0. 2
    What I understand by growth and equity debate :
    growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

    Ii. Different between growth and equity in the economy :

    Private Equity has come a long way since KKR’s 1988 takeover of RJR Nabisco. Over the past four years, private equity activity in Europe alone totalled an impressive €489 billion. What is less recognised, however, is the role of growth-focused private equity firms, i.e. private equity firms investing in smaller, growth stage companies — particularly as it relates to the technology sector where Venture Capital has become the front-of-mind funding channel.
    What is Growth-Stage Private Equity?
    Growth-stage Private Equity sits at the intersection of private equity and venture capital. Growth-focused PE firms typically invest in transactions valued between €10–100 million in exchange for either a minority or majority stake in the target company. And it is not uncommon for the invested capital to provide some level of liquidity to current owners.
    Working together with the management team, growth equity PE firms help create value through accelerated operational improvements and revenue growth, whether organic or acquisitive. And, unlike in larger leveraged buyouts, debt is not used extensively.
    Growth equity can be used to accelerate growth, fund acquisitions or offer liquidity to current shareholders.
    Which Companies Typically Receive Growth Equity?
    VC’s tend to target early-stage businesses with limited historical financials. On the other end of the spectrum, LBO investors acquire mature companies with a long track-record of cash generation.
    Growth equity investors fit somewhere in the middle, backing companies in established markets and with proven unit economics, even if their track record is relatively short. Companies best suited for growth equity exhibit potential for profitable revenue growth through a repeatable and scalable customer acquisition process and customer lifetime value that exceeds the cost of acquisition.
    Growth Equity firms invest in well-run, growing businesses with proven business models and solid management teams looking to continue driving the business.
    Founders are likely to consider a growth equity deal when they don’t feel it is quite time to sell 100%, but also realize it is prudent to seek some level of liquidity.

    Iii.

    Yes, growth can exist with inequality.

    In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:

    “One might thus assume a long swing in the inequality characterizing the secular income structure: widening in the early phases of economic growth when the transition from the pre-industrial to the industrial civilization was most rapid; becoming stabilized for a while; and then narrowing in the later phases.”

    Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
    Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

    These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.

    The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.

    Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.

    On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

    In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.

    In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.

    Important as well for the purposes of this paper is this—the latest economic research we reviewed only examines the outcome of whether there are results for regressions that demonstrate positive or negative relationships between inequality and economic growth and stability. This means the paper cannot provide clear guidance for policymakers on exactly how to address inequality or mitigate its effects on growth. In other words, the research examined in this paper generally does not identify the channels or mechanisms by which inequality affects growth.

    An additional issue (above and beyond the challenges of how to specify a model) is the paucity of data to evaluate questions about inequality and growth. Ideally, economists would want a variety of measures for inequality, including earnings, income, and wealth, that can be compared across a large number of countries over a long period of time. Sadly, such a perfect data set does not exist. Therefore, econ- omists are left to do the best estimates with the data at hand. Over time, though, the data sets that have been used to perform these analyses have been improving.

    Other scholars who have examined this literature have also come to the conclu- sion that to inform policymaking, we need to do more than search for a mechanis- tic relationship between inequality and growth. Dani Rodrik, the former Harvard University professor now at the Institute of Advanced Studies, underscores the limitations of this kind of research, arguing that methods for analyzing data that span across places and time are ill-suited to address the fundamental questions about the relationship of government policy and inequality with growth outcomes.

  10. Ugwu Chibuike Jude says:

    Ugwu Chibuike Jude
    2018/249382
    Economics department

    QUESTION 1
    What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    ANSWER
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.
    The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly.
    Growth Strategy is pursued to reduce the cost of production per unit. Growth strategies involve a significant increase in performance objectives.
    These strategies are adopted when firms remarkably broaden the scope of their customer groups, customer functions and alternative technologies either singly or in combination with each other.
    Growth strategy can be adopted in the form of expansion, vertical integration, diversification, merger, acquisition and joint venture.
    The basic objective in all these cases is growth but the basic problem in each case is significantly different which needs more elaborate discussion.
    Some of the types of growth strategies are as follows:-
    1. Internal Growth Strategy.
    2. External Growth Strategy.
    3. Concentration Expansion Strategy.
    4. Integration Expansion Strategy.
    5. Internationalization Expansion Strategy.
    6. Diversification Expansion Strategy.
    7. Cooperation Expansion Strategy.
    8. Intensive Growth Strategy.
    9. Integrative Growth Strategy.
    10. Diversification Growth Strategy.

    Intensive Growth Strategies
    The firm pursues intensive growth strategies with an objective to achieve further growth of existing products and/or existing markets.
    The basic classification of intensive growth strategies:
    (a) Market penetration strategy
    (b) Market development strategy
    (c) Product development strategy
    These strategies are also called ‘organic growth strategies’.

    (a) Market Penetration Strategy:
    A firm pursuing market penetration strategy directs its resources to the profitable growth of a existing products in current markets. It is the most common form of intensive growth strategy.
    The variants of these strategies are:
    – Increase sales to current customers by habituating existing customers to use more.
    – Pull customers from the competitors’ products to company’s products maintaining existing customers intact.
    – Convert non-users of a product into users of the product and making potential opportunity for increasing sales.

    (b) Market Development Strategy:
    This strategy involves introducing present products or services into new geographic areas. The marketing efforts are made on existing products, to customers in related market areas, by adding different channels of distribution or by changing the current content of the advertising and promotional efforts.
    The market development can be achieved in any of the following ways:
    – By adding new distribution channels to expand the consumer reach of the product.
    – By entering new market segments.
    – By entering new geographical markets.
    In market development strategy, a firm seeks to increase the sales by taking its product into new markets.

    (c) Product Development Strategy:
    This strategy involves the growth of market through substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels.
    The variants of this strategy are:
    – Expand sales through developing new products.
    – Create different quality versions of the product.
    – Develop additional models and sizes of the product to suit the varied preference of the customers.
    A company can increase its current business by product improvement or introduction of products with new features.

    Integrative Growth Strategies
    The integrative growth strategies are designed to achieve increase in sales, assets and profits.
    There are basically two variants in integrative growth strategy which involves:
    1. Integration at the same level or stage of business in the same industry i.e. horizontal integration.
    2. Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages.

    (a) Horizontal Integration
    When two or more firms dealing in similar lines of activity combine together then horizontal integration takes place. Many companies expand by creating other firms in their same line of business. A firm is said to follow horizontal integration if it acquires or starts another firm that produce the same type of products with similar production process/marketing practices. When the combination of two or more business units (existing and created) results in greater effectiveness and efficiency than the total yielded by those businesses, when they were operated separately, the synergy has been attained.
    The reasons for horizontal integration are as follows:
    – Elimination or reduction in intensity of competition.
    – Putting an end to practice of price cutting.
    – Achieve economics of scale in production.
    – Common pool of resources for research and development.
    – Use of common distribution channels and uniform brand name.
    – Fixation of common price.
    – Effective management of capacity imbalances.
    – Common advertising and sales promotion.
    – Making common purchases at low prices.
    – Reduction in overall cost of operations per unit.
    – Greater leverage to deal with the customers and suppliers.
    The horizontal integration will increase the monopolistic tendency in the market. Less number of players in the industry will lead to collusion to reap abnormal profits by setting price of finished products at higher level than the market determined price.

    (b) Vertical Integration
    A vertical integration refers to the integration of firms in successive stages in the same industry. The integration of different levels/stages of the industry is known as vertical integration. Vertical integration may be either backward integration or forward integration.

    I). Backward Integration:
    In case of backward integration, it extends to the suppliers of raw materials. A vertical integration is one in which the company expands backwards by diversification into supplying raw materials. This allows for smooth flow of production, reduced inventory, reduction in operating costs, increase in economies of scale, elimination of bottlenecks, lower buying cost of materials etc.
    It is a diversification engaged at different stages of production cycle within the same industry. Firms adopting this strategy can have a regular and uninterrupted supply of raw materials components and other inputs and the quality is also assured.

    II). Forward Integration:
    It is a case of down-stream integration extends to those businesses that sell eventually to the consumer. The purpose of such diversification is to attain lower distribution costs, assured supplies to the market, increasing or creating barriers to entry for potential competitors.
    The firm expands forward in the direction of the ultimate consumer. For example- a cement manufacturing company undertakes the civil construction activity; it will be a case of diversification with forward linkage. With forward integration, firms can acquire greater control over sales, distribution channels, prices, and can improve its competitive position through differentiation and customer support.

    Diversification Growth Strategies
    Diversification means going into an operation which is either totally or partially unrelated to the present operations.
    Before opting for diversification, the following basic questions must be seriously considered:
    1. Whether it brings a positive synergy, to the company?
    2. Whether the market wants the new product or service which we offer?
    3. Whether the product or service has a good growth potential?
    Before selecting diversification strategy, one must have a clear understanding of the new product/service, the technology and the markets. Diversification strategies are used to expand firm’s operations by adding markets, products, services or stages of production to existing operations. The purpose of diversification is to allow the company to enter lines of business that are somewhat different from current operations.
    Diversification makes addition to the portfolio of business the growth strategy is pursued when the firm’s growth objectives are very high and it could not be achieved with in the existing product/market scope. Spreading risks by operating in multiple areas decreases the threat of any one area causing the firm to fail.
    However, diversification spreads resources over several areas, similarly decreasing the probability that the firm can be a strong force in any area. Diversification refers to the directions of development which take the organization away from both its present products and its present markets at the same time. Diversification strategies are becoming less popular as organizations are finding it more difficult to manage diverse business activities.

    External Growth Strategies
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    1. Merger
    A merger refers to a combination of two or more companies into a single company. This combination may be either through absorption or consolidation. Merger is said to occur when two or more companies combine into one company. Merger is defined as ‘a transaction involving two or more companies in the exchange of securities and only one company survives.’
    When the shareholders of more than one company, usually two, decides to pool the resources of the companies under a common entity it is called ‘merger’. If as a result of a merger, a new company comes into existence it is called as ‘amalgamation’. As a result of a merger, one company survives and others lose their independent entity, it is called ‘absorption’.

    Motives for Merger
    The merger activities are as a result of following factors and strategies, which are classified under three heads:
    (a) Strategic motives,
    (b) Financial motives, and
    (c) Organizational motives.

    2. Takeover:
    A takeover generally involves the acquisition of a certain block of equity capital of a company which enables the acquirer to exercise control over the affairs of the company. The main objective of takeover bid is to obtain legal control of the company. The company taken over remains in existence as a separate entity unless a merger takes place.
    Thus, a takeover is different from merger in that under a takeover, the company taken over maintains its separate entity, while under a merger both the companies merge to form single corporate entity, and at least one of the companies loses its identity.
    The element of willingness on the part of the buyer and seller distinguishes an acquisition from a takeover. If there exists willingness of the company being acquired, it is known as ‘acquisition’. If the willingness is absent, it is known as ‘takeover’.
    Takeover may be defined as ‘a transaction or series of transactions whereby an individual or group of individuals or company acquires control over the management of the company by acquiring equity shares carrying majority voting power’. Takeover is an acquisition of shares carrying voting rights in a company with a view to gaining control over the assets and management of the company.
    In theory, the acquirer must buy more than 50% of the paid-up equity of the acquired company to enjoy complete control. But in practice, however effective control maybe exercised with a smaller shareholding, because the remaining sharehold­ers scattered and ill-organized are not likely to challenge the control of acquirer.
    Sometimes the acquirer may have tacit support of the financial institutions, banks, mutual funds, having sizable holding in the company’s capital. The main objective of a takeover bid is to obtain legal control of the company.
    In takeover, the seller management is an unwilling partner and the purchaser will generally resort to acquire controlling interest in shares with very little advance information to the company which is being bought. Where the company is closely held by small group of shareholders, the controlling interest is obtained by purchasing the shares of other shareholders.
    Where the company is widely held i.e. in case of listed company, the shares are generally traded in the stock market, the purchaser will acquire shares in the open market. Takeover is a general phenomenon all over the globe and companies whose stock prices are quoted less and who are having latent potential for growth.
    The takeovers are subject to the regulations contained in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Takeover is a business strategy of acquiring control over the management of Target Company – either directly or indirectly. The motive of acquirer is to gain control over the board of directors of the target company for synergy in decision-making. The eagle eyes of raiders are on the lookout for cash rich and high growth rate companies with low equity stake of promoters.

    Kinds of Takeover
    The ways in which controlling interest can be attained are discussed below:
    i. Friendly Takeovers
    In a friendly takeover, the acquirer will purchase the controlling shares after thorough negotiations and agreement with the seller. The consideration is decided by having friendly negotiations. The takeover bid is finalized with the consent of majority shareholders of the target company.
    This form of purchase is also called as ‘consent takeover’. In a friendly takeover, the acquirer first approaches the promoters/management of the target company for negotiating and acquiring shares. Friendly takeover is for mutual advantage of acquirer and acquired companies.
    ii. Hostile Takeovers
    A person seeking control over a company, purchases the required number of shares from non-controlling shareholders in the open market. This method normally involves purchasing of small holding of small shareholders over a period of time at various places. As a strategy the purchaser keeps his identity a secret. These takeovers are also referred to as violent takeovers. The hostile takeover is against the wishes to the target company management. Acquirer makes a direct offer to the shareholders of the target company without the prior consent of the existing promoter/management.
    iii. Bailout Takeovers
    These forms of takeover are resorted to bailout the sick companies, to allow the company for rehabilitation as per the schemes approved by the financial institutions. The lead financial institution will evaluate the bids received for acquisition, the financial position and track record of the acquirer.
    iv. Tender Offer
    In a tender offer, one firm offers to buy the outstanding stock of the other firm at a specific price and communicates this offer in advertisements and mailings to stockholders. By doing so, it bypasses the incumbent management and board of directors of the target firm. Consequently, tender offers are used to carry out hostile takeovers.
    The acquired firm will continue to exist as long as there are minority stockholders who refuse the tender. From a practical standpoint, however, most tender offers eventually become mergers, if the acquiring firm is successful in gaining control of the target firm.
    v. Purchase of Assets
    In a purchase of assets, one firm acquires the assets of another, though a formal vote by the shareholders of the firm being acquired is still needed.
    vi. Management Buyout
    In this form, a firm is acquired by its own management or by a group of investors, usually with a tender offer. After this transaction, the acquired firm can cease to exist as a publicly traded firm and become a private business. These acquisitions are called ‘management buyouts’, if managers are involved, and ‘leveraged buyout’, if the funds for the tender offer come predominantly from debt.

    3. Joint Venture
    All joint ventures are typically characterized by two or more ventures being bound by a contractual arrangement which establishes joint control. Activities, which have no contractual arrangements to establish joint control, are not joint ventures. The contractual arrangements establish joint control over the joint venturers.
    Such an arrangement ensures that no single venturer is in a position to unilaterally control the activity. Joint venture may give protective or participating rights to the parties to the venture. Protective rights merely allow a co-venturer to protect its interests in the venture in situation where its interests are likely to be adversely affected.
    Joint venture is a form of business combination in which two unaffiliated business firms contribute financial and/or physical assets, as well as personnel, to a new company formed to engage in some economic activity, such as the production or marketing of a product. Joint venture can be formed between a domestic company and foreign enterprise in order to flow the skills and knowledge both the ways.
    A joint venture by a domestic company with multinational company can allow the transfer of technology and reaching of global market. The partners in joint venture will provide risk capital, technology, patent, trade mark, brand names and allow both the partners to reap benefit to agreed share.
    Joint ventures with multinational companies contribute to the expansion of production capacity, transfer of technology and capital and above all penetrating into global market. Entering into a Joint venture is a part of strategic business policy to diversity and enter into new markets, acquire finance, technology, patent and brand names.

    Forms of Joint Venture
    Joint ventures take many forms and structures.But it can be broadly categorized into three:
    i. Jointly Controlled Operations:
    The operation of some joint ventures involves the use of the assets and other resources of the venturers rather than the establishment of a corporation, partnership or other entity or a financial structure that is separate from the venturers themselves.
    ii. Jointly Cent Rolled Assets:
    Some joint ventures involve the joint control, and often the joint ownership, by the venturers of one or more assets contributed to, or acquired for the purpose of, the joint venture and dedicated to the purposes of the joint venture.

    iii. Jointly Controlled Entities:
    A jointly controlled entity is a joint venture, which involves the establishment of a corporation, partnership or other entity in which each venturer has an interest.

    4. Strategic Alliances
    An ‘alliance’ is defined as associations to further the common interests of the members. Strategic alliance is an arrangement or agreement under which two or more firms cooperate in order to achieve certain commercial objectives. The motives behind strategic alliances are to reduce cost, technology sharing, product development, market access, availability of capital, risk sharing etc.
    The concept of ‘alliance is gaining importance in infrastructure sectors, more particularly in the areas of power, oil and gas. The basic objective is to facilitate transfer of technology while implementing large objectives. The resultant benefits are shared in proportion to the contribution made by each party in achieving the targets. In strategic alliance, two or more firms that unite to pursue a set of agreed upon goals; remain independent subsequent to the formation of an alliance.
    The strategic alliances are generally in the forms like joint venture, franchising, supply agreement, purchase agreement, distribution agreement, marketing agreement, management contract, technical service agreement, licensing of technology/patent/trade mark/design etc. The strategic alliance agreement contains the terms like capital contribution, infrastructure, decision making, sharing of risk and return etc.
    A strategic alliance integrates the synergetic talents of alliance partners. Mutual understanding and trust are the basic tenets of strategic alliances. For smooth functioning of an alliance, partners are required to have preset priorities and expectations from each other. This strategy seeks to enhance the long-term competitive advantage of the firm by forming alliances with its competitors existing or potential in critical areas instead of competing with others.
    Strategic alliances, which enable companies to increase resource productivity and profitability by avoiding unnecessary fragmentation of resources and duplication of investment and effort in R&D/technology. In a world of fast changing technologies, changing tastes and habits of consumers, escalating fixed costs and growing protectionism – strategic alliance is an essential tool for serving customers.

    5. Franchising
    Franchising provides an immediate access to business operations and technology in profitable fields of operations. It is an important means of doing business in several countries and represents an effective combination of the advantages of large business with the motivation and adaptation capabilities of small or medium scale enterprises.
    It also enables linkages of large and small businesses within a framework of vertical division of labour. The concept of franchising is quite comprehensive and covers an extensive range of marketing and distribution arrangements for goods and services. Franchises are becoming a key mechanism for technological, marketing and service linkages between enterprises within a country as well as globally.

    6. Licensing Agreement
    A licensing agreement is a commercial contract whereby the licenser gives something of value to the licensee in exchange of certain performance and payments.
    (a) The licenser may provide any of the following:
    i. Rights to produce a potential product or use a potential production process.
    ii. Manufacturing know-how (unpatented).
    iii. Technical advice and assistance.
    iv. Right to use a trademark, brand etc.
    (b) The licenser receives a royalty.
    (c) The licensee may eventually become a competitor.
    (d) Results in improved supply of essential materials, components, plants etc.
    Licensing involves the transfer of some industrial property right from the originator. Most tend to be patents, trademarks, or technical know-how that are granted to the licensee for a specified time in return for a royalty. Another licensing strategy is to contract the manufacturing of its product line to a foreign company to exploit local comparative advantages in technology, materials or labour.

    Type # 1. Concentration Expansion Strategy:
    Concentration involves expansion within the existing line of business. Concentration expansion strategy involves safeguarding the present position and expanding in the current product-market space to achieve growth targets. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain.

    A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business.

    Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development is first suggested in Ansoff’s model. Concentration strategy is followed when adequate growth opportunities exist in the firm’s current products-market space.

    Type # 2. Integration Expansion Strategy:
    When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.

    In contrast to the intensive growth, integration strategy involves expanding externally by combining with other firms. Combination involves association and integration among different firms and is essentially driven by need for survival and also for growth by building synergies.

    Combination of firms may take the merger or consolidation route. Merger implies a combination of two or more concerns into one final entity. The merged concerns go out of existence and their assets and liabilities are taken over by the acquiring company. A consolidation is a combination of two or more business units to form an entirely new company.

    All the original business entities cease to exist after the combination. Since mergers and consolidations involve the combination of two or more companies into a single company, the term merger is commonly used to refer to both forms of external growth. As is the case in all the strategies, acquisition is a choice a firm has made regarding how it intends to compete.

    Type # 3. Internationalization Expansion Strategy:
    International strategy is a type of expansion strategy that requires firms to market their products or services beyond the domestic or national market. Firm would have to assess the international environment, evaluate its own capabilities, and devise appropriate international strategy. An organisation can “go international” by crossing domestic borders international expansion involves establishing significant market interests and operations outside a company’s home country.

    Foreign markets provide additional sales opportunities for a firm that may be constrained by the relatively small size of its domestic market and also reduces the firm’s dependence on a single national market.

    Firms expand globally to seek opportunity to earn a return on large investments such as plant and capital equipment or research and development, or enhance market share and achieve scale economies, and also to enjoy advantages of locations. Other motives for international expansion include extending the product life cycle, securing key resources and using low-cost labour.

    However, to mould their firms into truly global companies, managers must develop global mind-sets. Traditional means of operating with little cultural diversity and without global competition are no longer effective firms.

    International expansion is fraught with various risks such as, political risks (e.g., instability of host nations) and economic risks (e.g., fluctuations in the value of the country’s currency). International expansions increases coordination and distribution costs, and managing a global enterprise entails problems of overcoming trade barriers, logistics costs, cultural diversity, etc.

    There are several methods for going international. Each method of entering an overseas market has its own advantages and disadvantages that must be carefully assessed. Different international entry modes involve a trade-offs between level of risk and the amount of foreign control the organisation’s managers are willing to allow.

    It is common for a firm to begin with exporting, progress to licensing, then to franchising finally leading to direct investment. As the firm achieves success at each stage, it moves to the next. If it experiences problems at any of these stages, it may not progress further.

    If adverse conditions prevail or if operations do not yield the desired returns in a reasonable time period, the firm may withdraw from the foreign market. The decision to enter a foreign market can have a significant impact on a firm.

    Expansion into foreign markets can be achieved through- exporting, licensing, joint venture strategic alliance or direct investment.

    Type # 4. Diversification Expansion Strategy:
    Diversification is defined as the entry of a firm into new lines of activity, through internal or external modes. Diversification is the process of entry into a business which is new to an organisation either market-wise or technology-wise or both.

    In diversification, firm acquires ownership or control over another firm against the wishes of the latter’s management. But in practice it can be both, hostile or friendly. The primary reasons a firm pursues increased diversification are value creation through economies of scale and scope, or market dominance.

    In some cases firms choose diversification because of government policy, performance problems and uncertainty about future cash flow. In one sense, diversification is a risk management tool, in that it’s successful use reduces a firm’s vulnerability to the consequences of competing in a single market or industry.

    Risk plays a very vital role in selecting a strategy and hence, continuous evaluation of risk is linked with a firm’s ability to achieve strategic advantage. Internal development can take the form of investments in new products, services, customer segments, or geographic markets including international expansion. Diversification is accomplished through external modes through acquisitions and joint ventures.

    Firms choose expansion strategy when their perceptions of resource availability and past financial performance are both high. The most common growth strategies are diversification at the corporate level and concentration at the business level.

    Reliance Industry, a vertically integrated company covering the complete textile value chain has been repositioning itself to be a diversified conglomerate by entering into a range of businesses such as power generation and distribution, insurance, telecommunication, and information and communication technology services.

    Tata Tea’s takeover of Consolidated Coffee (a grower of coffee beans) and Asian Coffee (a processor) are the examples of related diversification.

    Type # 5. Cooperation Expansion Strategy:
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.

    Thus, cooperating with other firms is another strategy that is used to create value for a customer that exceeds the cost of creating that value and to create a favourable position in the marketplace relative to the five forces of competition.

    3. Product development.
    i. Market Penetration Strategy:
    Market penetration strategy strives to increase the sale of the current products in the current markets.
    ii. Market Development Strategy:
    The market development strategy involves broadening the market for a product.
    iii. Product Development Strategy:
    A company may be able to increase its current business by product improvement or introducing products with new features. Example – Colgate-Palmolive has been trying to maintain its share of the toothpaste market by introducing new brands. (Maintaining the market share in a growing market means, obviously, increasing sales).
    Many companies endeavour to maintain/increase sales through continuous feature improvements/introduction of new products. This is very obvious in certain industries like electronics, white goods, passenger vehicles (including two-wheelers), etc.
    Often, market development and product development strategies facilitate better market penetration.

    Integrative Growth Strategies
    One of the common growth strategies is the integrative growth strategy. A major contributor to the growth of Reliance Industries in the early stages was backward and forward integration. It is today the most fully integrated company in the world (from petroleum exploration to textiles retailing).
    There are broadly two types of integrative growth:
    1. Integration at the same level or stage of business in the same industry (horizontal integration), or
    2. Integration of different levels/stages of business in the same industry (vertical integration).
    i. Horizontal Integration:
    Integration at the same level of business, popularly known as horizontal integration, involves the acquisition of one or more competitors.
    For example- a tyre company may grow by acquiring another tyre company. Examples of horizontal integration includes acquisition of Universal Luggage’s (Aristocrat) by Bioplast (V.I.P.) and Tata Oil Mills Company (TOMCO) by Hindustan Lever. The Indian cement industry has witnessed considerable horizontal integration. The FMCG sector has recently undergone several acquisitions resulting in horizontal integration.
    Perhaps, the most important advantage of horizontal integration is that it eliminates or reduces competition.
    ii. Vertical Integration:
    Integration of the different levels/stages of the same industry is known as vertical integration.

    Diversification Growth Strategies
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).
    Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

    QUESTION 2
    What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWER
    There are two sides to the issue of the relationship between inequality and development. One side focuses on the distribution of the benefits of development and the capacity of development to effectively reduce poverty. The other side focuses on how the distribution of economic resources may affect the pace and structure of development.
    The first side of the issue, namely who benefits from development, centers around Simon Kuznets’ famous hypothesis, according to which income inequality tends to increase in the first stage of development, and then decreases beyond some threshold. This hypothesis motivated many studies in the 1970s and the 1980s. On the one hand, it provided an explanation for the mechanisms that determine the distributional consequences of economic growth. On the other hand, it allowed us to test whether the hypothesis of an inverted-U, or Kuznets curve between inequality and average income per capita could be justified empirically. As it turns out, there seems to be no empirical evidence of a systematic relationship between the level of development (e.g., as measured by GDP per capita) and income inequality (e.g., as measured by the Gini coefficient). The recent increase in inequality in developed countries may support this conclusion, as well as demonstrate the complexity of the multiple mechanisms and policies that determine the evolution of inequality.
    The other side of the issue of the inequality-development relationship has attracted much attention over the last 20 years or so, even though the modern discussion on the topic dates back to Kaldor [1955]. He observed that if capitalists saved more than the workers, a faster rate of growth was associated with a higher share of profit. In the 1990s, renewed interest in the theory and empirics of economic growth led to various alternative views on whether and how inequality could affect the rate of economic growth. These views departed somewhat from the pure macroeconomic functional distribution framework in classical, neo-classical, and Keynesian (i.e., Kaldor’s contribution) economics. From a theoretical perspective, the prevailing belief included the existence of a tradeoff between the equality of the distribution of economic resources and economic efficiency. However, many authors showed that inequality could actually cause inefficiency and slower growth through various channels, including market imperfections, endogenous redistribution, and political economy mechanisms. From an empirical perspective, the growth regression wave of the 1990s generated a flurry of econometric tests of the effect of the initial Gini coefficient of income distribution on economic growth during some period. Heterogeneous results were obtained, although a slight majority favored a negative relationship.
    Despite the considerable work and energy expended by the economic profession on this matter, there are few conclusions on whether inequality has a positive or negative effect on economic growth and development, or what the policy implications of the effect might be. Of course, equality may be seen as an objective worth pursuing per se, for ethical reasons.
    There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s.
    Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality. Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes.
    The relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective.
    In general terms, a negative relationship can be observed between the level of inequality and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.
    At a theoretical level, the prevailing view in the 1950s and 60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.
    However, several voices have subsequently warned of the negative effects of inequality on growth.
    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).
    Greater inequality can also negatively affect growth if, for example, it encourages populist policies. Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth.
    Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.
    Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth; in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.
    A recent study by the IMF suggests that an increase in inequality is harmful to economic growth. By way of example, the historical relationship (1980-2012) observed between inequality and growth in the 159 countries analysed shows that, if the income share of the richest 20% of the population increases by 1 pp (a rise in inequality), GDP growth slows down by 0.08 pps during the next five years. On the other hand, if the income share of the poorest 20% of the population increases by 1 pp (a reduction in inequality), GDP growth is 0.38 pps higher during the next five years on average.
    Along the same lines, a study by the OECD estimates that an increase in the Gini coefficient of three points (which coincides with the average increase recorded in OECD countries in the last two decades) would have a negative impact on economic growth of 0.35 pps per year over 25 years, representing a cumulative loss of 8.5% of GDP. Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution). For example, if the bottom inequality in the UK were changed to be like that in France, or that of the US to become like that of Japan or Australia, the average annual growth in GDP would improve by almost 0.3 pps over the next 25 years, representing a cumulative rise in GDP of more than 7%. Once again, it should be noted that these estimates are for illustrative purposes only and must not be interpreted as the actual effect a change in equality can have on growth in each country.
    Lastly, the report concludes that one of the key channels through which inequality acts as a brake on economic performance is by reducing the investment opportunities, primarily in education, of the poorest segments of the population. In fact, social mobility has deteriorated significantly in countries such as the US, where the percentage of children who receive a higher income than their parents has fallen from 90% for the cohort of 1940 to 50% for people born in the 1980s.
    It should be noted that, although inequality is, to some extent, an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth.

  11. Obiajulu Olisaemeka Charles says:

    NAME: OBIAJULU OLISAEMEKA CHARLES
    REG NO: 2018/242803
    DEPT: ECONOMICS/POLITICAL SCIENCE
    ECO 361

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    In the fast expanding economies of today, adoption of growth strategies by business enterprises is a must for the survival, in the long-run; lest they should be swept away by environmental influences, especially competition, technology and governmental regulations.

    Categories of Growth strategies
    (I) Internal growth strategies
    (II) External growth strategies.
    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.
    Some popular internal growth strategies are described below:
    (1) Market Penetration: Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
    1. Aggressive advertising and other sales promotion techniques.
    2. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
    3. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.
    (2) Market Development:
    This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc.
    Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.
    (3) Product Development:
    Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
    Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.
    4) Diversification:
    Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.

    External Growth Strategies:
    Some popular external growth strategies are described below:
    (1) Joint Ventures:
    Joint venture is a growth strategy in which two or more companies, establish a new enterprise (or organisation) by participating in the equity capital of the new organisation and by agreeing to participate in its management in an agreed manner. A firm or a company may have a joint venture with another company of the same country or a foreign country. Some examples of joint ventures: Tata Iron and Steel Co. joined hands with IPICOL of Orissa to form IPITATA Sponge Iron Ltd; Hindustan Computers Ltd. and Hewlett Packard of USA formed a joint venture named HCL-HP Ltd; Tungabhadra Industries Ltd. of India and Yamaha Motor Company Ltd. of Japan formed a joint-venture Birla Yamaha Ltd. etc.
    For ensuring success of a joint venture, the co-venturers must agree in advance on:
    1. Objectives of joint venture
    2. Equity participation of co-venturers
    3. Management pattern etc.

    Advantages of Joint Ventures:
    As a growth strategy, joint-venture provides the following advantages:
    (i) In case joint venture involves a foreign partner, the problem of foreign exchange is solved to a great extent; if the foreign partner brings latest machines etc. from the other country.
    (ii) Through joint venture approach, risk of business is shared among partners. In fact, high risk involved in a new project can be reduced considerably by mutual sharing of such risk.

    (2) Mergers:
    Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover. Specially in the Indian conditions, industrialists Vijaya Mallaya, R.P. Goenka and Manu Chabria are described as “take-over kings.”

    Types of Growth/Expansion Strategies:
    The expansion or growth strategies are further classified as:
    1. Concentration Expansion Strategy
    2. Integration Expansion Strategy
    3. Internationalization Expansion Strategy
    4. Diversification Expansion Strategy
    5. Cooperation Expansion Strategy
    Type # 1. Concentration Expansion Strategy:
    Concentration involves expansion within the existing line of business. Concentration expansion strategy involves safeguarding the present position and expanding in the current product-market space to achieve growth targets. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain.
    A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business.
    Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development is first suggested in Ansoff’s model. Concentration strategy is followed when adequate growth opportunities exist in the firm’s current products-market space.

    Type # 2. Integration Expansion Strategy:
    When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.
    In contrast to the intensive growth, integration strategy involves expanding externally by combining with other firms. Combination involves association and integration among different firms and is essentially driven by need for survival and also for growth by building synergies.

    Type # 3. Internationalization Expansion Strategy:
    International strategy is a type of expansion strategy that requires firms to market their products or services beyond the domestic or national market. Firm would have to assess the international environment, evaluate its own capabilities, and devise appropriate international strategy. An organisation can “go international” by crossing domestic borders international expansion involves establishing significant market interests and operations outside a company’s home country. foreign market can have a significant impact on a firm.

    Type # 4. Diversification Expansion Strategy:
    Diversification is defined as the entry of a firm into new lines of activity, through internal or external modes. Diversification is the process of entry into a business which is new to an organisation either market-wise or technology-wise or both. In diversification, firm acquires ownership or control over another firm against the wishes of the latter’s management. But in practice it can be both, hostile or friendly. The primary reasons a firm pursues increased diversification are value creation through economies of scale and scope, or market dominance.
    In some cases firms choose diversification because of government policy, performance problems and uncertainty about future cash flow. In one sense, diversification is a risk management tool, in that it’s successful use reduces a firm’s vulnerability to the consequences of competing in a single market or industry. Risk plays a very vital role in selecting a strategy and hence, continuous evaluation of risk is linked with a firm’s ability to achieve strategic advantage. Internal development can take the form of investments in new products, services, customer segments, or geographic markets including international expansion. Diversification is accomplished through external modes through acquisitions and joint ventures.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    First of all, we talk about Growth.
    Growth can be seen as the increase in some quantity over time. It can be seen as the gradual development in maturity, age, size, weight or height. It is a process that focuses on quantitative improvement.
    Equity on the other hand is where income is distributed in a way that is considered to be fair or just. Note that an equitable distribution is not the same as a totally equal distribution and that different people have different views on what is equitable.
    In the last month or so, there has been a fascinating debate on the internet about the old issue of growth vs equity. The inspiration seems to be a media statement by Prof. Amartya sen that in India we should end our “obsession with growth”.
    Expectedly, the riposte comes from the “Prof Jadish Bhagwati group (for want of a better term) stressing the importance of high growth. There is some truth in Prof sen’s statement about “Obsession with growth” as for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their Trump card whenever confronted with other issues like, Inflation, Corruption, governance etc.
    Yet, the interesting feature of the debate is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms.

    * First, a question. Are growth and poverty in conflict? It is difficult to argue that high growth of GDP has no impact on bringing at least some people above the poverty line. After all, it is clear that with a 15% growth, government measures to redistribute income will meet with less political resistance.

    * While growth refers to the increase in national income over long period of time, equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice.

    * Growth is desirable as you must have the cake to distribute it but growth in itself does not guarantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production.
    In other words, the major share of Gross Domestic product (GDP) might be owned by a small proportion of population which mai result in exploitation of weaker sections of society.
    Hence, growth with equity is a rational and desirable objective of planning. The objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth in income.
    In conclusion, there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between Growth and equity. It is even more unlikely that growth can be attained with equity.

  12. Ogbaji Chukwudubem, 2018/250210, Economics Department says:

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    ●ECONOMIC GROWTH

    Economic Growth refers to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
    Economic development strategies also relate closely to planning and redevelopment strategies. Vibrant, clean, and safe places make the perfect environment for economic growth. And strategies necessarily include an effective use of public incentives to catalyze growth and encourage business retention.

    ●THEORIES OF ECONOMIC GROWTH

    ■Balanced Growth Theory:
    The theory of balanced growth, also known as the Nurkse-Rosenstein-Rodan theory after its founders, suggests a way through which an underdeveloped country can develop.
    As the name indicates, the theory suggests a ‘balanced’ approach to development. Instead of making all the investments in a single industry or a single sector, the theory suggests a simultaneous development of a range of different industries.
    For example, suppose that in a simple economy, the government invests to build a large shoe industry. Thus, 100 unemployed workers get jobs in that factory. The workers spend all their wages on buying shoes. A shoe market is created. If instead, the government had built two smaller factories of shoes and socks, the workers would have spent their wages in buying both shoes and socks. In the second scenario, along with a shoe market, a socks market is also created.
    Thus, a series of investments in different industries increase the economic activity of the country. More markets mean more spending, demand, and economic activities. This helps in long term growth and development.
    The theory of balanced growth thus encourages the simultaneous and harmonious development of the different sectors of the economy. Nurkse was of the view to simultaneously develop the industrial and the agricultural sector. Expansion in the agricultural sector then would mean more income for the people involved in agriculture, and thus they would buy more products from the industry. On the other hand, the industrial sector can use more raw materials from the agricultural sector. Thus both sectors help each other to achieve growth and development.

    ■Unbalanced Growth Theory:
    Unbalanced growth theory is just the opposite, in the sense that it encourages investment in a specific industry instead of a string of different industries. This theory is primarily associated with Hirschman. It advocates using scarce resources and investing them in certain strategic industries.
    While unbalanced growth theory refers to development as a series of disequilibria, balanced growth theory treats development as a dynamic concept.

    ■Different models of economic growth stress alternative causes of economic growth. The principal theories of economic growth include:

    ▪︎Mercantilism: Wealth of a nation determined by the accumulation of gold and running trade surplus

    ▪︎Classical theory: Adam Smith placed emphasis on the role of increasing returns to scale (economies of scale/specialisation)

    ▪︎Neo-classical-theory: Growth based on supply-side factors such as labour productivity, size of the workforce, factor inputs.

    ▪︎Endogenous growth theories – Rate of economic growth strongly influenced by human capital and rate of technological innovation.

    ▪︎Keynesian demand-side: Keynes argued that aggregate demand could play a role in influencing economic growth in the short and medium-term. Though most growth theories ignore the role of aggregate demand, some economists argue recessions can cause hysteresis effects and lower long-term economic growth.

    ▪︎Limits to growth– reminiscent of Malthus theories: From an environmental perspective, some argue in the very long-term economic growth will be constrained by resource degradation and global warming. This means that economic growth may come to an end

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ●GROWTH AND EQUITY DEBATE

    In the last month or so, there has been a fascinating debate on the internet (largely among non-resident Indian economists and some India watchers) about the age-old issue of growth vs equity. The inspiration seems to be a media statement by Prof Amartya Sen that in India we should end our “obsession with growth”. Expectedly, the riposte comes from the ‘Prof Jagdish Bhagwati group’ (for want of a better term) stressing the importance of high growth. There is some truth in Prof Sen’s statement about “obsession with growth” as, for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation, corruption, governance, etc. Yet, the interesting feature of the debate (which at the current level could continue for the next 50 years without any conclusion) is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.

    ●DIFFERENCES BETWEEN GROWTH AND EQUITY

    There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s. Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality. Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes.

    ●CAN GROWTH EXIST WITHOUT INEQUALITY ?

    In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:
    Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
    These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.
    The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.
    Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.
    On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.
    In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.
    In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.
    Important as well for the purposes of this paper is this—the latest economic research we reviewed only examines the outcome of whether there are results for regressions that demonstrate positive or negative relationships between inequality and economic growth and stability. This means the paper cannot provide clear guidance for policymakers on exactly how to address inequality or mitigate its effects on growth. In other words, the research examined in this paper generally does not identify the channels or mechanisms by which inequality affects growth.

  13. Name: Ugwueze Martha Chioma
    Reg no:2018/247847
    Dept: Economics
    Course code:Eco 361
    Assignment
    (1) what do you understand by growth strategy?
    Growth Strategy
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    (1b)clearly discuss different growth strategies in the economy that will support and enhance the growth and development of a developing country like Nigeria
    Types of growth strategies:
    Everything you need to know about the types of growth strategies. A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.

    The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly.

    Growth Strategy is pursued to reduce the cost of production per unit. Growth strategies involve a significant increase in performance objectives.

    These strategies are adopted when firms remarkably broaden the scope of their customer groups, customer functions and alternative technologies either singly or in combination with each other.

    Growth strategy can be adopted in the form of expansion, vertical integration, diversification, merger, acquisition and joint venture.

    The basic objective in all these cases is growth but the basic problem in each case is significantly different which needs more elaborate discussion.

    Some of the types of growth strategies are as follows:-

    1. Internal Growth Strategy 2. External Growth Strategy 3. Concentration Expansion Strategy 4. Integration Expansion Strategy 5. Internationalization Expansion Strategy

    6. Diversification Expansion Strategy 7. Cooperation Expansion Strategy 8. Intensive Growth Strategy 9. Integrative Growth Strategy 10. Diversification Growth Strategy.

    Types of Growth Strategies: Concentration Expansion Strategy, Integration Expansion Strategy and Other Details
    Types of Growth Strategies – Internal Growth Strategies and External Growth Strategies
    Type # 1. Internal Growth Strategies:
    The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.

    These strategies are broadly classified as:

    1. Intensive Growth Strategies:

    The firm pursues intensive growth strategies with an objective to achieve further growth of existing products and/or existing markets.

    The basic classification of intensive growth strategies:

    (a) Market penetration strategy

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    (b) Market development strategy

    (c) Product development strategy

    These strategies are also called ‘organic growth strategies’.

    (a) Market Penetration Strategy:

    A firm pursuing market penetration strategy directs its resources to the profitable growth of a existing products in current markets. It is the most common form of intensive growth strategy.

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    The variants of these strategies are:

    (a) Increase sales to current customers by habituating existing customers to use more.

    (b) Pull customers from the competitors’ products to company’s products maintaining existing customers intact.

    (c) Convert non-users of a product into users of the product and making potential opportunity for increasing sales.

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    The firm try to increase market share for present products in current markets through increase of marketing efforts like increase of sales promotion and advertising expenditure, appointment of skilled sales force, proper customer support and after sales service etc.

    (b) Market Development Strategy:

    This strategy involves introducing present products or services into new geographic areas. The marketing efforts are made on existing products, to customers in related market areas, by adding different channels of distribution or by changing the current content of the advertising and promotional efforts.

    The market development can be achieved in any of the following ways:

    ADVERTISEMENTS:

    (a) By adding new distribution channels to expand the consumer reach of the product.

    (b) By entering new market segments.

    (c) By entering new geographical markets.

    In market development strategy, a firm seeks to increase the sales by taking its product into new markets.

    (c) Product Development Strategy:

    This strategy involves the growth of market through substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels.

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    The variants of this strategy are:

    (a) Expand sales through developing new products.

    (b) Create different quality versions of the product.

    (c) Develop additional models and sizes of the product to suit the varied preference of the customers.

    A company can increase its current business by product improvement or introduction of products with new features.

    2. Integrative Growth Strategies:

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    The integrative growth strategies are designed to achieve increase in sales, assets and profits.

    There are basically two variants in integrative growth strategy which involves:

    (a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.

    (b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages.

    (a) Horizontal Integration:

    When two or more firms dealing in similar lines of activity combine together then horizontal integration takes place. Many companies expand by creating other firms in their same line of business. A firm is said to follow horizontal integration if it acquires or starts another firm that produce the same type of products with similar production process/marketing practices. When the combination of two or more business units (existing and created) results in greater effectiveness and efficiency than the total yielded by those businesses, when they were operated separately, the synergy has been attained.

    ADVERTISEMENTS:

    The reasons for horizontal integration are as follows:

    (a) Elimination or reduction in intensity of competition.

    (b) Putting an end to practice of price cutting.

    (c) Achieve economics of scale in production.

    (d) Common pool of resources for research and development.

    (e) Use of common distribution channels and uniform brand name.

    ADVERTISEMENTS:

    (f) Fixation of common price.

    (g) Effective management of capacity imbalances.

    (h) Common advertising and sales promotion.

    (i) Making common purchases at low prices.

    (j) Reduction in overall cost of operations per unit.

    (k) Greater leverage to deal with the customers and suppliers.

    The horizontal integration will increase the monopolistic tendency in the market. Less number of players in the industry will lead to collusion to reap abnormal profits by setting price of finished products at higher level than the market determined price.

    (b) Vertical Integration:

    A vertical integration refers to the integration of firms in successive stages in the same industry. The integration of different levels/stages of the industry is known as vertical integration. Vertical integration may be either backward integration or forward integration.

    I. Backward Integration:

    In case of backward integration, it extends to the suppliers of raw materials. A vertical integration is one in which the company expands backwards by diversification into supplying raw materials. This allows for smooth flow of production, reduced inventory, reduction in operating costs, increase in economies of scale, elimination of bottlenecks, lower buying cost of materials etc.

    It is a diversification engaged at different stages of production cycle within the same industry. Firms adopting this strategy can have a regular and uninterrupted supply of raw materials components and other inputs and the quality is also assured.

    II. Forward Integration:

    It is a case of down-stream integration extends to those businesses that sell eventually to the consumer. The purpose of such diversification is to attain lower distribution costs, assured supplies to the market, increasing or creating barriers to entry for potential competitors.

    The firm expands forward in the direction of the ultimate consumer. For example- a cement manufacturing company undertakes the civil construction activity; it will be a case of diversification with forward linkage. With forward integration, firms can acquire greater control over sales, distribution channels, prices, and can improve its competitive position through differentiation and customer support.

    3. Diversification Growth Strategies:

    Diversification means going into an operation which is either totally or partially unrelated to the present operations.

    Before opting for diversification, the following basic questions must be seriously considered:

    (a) Whether it brings a positive synergy, to the company?

    (b) Whether the market wants the new product or service which we offer?

    (c) Whether the product or service has a good growth potential?

    Before selecting diversification strategy, one must have a clear understanding of the new product/service, the technology and the markets. Diversification strategies are used to expand firm’s operations by adding markets, products, services or stages of production to existing operations. The purpose of diversification is to allow the company to enter lines of business that are somewhat different from current operations.

    Diversification makes addition to the portfolio of business the growth strategy is pursued when the firm’s growth objectives are very high and it could not be achieved with in the existing product/market scope. Spreading risks by operating in multiple areas decreases the threat of any one area causing the firm to fail.

    However, diversification spreads resources over several areas, similarly decreasing the probability that the firm can be a strong force in any area. Diversification refers to the directions of development which take the organization away from both its present products and its present markets at the same time. Diversification strategies are becoming less popular as organizations are finding it more difficult to manage diverse business activities.

    Type # 2. External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    1. Merger:

    A merger refers to a combination of two or more companies into a single company. This combination may be either through absorption or consolidation. Merger is said to occur when two or more companies combine into one company. Merger is defined as ‘a transaction involving two or more companies in the exchange of securities and only one company survives.’

    When the shareholders of more than one company, usually two, decides to pool the resources of the companies under a common entity it is called ‘merger’. If as a result of a merger, a new company comes into existence it is called as ‘amalgamation’. As a result of a merger, one company survives and others lose their independent entity, it is called ‘absorption’.

    Motives for Merger:

    The merger activities are as a result of following factors and strategies, which are classified under three heads:

    (a) Strategic motives,

    (b) Financial motives, and

    (c) Organizational motives.

    2. Takeover:

    A takeover generally involves the acquisition of a certain block of equity capital of a company which enables the acquirer to exercise control over the affairs of the company. The main objective of takeover bid is to obtain legal control of the company. The company taken over remains in existence as a separate entity unless a merger takes place.

    Thus, a takeover is different from merger in that under a takeover, the company taken over maintains its separate entity, while under a merger both the companies merge to form single corporate entity, and at least one of the companies loses its identity.

    The element of willingness on the part of the buyer and seller distinguishes an acquisition from a takeover. If there exists willingness of the company being acquired, it is known as ‘acquisition’. If the willingness is absent, it is known as ‘takeover’.

    Takeover may be defined as ‘a transaction or series of transactions whereby an individual or group of individuals or company acquires control over the management of the company by acquiring equity shares carrying majority voting power’. Takeover is an acquisition of shares carrying voting rights in a company with a view to gaining control over the assets and management of the company.

    In theory, the acquirer must buy more than 50% of the paid-up equity of the acquired company to enjoy complete control. But in practice, however effective control maybe exercised with a smaller shareholding, because the remaining sharehold­ers scattered and ill-organized are not likely to challenge the control of acquirer.

    Sometimes the acquirer may have tacit support of the financial institutions, banks, mutual funds, having sizable holding in the company’s capital. The main objective of a takeover bid is to obtain legal control of the company.

    In takeover, the seller management is an unwilling partner and the purchaser will generally resort to acquire controlling interest in shares with very little advance information to the company which is being bought. Where the company is closely held by small group of shareholders, the controlling interest is obtained by purchasing the shares of other shareholders.

    Where the company is widely held i.e. in case of listed company, the shares are generally traded in the stock market, the purchaser will acquire shares in the open market. Takeover is a general phenomenon all over the globe and companies whose stock prices are quoted less and who are having latent potential for growth.

    The takeovers are subject to the regulations contained in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Takeover is a business strategy of acquiring control over the management of Target Company – either directly or indirectly. The motive of acquirer is to gain control over the board of directors of the target company for synergy in decision-making. The eagle eyes of raiders are on the lookout for cash rich and high growth rate companies with low equity stake of promoters.

    Kinds of Takeover:

    The ways in which controlling interest can be attained are discussed below:

    i. Friendly Takeovers:

    In a friendly takeover, the acquirer will purchase the controlling shares after thorough negotiations and agreement with the seller. The consideration is decided by having friendly negotiations. The takeover bid is finalized with the consent of majority shareholders of the target company.

    This form of purchase is also called as ‘consent takeover’. In a friendly takeover, the acquirer first approaches the promoters/management of the target company for negotiating and acquiring shares. Friendly takeover is for mutual advantage of acquirer and acquired companies.

    ii. Hostile Takeovers:

    A person seeking control over a company, purchases the required number of shares from non-controlling shareholders in the open market. This method normally involves purchasing of small holding of small shareholders over a period of time at various places. As a strategy the purchaser keeps his identity a secret. These takeovers are also referred to as violent takeovers. The hostile takeover is against the wishes to the target company management. Acquirer makes a direct offer to the shareholders of the target company without the prior consent of the existing promoter/management.

    iii. Bailout Takeovers:

    These forms of takeover are resorted to bailout the sick companies, to allow the company for rehabilitation as per the schemes approved by the financial institutions. The lead financial institution will evaluate the bids received for acquisition, the financial position and track record of the acquirer.

    iv. Tender Offer:

    In a tender offer, one firm offers to buy the outstanding stock of the other firm at a specific price and communicates this offer in advertisements and mailings to stockholders. By doing so, it bypasses the incumbent management and board of directors of the target firm. Consequently, tender offers are used to carry out hostile takeovers.

    The acquired firm will continue to exist as long as there are minority stockholders who refuse the tender. From a practical standpoint, however, most tender offers eventually become mergers, if the acquiring firm is successful in gaining control of the target firm.

    v. Purchase of Assets:

    In a purchase of assets, one firm acquires the assets of another, though a formal vote by the shareholders of the firm being acquired is still needed.

    vi. Management Buyout:

    In this form, a firm is acquired by its own management or by a group of investors, usually with a tender offer. After this transaction, the acquired firm can cease to exist as a publicly traded firm and become a private business. These acquisitions are called ‘management buyouts’, if managers are involved, and ‘leveraged buyout’, if the funds for the tender offer come predominantly from debt.

    3. Joint Venture:

    All joint ventures are typically characterized by two or more ventures being bound by a contractual arrangement which establishes joint control. Activities, which have no contractual arrangements to establish joint control, are not joint ventures. The contractual arrangements establish joint control over the joint venturers.

    Such an arrangement ensures that no single venturer is in a position to unilaterally control the activity. Joint venture may give protective or participating rights to the parties to the venture. Protective rights merely allow a co-venturer to protect its interests in the venture in situation where its interests are likely to be adversely affected.

    Joint venture is a form of business combination in which two unaffiliated business firms contribute financial and/or physical assets, as well as personnel, to a new company formed to engage in some economic activity, such as the production or marketing of a product. Joint venture can be formed between a domestic company and foreign enterprise in order to flow the skills and knowledge both the ways.

    A joint venture by a domestic company with multinational company can allow the transfer of technology and reaching of global market. The partners in joint venture will provide risk capital, technology, patent, trade mark, brand names and allow both the partners to reap benefit to agreed share.

    Joint ventures with multinational companies contribute to the expansion of production capacity, transfer of technology and capital and above all penetrating into global market. Entering into a Joint venture is a part of strategic business policy to diversity and enter into new markets, acquire finance, technology, patent and brand names.

    Forms of Joint Venture:

    Joint ventures take many forms and structures.

    But it can be broadly categorized into three:

    i. Jointly Controlled Operations:

    The operation of some joint ventures involves the use of the assets and other resources of the venturers rather than the establishment of a corporation, partnership or other entity or a financial structure that is separate from the venturers themselves.

    ii. Jointly Cent Rolled Assets:

    Some joint ventures involve the joint control, and often the joint ownership, by the venturers of one or more assets contributed to, or acquired for the purpose of, the joint venture and dedicated to the purposes of the joint venture.

    iii. Jointly Controlled Entities:

    A jointly controlled entity is a joint venture, which involves the establishment of a corporation, partnership or other entity in which each venturer has an interest.

    4. Strategic Alliances:

    An ‘alliance’ is defined as associations to further the common interests of the members. Strategic alliance is an arrangement or agreement under which two or more firms cooperate in order to achieve certain commercial objectives. The motives behind strategic alliances are to reduce cost, technology sharing, product development, market access, availability of capital, risk sharing etc.

    The concept of ‘alliance is gaining importance in infrastructure sectors, more particularly in the areas of power, oil and gas. The basic objective is to facilitate transfer of technology while implementing large objectives. The resultant benefits are shared in proportion to the contribution made by each party in achieving the targets. In strategic alliance, two or more firms that unite to pursue a set of agreed upon goals; remain independent subsequent to the formation of an alliance.

    The strategic alliances are generally in the forms like joint venture, franchising, supply agreement, purchase agreement, distribution agreement, marketing agreement, management contract, technical service agreement, licensing of technology/patent/trade mark/design etc. The strategic alliance agreement contains the terms like capital contribution, infrastructure, decision making, sharing of risk and return etc.

    A strategic alliance integrates the synergetic talents of alliance partners. Mutual understanding and trust are the basic tenets of strategic alliances. For smooth functioning of an alliance, partners are required to have preset priorities and expectations from each other. This strategy seeks to enhance the long-term competitive advantage of the firm by forming alliances with its competitors existing or potential in critical areas instead of competing with others.

    Strategic alliances, which enable companies to increase resource productivity and profitability by avoiding unnecessary fragmentation of resources and duplication of investment and effort in R&D/technology. In a world of fast changing technologies, changing tastes and habits of consumers, escalating fixed costs and growing protectionism – strategic alliance is an essential tool for serving customers.

    5. Franchising:

    Franchising provides an immediate access to business operations and technology in profitable fields of operations. It is an important means of doing business in several countries and represents an effective combination of the advantages of large business with the motivation and adaptation capabilities of small or medium scale enterprises.

    It also enables linkages of large and small businesses within a framework of vertical division of labour. The concept of franchising is quite comprehensive and covers an extensive range of marketing and distribution arrangements for goods and services. Franchises are becoming a key mechanism for technological, marketing and service linkages between enterprises within a country as well as globally.

    6. Licensing Agreement:

    A licensing agreement is a commercial contract whereby the licenser gives something of value to the licensee in exchange of certain performance and payments.

    (a) The licenser may provide any of the following:

    i. Rights to produce a potential product or use a potential production process

    ii. Manufacturing know-how (unpatented)

    iii. Technical advice and assistance

    iv. Right to use a trademark, brand etc.

    (b) The licenser receives a royalty.

    (c) The licensee may eventually become a competitor.

    (d) Results in improved supply of essential materials, components, plants etc.

    Licensing involves the transfer of some industrial property right from the originator. Most tend to be patents, trademarks, or technical know-how that are granted to the licensee for a specified time in return for a royalty. Another licensing strategy is to contract the manufacturing of its product line to a foreign company to exploit local comparative advantages in technology, materials or labour.

    Types of Growth Strategies – Top 5 Types: Concentration Expansion Strategy, Integration Expansion Strategy, Diversification Expansion Strategy and a Few Others
    Types of Growth/Expansion Strategies:

    The expansion or growth strategies are further classified as:

    1. Concentration Expansion Strategy

    2. Integration Expansion Strategy

    3. Internationalization Expansion Strategy

    4. Diversification Expansion Strategy

    5. Cooperation Expansion Strategy

    Type # 1. Concentration Expansion Strategy:
    Concentration involves expansion within the existing line of business. Concentration expansion strategy involves safeguarding the present position and expanding in the current product-market space to achieve growth targets. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain.

    A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business.

    Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development is first suggested in Ansoff’s model. Concentration strategy is followed when adequate growth opportunities exist in the firm’s current products-market space.

    Type # 2. Integration Expansion Strategy:
    When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.

    In contrast to the intensive growth, integration strategy involves expanding externally by combining with other firms. Combination involves association and integration among different firms and is essentially driven by need for survival and also for growth by building synergies.

    Combination of firms may take the merger or consolidation route. Merger implies a combination of two or more concerns into one final entity. The merged concerns go out of existence and their assets and liabilities are taken over by the acquiring company. A consolidation is a combination of two or more business units to form an entirely new company.

    All the original business entities cease to exist after the combination. Since mergers and consolidations involve the combination of two or more companies into a single company, the term merger is commonly used to refer to both forms of external growth. As is the case in all the strategies, acquisition is a choice a firm has made regarding how it intends to compete.

    Type # 3. Internationalization Expansion Strategy:
    International strategy is a type of expansion strategy that requires firms to market their products or services beyond the domestic or national market. Firm would have to assess the international environment, evaluate its own capabilities, and devise appropriate international strategy. An organisation can “go international” by crossing domestic borders international expansion involves establishing significant market interests and operations outside a company’s home country.

    Foreign markets provide additional sales opportunities for a firm that may be constrained by the relatively small size of its domestic market and also reduces the firm’s dependence on a single national market.

    Firms expand globally to seek opportunity to earn a return on large investments such as plant and capital equipment or research and development, or enhance market share and achieve scale economies, and also to enjoy advantages of locations. Other motives for international expansion include extending the product life cycle, securing key resources and using low-cost labour.

    However, to mould their firms into truly global companies, managers must develop global mind-sets. Traditional means of operating with little cultural diversity and without global competition are no longer effective firms.

    International expansion is fraught with various risks such as, political risks (e.g., instability of host nations) and economic risks (e.g., fluctuations in the value of the country’s currency). International expansions increases coordination and distribution costs, and managing a global enterprise entails problems of overcoming trade barriers, logistics costs, cultural diversity, etc.

    There are several methods for going international. Each method of entering an overseas market has its own advantages and disadvantages that must be carefully assessed. Different international entry modes involve a trade-offs between level of risk and the amount of foreign control the organisation’s managers are willing to allow.

    It is common for a firm to begin with exporting, progress to licensing, then to franchising finally leading to direct investment. As the firm achieves success at each stage, it moves to the next. If it experiences problems at any of these stages, it may not progress further.

    If adverse conditions prevail or if operations do not yield the desired returns in a reasonable time period, the firm may withdraw from the foreign market. The decision to enter a foreign market can have a significant impact on a firm.

    Expansion into foreign markets can be achieved through- exporting, licensing, joint venture strategic alliance or direct investment.

    Type # 4. Diversification Expansion Strategy:
    Diversification is defined as the entry of a firm into new lines of activity, through internal or external modes. Diversification is the process of entry into a business which is new to an organisation either market-wise or technology-wise or both.

    In diversification, firm acquires ownership or control over another firm against the wishes of the latter’s management. But in practice it can be both, hostile or friendly. The primary reasons a firm pursues increased diversification are value creation through economies of scale and scope, or market dominance.

    In some cases firms choose diversification because of government policy, performance problems and uncertainty about future cash flow. In one sense, diversification is a risk management tool, in that it’s successful use reduces a firm’s vulnerability to the consequences of competing in a single market or industry.

    Risk plays a very vital role in selecting a strategy and hence, continuous evaluation of risk is linked with a firm’s ability to achieve strategic advantage. Internal development can take the form of investments in new products, services, customer segments, or geographic markets including international expansion. Diversification is accomplished through external modes through acquisitions and joint ventures.

    Firms choose expansion strategy when their perceptions of resource availability and past financial performance are both high. The most common growth strategies are diversification at the corporate level and concentration at the business level.

    Reliance Industry, a vertically integrated company covering the complete textile value chain has been repositioning itself to be a diversified conglomerate by entering into a range of businesses such as power generation and distribution, insurance, telecommunication, and information and communication technology services.

    Tata Tea’s takeover of Consolidated Coffee (a grower of coffee beans) and Asian Coffee (a processor) are the examples of related diversification.

    Type # 5. Cooperation Expansion Strategy:
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.

    Thus, cooperating with other firms is another strategy that is used to create value for a customer that exceeds the cost of creating that value and to create a favourable position in the marketplace relative to the five forces of competition.

    Increasingly, cooperative strategies are formed by firms competing against one another, as shown by the fact that more than half of the strategic alliances (a type of cooperative strategy) established within a recent two-year period were between competitors such as FedEx and the U.S. Postal Service.

    Types of Growth Strategies – 3 Important Types: Intensive Growth Strategies, Integrative Growth Strategies and Diversification Growth Strategies (With Examples)
    Type # 1. Intensive Growth Strategies:
    Intensive growth strategies aim at achieving further growth for existing products and/ or in existing markets.

    There are three important intensive growth strategies, viz.:

    i. Market penetration,

    ii. Market development and

    iii. Product development.

    i. Market Penetration Strategy:

    Market penetration strategy strives to increase the sale of the current products in the current markets.

    ii. Market Development Strategy:

    The market development strategy involves broadening the market for a product.

    iii. Product Development Strategy:

    A company may be able to increase its current business by product improvement or introducing products with new features. Example – Colgate-Palmolive has been trying to maintain its share of the toothpaste market by introducing new brands. (Maintaining the market share in a growing market means, obviously, increasing sales).

    Many companies endeavour to maintain/increase sales through continuous feature improvements/introduction of new products. This is very obvious in certain industries like electronics, white goods, passenger vehicles (including two-wheelers), etc.

    Often, market development and product development strategies facilitate better market penetration.

    Type # 2. Integrative Growth Strategies:
    One of the common growth strategies is the integrative growth strategy. A major contributor to the growth of Reliance Industries in the early stages was backward and forward integration. It is today the most fully integrated company in the world (from petroleum exploration to textiles retailing).

    There are broadly two types of integrative growth:

    i. Integration at the same level or stage of business in the same industry (horizontal integration), or

    ii. Integration of different levels/stages of business in the same industry (vertical integration).

    i. Horizontal Integration:

    Integration at the same level of business, popularly known as horizontal integration, involves the acquisition of one or more competitors.

    For example- a tyre company may grow by acquiring another tyre company. Examples of horizontal integration includes acquisition of Universal Luggage’s (Aristocrat) by Bioplast (V.I.P.) and Tata Oil Mills Company (TOMCO) by Hindustan Lever. The Indian cement industry has witnessed considerable horizontal integration. The FMCG sector has recently undergone several acquisitions resulting in horizontal integration.

    Perhaps, the most important advantage of horizontal integration is that it eliminates or reduces competition.

    ii. Vertical Integration:

    Integration of the different levels/stages of the same industry is known as vertical integration.

    Type # 3. Diversification Growth Strategies:
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

    Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

    Diversification is also described as portfolio change.

    Large conglomerate (diversified) business houses dominate the industrial sector of many countries. While most of the top industrial houses of the US are focused, of the West European and Asian countries like Japan, South Korea and India are diversified.

    (2)what do you understand by growth and equity debate in development economic?

    Equity means being fair and impartial.
    Equity is a solution for addressing imbalanced social systems. Justice can take equity one step further by fixing the systems in a way that leads to long-term, sustainable, equitable access for generations to come.
    According to the World Health Organization (WHO), equity is definedExternal link:open_in_new as “the absence of avoidable or remediable differences among groups of people, whether those groups are defined socially, economically, demographically or geographically.” Therefore, as the WHO notes, health inequities involve more than lack of equal access to needed resources to maintain or improve health outcomes. They also refer to difficulty when it comes to “inequalities that infringe on fairness and human rights norms.”
    WHILE
    Growth: takes place when there is a sustained increase in a country’s output of goods and services.
    (2b)what is the difference between growth and equity in the economy?
    Answer
    The difference between growth and equity:
    the last month or so, there has been a fascinating debate on the internet (largely among non-resident Indian economists and some India watchers) about the age-old issue of growth vs equity. The inspiration seems to be a media statement by Prof Amartya Sen that in India we should end our “obsession with growth”. Expectedly, the riposte comes from the ‘Prof Jagdish Bhagwati group’ (for want of a better term) stressing the importance of high growth. There is some truth in Prof Sen’s statement about “obsession with growth” as, for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation, corruption, governance, etc. Yet, the interesting feature of the debate (which at the current level could continue for the next 50 years without any conclusion) is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.
    (2c)can growth exist with inequality?
    Yes growth can exist with inequality:
    In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:

    “One might thus assume a long swing in the inequality characterizing the secular income structure: widening in the early phases of economic growth when the transition from the pre-industrial to the industrial civilization was most rapid; becoming stabilized for a while; and then narrowing in the later phases.”

    Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.

    Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

    These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.

    The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.

    Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.

    On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

    In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.

    In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.

    Important as well for the purposes of this paper is this—the latest economic research we reviewed only examines the outcome of whether there are results for regressions that demonstrate positive or negative relationships between inequality and economic growth and stability. This means the paper cannot provide clear guidance for policymakers on exactly how to address inequality or mitigate its effects on growth. In other words, the research examined in this paper generally does not identify the channels or mechanisms by which inequality affects growth.

  14. Oyem Lawrence Ifechukwude 2018/241846 Economics says:

    1. GROWTH STRATEGY
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximizing gains and minimizing risk and untoward consequences.
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Growth strategies may be classified into two categories:
    (I) Internal growth strategies

    (II) External growth strategies.

    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.

    BALANCED AND UNBALANCED GROWTH STRATEGY
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    Cooperation Expansion Strategy:
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.

    Diversification Growth Strategies:
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification.

    Integrative Growth Strategies:
    An integrative growth strategy is a growth strategy that emphasizes blending businesses together through acquisitions and mergers Integrative growth strategies are typically more expensive than intensive growth strategies and are usually practiced by mature businesses with large cash flow. horizontal integration involves the acquisition of one or more competitors. Integration of the different levels/stages of the same industry is known as vertical integration.

    2. GROWTH AND EQUITY DEBATE
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real terms. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
    Equity is a key a stabilizing force in societies that make it possible for people to pursue the futures they want. Equity means being fair and impartial. Specifically in debate, equity means assuring that debaters, judges, and spectators are all comfortable with what is being discussed. While debate is about challenging controversial topics. Who are the needy in our society? Are rources going to the most vulnerable or needy? Should resources be distributed on the basis of age and/or need? What are the appropriate roles of government, the private sector, and family in responding to individual and family
    needs.

  15. Oyem Lawrence Ifechukwude 2018/241846 Economics says:

    1. GROWTH STRATEGY
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximizing gains and minimizing risk and untoward consequences.
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Growth strategies may be classified into two categories:
    (I) Internal growth strategies

    (II) External growth strategies.

    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.

    BALANCED AND UNBALANCED GROWTH STRATEGY
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    Cooperation Expansion Strategy:
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.

    Diversification Growth Strategies:
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification.

    Integrative Growth Strategies:
    An integrative growth strategy is a growth strategy that emphasizes blending businesses together through acquisitions and mergers Integrative growth strategies are typically more expensive than intensive growth strategies and are usually practiced by mature businesses with large cash flow. horizontal integration involves the acquisition of one or more competitors. Integration of the different levels/stages of the same industry is known as vertical integration.

    2. GROWTH AND EQUITY DEBATE
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real terms. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
    Equity is a key a stabilizing force in societies that make it possible for people to pursue the futures they want. Equity means being fair and impartial. Specifically in debate, equity means assuring that debaters, judges, and spectators are all comfortable with what is being discussed. While debate is about challenging controversial topics. Who are the needy in our society? Are rources going to the most vulnerable or needy? Should resources be distributed on the basis of age and/or need? What are the appropriate roles of government, the private sector, and family in responding to individual and family
    needs.

    DIFFERENCE BETWEEN GROWTH AND EQUITY DEBATE
    Here, the argument is on growth and income distribution. Some scholars argue that increase in income will bring about an increase in inequality. This is because of unequal educational opportunities and unequal capability distribution. When an economy is growing, the sectors that grow faster tends to have the highest income than others. This is also dependent on political system.

  16. Udeh Josephine Nkemakoram says:

    Udeh Josephine Nkemakoram
    2018/241843
    Economics
    300l
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
    • MARKET PENETRATION
    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    • MARKET DEVELOPMENT
    This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    • PRODUCT DEVELOPMENT
    The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    • DIVERSIFICATION
    This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    Diversification may be divided into further categories:
    O HORIZONTAL DIVERSIFICATION
    This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.
    O VERTICAL DIVERSIFICATION
    The company enters the sector of its suppliers or of its customers. For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.
    O CONCENTRIC DIVERSIFICATION
    Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
    O CONGLOMERATE DIVERSIFICATION
    Is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio.
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Equity comes from the idea of moral equality, that people should be treated as equals. Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens. Applying these ideas in a specific country context involves hard choices, and embedding discussions of distributive justice into domestic political and policy debates is central to national development.
    Economic growth, the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.
    Yes growth can exist with inequality, there could be a situation the the economy grows but the resources in the country are not distributed equally a situation where some selected people keep enriching themselves while others are being impoverished.

  17. Ukwuma Ifunanya Clara says:

    Ukwuma Ifunanya Clara
    2018/243088
    Economics Department

    1). A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    Types of Growth Strategies.
    a).Balanced Growth Theory
    The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse. The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. It tries to develop all sectors of the economy at a time.
    b).Unbalanced Growth Theory
    A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining. Unbalanced growth portends an eventual economic slowdown or recession, though economists disagree on how a country should address it.
    c). Endogenous Growth Theory
    The Endogenous Growth Theory states that economic growth is generated internally in the economy, i.e., through endogenous forces, and not through exogenous ones. The theory contrasts with the neoclassical growth model, which claims that external factors such as technological progress, etc. are the main sources of economic growth.
    d). Import Substitution
    Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production. ISI is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. As a contemporary economic development strategy, import substitution industrialization is much more challenging. The goal here is to develop a diversified economy, rather than specialize in a primary commodity.
    e).Globalization Theory
    Globalisation is a theory of development (Reyes, 2001a) that uses a global mechanism of greater integration with particular emphasis on the sphere of economic transactions.This integration is believed to have an effective influence on the development of economies and on the improvement in social sectors of the economy.

    2). Growth vs Equity debate in development economics can be dwfined as the arguments on economic growth and income distribution.
    Growth cannot exist with inequality as there is growing evidence that inequality is bad for growth in the long run. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.It is that inequality is harmful for economic growth. That is, ceteris paribus, the more equal is the income or wealth distribution, the better are a country’s prospects for economic development.

  18. Ugwu chidera loveth says:

    NAME: Ugwu chidera loveth
    REG NO: 2018/241235
    DEPARTMENT: Economics education

    1. MEANING OF GROWTH STRATEGY.
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise or economy in fields of manufacturing, marketing, financial resources etc.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate the distorting effect of inflation on the prices of goods produced. Measurement of economic growth uses national income accounting.[2] Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure. The economic growth-rates of countries are commonly compared using the ratio of the GDP to population (per-capita income).

    GROWTH STRATEGIES:
    THE BALANCED GROWTH STRATEGY: The balanced growth Strategy is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
    Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy.

    THE UNBALANCED GROWTH STRATEGY: Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments.

    LINEAR GROWTH STRATEGY: Rostow, One of the first growth theories was that proposed by American economic historian Walt Rostow in the early 1960s. As a vigorous advocate of free market capitalism, Rostow argued that economies must go through a number of developmental stages towards greater economic growth. He argued that these stages followed a logical sequence; each stage could only be reached through the completion of the previous stage.
    Traditional society, dominated by agriculture and barter exchange, and where science and technology are not understood or exploited.
    Pre-take-off stage, with the development of education and an understating of science, the application of science to technology and transport, and the emergence of entrepreneurs and a simple banking system, and hence rising savings.
    Take-off, with positive growth rates in particular sectors and where organised systems of production and reward replace traditional methods and norms.
    The drive to maturity, with an ongoing movement towards a diverse economy, with growth in many sectors.
    The stage of mass consumption, where citizens enjoy high and rising consumption per head, and where rewards are spread more evenly.
    Rostow’s work, like many other accounts of growth, points to the significance of the accumulation of savings to achieve take-off in this case as a necessary condition for the movement from traditional to developed societies.

    DEPENDENCY THEORY STRATEGY: Dependency theory became popular in the 1960’s as a response to research by Raul Prebisch. Prebisch found that increases in the wealth of the richer nations appeared to be at the expense of the poorer ones. In its extreme form, dependency theory is based on a Marxist view of the world, which sees globalisation in terms of the spread of market capitalism, and the exploitation of cheap labour and resources in return for the obsolete technologies of the developed world. The dominant view of dependency theorists is that there is a dominant world capitalist system that relies on a division of labour between the rich ‘core’ countries and poor ‘peripheral’ countries. Over time, the core countries will exploit their dominance over an increasingly marginalised periphery.
    Dependency theory advocated an inward looking approach to development and an increased role for the state in terms of imposing barriers to trade, making inward investment difficult and promoting nationalisation of key industries.
    Although still a popular theory in history and sociology, dependency theory has disappeared from the mainstream of economic theory since the collapse of Communism in the early 1990s. The considerable inefficiencies associated with state involvement in the economy and the growth of corruption, have been dramatically exposed in countries that have followed this view of development, most notably a small number of African economies, including Zimbabwe.

    2. GROWTH AND EQUITY DEBATE IN DEVELOPMENT ECONOMICS
    There is no intrinsic tradeoff between long-run aggregate economic growth and overall equity. Policies aimed at helping the poor accumulate productive assets especially policies to improve schooling, health, and nutrition when adopted in a relatively nondistorted framework, are important instruments for achieving higher growth. The stylized fact that distribution must get worse with economic growth in poor countries before it can get better turns out not to be a fact at all. Growth’s effects on inequality can go either way and are contingent on several other factors.
    DIFFERENCE BETWEEN GROWTH AND EQUITY IN THE ECONOMY.
    Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.
    The “rate of economic growth” refers to the geometric annual rate of growth in GDP between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend.
    Economists refer to an increase in economic growth caused by more efficient use of inputs (increased productivity of labor, of physical capital, of energy or of materials) as intensive growth. In contrast, GDP growth caused only by increases in the amount of inputs available for use (increased population, for example, or new territory) counts as extensive growth. Development of new goods and services also generates economic growth.

    Equity, or economic equality, on the other hand is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
    The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity. The complementaries between equity and prosperity arise for two main reasons. Firstly, market failures, notably in credit, insurance, land and human capital, mean that resources may not flow where returns are highest and may lead to unequal opportunities. Secondly, high levels of economic and political inequalities tend to result in inequitable institutions that systematically favour the interests of those with more influence.

    CAN GROWTH EXIST WITH INEQUALITY?
    NO, Growth does not exist with inequality, but this is majorly for poor developing countries because High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries, according to a recent paper by NBER Research Associate Robert Barro.
    The curve describes a U-shaped relationship between inequality and growth: inequality first increases and later decreases in the process of economic development. Kuznets explained this in terms of a shift from the rural/agricultural sector of the economy to an urban/industrial sector.
    This type of relationship also emerges in Barro’s analysis. However, the curve likely reflects not only the influence of the level of income per capita, but also an effect of the adoption of new technologies. The poor sector tends to use old technologies, whereas the rich sector uses more advanced techniques. Technological innovations (including the factory system, electric power, computers, and the internet) tend to raise the level of inequality at first when just a few people initially share in the relatively high incomes of the advanced sector. Eventually, however, as more people take advantage of the new technology, inequality falls.
    Overall, for poor countries, the escape from poverty is made more difficult because rising per capita income induces more inequality, which retards growth in this range. For rich countries, rising per capita income tends to reduce inequality, which lowers growth in this range.

  19. Onyedekwe Henry Chinedu. says:

    Onyedekwe Henry Chinedu
    2018/242306
    Economics department

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria

    answer

    Growth Strategies are measures, procedures and processes taken to prioritize and support “good growth” in an area.
    The synchronized application of capital to a wide range of different industries is called balanced growth by its advocates. The term BG is used in different senses. Paul Rosenstein Rodan, one of
    the original proponents of the doctrine, had in mind the scale of investment necessary to overcome indivisibilities on both the supply and the demand sides of the development process.
    Indivisibilities on the supply side refers to the ‘lumpiness’ of capital (especially social overhead capital) and the fact that only investment in a large number of activities simultaneously can exploit the various external economies of scale.
    Horizontal vs. Vertical Balance:
    BG, therefore, has both horizontal and vertical aspects. On the one hand it recognises
    indivisibilities in supply and complementarities of demand. On the other hand it highlights the importance of achieving balance between such sectors as agriculture and industry, between the consumer goods industries and the capital goods industries, and between social overhead capital (SOC) and directly productive activities (DPA). Two Versions of Balanced Growth:
    Thus, there are two versions of the doctrine of BG. One refers to the path of development and the pattern of investment necessary to ensure smooth functioning of the economy. The other refers to the scale of investment necessary to overcome indivisibilities in the production process on both sides of the market. Nurkse’s exposition of BG embraces both versions of the doctrine, while Rosen Steiner concentrates on the necessity for a ‘big-push’ to overcome the existence of indivisibilities. On the demand side, the division of labour is limited by the size of the market and if the market is limited, certain activities may not be economically viable. So, several activities are to be set up simultaneously so that each can provide a market for the others’ products. In addition, activities that are not profitable, when considered in isolation, will become so when considered in the context of a large-scale development programme.
    For this it is necessary that industrial enterprises are of a certain minimum size so that they can operate profitably. On the supply side, the argument for a ‘big push’ is inseparably linked up with the existence of external economies of scale. In the context of development economics, the external economies refer mainly to the impact of a large investment programme on the cost and profit functions of the participating firms. In the presence of external economies, in either sense, the social return of an activity will exceed the private return Intersectoral Balance:
    The second version of the theory of BG stresses the necessity of balance among different sectors of the economy. The objective is to prevent development of bottlenecks in some sectors, which may act as an obstacle to development and excess capacity in others which may be wasteful. For example, a shortage of raw jute or raw cotton will hinder the development of the jute or the cotton textile industries.

    Unbalanced Growth:

    A. O. Hirschman and his followers showed more faith in market forces but stressed the virtual impossibility of BG in the narrow sense of the simultaneous establishment of many industries all
    at a time. He pointed out that most poor countries lack the resources for investing in more than one or very few modern projects at any given time and, therefore, can aim at BG only in the long run, through a sequential process of building first one, then another plant, with each step correcting the worst imbalance in order to approach a more balanced structure gradually. He called that process ‘unbalanced growth’-and argued that market forces are likely to aid it, because imbalances create shortages, whose impact on prices render their relief or elimination more profitable.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    answer

    Growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product or gross domestic product (GDP), although alternative metrics are sometimes used.

    While Equity means fairness or evenness, and achieving it is considered to be an economic objective. Despite the general recognition of the desirability of fairness, it is often regarded as too normative a concept given that it is difficult to define and measure. However, for most economists, equity relates to how fairly income and opportunity are distributed between different groups in society. The opposite of equity is inequality.

    The relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective.

    In general terms, a negative relationship can be observed between the level of inequality1 and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.

    At a theoretical level, the prevailing view in the 1950s and
    60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.

    However, several voices have subsequently warned of the negative effects of inequality on growth.

    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).

    Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).

    Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.

    Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.

    A recent study by the IMF suggests that an increase in inequality is harmful to economic growth. By way of example, the historical relationship (1980-2012) observed between inequality and growth in the 159 countries analysed shows that, if the income share of the richest 20% of the population increases by 1 pp (a rise in inequality), GDP growth slows down by 0.08 pps during the next five years. On the other hand, if the income share of the poorest 20% of the population increases by 1 pp (a reduction in inequality), GDP growth is 0.38 pps higher during the next five years on average.

    Along the same lines, a study by the OECD estimates that an increase in the Gini coefficient of three points (which coincides with the average increase recorded in OECD countries in the last two decades) would have a negative impact on economic growth of 0.35 pps per year over 25 years, representing a cumulative loss of 8.5% of GDP. Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution). For example, if the bottom inequality in the UK were changed to be like that in France, or that of the US to become like that of Japan or Australia, the average annual growth in GDP would improve by almost 0.3 pps over the next 25 years, representing a cumulative rise in GDP of more than 7%. Once again, it should be noted that these estimates are for illustrative purposes only and must not be interpreted as the actual effect a change in equality can have on growth in each country.

    Lastly, the report concludes that one of the key channels through which inequality acts as a brake on economic performance is by reducing the investment opportunities, primarily in education, of the poorest segments of the population. In fact, social mobility has deteriorated significantly in countries such as the US, where the percentage of children who receive a higher income than their parents has fallen from 90% for the cohort of 1940 to 50% for people born in the 1980s.

    In fact, less social mobility can act as an indicator of a rise in inequality. Several empirical studies have revealed a negative relationship between inequality and social mobility (see the second graph) precisely because inequality, particularly when this occurs within the lowest income groups, reduces the chances of the more disadvantaged segment of the population to invest in education, which is the main way to increase social status. Spain is no exception: university graduates from a lower social background record rates of access to professional and managerial jobs that are 14 times higher than those who do not finish secondary education. By way of conclusion, it should be noted that, although inequality is, to some extent, an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth.’

  20. Eze Uchechukwu says:

    Eco. 361 —18-10-2021(Online discussion 5—Understanding Growth Strategies and Growth vs Equity debate)
    NAME:EZE UCHECHUKWU
    REG NO: 2018/241866
    DEPT: ECONOMICS
    LEVEL: 300L
    EMAIL: uchechukwu.eze.241866@unn.edu.ng
    QUESTION:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWER
    Growth strategies is a plan or course of actions that permit you or an organization to attain or achieve a bigger or higher goal or objectives in other to reach a targeted market shares. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    The various growth strategies that Will spur growth and development in Nigeria economy are as follows:
    Product development strategy :growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
    Market development strategy :growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.
    Market penetration strategy:growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
    Diversification strategy: growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.
    Balanced growth strategy: this theory posits that all sectors of the economy should grow simultaneously so as to keep a proper balance between industry and agricultural and between production for home consumption and production for exports. It also entails that balance could be established among agriculture, industries and trade, but with an equal emphasis on agriculture and industry.
    Unbalance growth strategy: propounded by various scholar like Robstown, Fleming and others. The theory stresses the need for investment in strategic sector of the economy, rather than in all sectors simultaneously. Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a rate similar to one another.
    2a Growth and equity debate:
    This presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by the united nations Economics commission for latin America and the Caribbean (ECLAC): the need for the rapid, large-scale spread of technology. Finally, notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity
    2b Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. WHILE Growth or Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time.
    2c. According to recent study by international monetary fund (IMF) there is a negative relationship between inequality and Economics growth. An increase inequality is harmful to economic growth in the sense that inequality reduces the opportunity available to the most disadvantage persona in the society.
    Moreover, most study shows that the most negative effect of inequality on is caused by the system inefficiency which affect the lowest income individuals ( those at the bottom of income distribution)

  21. Owoh Chiamaka Philia says:

    Name: Owoh Chiamaka Philia
    Reg No: 2019/247552 (2/3)
    Department: Education/Econs
    Course Code: Eco 361
    Course Title: Development Economics
    Question:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Answer:
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services. As a student, growth strategies are the those laid down principles, targeted goals and plans in which students sets for themselves to achieve in the nearest future.
    Growth Strategies May be Classified Into;
    (I) Internal Growth Strategies: Internal Growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand;
    II) External Growth Strategies: are those in which a firm plans to grow by combining with others.
    Types of Growth Strategies:
    Following is an account of important growth strategies, comprised in both categories as stated above:
    (I) Internal Growth Strategies
    Some popular internal growth strategies are described below:
    (1) Market Penetration:
    Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
    a) Aggressive advertising and other sales promotion techniques.
    b) Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
    c) Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.
    (2) Market Development:
    This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc.
    Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.
    (3) Product Development:
    Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
    Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.
    (4) Diversification:
    Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answer:
    Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. It 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.
    Economic Equality:
    In simple terms, economic equality is about a level playing field where everyone has the same access to the same wealth. it is the belief that people should receive the same rate of pay for a job, regardless of race, gender, or other characteristics that are not related to their ability to perform the task. The easiest example of economic equality gone wrong in Nigeria is in differential treatment between men and women.
    Difference Between Growth and Equality include:
    Growth has been and increasingly is causally associated with less equality, greater equality with slower growth. The ineluctable connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies.
    Growth Cannot Exist with inequality because;
    Specifically, rising inequality transfers income from low-saving households in the bottom and middle of the income distribution to higher-saving households at the top. All else equal, this redistribution away from low- to high-saving households reduces consumption spending, which drags on demand growth.

  22. Nwakpa Ruth Nnenna. 2018/242402. Economics department says:

    1.By “growth strategies” I refer to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    Balanced VS unbalanced growth strategies
    Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.

    Underdeveloped countries have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.

    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    2.Growth and equity debate
    Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.Equity is free from the biases that occur with equality. It reduces institutional barriers and motivates an individual to strive to be successful. Whereas equality is giving everyone the same thing, equity is giving individuals what they need.

    Can growth exist with inequality?
    Answer is No
    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.

    At a theoretical level, the prevailing view in the 1950s and
    60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.

    However, several voices have subsequently warned of the negative effects of inequality on growth.

    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations.

    Greater inequality can also negatively affect growth if, for example, it encourages populist policies.
    Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth; in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.

  23. Okoye Chidimma Favour says:

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

    ASSIGNMENT

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    (1)
    To define growth strategy in the aspect of business environment, it is a plan of action to increase a business’s market share. If your company is looking to expand, a market growth strategy will enable you to chart your path to expansion, taking into account your industry, your target market, and your finances.
    It is also an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    In economy, it is an economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.

    Growth strategies in the economy that will support and enhance the growth and development of a developing country like Nigeria includes:
    The Strategy of Economic Development is a 1958 book on economic development by Albert O. Hirschman. Hirschman critiques the theories of balanced growth put forward by Ragnar Nurkse and Paul Rosenstein-Rodan, which call for simultaneous, large-scale increases in investment across multiple sectors to spur economic growth.[1][2] Hirschman argues that such strategies are unrealistic and often infeasible in underdeveloped countries. In place of balanced growth, Hirschman proposes a theory of unbalanced growth, where “imbalances” and “pressure points” created by the growth process can be used to identify areas where policymakers can intervene. In addition, Hirschman introduces the notions of backward linkages—the demand created by a new industry for intermediate goods—and forward ones—the knock-on effects on industries who use the present industry’s goods as inputs.
    1:Balanced growth strategy: Balanced growth refers to a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending.
    Thus, the concept of balanced growth from the supply side is that various sectors of an underdeveloped economy should be developed simultaneously so that no difficulty in the path of economic development is created. For example, agriculture, industry, internal trade, transport, etc. should be developed simultaneously.
    2: Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. … Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments.
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
    Growth Strategy is pursued to reduce the cost of production per unit. Growth strategies involve a significant increase in performance objectives.

    (2)
    Growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy. Economic growth reflects the growth of national or per capita income.
    Then Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
    Equity is giving individuals what they need.
    Equality is far more important to the well-being of the citizens than GDP growth. The share of the total growth in income was just half the increase enjoyed by the richest.
    Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.
    Policies that promote equity can help, directly and indirectly, to reduce poverty.
    Growth can’t exist with inequality because, inequality is bad for growth because it implies higher levels of poverty, which, in the presence of credit constraints, make it difficult for the poor to acquire education. It might also lead to greater crime and social instability.
    Inequality and growth are entwined in complex ways and found that overall, both high and low levels of inequality diminish growth.
    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

  24. NAME: OBODOAGU SOMTOCHUKWU LILIAN
    REG. No: 2018/242452
    DEPARTMENT: ECONOMICS
    COURSE: ECO 361 (DEVELOPMENT ECONOMY)
    ASSIGNMENT
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansions. A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    As an action plan, your growth strategy should include the following components:
    Goal: What do you want to achieve?
    People: How is each department impacted by your goal?
    Product: Is your product positioned to help you achieve your goal?
    Tactics: How will you work toward your goal?
    Example of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    There are two main growth strategies
    (1)Balance growth strategies
    (2) Unbalanced growth strategies
    (1)Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports.The balanced growth aims at the development of all sectors simultaneously .
    (2)Unbalance growth strategies is a situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining. unbalanced growth recommends that the investment should be made only in leading sectors of the economy. … On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sector
    Other growth strategies includes:
    MARKET PENETRATION
    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    MARKET DEVELOPMENT
    This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    PRODUCT DEVELOPMENT
    The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    DIVERSIFICATION
    This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Economic growth is the increase in the value of an economy’s goods and services, which creates more profit for businesses. As a result, stock prices rise. Equity is a solution for addressing imbalanced social systems,Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome. The route to achieving equity will not be accomplished through treating everyone equally. It will be achieved by treating everyone justly according to their circumstances.”
    Therefore growth and equity debate work in hand,they works together to bring development in an economy, the economist and scholars debate that equity bring about growth,whereby government carried everyone along, by treating and allocating resources according to their circumstances.
    The difference between equity and growth
    equity contributes to poverty reduction through potential beneficial effects on aggregate long-term development and through enhanced opportunities for poorer groups within society.The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation.while growth is an increase and expansion in an economy both in production, political socially and economically which lead to development here every member of d economy is not carried along unlike equity so d development may be beneficial to some.
    Yes growth can exist without inequality with this so many reasons ;
    Inequalities tend to result in inequitable institutions that systematically favour the interests of those with more influence.Inequalities tend to persist over time due to the interaction between different forms of inequality.
    (1) The adverse effects of unequal opportunities are damaging for development because economic, political and social inequalities often reproduce themselves across generations – a phenomenon known as the ‘inequality trap’.
    (2) The distribution of wealth is closely associated with the social distinctions that stratify people, communities and nations into groups that dominate and those that are dominated.
    (3) The patterns of domination persist because economic and social differences are reinforced by the overt and covert use of power. Such overlapping political, social and economic inequalities stifle mobility and are closely tied to the business of ordinary life.
    (4) Inequalities are perpetuated by the elite and are often internalised by marginalised or oppressed groups, thus making it difficult for the poor to find their way out of poverty.
    (5) Inequality of opportunity is wasteful and inimical to development and poverty reduction. Institutions should promote a more level playing field, in which all members of society have similar chances to become socially active, politically influential and economically productive. Governments can contribute to the move from ‘inequality traps’ to virtuous circles of equity and growth .

  25. Ifiegbu Ononuju Julie says:

    NAME: IFIEGBU ONONUJU JULIE
    REG NO: 2017/245848.(DEFERRED STUDENT)
    DEPARTMENT: ECONOMICS EDUCATION.
    EMAIL: juliexfib@gmail.com

    QUESTIONS
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWERS.
    GROWTH STRATEGY

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.
    DIFFERENT GROWTH STRATEGIES.
    BALANCED GROWTH STRATEGY
    The advocates of the balanced growth doctrine are economists such as Rosenstein Rodan,Ragnar Nurkse and Arthur Lewis, with different interpretations to the theory. To some, it means investing in a lagged sector or industry, to others it means simultaneous investment in all sectors, especially manufacturing industries and agriculture (KindleBerger as cited in Jhingan, 2011). The balanced growth theory entails a balance between social and economic overheads (power and energy, drainage system, etc,) and directly productive investment so that all sectors grow in unison (Ahuja 1980 as cited in Metu et al 2018). They believe that there should be simultaneous investment in a number of industries, that is a balanced growth of different industries or investment in lagged sectors of the economy until all sectors are equally developed. Balanced growth strategy recognises the need for expansion and inter-sectoral balance between agriculture and manufacturing so that each of these sectors provides a market for the product of the other and in turn, supplies the necessary raw materials for the development and growth of the other. For instance, in the simultaneous development of agriculture and industrial sector, employment in the industrial sector will lead to increase in the demand for food stuff and irrigation, intermediate goods, etc. The demand side relates to the provision of employment opportunities and incomes so as to induce investment through improved savings resulting from increase in employment and income. According to Lewis as cited in Todaro and Smith (2015), development programmes Should include a balance between agriculture and industry; balance between production For consumption and exports and a balance between the domestic sector and the foreign employment opportunities and incomes so as to induce investment through improved savings resulting from increase in employment and income.According to Lewis as cited in Todaro and Smith (2015), development programmes should include a balance between agriculture and industry; balance between production for consumption and exports and a balance between the domestic sector and the foreign sector.
    UNBALANCED GROWTH STARTEGY
    Economists such as Singer and Hirschman argue that for development to take place in an Economy, there should be an unbalanced growth strategy by concentrating on investment In certain strategic industries. Hirschman advocated for big push in selected sectors of the Economy (Onwuka, 2011). According to the paper, underdeveloped countries may follow The method of unbalanced growth by undertaking initial investment in either social Overhead capital (SOC) or investment in direct productive activities (DPA) rather than Simultaneous investment. Social overhead capital includes investment on education, Public health, communication, public utilities such as light, water, drainage and irrigation Schemes (Ahuja, 2016; Jhingan 2011). Simultaneous investment in DPA and SOC is not Possible due to limited resources and because of the inability of underdeveloped countries To secure adequate resources. Therefore, there is need to determine the sequence of Expansion that will maximize induced decision-making. According to Hirschman, the Sequence of investment could be from investing in SOC or from investing in DPA first. If investment is first undertaken in DPA, the shortage of SOC will raise production costs and with time political pressure will stimulate investment in SOC.
    OTHER STARTEGIES INCLUDE
    Import Substitution Industrialization Strategy

    Import substitution industrialization strategy (ISI)is a conscious attempt by developing Countries to domestically produce commodities that were formerly imported from Developed countries (Todaro & Smith, 2015). It involves promoting the emergence and Expansion of domestic industries by replacing major imports especially consumer goods Such as household appliances, food, textile materials, etc., with locally produced Substitutes. That is why it is also referred to as inward-looking development strategy (Onwuka, 2011)Countries resort to import substitution industrialization strategy due to balance of Payment difficulties and due to negative impact of such imports on the foreign exchange Earnings of developing countries. For industries established under ISI to function Governments must have to protect them through the use of tariffs and non-tariff barriers To trade. Tax exemptions and subsidies are also used to reduce costs in import competing Industries. Import substitution usually begins with the manufacture of durable consumer goods at the final stages of production.
    (a). Promotion of locally manufactured goods – ISI stresses the need to encourage Indigenous “learning by doing” in the manufacturing sector and the subsequent Development of appropriate technologies that would be used to tap a country’s resource Endowments (Jhingan, 2011). This presupposes self-reliance and that is usually Accompanied with restrictions on trade, movement of people and policies that restrict the Onslaught of multinational enterprises on the national economy.
    b). For achieving self-sufficiency – The case for important substitution rests on the Premise that trade has operated historically as a mechanism of international inequality to The disadvantages of developing countries (Onwuka, 2011). They are also justified on the Very fact that ISI is adopted for purposes of achieving self-sufficiency in the long run and To save foreign exchange.

    C) Employment opportunities – It is contended that ISI is necessary to provide gainful Employment to the underemployed in the industrial sector and to absorb surplus Manpower released from agricultural production as a result of increased productivity.This means that as population increases, the growing labors force are engaged in Industrial production. ISI also encourages the use of modern labor-saving techniques in Productive activity thereby increasing output and efficiency.

    Export Promotion or Export-Led Strategy

    The promotion of exports of developing countries, either primary or secondary, has long Been considered a major ingredient in any viable long-run development strategy. Export Promotion strategy is a trade strategy in which there is bias of incentive towards Production of import substitutes (Metu et al., 2018). Export promotion is a purposeful Governmental effort to expand the volume of a country’s exports through export Incentives and other means in order to generate more foreign exchange and improve the Current account of its balance of payments. The essence of promoting exports in Developing countries is to overcome disequilibria in the balance of payment (Onwuka, 2011).Todaro and Smith (2015) opine that before embarking on export promotion, Comprehensive market surveys are carried out to ascertain potential markets. Also, Promotion of dynamic commodities that command demand in the world market and price Elasticity should be sought and encouraged; while those with doubtful demand abroad And hence low foreign exchange earnings base should be discouraged. Similarly, while it is encouraged to increase the production of non-traditional items Needed by both developed and developing countries, it is equally essential that a careful Examination of the composition of these exports in items and their prospects in the world Market be carried out. This is necessary to decide which exports should be increased, Promoted or be left out of consideration (Onwuka, 2011).

    2) GROWTH IN DEVELOPMENT ECONOMICS
    The term economic growth has been variously defined. Nafziger (2006) explains Economic growth as increases in a country’s production or income per capita, while the Production is usually measured by gross national product (GNP) or gross national income (GNI); they are used interchangeably to measure an economy’s total output of goods and Services.
    According to Haller (2012) economic growth, in a narrow sense, is an increase of the National income per capita in quantitative terms with a focus on the functional relations Between the endogenous variables. Then in a wider sense, it involves the increase of the GDP, GNP and NI, including the production capacity, expressed in both absolute and Relative size, per capita. By this definition, it means that economic growth involves the Process of increasing the sizes of national economies, the macro-economic indications, Especially the GDP per capita.
    Todaro and Smith (2015) defines economic growth as the steady process by which the Productive capacity of the economy is increased over time to bring about rising levels of National output and income. While Mladen (2015) view economic growth as constantly Increasing the volume of production or the increase in gross domestic product over a Period of time, usually one year. Economic growth is a long-term rise in the capacity to supply increasingly diverse Economic goods to its population. The growing capacity is based on advancing Technology as well as institutional adjustments. Economic growth occurs whenever People take resources and efficiently rearrange them in ways that make them more Productive overtime (Metu et al., 2017). It is the continuous improvement in the capacity To satisfy the demand for goods and services, resulting from increased production scale, And improved productivity i.e. innovations in products and processes. Aggregate economic growth is measured in terms of gross national product (GNP) or Gross domestic product (GDP), although alternative metrics are sometimes used. In a Nutshell, economic growth is an increase in the capacity of an economy to produce goods And services, compared from one period of time to another.

    EQUITY IN DEVELOPMENT ECONOMICS
    Equity, is the concept or idea of fairness in particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution

    DIFFERENCE BETWEEN GROWTH AND EQUITY
    I) Equity on the other hand is a more normative concept that concerns the ‘justness’ or ‘fairness’ of resource allocation.
    While GROWTH in an economy means the process by which a nation’s wealth increases over time.
    ii) Equity, is the concept or idea of fairness in particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution
    While GROWTH in an economy is the increase in the value of an economy’s goods and services, which creates more profit for businesses

    iii).Can growth exist with inequality? If yes, how? If no, why?
    No growth cannot exist in an economy. Inequality is negatively related to economic growth ,greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations. Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth.

  26. OGBONNAYA GERALDINE UGOCHI says:

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

    QUESTIONS
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWERS
    1. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. It is also a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    DIFFERENT GROWTH STRATEGIES IN THE ECONOMY.
    Some of the main types of growth strategies are as follows;

    MARKET PENETRATION STRATEGY
    Market penetration is about developing uniqueness about your product or service that you’re offering through price differentiation. Either you offer products at cheaper prices to capture the market share, or you charge higher prices to grab a completely different segment of the market.

    You could also differentiate your brand by promoting and making your product more attractive. Here you only change the marketing and advertisement strategy, so that your target customer would perceive your products from a different perspective. It would lead to an increase in market share.

    For example, IKEA followed the market penetration in the beginning by offering its products at lower prices. The company uses the cheaper raw material, merging warehouses, and taking away storage and assembly lines. It helped the company to become the world’s leading retailer that offers economical furniture.

    MARKET EXPANSION
    The market expansion allows you to grab the market share of a completely new and different market. Here you target the unserved or underserved customers. It means expanding your market and reaching a global audience. It would include the customers of the new demographic that you haven’t served before.

    For example, a watch is your product and you’re selling it in the US. You could go global and offer the same watches in Asia and Europe. It would help you to become a global play and expand your market share and customer base.

    PRODUCT DEVELOPMENT STRATEGY
    Product development strategy means improving your product/service in order to meet the expectations of customers. If customers are happy with your product, then they’ll keep using it and share their experience with their social circle. It would create a repetitive loop of sale, and you’ll keep getting new customers through referrals.

    For instance, smartphone companies like Apple iPhone follow product development strategies. They introduce a new model of the iPhone series with a new design, feature, and more powerful than the previous model. Just like they launched HomePod with smart speakers voice-enabled last year, and it was a completely new product

    Product development strategy helps you to attract new customers, increasing sales, and expand your market share.

    ACQUISITION
    A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.

    DIVERSIFICATION STRATEGY
    Diversification strategy means introducing a new product/service in an unexplored market. It’s a highly risky strategy because it involves the marketing of the new product/service in a completely new market. There are different types of diversification;

    •Horizontal Diversification
    •Vertical Diversification
    •Concentric Diversification
    •Conglomerate Diversification
    •Collaboration & Partnership
    Some businesses are competing with each other in the same market and targeting the same audience, but they offer different solutions to the customers’ problems. Here you collaborate and develop a partnership with them in order to expand your market share.

    For example, a retailer deals with foreign exchange current notes, and you offer luggage traveler bags to the customers. Both businesses complement each other. If bag seller and current exchange retailer make a deal to refer customers for a commission. It would be a win-win situation for both of them.

    2. GROWTH relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports.

    EQUITY DEBATE requires that the state implement policy to attain a more equitable distribution of the economy’s resources. Equity in itself means equality that is to say the government needs to bring out policies that will help the economy grow. These policies must be implemented without any failure. In doing so, there the need for the state to implement a policy that will help distribute the resources(income, goods and services, funds) attained equally to enhance development in the country.

    DIFFERENCE BETWEEN GROWTH AND EQUITY
    ECONOMIC GROWTH
    •Economic growth is an increase in the production of goods and services in an economy.
    •Increases in capital goods, labor force, technology, and human capital can all contribute to economic growth.
    •Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.

    ECONOMIC EQUITY
    •Equity in economics is defined as process to be fair in economy which can range from concept of taxation to welfare in the economy and it also means how the income and opportunity among people is evenly distributed.
    •Equity represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off.
    •We can also think of equity as a degree of residual ownership in a firm or asset after subtracting all debts associated with that asset.
    •Equity represents the shareholders’ stake in the company, identified on a company’s balance sheet.
    •The calculation of equity is a company’s total assets minus its total liabilities, and is used in several key financial ratios such as ROE.

    CAN GROWTH EXIST WITH INEQUALITY? IF YES, HOW? If NO, WHY?

    According to the utilitarian view, income inequality must exist along with economic growth in order to maximize social welfare. This is in sharp contrast to the egalitarian view according to which, all members of the society should have equal access to all economic resources in terms of economic power, wealth and contribution. Kuznets (1955) introduced the inverted U-shaped Kuznets curve that showed that in an economic system, at the initial level of low economic growth, income inequality is low and as growth occurs, income inequality increases till a threshold, after which, income inequality decreases with increased economic growth.
    Economic growth may have a negative impact on income inequality since economic growth is often positively associated with higher investments, higher employment-generating processes and higher employment, hence giving greater access to jobs and income to a larger number of people. The degree of the impact may vary between rural and urban areas because of the following reasons. A higher population density in the urban area may lead to greater job competition and hence lead to lower access to jobs than in rural areas. International immigration is usually higher in urban areas than in rural areas. The greater influx of immigrants, as well as often seen, the willingness of the immigrants to work at lower wages may lead to lower access to jobs for the locals. This should hold true for the low-skilled jobs. For the high-skilled jobs on the other hand, educational attainment of the people will play a more important role on their ability to get jobs in the urban areas than in the rural areas. However, growth may reduce income inequality in the urban areas because higher population density results in more personal contacts, better networking and access to information, and hence more opportunities to access more and better jobs. If the results show that economic growth has a negative impact on income inequality, it will be possible to comment on the causality of the inequality-growth relationship. More so, if it is seen that economic growth has a stronger impact in decreasing income inequality in the urban areas than in the rural areas, it will show that the higher wages and more diverse job opportunities in the urban areas have a greater spillover effect than in the rural areas. The policy implication such a result may have is that higher investments will have to be made in educational and vocational training in order to generate a stream of skilled labourers, which in turn will add to economic growth and thus will lead to lower income inequality and better social cohesion.

  27. Edeh Jennifer says:

    Edeh Amarachukwu Jennifer
    2018/248241
    Economics/psychology (CSS)
    Eco 361

    1. What do you understand about growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

    ANSWER
    Growth strategies refer to economic policies and institutional structures aimed at achieving higher living standards prevailing in advanced countries. They are economic measures and policies implemented by the government to achieve economic growth. Most times, economic growth strategies involve reforms and domestic knowledge. It takes a lot of structural and institutional reforms to achieve economic growth.

    THE GROWTH STRATEGIES THAT ENHANCE GROWTH AND DEVELOPMENT IN DEVELOPING COUNTRIES

    There are several growth strategies that provide a great stimulus for economic growth and development. They include:

    BALANCED GROWTH
    Balanced growth advocates the development of all sectors of the economy simultaneously. It aims at harmony, consistency, and equilibrium of sectoral growth. Balanced growth is a long-term strategy as the development of all the sectors of the economy is possible only in the long run.

    As expected, the implementation of balanced growth requires a huge amount of capital and developing countries don’t have sufficient human and capital resources for simultaneous investment in different industries. However, most developing countries receive funds and loans from international organizations to champion the activities of development. In addition, foreign direct investment and privatization also contribute significantly to the growth of distinct sectors.

    UNBALANCED GROWTH

    The strategy of unbalanced growth proposes the creation of disharmony, inconsistency, and disequilibrium in the development process of the sectors of the economy. Unbalanced growth suggests that economic policies and measures should focus investment only on leading sectors of the economy.

    Hence, the investment made in selected sectors leads to new investment opportunities. Unbalanced growth requires less amount of capital, and is a short-term strategy.

    2. What do you understand by the growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If not, why?

    ANSWER

    GROWTH VS EQUITY DEBATE

    The debate on growth vs equity is an age-old issue. Several economists have made their contributions to this debate and while many support the supremacy of growth, some other economists like Amartya Sen believe that we should not focus on just growth, but other variables that make for an equitable society. He indicated that certain variables such as inflation, governance, and corruption hinder EQUITY.

    The underlying question this debate leaves us with is this – Is growth in conflict with equity or poverty reduction? Normally, we expect that as GDP increases and we experience a high level of economic growth, more people should cross over from the poverty line and that infrastructure, as well as level of education, should increase.

    However, this is not always the case in developing countries. We continue to observe that even with increased production and GDP, the gap between the rich and the poor continues to increase. Nevertheless, the relationship between equity and growth cannot be ignored. Both variables move hand in hand to promote economic development.

    According to recent research conducted by an NBER associate – Robert Barro, growth tends to fall with greater inequality. Robert Barro studied a broad number of countries between 1960 and 1995 and he observed that income-equalizing policies would create more room for growth in developing countries.

    The KUZNET curve also studies the relationship between inequality and growth. We observe that inequality increases first and later decreases in the process of economic development. Robert Barro also revealed that advanced technologies significantly raise the level of inequality.

    In turn, we also observe that growth-inclined policies have a high impact on the level of inequality. Hence, there is a trade-off between growth and inequality. Such that, GDP growth seems to account for the widening gap between the income of the rich and the income of the poor. On the other hand, growing income inequalities also undermine the activities of growth. Increasing inequality leads to weakening incentives as well as increasing unemployment.

    Hence, by implementing broader policies that not only accommodate economic growth but also take into account factors that redistribute income and reduce the gap between the rich and the poor.

    DIFFERENCES BETWEEN GROWTH AND EQUITY

    Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

    However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.

    Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

    CAN GROWTH EXIST WITH INEQUALITY?
    Certainly, significant growth can exist with inequality. If we refer to growth as the persistent increase in the production of goods and services in a country within a period of time. Then, definitely, growth can exist with inequality. We can observe a persistent increase in GDP and still observe an increasing disparity in income.

    Since 1990, economists have begun to pay attention to the ever-increasing gap between the rich and the poor. And while inequality impacts negatively on the growth process. We can certainly say that significant growth can exist with inequality. In fact, the Kuznet curve depicts such an example where increasing growth stimulates this inequality. However, inequality is reduced in the process of economic development.

    This is why economic development is the ultimate goal of every nation. As development accounts for different variables such as living standards, security, equitable distribution of income, etc.

    In the real world, truly economic growth can be observed with inequality. For example, the activities of monopolists can significantly stimulate growth and increase inequality as well. Inflation is an interesting economic variable that affects income by reducing purchasing power. However, inflation most of the time further widens the gap between the rich and the poor.

  28. Ikechukwu ifechukwu Victor says:

    NAME: IKECHUKWU IFECHUKWU VICTOR
    REG NO: 2018/248667
    COURSE: ECO 361
    Assignment.
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Answer:
    DEFINITION:
    growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    THE FOUR GROWTH STRATEGIES
    Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
    MARKET PENETRATION
    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    MARKET DEVELOPMENT
    This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    PRODUCT DEVELOPMENT
    The objective is to launch new products or services on existing markets. Product development increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    DIVERSIFICATION
    This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    Diversification may be divided into further categories:
    HORIZONTAL DIVERSIFICATION
    This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.
    VERTICAL DIVERSIFICATION
    The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answer:
    growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

  29. Owoh Anayo Jonathan says:

    NAME: OWOH ANAYO JONATHAN
    DEPT: ECONOMICS
    REG NO: 2018/250325
    DATE: 25/10/21
    EMAIL: owohaj@gmail.com
    COURSE: ECO 361(DEVELOPMENT ECONOMICS)
    QUESTIONS:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    ANSWERS:
    (1)A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    It can also be defined as a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    As an action plan, your growth strategy should include the following components:
    *Goal: What do you want to achieve?
    *People: How is each department impacted by your goal?
    *Product: Is your product positioned to help you achieve your goal?
    *Tactics: How will you work toward your goal?
    Your growth strategy needs to be communicated across your organization, so everyone is on the same page and can share ideas on the plan. As Mailchimp saw in its 2014 all-hands meeting, teams can become uneasy if they don’t understand the company strategy.
    THEORY OF BALANCED GROWTH
    • Fredrick List was first to put forward the theory
    of balance growth. According to him, a balance
    could be established among agriculture, industries
    and trade.
    • In the year 1928, Arthur Young gave the concept
    of different industries were mutually
    interdependent, then all of them should be
    developed simultaneously.
    A strategy of growth with an equal emphasis
    on agriculture and industry. Agricultural
    development provides the food required and
    releases labour from the land to engage in
    industry. Industrial wealth stimulates markets
    for agricultural growth or such is the theory.
    Unbalanced growth denotes a strategy which
    focuses on agriculture or industry alone.
    According to Lewis
    “Balance growth means that all sectors of
    economy should grow simultaneously so as to
    keep a proper balance between industry and
    agriculture and between production for home
    consumption and production for exports. The
    truth is that all sectors should be expanded
    simultaneously.”
    Basis of Theory of Balanced Growth
    1. Supply Side
    Low Income Low Saving Low investment Low
    productivity Low Income
    2. Demand Side:
    Low Income Low Purchasing capacity Low investment Low productivity
    Different Views Regarding
    Balanced Growth
    1. Explanation of Rodan’s Theory of Balanced
    Growth.
    According to an article ‘Notes on Big Push’(1957)
    by Rodan, indivisibilities of supply side are
    concerned with social overhead capital.
    Indivisibilities of demand side means restricting
    the desirability and profitability of economic
    activities due to the narrow extent of the market.
    Rodan has referred to three kinds of indivisibilities:
    (i) Indivisibility in the production function or in the supply of social overhead costs
    (ii) Indivisibility of Demand
    (iii) Indivisibility of Supply of savings
    2. Explanation of Nurkse’s Theory of
    Balance Growth
    According to Prof. Nurkse in the
    development of underdeveloped countries
    the greatest obstacle is Vicious Circle of
    Poverty. The Vicious Circle shows that
    income is low in underdeveloped countries.
    Because of low income, saving is low. There
    for investment and output is low. Low
    output means low income.
    (i) Complementarity of Demand
    (ii) Intervention by the Government
    (iii) External Economies
    (iv) Accelerated Rate of Growth
    3. Explanation of Lewis’s Theory
    of Balanced Growth
    Lewis has given the following two arguments
    in favour of balanced growth:
    (i) In the absence of balanced growth, price
    in one sector may be more than the
    prices in others.
    (ii) When the economy grows then several
    bottlenecks appear in different sectors.
    Balance among Different Sectors
     Balance between Agriculture and
    Industries
     Balance between Human and Physical
    Capital
     Balance between Domestic Trade and
    Foreign Trade
     Role of Government in the Balance
    Growth
    Advantage of Theory of Balanced
    Growth
    Large size of Market
    External Economies
    Horizontal Economies
    Vertical Economies
    Better Division of Labour
    Better Use of Capital
    Rapid Rate of Development
    Encouragement of Private Enterprises
    Breaking of Vicious Circle of Poverty
    Encouragement of International
    Specialization
    Development of Social Overhead Costs
    Criticism of Theory of
    Balanced Growth
    This theory Criticized by Fleming, Singer,
    Hirschman and Kurihara.
    • Unrealistic or Ignores Scarcity of Resources
    • Ignores the Need of Planning
    • External Diseconomies
    • Development from Scratch
    • Not a Theory of Development
    • Same Policy for Developed and Underdeveloped
    countries
    • Not supported by History
    • Scarcity of Factors of Production
    • Inflation
    • Contrary to the Theory of Comparative Costs
    Theory of Unbalanced Growth
    Hirschman, Rostow, Fleming, Singer have
    propounded the concept of unbalanced
    growth as a strategy of development for
    the underdeveloped nations. The theory
    stresses the need for investment in
    strategic sectors of the economy, rather
    than in the all sectors simultaneously.
    Unbalanced growth is a situation in which
    the various sectors of a given economy
    are not growing at a rate similar to one
    another
    Specific sectors of the economy will
    be growing at a rapid rate, while
    other sectors are either stagnant or
    experiencing a significantly reduced
    rate of growth. When economic
    growth patterns such as unbalanced
    growth appear, the phenomenon
    usually indicates that major shifts in
    the overall economy are about to
    take place.
    Explanation of the Theory of Unbalanced Growth
    Prof.Hirschman states in his book,”Strategies of
    Economic Development”, that creating imbalances in
    the system is the best strategy of growth.
    Accordingly , strategic sectors of the economy should
    get priority in matters of investment:
    • External Economies
    • Compementries
    • Social Overhead Capital or (SOC)
    • Direct productive Activities or (DPA)
    • Unbalancing the Economy through (SOC)
    • Unbalancing the Economy with direct productive Activities(DPA)
    Path of Development
    • Development via excess capacity of SOC
    • Development via shortages of SOC
    Feature of the Theory of Unbalanced
    Growth
    Investment should first be made in
    the key sectors of the economy.
    Based on the principle of
    inducement & pressures.
    Big Push
    Real life observations
    Significance of the Public sector with
    regard to SOC activities
    Merits of the Theory of Unbalanced
    Growth
    Realistic Theory
    More Importance to Basic Industies
    Economies of Large Scale Production
    Encouragemence to New Inventions
    Self-Reliance
    Economic Surplus
    Criticism of the Theory of
    Unbalanced Growth
    According to Paul Streeten
    • Inflation
    • Wastage of Resources
    • No Mention of Obstacles
    • Increase in Uncertainty
    • Unbalance is not Necessary
    • Neglect of Degree of Unbalance
    • Lack of basic Facilities
    • Disadvantages of Localisation
    Other growth strategies are:
    (i) Market Penetration: This is an excellent strategy to use when a
    business wants to market its existing products in the same market where it
    already has a presence. The goal is to increase its market share in a
    predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businessesin the same market. Market penetration involves going deeper in an existing
    vertical rather than introducing new market channels.
    (ii). Market Development: Development refers to expanding the sales of existing
    products in new markets. Competition in the current market may be so tight
    there is no room for growth without spending exorbitant amounts on advertising.
    It may be much more efficient to develop new markets to increase profitability.
    The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
    (III). Product Expansion: If technology changes and advancements begin to reduceexisting sales, the company may expand its product line by creating new products or adding additional features to their existing products. The
    business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
    (iv) Diversification: The goal is to sell novel products to new markets.
    Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.

    (2) One of the important objective of planning is to get stable growth and equity in the economy. Growth refers to an increase in the level of national income over a period of time and equity refers to equitable distribution of national income.
    For every nation it is important to have growth together with equity. If there is only growth (without equity) in the economy, then it means everyone is enjoying the benefit of growth. In this regard, planners have to ensure that the prosperity of economic growth should reach all the people. Every individual should be able to fulfil his or her own basic need of food, house, education and healthcare. So, the government should ensure appropriate allocation of wealth among the people to reduce economic inequality in the economy.Therefore ‘growth with equity’ is a more rational and desireable objective of planning for a nation.
    With the above, we can see that growth can exist with inequality and also with equity but the latter is more desirable.

  30. Amaka says:

    Agu Chiamaka Chisom
    Reg no: 2018/245463
    Combined social sciences (Eco/pol)
    Eco 361(Development Economics 1)

    By growth strategies it refers to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advance countries.

    Growth strategies  an also be measures or policies adopted by the government of a particular country to move the country forward which leads to economic growth and development.

    Different Growth strategies;
    *Internal Growth Strategies- this is a growth strategy of an organisation through expanding operations throughout diversificaton , increase of already existing capacity.

    * External Growth strategy:
    This comes in form of mergers, takeovers , strategic alliances of a firm towards its rivals or competitors.

    * Diversificaton Growth Strategy

    *Intensive Growth Strategy such as
    Market penetration strategy
    Product development strategy
    Market development strategy
    These strategies can also be regarded as the Organic Growth Strategies.

    The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    It can also be strategies

    Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

    They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.

    Balance growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.

    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.

    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

    *Different strategies in the economy that will support and enhance the growth and development of a developing country like Nigeria.
    Ans: we operate an unbalanced growth strategy in Nigeria which has lead to  much dependency on our  Crude oil, here the problem is not about depending on Crude oil, we don’t refine these oil, rather we extract them in raw form and export to other foreign countries which they tell us how much they are willing to buy our Crude oil and after purchasing these oil, they go and refine it , bring them back to us  and tell us the price in which they will sell.

    And this dependency has lead to neglects of other sectors in the economy such as Agricultural sector, techological sector security sector etc

    Looking at other developed countries they operate a balanced growth strategy I.e Diversificaton

    I will suggest that balanced growth Strategies should be adopted in a country like Nigeria, hereby giving each sectors of the economy a chance to strife which  will inturn lead to economy growth and development.

    2.What do you understand my growth and equity debate in the development economic

    B. What’s the differences between Growth and Equity the economy?
    Growth in an economy is an increase in the production of economic goods and services in an economy

    It’s also the increase in capital goods, labourer force,technology, and human capital can all contribute to economic growth.

    Economic growth is also an increase in technological Improvement

    It’s also increase in human capital. This means laborers become more skilled at their crafts, raising their productivity.

    While Equity in Economics is a concept or idea of fairness in economics, particularly in regards to taxation or welfare economics.

    Equity in Economics means the fairness of the allocation of resources or goods to a group of people.

    C. Can growth exist with inequality? If yes, how? If no, why?

    Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP.

    And secondly not everyone in the developed country are wealthy or equal in terms of per capital income but yet, there’s economic growth and development in those countries

  31. MBA COLLINS CHIDUMEBI says:

    NAME: MBA COLLINS CHIDUMEBI
    REG NO: 2018/242336
    DEPARTMENT: ECONOMICS
    ECO. 361: DEVELOPMENT ECONOMICS I
    What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.
    Growth strategies are simply a plan of actions that a developing economy may adopt In order to achieve sustainable growth that will lead economic development. A growth strategy is a plan made by an economy to overcome challenges to realize its aims for economic development. In adopting a growth strategy, an economy seeks to increase its output of goods and services, increase national income, reduce poverty and unemployment and raise the living standard and welfare of the majority of the individuals in the society.
    There are two main growth strategies that an economy may adopt: balanced and unbalanced growth strategies.
    BALANCED GROWTH STRATEGY
    This growth strategy seeks to develop all the sectors of the economy simultaneously. This will enlarge the market size, increase productivity and provide an incentive for the private sector to invest. Frederick List was the first to put forward the notion of balanced growth strategy. He advocated for balanced growth between the agricultural, industrial and trade sectors of the economy with equivalent emphasis on industrial and agricultural sectors. The inter-sectoral dependence between industrial and agricultural sectors is pertinent so that each sector provides market for the sales of the other sector products and supply required raw materials for the growth of the other. According to List, if it is not feasible to grow the two sectors at the same rate, then strategy of balance between domestic and foreign trade should be adopted. If for instance, the industrial sector is not developing at the required level, then agricultural produce should be exported and industrial products be imported and vice versa.
    UNBALANCED GROWTH STRATEGY

    This strategy is aimed at improving or advancing the key sectors in the economy. The proponents of this growth strategy believe that investing in key sectors of the economy will boost economic development through a snowball effect. According to them is it not always feasible to grow all the sectors of the economy in tandem, instead by placing emphasis on developing strategic sectors it will create a dynamic pressure on other sectors of the economy to grow. For instance, if there is growth in the agricultural sector it will create a complementary investment in the transportation sector. Likewise growth in one sector can trigger a multiplier effect and this can induce investment in related industries. For example, growth in the manufacturing sector can lead to increase in demand for raw materials for production; this increased demand can induce investment in agricultural sector so as to meet the demands of the manufacturing sector.
    What do you understand by growth and equity debate in development economics? What are the differences between growth and equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Growth and equity debate in development economics deals with the possibility of trade-off between growth and equity. Some scholars have suggested that growth is responsible for the widening income disparity in developing countries, while others debunked these claims by stating that growth and equity works hand in hand. This sparked up a debate which raged on for years. This debate is based on these two weighty questions: Does growth elicit equity? Can growth exist with inequality?
    This debate culminated in the conclusion that, there is no inevitable conflict or trade-off between growth and equity, provided that economic policies promote areas of complementarities between growth and equity.
    Growth implies increase in national income, while equity is the fair distribution of this income among the citizens.
    Growth is geared towards increase in an economy`s output, while equity is targeted towards improving the living standards of the people.
    Growth is a necessary but insufficient condition for equity, while equity is both a necessary and sufficient condition to improve the life quality and welfare of the individuals that constitutes the economy.
    No, economic growth cannot exist with inequality. This is because policies enacted by the government to ensure equitable distribution of resources in the economy especially policies to improve healthcare, education, nutrition etc, are important instruments for achieving even higher growth.
    Policies that promote equity can help to implicitly or explicitly reduce poverty. When incomes are more evenly distributed, it has the effect putting a greater number of the individuals in the society above the poverty line. So, equity enhancing policies can in the long run lead to economic growth and development.

  32. Onuh Onyinye says:

    Name :Onuh Onyinye
    Department :Economics department
    Reg number : 2018 /241872
    Email :onuhonyinye7@gmail.com

    Question 1

    In our understanding, a development strategy is an economic conception that defines the priority
    goals, coherently explains how set goals can be reached, identifies the policy tools and explores trade offs and the time frame. It is a kind of vision with normative goals, balanced against what is feasible.
    Such a strategy does not necessarily have to be explicit; rather, it can be implicit in the mind-set of
    policymakers or a tacit agenda of governments. Moreover, it does not need to be comprehensive, but it
    must address key issues for the medium to long term. If such a vision does not exist, it is likely that the
    policymakers in charge, including external advisers, will simply follow the historic track, with a focus
    on short-term issues barely related to long-term goals. Pragmatism without a compass might prevail
    with rather low ambitions.
    Generally there are 2 classifications of growth strategies and they are Internal Growth Strategy and External Growth Strategy. Internal growth strategies are those in which a firm plans to grow on its own, without the support of others and some growth strategies under this classification includes Market Penetration, Market and Product Development, Market Expansion, Diversification while external growth strategies are those in which a firm plans to grow by combining with others and they include Joint ventures and Mergers.

    Growth strategies commonly utilized by most businesses are balanced, unbalanced growth strategies, market penetration, market development, product expansion, acquisition and diversification.
    Balanced growth
    this is a growth strategy where all the sectors of the economy are carried along, there are equal growth, no sector is neglected, but this strategy can slow economic growth since some of the sectors that are lagging behind are being financed by the resources generated by the sectors that are doing well.
    Unbalanced growth
    This is a type of growth strategy where some of the economic sector are concentrated on, not all the sectors are carried a lot, there are no equal growth. The sectors that are doing well are invested more on and then neglect the ones that has slow growth.

    Question 2
    Growth refers to an increase in the level of national income over a period of time and equity refers to equitable distribution of the national income.

    For every nation, it is very important to have growth along with equity. If there is only growth (without equity) in the economy, then it means that everyone is not enjoying the benefit of growth. In this regard, planners have to ensure that the prosperity of economic growth should reach all the people. Every individual should be able to fulfil his/her basic needs of food, house, education and healthcare.

    High and rising levels of inequality will doubtless resound in the politicking leading up to the presidential election. In fact, likely Republican contenders focused on it in their responses to the president’s address. “Income inequality has worsened under this administration. And tonight, President Obama offers more of the same policies—policies that have allowed the poor to get poorer and the rich to get richer,” Sen. Rand Paul declared. Jeb Bush had the same reaction: “While the last eight years have been pretty good ones for top earners, they’ve been a lost decade for the rest of America.” And Sen. Ted Cruz said, “We’re facing right now a divided America when it comes to the economy.”

    Concerns about inequality and efforts to reverse or at least mitigate its rise derive partly from its causes—whether they’re deemed legitimate, attributed to differences in productivity and “value-added,” or illegitimate, attributed instead to discrimination, favoritism, unfairness, or some other corruption—and partly from its effect on social stability. The two are intimately linked. To the extent inequality is seen as legitimate, its adverse effects on social harmony are minimized: People generally focus on enhancing their own living standards rather than comparing themselves with the “super-rich” 1 percent or “rich” 5 percent.
    There are two sides to the issue of the relationship between inequality and development. One side focuses on the distribution of the benefits of development and the capacity of development to effectively reduce poverty. The other side focuses on how the distribution of economic resources may affect the pace and structure of development.

    The first side of the issue, namely who benefits from development, centers around Simon Kuznets’ famous hypothesis, according to which income inequality tends to increase in the first stage of development, and then decreases beyond some threshold. This hypothesis motivated many studies in the 1970s and the 1980s. On the one hand, it provided an explanation for the mechanisms that determine the distributional consequences of economic growth. On the other hand, it allowed us to test whether the hypothesis of an inverted-U, or Kuznets curve between inequality and average income per capita could be justified empirically. As it turns out, there seems to be no empirical evidence of a systematic relationship between the level of development (e.g., as measured by GDP per capita) and income inequality (e.g., as measured by the Gini coefficient). The recent increase in inequality in developed countries may support this conclusion, as well as demonstrate the complexity of the multiple mechanisms and policies that determine the evolution of inequality.

  33. Ugwu Emmanuel Chibuike says:

    Ugwu Emmanuel chibuike
    2019/248403
    Education economics
    ANSWERS
    No1
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. It is also a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    DIFFERENT GROWTH STRATEGIES IN THE ECONOMY.

    The balance theory of growth
    The theory of balanced growth states that there should be simultaneous and harmonious development of different sectors of the economy so that the sectors grow in unison. To get the unified growth, the development of the demand and s upply side of the economy has to be balanced. The demand side has to do with the provision for large employment opportunities and in creasing incomes so that there will be increase in the demand for goods and services in the economy, while the supply side emphasises on the si multaneous development of all the interrelated sectors which h elp in increasing the supply of goods. In sum, when there is increased de mand backed by increase in supply of goods and services, and all g oods and services are sold off at the end of the day, then we can say the re is balanced growth in such an economy. The doctrine of Balance growth as formulated by Ros enstein–Rodan and Nurske is explained below.
    According to Rosenstein –Rodan, for an economy to grow, the whole of the industry to be created in eastern and south-eas tern Europe should be treated and planned like one huge firm or trust. He pointed out that Often Social Marginal Product (SMP) of an investme nt is different from its Private Marginal Product (PMP) and that wh en a group of industries is planned together in accordance with t heir SMPs; the rate of growth of the economy is greater than it would have been otherwise”. This is so because an individual entrepreneur would likely be interested only in the Private Marginal Product of his investm ent and is likely not going to have an accurate assessment of its SMP. In explaining his idea, Rodan gave an example of a shoe factory, which empl oys a particular amount of workers in the region it is established.
    Criticism of balance growth theory
    The balanced growth theory has been criticised by lots of economists especially the unbalanced growth theorists like Alb ert O. Hirschman and Hans W. Singer. Some of the criticisms they raised are given below.
    1) Shortage of resources : The theory does not address the
    problems of shortage of resources because it is bas ed on Say’s Law which has it that supply creates its own demand . This is a wrong notion because supply of goods refers to the demand for factors especially capital which does not create it s own supply. With simultaneous investment carried out in differe nt new industries, there is bound to be competition in the demand for factors.
    2) Rise in costs: A simultaneous establishment of industries in an economy will likely raisemoney and real costs of p roduction which will in the long-run make those investments e conomically unprofitable in an environment characterised by ina dequate and insufficient capital equipment, skills, cheap sourc e of power, infrastructure and other necessary resources that w ould aid growth.
    3) Reduction in costs : According to Kindleberger, Nurkse theory should have addressed the issue of reducing the cos ts of existing industries rather than starting new ones.
    4) Beyond the capabilities of developing countries : In Hirschman’s view, the developing countries are so c alled because they face a lack of resources (human and capital), so therefore it is unrealistic for the balanced growth theory to be advocating for a large investment in many industries in a developi ng country
    5) Not a growth theory : Again according to Hirschman, the balance growth theory is not a growth theory becaus e economic growth is supposed to be a gradual transformation o f an economy from one stage to the next. That is to say, an econ omy is supposed to grow from infancy to maturity. But the doctrine of balanced growth involves the superimposition of a b rand new self sufficient modern industrial economy upon the stagn ant and equally self sufficient traditional economy.
    The unbalance growth theory
    Professor Hirschman. Other economists belonging to this school of thought are Rostow, Flemming and Singer. The princi ple behind this theory is that for growth to take place in an econo my there is a need for investment to be carried out in strategic sectors o f the economy rather than for all the sectors to be simultaneously. invested on. The unbalanced growth economists stres sed the need for an unbalanced approach to development rather than a ba lanced approach like Nurkse and Rosenstein. Hirschman argued that creating imbalances in the sy stem is the best strategy for growth. Stating further, he explained that owing to the lack of availability of resources in the less developed countries, the little that is available must be efficiently used. If investmen t is carried out in the key sectors of the economy, the other sectors would automatically develop through what is known as “Linkage effect”. By promoting growth through the investment in a lea ding sector, the other sectors grow through
    (1) Externalities effect and
    (2) Complimentary effect which may bring about economie s of scale.
    Hirschman classified investment into Social overhea d capital (SOC) and Direct productive activities (DPA). SOC are investm ents on social infrastructure usually done by the government and e xample are capital on schools, hospitals, roads etc, while DPA are inv estments done by the private entrepreneur which adds to the flow of fina l goods and services, and example is the investment in an industry. The investment on SOC creates more economies and is thus called divergent series of investment. As for the DPA, they are called converg ent services because they appropriate more economies than they have crea ted. The strategy of unbalance growth suggests that since the underdeveloped countries can not pursuea simultaneous investment in both SOC and DPA due to a general lack of resources so therefore they should according to Hirschman (a) unbalance the economy for overall gro wth through SOC, as this would stimulate investment in DPA e.g. with constant electricity and good roads, there would be growth of small scal e industries and (b) unbalance the economy for growth with DPA as this w ould press for investment.
    Criticisms of unbalance growth
    No mention of obstacles – According to Paul Streeten, the theory mentions the establishing of leading sectors. It ho wever fails to mention the possible difficulties in establishing t hese leading sectors. In reality, it is not easy to establish le ading industries right at the beginning of a development programme.
    Neglect of the degree of imbalance – How much to imbalance and where to imbalance are not known by the theory of unbalanced growth. It only tells of the need to imb alance.
    3. Lack of basic facilities – ‘Unbalanced Growth Theory’ assumes the availability of certain basic facilities in ter ms of necessary raw materials, technical knowhow and developed meansof transport. However in less developed countries these are insufficient.
    4. Linkages effects are not based on empirical dat a- Prof. Hirschman advocated to start only those industries that have maximum linkages effect. But these effects are not based on statistical data pertaining to the less developed c ountries.
    5. Unbalance is not necessary – Critics are of the opinion thatdeliberately introducing imbalances in the system i s not so much needed in the less develop countries. These imbalances are caused on their own due technical indivisibility and uncertain behaviour of demasnd and supply forces.
    THE HARROD DOMAR MODELS
    The Harrod- Domar models attempt to analyse the requirement of a steady growth in the advanced economies. They are interested in discovering the rate of income growth necessary for a smooth working of an economy and as such, believed that investment plays a key role in the process of economic growth. Investment accordin g to the models is divided into two, based on its ability to:

    (a) create income, which is the demand effect of nvestment and
    (b) augmenting the productive capacity of the economy by increasing capital stock, this is the supply effect of investm ent. Expansion of net investment would result in increase in real inc ome and output in the economy and if this expansion is stopped, in come and employment will fall, thereby moving the economy off the equilibrium path of steady growth. For net investmnt to grow however, the real income is required to also grow c ontinuously at a rate sufficient enough to ensure capacity use of growing stock of capital. The real income growth rate required he re is called the full capacity growth rate or the warranted rate of growth.
    Assumptions of the domar model
    1. There is an initial full employment equilibrium level of income.
    2.There is an absence of government interference and the models operate in a closed economy which has no foreign trade
    3.The average propensity to save is equal to the marinal propensity to save and marginal propensity to save remains constant for the period
    4.There are no changes in interest rates
    5.There is a fixed proportion of capital and labour i n the productive process
    6.The general price level is constant i.e. nominal an d real incomes are the same
    7.There is no separation between fixed and circulating capital. They are both lumped together under capital
    No2
    Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).
    However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.
    Growth vs Equity debate in development economics can be defined as the arguments on economic growth and income distribution.
    Growth cannot exist with inequality as there is growing evidence that inequality is bad for growth in the long run. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth,it is that inequality is harmful for economic growth. That is, ceteris paribus, the more equal is the income or wealth distribution, the better are a country’s prospects for economic development.

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

    1. A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    “growth strategies” I refer to economic policies
    and institutional arrangements aimed at achieving economic convergence with the living
    standards prevailing in advanced countries.
    There are various growth strategies :
    MARKET PENETRATION
    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.

    MARKET DEVELOPMENT
    This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets

    PRODUCT DEVELOPMENT
    The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    DIVERSIFICATION
    This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.

    2)growth refer to a positive change in size and/ or maturation,often over a period of time. Growth can occur as a stage of maturation or a process toward fullness or fulfillment.
    Equity means fairness or evenness, and achieving it is considered to be an economic objective.
    The conclusion is that there is no inevitable difference between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.
    No growth and inequality can’t exit
    Specifically, rising inequality transfers income from low-saving households in the bottom and middle of the income distribution to higher-saving households at the top. All else equal, this redistribution away from low- to high-saving households reduces consumption spending, which drags on demand growth.

  35. Okafor Ifunanya Chioma says:

    Name: Okafor Ifunanya Chioma
    Reg number: 2018/241851
    Department: Economics
    Eco 361 Assignment.
    Email:ifunanya.okafor.241851@unn.edu.ng
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Growth strategies are those methods, procedures or processes to enable the facilitation of growth or expand the country or economy including businesses. In other words, for the economy growth strategies are set of actions and plans put in place in order to accelerate increase in output and income. For a business, there are actions that helps you achieve a higher level of market share.
    B. Balanced growth strategy: Is the growth in which all the sectors of the economy grow simultaneously, resource allocation done at the same time leading to no shortage or surplus. But this theory has some criticism which include: lack of funds for the developing country to embark on such massive strategy of funding all the sectors of the economy at the same time.
    And it might not be feasible for all the sectors to develop at the second time.
    Bii Unbalanced growth strategy is the reverse of the balanced growth strategy. This involves the growth or investment in strategic sectors of the economy and not in all sectors simultaneously. In this case various sectors of the economy are not moving or growing at the same pace or speed. It implies that growth in some specified sectors will cause induced investment in related industries. But this might lead to neglect of some sectors in the economy.
    Biii Export-led growth strategy: This strategy has to do with the expansion or increase in output through international trade. This strategy has to do with self sufficiency.
    Biv Market Penetration:This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence.
    Bv Product Expansion: If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    A. Growth is the increase in the production of goods and services in a year. It is measured with GDP,GNI etc. Thus increases the nation’s wealth. While Equity is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics and it also means how the income and opportunity among people is evenly distributed.
    B. Growth has to do with increase in income and production in an economy. There might be an increase in income for the rich for instance or increase in output, but leaving the poor out and the gap between them increases.Rising GDP is good; falling GDP is bad. But as a measure of economic activity, GDP is what it says it is: a gross number. It doesn’t measure how money and wealth circulates through a system, what use it is put to, how the rewards of its use are distributed. It just counts how much comes out of the spigot at the end of the pipe. This completely avoids taking into account what may be the most important indicator of economic health: equality.A high GDP might be out of increase in population which leads to an increase in output. It doesn’t tell us the equity ie fairness among the people themselves. Equity tends to be development in some cases. In which there’s equity in everything that includes income, tax and welfare. Equity would mean that resources are allocated based on individual needs. Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.
    C. They can be growth with inequality. In particular, the earnings of high-skilled labor relative to low-skilled labor have increased.Inequality was regarded as a separate issue, which could be addressed at the margin through making net taxes more or less progressive. Rich people would contribute a higher share of their total incomes to the public finances than would the middle class. Although in the long run it can reduce the growth rate but inequality cannot happen with development.

  36. ASOGWA OBIORA says:

    NAME: ASOGWA OBIORA
    REG NUMBER: 2018/242288
    DEPARTMENT: ECONOMICS
    COURSE TITLE: DEVELOPMENT ECONOMICS 1
    COURSE CODE: ECO 361

    Assignment
    No 1) Growth vs equity debate.
    In the last month or so, there has been a fascinating debate on the
    internet (largely among non-resident Indian economists and some India
    watchers) about the age-old issue of growth vs equity. The inspiration
    seems to be a media statement by Prof Amartya Sen that in India we
    should end our “obsession with growth”. Expectedly, the riposte comes
    from the ‘Prof Jagdish Bhagwati group’ (for want of a better term)
    stressing the importance of high growth.
    There is some truth in Prof Sen’s statement about “obsession with growth
    ” as, for some reason, the ruling party managers trumpet the high
    growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation,
    corruption, governance, etc.
    Yet, the interesting feature of the debate (which at the current level could
    continue for the next 50 years without
    any conclusion) is that none of the
    protagonists in this debate seem to have moved on to micro issues.
    Specifically, what are the sectoral implications of the debate and how
    does this impact on the future pace of economic reforms in India?
    First, are growth and poverty in conflict? This seems absurd. It is difficult
    to argue that high growth of GDP (except in an exploitative nondemocratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a
    15% growth rate of GDP, ceteris paribus, will not automatically reduce
    poverty more than a 10% rate. After all, it is clear that with a 15% growth,
    government measures to redistribute income (say, via higher tax
    incomes) will meet with less political resistance. One has to be a
    communist to argue that a high growth rate does not matter.
    What about growth and income distribution? Here the arguments are not
    so clear-cut. It is almost certain that a 15% growth rate will probably be
    accompanied by greater inequality of incomes than a 5% rate. This is
    simply because capabilities (except by in a rare utopian world) are
    unequally distributed and this is not only because of unequal educational
    opportunities. Any growing economy will find some sectors grow faster
    than others and hence, the incomes of those best suited to production in
    the faster growing sectors will grow proportionately more than in the
    other sectors. This is also independent of the political system so that
    even communist China has seen income inequalities (measured by the
    Gini coefficient or whatever) increase over the last decade or so.
    So, what is the Indian problem? This lies in the fact that high growth rates
    do not seem to be impacting the agricultural sector. So, understanding
    why this is so is crucial to understanding why so many worthy
    economists are still debating the issue of growth vs equity. The issue of
    economic reforms in agriculture has both political and economic
    dimensions. It is interesting to note that industrial reforms find little
    resistance today. Since 1991, industry has gone through delicensing and
    greater exposure to foreign competition which even the Left does not
    want to reverse. Yet, any attempt at reform in agriculture is met with
    fierce opposition. This is mainly because legislators can blame the Centre
    for trade and industrial reforms. On the other hand, agriculture being a
    state subject, reforms in agriculture are a political hot potato. So
    deferring agricultural reforms is the safest political strategy. Economics
    may demand this, but who will bell the cat?
    Look at some statistics on the agricultural sector. For one, the
    productivity in the major crop, cereals, has remained around 1,600-1,800
    kg per hectare since about 1995 or so. Second, the average size o
    operational holdings in agriculture is around 1.3 ha. Barring states like
    Punjab and Rajasthan, the average size over the country lies between 0.5
    and 2 ha. If one excludes the large landholdings, the average size would
    fall to around one ha. Hardly the kind of holdings on which major
    productivity changes can be built using better inputs and technology. At
    the same time, opening up of inter-state trade in foodgrains is still stuck
    in bureaucratise which is paradoxical, given that both retail and wholesale
    trade are largely in private hands. Similarly, many attempts to reform the
    state agricultural produce marketing committees (APMCs) to end the
    state monopoly in procurement have still not succeeded fully. What this
    failure does is to strengthen the monopoly of large traders in wholesale
    trade.
    It is well known that the farming today is the least profitable occupation,
    particularly for small farmers. But in the absence of employment
    opportunities outside agriculture, the low productivity low per capita
    income trap will continue. With 50% of population still viewing agriculture
    as the principal source of income, these debates on growth vs equity
    don’t take us anywhere

    2) The following are types of growth strategies.

    You know you need a growth strategy, so…
    what should it be? There are four classic
    types of growth strategies, and companies
    may use one or more of the following.
    1. Product development strategy—
    growing your market share by
    developing new products to serve that
    market. These new products should
    either solve a new problem or add to
    the existing problem your product
    solves.
    2. Market development strategy—
    growing your market share by
    developing new customer segments,
    expanding your user base, or
    expanding your current users’ usage of
    your product. This strategy is salesfocused.
    3. Market penetration strategy—growing
    your market share by bundling
    products, lowering prices, and
    advertising — basically everything you
    can do through marketing after your
    product is created. This strategy is
    often confused with market
    development strategy, but the
    approaches are distinct in emphasizing
    either sales or marketing.
    4. Diversification strategy—growing yourmarket share by entering entirely new
    markets. Rather than expanding within
    your existing market, you’re launching
    into the unknown with new products or
    services in a new market. This strategy
    is often the riskiest but can have huge
    rewards if successful.

  37. Okonkwo chinaza favour says:

    NAME: OKONKWO CHINAZA FAVOUR
    REG NO: 2018/242315
    DEPT: ECONOMICS
    GROWTH STRATEGIES: a growth strategies can be refers to as a clearly defined and well planned policies, arrangements geared towards achieving positive economic Change.

    BALANCED GROWTH STRATEGY
    The balanced growth strategy is a long term strategy which focused on the development of all sectors of the economy simultaneously. This strategy requires both huge human and physical resources ( capital) since all the sector are being developed at a time. It aims at diversification of all the sector of the economy with harmonized system and equilibrium which will increase productivity, generate employment, increase Investment and through improving economic activities foster economic growth.
    UNBALANCED GROWTH STRATEGY
    Unbalanced growth postulates that investment (capital,human and resources investment) should be made only in important and progressive sectors of the economy. This strategy assumes that investment in these progressive sectors will positively impact on other backward sectors of the economy i.e instead of investing in all the sectors, resources should be saved by investing in the leading sector and that growth will diffuse to other backward sectors. Unbalanced growth requires lesser amount of resources, since investment is only in leading sectors.

    LINEAR GROWTH STRATEGY
    Rostow is an advocate of free market capitalism. He argued that economies must go through a number or series of developmental processes and stages which tends towards greater economic growth. To him, the stages must follow a sequential order that is one stage must be completed before another.
    From the old society that is characterized by agriculture to the stage of development of education,science and technology then follows the period where is an organized and well defined way of producing and doing things in the organization setting follows by the stage of economic diversification and growth , lastly is the phase of mass consumption. This theory shows the importance of capital formation as the driver of the economy from the old traditional stage to an advanced stage.
    DEPENDENCY THEORY STRATEGY
    Dependency theory postulates that developed nations exploit developing countries under the disguise of globalization and spread of Market capitalism. This includes the exploitation of cheap labour in return to outdated technology.The main arguement of dependency theorists is that there is a world capitalist system that relies on a division of labour between the Developed‘core’ countries and poor ‘peripheral’ countries. As time goes on, the Developed countries will exploit their dominance over an increasingly marginalised Developing nations.
    It suggest an internal approach to development and an increased important role for the government in terms of protection of infant industries, making inward investment, creating an enabling socioeconomic environment for foreign and private investors and promoting nationalisation of key industries.
    use in this business.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes how and if no why
    ANSWER
    Growth is a sustain increase in the production of goods and services from one period of time to another. Economic growth is measured in terms of gross national product or gross domestic product (GDP).It is necessary but sufficient to achieve economic development and does not also account for depletion of natural resources.
    Equity means fairness in how income and resources are distributed in the economy. it is one of the macro economics objective
    There is a negative relationship between the level of inequality and economic growth.inequality is the opposite side of equity. Studies have shown that inequality benefits economic growth once it is able to create an incentive to work and invest more.
    One of the main arguments against inequality amist economic growth is that greater inequality can decrease the opportunities available to the disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential and also a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants.
    2b) Growth can exist with inequality. As growth is the increase in production of goods and services and equity ; the fairness in resources distribution. There can be growth in economic output without an equitable distribution of resources. Using workers as an example ; workers within the same organization are being paid differently, some high and some low not minding the increase in productivity .

  38. Name: Chris-Nwaije Ihuoma Nancy Reg no: 2018/241847 says:

    1. The theories of balanced and unbalanced growth are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
    But Ashok Mathur argues that, “balanced and unbalanced growth need not be mutually conflicting and an optimum strategy of development should combine some elements of balance as well as unbalance.”

    2
    In developed countries, the levels of production and consumption are already environmentally unsustainable. Further growth in these countries can only come at enormous cost to the environment. A solution to major economic problems in these countries, such as poverty and unemployment, has to be found in the redistribution of income and wealth in favour of the poorer sections.

    At the same time, the condition of most developing countries is far different from developed countries. Most people in these countries lack even the basic necessities of life and they face chronic hunger and grave deprivation. For achieving improvement in their lives, economic growth is necessary. The enormity of the problems these people face is such that even though more equitable sharing of currently-produced output levels will improve their living conditions somewhat, it may not take them very far.

    The connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies. The enormity of rewards garnered by the innovators and their close associates creates a strong tilt toward increased inequality of income and wealth.

    Economists refer to an economy’s maximum output level as defining its “production-possibility frontier.” Expanding the frontier depends on one or more “game-changing” innovations. In the recent past, these have mainly been in information technology. In the future they may emerge from other technologies: biogenetic and stem-cell technology, nanotechnology, robotics, or something else. The effect on growth will likely be large, as will the ensuing disproportionate rewards for the innovators and their close associates—leading to greater inequality.

    The link between growth and inequality is also reflected in an accompanying change in the shares of national income represented by wages and profits. Wage income redounds principally to middle-income recipients (notwithstanding the skewing effect of CEO vs. worker), while profits accrue to the owners of capital assets—notably the super-rich who are already upper-income. Although notably high-income recipients are included in the wage category, profit income is more concentrated among higher-income recipients than is wage income. Hence changes in which the profit share rises and the wage share falls signify increased inequality.

    What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.

    There is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity

    An “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity is advised.
    Growth has been and increasingly is causally associated with less equality, greater equality with slower growth. The ineluctable connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies.

    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

    A certain degree of income and wealth inequality is a characteristic of market economies, which are based on trust, property rights, enterprise and the rule of law. The notion that one can enjoy the benefits from one’s own efforts has always been a powerful incentive to invest in human capital, new ideas and new products, as well as to undertake risky commercial ventures. But beyond a certain point, and not least during an economic crisis, growing income inequalities can undermine the foundations of market economies. They can eventually lead to inequalities of opportunity. This smothers social mobility, and weakens incentives to invest in knowledge. The result is a misallocation of skills, and even waste through more unemployment, ultimately undermining efficiency and growth potential.

  39. Uzor Ngozi Nnenna says:

    NAME: Uzor Ngozi Nnenna
    REG. NO.: 2018/251387
    DEPARTMENT: Economics
    COURSE: ECO 361(Development Economics)
    ASSIGNMENT:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    ANSWER
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Answer:
    1. What ARE GROWTH STRATEGIES?
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Development Strategies assists in the creation of economic development strategies that focus, first, on business retention and expansion (BR&E).
    ‘Growth Strategy’ refers to a strategic plan formulated and implemented for expanding firm’s business. Every firm has to develop its own growth strategy according to its own characteristics and environment.
    1). INTERNAL GROWTH STRATEGY
    Internal growth strategy refers to the growth within the organisation by using internal resources. Internal growth strategy focus on developing new products, increasing efficiency, hiring the right people, better marketing etc. Internal growth strategy can take place either by expansion, diversification and modernisation.
    a). Expansion
    Business expansion refers to raising the market share, sales revenue and profit of the present product or services.
    Business can be expanded through:-
    1. Market penetration strategy
    2. Market development strategy
    3. Product development strategy
    b). Diversification
    The purpose of diversification is to allow the company to enter new lines of business
    1). Vertical diversification
    E.g. Backwards and forward integration
    2). Horizontal diversification
    3). Concentric diversification
    4). Conglomerate diversification

    2). EXTERNAL GROWTH STRATEGIES
    This include;
    a). Foreign collaboration
    Collaboration means cooperation. It means coming together. Collaboration is the act of working jointly. It is a process where two people or organisation comes together for the achievement of common goal. With the advent of globalisation, foreign trade and foreign investments are encouraged to increase the volume of trade.
    Foreign collaboration is an agreement or contract between companies or government of domestic country and foreign country to achieve a common objective. Foreign collaboration is a business structure formed by two or more parties for a specific purpose.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    ANSWER:
    GROWTH AND EQUITY IN DEVELOPMENT ECONOMICS
    Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability.
    DIFFERENCE BETWEEN GROWTH AND EQUITY IN THE ECONOMY
    1). Economic Growth
    Economic growth is an increase in the production of goods and services in an economy.
    2). Equity in economics
    Equity in economics is defined as process to be fair in economy which can range from concept of taxation to welfare in the economy and it also means how the income and opportunity among people is evenly distributed.
    CAN GROWTH EXIST WITH INEQUALITY
    Yes it can.
    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.
    Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
    Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

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

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.

    EXPANSION STRATEGIES
    Every enterprise seeks growth as its long-term goal to avoid annihilation in a relentless and ruthless competitive environment. Growth offers ample opportunities to everyone in the organization and is crucial for the survival of the enterprise. However, this is possible only when fundamental conditions of expansion have been met. Expansion strategies are designed to allow enterprises to maintain their competitive position in rapidly growing national and international markets. Hence to successfully compete, survive and flourish, an enterprise has to pursue an expansion strategy. Expansion strategy is an important strategic option, which enterprises follow to fulfill their long-term growth objectives. They pursue it to gain significant growth as opposed to incremental growth envisaged in stability strategy. Expansion strategy is adopted to accelerate the rate of growth of sales, profits and market share faster by entering new markets, acquiring new resources, developing new technologies and creating new managerial capabilitie

    Corporate Strategy
    Corporate strategy is essentially a blueprint for the growth of the firm. The corporate strategy sets the overall direction for the organization to follow. It also spells out the extent, pace and timing of the firm’s growth. Corporate strategy is mainly concerned with the choice of businesses, products and markets. The competitive and functional strategies of the firm are formulated to synchronize with the corporate strategy to enable it to reach its desired objectives. Defined formally, a corporate-level strategy is an action taken to gain a competitive advantage through the selection and management of a mix of businesses competing in several industries or product markets
    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan.

    The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy.He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
    Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.
    Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state.

    Retrenchment Strategy
    Many firms experience deteriorating financial performance resulting from market erosion and wrong decisions by management. Managers respond by selecting corporate strategies that redirect their attempt to turnaround the company by improving their firm’s competitive position or divest or wind up the business if a turnaround is not possible. Turnaround strategy is a form of retrenchment strategy, which focuses on operational improvement when the state of decline is not severe. Other possible corporate level strategic responses to decline include growth and stability.
    Combination Strategy
    The three generic strategies can be used in combination; they can be sequenced, for instance growth followed by stability, or pursued simultaneously in different parts of the business unit. Combination Strategy is designed to mix growth, retrenchment, and stability strategies and apply them across a corporation’s business units

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.

    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
    Equity adds a moral dimension to the idea that people should be treated as equals by asking whether distribution is fair and leads to equal life chances (Jones 2009). The concept of equity introduces a normative element: in other words, how one person’s experience stacks up against that of others.
    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

  41. Aroh perpetua says:

    Name: AROH OLUCHUKWU PERPETUA
    Reg no:2018/243120
    Department: ECONOMICS
    Course:ECO 361
    Date:24/10/2021
    1)What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals.A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire organization.The growth strategy is not a magic button. If you want to increase the growth, productivity, activation rate, or customer base, then you have to develop a strategy relevant to your product, customer market, any problem that you’re dealing with.
    Discuss different growth strategies in economy?
    There are two main aspects of economic growth:
    1)Aggregate demand (AD) (consumer spending, investment levels, government spending, exports-imports)
    Aggregated demand can increase for various reasons.
    * Lower interest rates – reduce the cost of borrowing and increase consumer spending and investment.
    *Increased real wages – if nominal wages grow above inflation then consumers have more disposable to spend.
    *Higher global growth – leading to increased export spending.
    *Devaluation, making exports cheaper and imports more expensive, increasing domestic demand.
    *Rising wealth, e.g. rising house prices cause consumers to spend more (they feel more confident and can remortgage their house.
    2)Aggregate supply (AS) (Productive capacity, the efficiency of economy, labour productivity)
    This is growth in aggregate supply (productive capacity). This can occur due to:
    *Development of new technology, e.g. steam power and telegrams helped productivity in the nineteenth century. Internet, AI and computers are helping to increase productivity in the twenty-first century.
    *Introduction of new management techniques, e.g. Better industrial relations helps workers become more productive.
    *Improved skills and qualification.
    More flexible working practices – working from home, self-employment.
    *Increased net migration – especially encouraging workers with the skills that are in short supply (e.g. builders, fruit pickers)
    *Raise retirement age and therefore increasing the supply of labour.
    *Public sector investment – e.g. improved infrastructure, increased spending on education.
    Balanced growth refers to a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending. Balanced growth is the opposite of volatile boom and bust economic cycles.
    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way.
    2). What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    The conclusion is that there is no inevitable difference between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.
    No, growth and inequality can’t exit
    Specifically, rising inequality transfers income from low-saving households in the bottom and middle of the income distribution to higher-saving households at the top. All else equal, this redistribution away from low- to high-saving households reduces consumption spending, which drags on demand growth.

  42. Name: Uwa chioma Maryjane
    Reg no: 2018/241876
    Department: Economics
    Course code: Eco 361
    Assignment
    1a) What do you understand by growth strategies?
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    1b) Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    I) The balanced growth theory: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest. Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work. Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. ccording to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory. No importance should be given to promoting exports.
    II) The unbalanced growth theory: Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan.
    III) Market Penetration : The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    IV)Market Development : This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    V) Product Development : The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    VI) Diversification : This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    Question 2
    What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    There are two sides to the issue of the relationship between inequality and development. One side focuses on the distribution of the benefits of development and the capacity of development to effectively reduce poverty. The other side focuses on how the distribution of economic resources may affect the pace and structure of development.The first side of the issue, namely who benefits from development, centers around Simon Kuznets’ famous hypothesis, according to which income inequality tends to increase in the first stage of development, and then decreases beyond some threshold. This hypothesis motivated many studies in the 1970s and the 1980s. On the one hand, it provided an explanation for the mechanisms that determine the distributional consequences of economic growth. On the other hand, it allowed us to test whether the hypothesis of an inverted-U, or Kuznets curve between inequality and average income per capita could be justified empirically. As it turns out, there seems to be no empirical evidence of a systematic relationship between the level of development (e.g., as measured by GDP per capita) and income inequality (e.g., as measured by the Gini coefficient). The recent increase in inequality in developed countries may support this conclusion, as well as demonstrate the complexity of the multiple mechanisms and policies that determine the evolution of inequality. The other side of the issue of the inequality-development relationship has attracted much attention over the last 20 years or so, even though the modern discussion on the topic dates back to Kaldor [1955]. He observed that if capitalists saved more than the workers, a faster rate of growth was associated with a higher share of profit. In the 1990s, renewed interest in the theory and empirics of economic growth led to various alternative views on whether and how inequality could affect the rate of economic growth. These views departed somewhat from the pure macroeconomic functional distribution framework in classical, neo-classical, and Keynesian (i.e., Kaldor’s contribution) economics. From a theoretical perspective, the prevailing belief included the existence of a tradeoff between the equality of the distribution of economic resources and economic efficiency. However, many authors showed that inequality could actually cause inefficiency and slower growth through various channels, including market imperfections, endogenous redistribution, and political economy mechanisms. From an empirical perspective, the growth regression wave of the 1990s generated a flurry of econometric tests of the effect of the initial Gini coefficient of income distribution on economic growth during some period. Heterogeneous results were obtained, although a slight majority favored a negative relationship.
    Despite the considerable work and energy expended by the economic profession on this matter, there are few conclusions on whether inequality has a positive or negative effect on economic growth and development, or what the policy implications of the effect might be. Of course, equality may be seen as an objective worth pursuing per se, for ethical reasons. Even so, however, it seems important to know something about the economic cost of reducing inequality. Is the cost substantial, or perhaps even prohibitive, as some claim? Alternatively, are there situations in which the objectives of equality and economic growth are complementary? The theme of the 2006 World Development Report (WDR) published by the World Bank was “Equity and Development.” This was probably the first major attempt at answering the preceding questions with a policy focus. Interestingly, the report used the word “equity” rather than “equality” or “inequality.” This distinction was conceptual, not rhetorical. An important contribution of the report was to emphasize the ambiguity and, often, the confusion associated with the concept of “inequality” in the debate on inequality and development. In line with the theoretical contributions in this area, the main message of the report was that inequality in terms of opportunities rather than economic outcomes can hinder economic efficiency and growth. Thus, the distribution of income, which had been the exclusive focus of empirical analyses, should be seen more as a consequence of how opportunities are distributed in the population and an imperfect marker of the inequality of opportunities than as the single target of policies aimed at generating equity, economic efficiency, and faster growth.
    Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP. This has been particularly the case for poorer households: in nearly all OECD countries for which data are available, GDP growth was substantially higher than households’ income growth in the lowest quintile. In long run then inequality may hinder growth and economic development.

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

    Ezeilo Kanayochukwu Chimuanya
    2018/242412
    Economics major
    300lvl

    1. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    Market Penetration:
    This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence.  The goal is to increase its market share in a predefined vertical channel.  Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market.  Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
    Market Development:
    Development refers to expanding the sales of existing products in new markets.  Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising.  It may be much more efficient to develop new markets to increase profitability.  The company may also develop new uses for its products.  For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
    Product Expansion:
    If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products.  The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
    Acquisition:
    A business can purchase another company in the same industry in order to expand its sales in that market.  The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes.  For this reason, an acquisition strategy can be very risky.  However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
    Diversification:
    The goal is to sell novel products to new markets.  Market research is essential to the success of this strategy because the company must determine the potential demand for its new products.  Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist.  Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
    Also including the order of growth strategies i.e unbalanced and balanced growth strategies

    Unbalanced growth:
    This requires less amount of capital, making investment in only leading sectors. The unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period. Unbalanced growth requires less amount of capital, making investment in only leading sectors. Nigeria can attest to this because currently Nigeria is having some aspects of the sectors economic boom and they are;
    1. Petroleum sector
    2. Bank sector
    3. Agricultural sector etc
    Putting more focus on these sectors because they are theleading sector of the economy.

    Balanced growth:
    This aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. Nigeria in mainly using the unbalanced economic growth but its still possible to create efficiency in the other sectors of the economy, not by leaving them domant but creating opportunities their in other to make it a balanced growth economy.

    2. Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP. Growth is usually calculated in real terms i.e., inflation-adjusted terms to eliminate the distorting effect of inflation on the prices of goods produced. Measurement of economic growth uses national income accounting. Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure.
    In studying development economics growth is a necessary factor to bring about economic development. Their are ways by which an economy can bring about economic development through growth, they are,
    1. Increase in technology.
    2. Increase in human capacity.
    3. Development in environmental and economic structures.
    4. Increase in labour capital.

    Equity is central to development. There is a broad and deep understanding of inequity and its causes, and on what works and what does not. Yet, equity remains low on the policy agenda in many countries. This must be down to a lack of political will.
    Equity is attracting growing explicit attention in development discourse, and despite its being
    of widespread intuitive value, it is often seen as somehow less relevant than some other issues, such
    as efficiency, economic growth or cohesion and remedying conflictequity is a normative concept, one which has a long history in religious, cultural and
    philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice,
    topics which are also the subject of fierce debate among political philosophers. As such, there will
    always be debates about the precise meaning of equity, and it is likely that a number of conceptions
    will compete to be the ‘correct’ definition. What follows in this section should be understood against
    this background: in order to explain the concept of equity we must present one particular point of view
    but the topic can be approached from many different points of view.equity is the application of this principle of moral equality to the ways in which people are treated by society

    Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time.its also a sustained increase in a country’s output of goods and services.
    While
    Equity is attracting growing explicit attention in development discourse, and despite its being
    of widespread intuitive value, it is often seen as somehow less relevant than some other issues, such
    as efficiency, economic growth or cohesion and remedying conflictequity is a normative concept, one which has a long history in religious, cultural and
    philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice,
    topics which are also the subject of fierce debate among political philosophers.

    Yes it can because,
    Looking at most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.
    Also, taking America as a case study, the maltreatment of the black races was on called for, but their were still economic gowth and even more, economic development. And we can still say America is still one of the greatest places to be, in the globe.

  44. Stephen Ifessy Precious says:

    Stephen Ifessy Precious
    2018/244261
    Education Economics

    1. Growth Strategy
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Balanced Growth
    Definition of balanced growth: Balanced growth refers to a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending. Balanced growth is the opposite of volatile boom and bust economic cycles.
    Unbalanced growth
    According to H.W.Singer, “Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand.” The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth. The only strategy of economic development in such a country is to break this low level equilibrium by deliberately planned unbalanced growth.
    2. Growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used. In economics, growth is commonly modeled as a function of physical capital, human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital, and raw materials, will lead to increased economic output.
    Equity comes from the idea of moral equality, that people should be treated as equals. Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens. Applying these ideas in a specific country context involves hard choices, and embedding discussions of distributive justice into domestic political and policy debates is central to national development, but three areas of considerable consensus can be identified. In order of priority, these are:

    1. Equal life chances: There should be no differences in outcomes based on factors for which people cannot be held responsible.
    2. Equal concern for people’s needs: Some goods and services are necessities, and should be distributed according solely to the level of need.
    3. Meritocracy: Positions in society and rewards should reflect differences in effort and ability, based on fair competition. circles of equity and growth by designing policies aimed at:

    Taking action at the domestic level by: investing in people; expanding access to public services, justice, land and infrastructure; guaranteeing property rights for all; and promoting fairness in markets.
    Undertaking reform at the international level by reducing inequities in the functioning global markets and the rules that govern them. Domestic policies aimed at promoting equity are more likely to be successful if accompanied by similar efforts to introduce greater fairness in global governance.
    Ensuring that public action to create a level playing field does not aim towards equality in outcomes. In particular, public policies should focus on the distribution of assets, economic opportunities and political voice, rather than inequality in incomes.
    Recognising the necessary short-term tradeoffs between equity and efficiency. A balance is needed to ensure that policies aimed at achieving equity do not harm growth and investment by ignoring individual incentives..
    Differences between Growth and equity debate
    1. Growth has more focus on GDP, GNP, National income while Equity is concerned with promotion of equity is central to the investment environment and to the agenda of empowerment in developing countries.
    2. Growth is a necessary condition for development while Equity stimulates long term growth in an economy.
    3. Growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP while Equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens.
    4. Growth is commonly modeled as a function of physical capital, human capital, labor force, and technology while policies that boost equity in the economy can promote social bonding and to a great extent curb chances of any kind of political conflict.

    No, inequality can not exist with growth
    Inequality can not exist with growth because there needs to be an existence of equal distribution of resources among sectors of an economy. High levels of economic and political inequalities tend to result in inequitable institutions that systematically favour the interests of those with more influence. Inequalities tend to persist over time due to the interaction between different forms of inequality.
    The adverse effects of unequal opportunities are damaging for development because economic, political and social inequalities often reproduce themselves across generations a phenomenon known as the ‘inequality trap’.
    The distribution of wealth is closely associated with the social distinctions that stratify people, communities and nations into groups that dominate and those that are dominated.
    The patterns of domination persist because economic and social differences are reinforced by the overt and covert use of power. Such overlapping political, social and economic inequalities stifle mobility and are closely tied to the business of ordinary life.
    Inequalities are perpetuated by the elite and are often internalised by marginalised or oppressed groups, thus making it difficult for the poor to find their way out of poverty.

  45. Nwigbo Chiamaka Blessing says:

    NWIGBO BLESSING CHIAMAKA,
    2018/245390.
    SOCIAL SCIENCE EDUCATION (EDUCATION ECONOMICS),
    FACULTY OF EDUCATION.
    OCTOBER, 2021.

    INTRODUCTION.
    Economic growth, the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.
    The strategy an organization uses to expand its business depends on its financial position, existing competition and any government regulation applicable to that industry. Five main growth strategies commonly utilized by most businesses are market penetration, market development, product expansion, acquisition and diversification.
    OTHER GROWTH STRATEGIES IN THE ECONOMY THAT WILL TARGET ON THE DEVELOPMENT OF THE DEVELOPING COUNTRIES.
    Growth strategies in the economy that targets on the development of the developing countries are as follows:
    1.Market Penetration
    This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels
    2.Market Development
    Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
    Product Expansion
    If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
    Acquisition
    A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.

    Diversification
    The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
    NUMBER TWO.
    DIFFERENCES BETWEEN GROWTH AND EQUITY DEBATE.
    The possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.

  46. Nzenwa Ngozi Beatrice says:

    Name: Nzenwa Ngozi Beatrice
    Registration number: 2018/249548
    Department: Social Science Education
    Unit: Economics and Education
    Email: paulbeatrice3417@gmail.com

    What is Growth Strategy:
    According to Garner Glossary growth Strategy is an organization’s plan for overcoming current and future challenges to realize it’s goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services. To the researcher, growth Strategy can be define as the techniques, methods, decisions adopted by an organization, policy makers, government in an economy in other to promote or expand the existing conditions of the economy as well as the future state of the economy.

    Different Growth Strategies

    1. Unbalanced Growth Strategy: According to H.W.Singer, “Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand.” Meier and Baldwin are also of the opinion that “Planners should concentrate on certain focal points, so as to achieve the goal of rapid economic development. The priorities should be given to those projects which ensure external economies to the existing firms, and those which could create demand for supplementary goods and services.” To the researcher unbalanced growth is a situation where all the sectors in the economy develop at a different rate in other to be more focused on a particular sector and develop such sector successfully before moving to another sector to develop.
    2. Balanced Growth Strategy: According to Lewis “Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.” Jonathan Temple also stated In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. To the researcher, as the name implies balanced growth strategy as to do with the way all sectors of the economy aim at being developed without neglecting any other sector so that all sector can be at the same rate of development in other words well balanced.
    The researcher suggest that a country like Nigeria should focus on adopting unbalanced growth Strategy for a start. However, aside oil and gas sector Nigeria should focus on more important sector that can help promote the economy. Sectors like; the educational, agricultural and health sectors among others.

    Meaning of Growth and Equity Debate in Development Economics
    Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor however, adopting a purposeful, long-range policy to encourage growth, ensure equity, and reduce the government’s equity are of great importance (Martin Neil Baily, Gary Burtless, and Robert E. Litan 1993). Balance growth with equity is defined as the relative welfare of the poor; they are policies that can help make sure that the poor would benefit from an increase in growth, whatever its source. To the researcher, knowing that development economics focus on the study of the welfare of the people. This further explains that equity among every citizen is also important to enable great growth in the economy that is, ensuring the gap between the rich and the poor be reduced if not eliminated.

    Difference between Growth and Equity in the Economy
    Growth with regards the economy state as to do with increase in GDP (Gross Domestic Product) which means increase in the outcome of total goods and services produced within a country at a particular period of time while that of equity as regards the economy deals with how the gaps between the rich and the more can be closed.

    Can Growth Exist with inequality?

    Growth can exist even when there’s inequality because economic growth focus on the total output of goods and services produced in an economy within a particular period. On the other hand, economic development focus on a sustained increase in the welfare of the people in the economy. With this, whether or not there is inequalities growth still continue to exist all things been equal. Thus, growth can continue to occur even when there is inequalities.

  47. OGBU EMMANUEL CHIMAOBIM says:

    NAME: OGBU EMMANUEL CHIMAOBIM
    REG NO. 2018/246272
    ECONOMIC/ POLITICAL SCIENCES
    Emmanuelogbu571@gmail.com

    Question
    Differentiate between growth and equity debate

    Answers
    Before venturing into the differences between equity debate and growth, it is important we know their meaning.
    According to Dictionary.com, growth can be seen as development from a simpler to a complex stage. Economically, growth is the persistent increase in countries output.
    In education, the term equity refers to the principles of fairness. Equity in Economics is defined as a process to be fair in economy which can range from concept of taxation to welfare In the economy and it also means how the income and opportunity among people is evenly distributed.
    Having defining the concept, we will look at their differences and debate.
    Equity issues are especially knotty because they are inextricably intertwined with social values. Nonetheless, Economic policy makers that promote equity can help, directly and indirectly, to reduce poverty. When incomes are more evenly distributed, fewer individuals fall below the poverty line.
    Economic growth deals with the increase in the amount of goods and services produced per head of the population over a period of time while equity is the concept or idea of fairness in Economics, particularly in regards to taxation or welfare economics.
    Economic growth deals with issues or macro Economic objectives which involves reduction in poverty, Reduced unemployment and while equity deals with moral, social values.
    The conclusion is that there is no inevitable conflict between these two goals, provided that Economic policy promotes the areas of complementary between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the trickle down theory which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve.

  48. Ugochukwu Kosisochukwu Henry says:

    NAME : UGOCHUKWU KOSISOCHUKWU HENRY
    REG NO: 2018/250200
    DEPARTMENT: COMBINED SOCIAL SCIENCES
    COURSE: ECO 361 DEVELOPMENT ECONOMICS 1
    COMBINATION: ECONOMICS/ SOCIOLOGY AND ANTHROPOLOGY

    1) What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    Strategy of Balanced Growth:
    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
    In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.
    As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.

    External Economies and Balanced Growth:
    It seems to be proper to refer in this con­nection to external economies. When one industry creates demand for another, it will be prof­itable to the other industry. When one industry benefits from the growth of another industry, then we say that external economies are available from one industry to another.
    We have seen above that it proves profitable to make investment in complementary industries, because people engaged in such industries become one another’s customers or create demand for one another. It is clear, therefore that the doctrine of balanced growth is based on the concept of external economies.
    It is to be noted that here we do not use the term ‘external economies’ in the sense in which Marshall used it. By ‘external economies’ Marshall meant those economies which arise from the localisation of a certain industry in a particular place and these economies are enjoyed by each firm in the industry by the establishment of numerous firms there.
    But in development economics, by external economies we mean those benefits which accrue to other industries by the establishment of new industries or the expansion of the existing industries. We have seen above how, according to Nurkse’s doctrine of balanced growth, these benefits accrue to the other industries by the establishment of new industries or the expansion of old industries through simultaneous investment in such industries in the form of increased demand or extension of the market.

    A Critique of Balanced Growth Doctrine:
    Prof. Hans Singer and Albert Hirschman, eminent American economists, have criticized Nurkse’s doctrine of balanced growth. They contend that what is needed is not balanced growth, but a strategy of judiciously-planned unbalanced growth.
    According to Singer, balanced growth cannot solve the problem of the under-developed countries, nor do they have sufficient resources to achieve balanced growth. Singer maintains that balanced growth doctrine might be better expressed as follows: “As hundred flowers may grow whereas a single flower would wither away for lack of nourishment.” But where are the resources to grow hundred flowers? Singer argues that the slogan “stop thinking piecemeal and start thinking big” is a sound advice for under-developed countries but he also feels that there are “several areas of doubt” about the balanced growth theory in its Nurksian form.
    First, if the balanced growth doctrine is interpreted to advise the under-developed countries to embark on a large and varied package of industrial investment with no attention to agricultural productivity, it can lead to trouble.
    At the initial stages of development, as the income grows with new industrial investment and employment, the relatively greater demand would be created for food and other agricultural goods. In order to sustain industrial investment, the agricultural productivity would have to be greatly raised.
    Thus, the big push in industry must be accompanied by a big push in agriculture as well, if the country is not to run short of foodstuffs and agri­cultural raw materials during the transition to an industrialised society.
    But when we start talking about varied investment package for industry and “major additional blocks of investment in agriculture” at the same time, we run into serious doubts about the capacity of under-developed countries to follow the balanced growth path.
    According to Marcus Fleming, “Whereas the balanced growth doctrine assumes that the relationship between industries is for the most part complementary, the limitation of factor supply assures that the relationship is for the most part competitive.” Singer adds: “The resources required for carrying out the policy of balanced growth…are of such an order of magnitude that a country disposing of such resources would in fact not be under-developed.”
    Investment may be of whatever type, it necessarily induces some additional investment and some other productive activities. According to Singer, the expansion of social overhead capital and the growth of consumer goods industries and improvement of production techniques in them to raise productivity cannot take place simultaneously, because the under-developed countries have only limited capabilities of making use of their resources.
    In the under-developed countries, not only are the resources and the capabilities to bring about balanced growth lacking but, according to Hirschman, balanced growth is not even desirable. His view is that if economic growth is to be accelerated, it will have to be brought about by unbalanced growth.
    If we promote growth by creating imbalances in the economy, the growth will be accelerated, because it will produce such incentives and pressures which will encourage development in the private sector. “The balanced growth doctrine is premature rather than wrong.” Singer concludes. It is applicable to a subsequent stage of self-sustained growth rather than to the breaking of a deadlock.
    For launching growth “it may well be a better development strategy to concentrate available resources on those types of investment which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded markets and expanding demand”. He mentions investments in social overhead capital and removal of special bottlenecks as examples of such “strategic” in­vestment.
    The fundamental trouble with the balanced growth doctrine, according to Singer, is its failure to come to grip with the true problem of under-developed countries, the shortage of resources. “Think Big” is a sound advice to under-developed countries, but “Act Big” is unwise counsel if it spurs them to bite more than they can possibly chew.
    Moreover, the balanced growth doctrine assumes that an under-developed country starts from a scratch. In reality, every under-developed country starts from a position that reflects previous investment and previous development. Thus, at any point of time, there are some highly desirable investment programmes which are not in themselves balanced investment packages but which represent unbalanced in­vestment to complement existing imbalances.

    Hirschman’s Strategy of Unbalanced Growth:
    Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.
    Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
    As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.
    After all, he points out the industrialised countries did not get to where they are now through “balanced growth.” True, if you compared the economy of the United States in 1950 with the situation in 1850, you will find that many things have grown, but not everything grew at the same rate throughout the whole century. Development has proceeded “with growth being communicated from the leading sectors of the economy to the followers, from one industry to another; from one firm to another.”
    According to Professor Hirschman, the real scarcity in under-developed countries is not the resources themselves “but the ability to bring them into play.” He divides the initial invest­ment into two related activities: (a) directly productive activities (DPA) and (b) social overhead capital (SOC).
    An under-developed country may follow the method of unbalanced growth by undertaking initial investment either in social overhead capital or the directly productive activities. Whichever the type of investments it will yield an ‘extra dividend’ of induced decisions resulting in additional investment and output. He contends that social overhead capital, and directly pro­ductive activities cannot be expanded simultaneously because of the limited ability to utilise resources.
    Thus, the planning problem is to determine the sequence of expansion that will maxi­mize induced decision-making. Balanced growth (of social overhead capital and directly pro­ductive activities) is not only unattainable in most under-developed countries it may also not be desirable. The rate of growth is likely to be faster with crucial imbalances precisely because of “the incentives and pressures” it sets up.

    A Critique of Unbalanced Growth Strategy:
    The strategy of unbalanced growth has come in for severe criticism. First, it has been pointed out that unbalanced growth strategy is based on wrong assumption that only factor constraining economic growth is the scarcity of decision-making ability in respect of investment.
    According to it all that is needed for accelerating growth in less developed countries is to provide inducements and incentives to private enterprise to undertake investment projects. Once this is done, supply of financial resources will adequately flow into investment projects.
    This is not a realistic assumption to make in the context of the developing economies. In the developing countries supply of financial resources is scare due to low rate of saving and this hampers economic growth. Hischman paid little attention to overcome thus bottleneck to accelerate growth. Thus, not only the supplies of physical resources are limited but also the availability of financial resources for funding the developmental projects is scarce.
    Hirschman’s unbalanced growth strategy has also been criticised on the ground that it will generate inflationary pressures in the economy. Whether more investment is undertaken in social overhead capital (SOC) or directly productive activities (DPO) incomes of the people will rise which will lead to the increased demand for consumer goods, especially food-grains. If sufficient investment in agriculture and other consumer goods is not made, it will cause rise in prices as was actually witnessed in India during the second and third five year plans.
    Thirdly, it has been pointed out that in case response from private enterprises to the in­ducements and pressures created by unbalanced growth strategy is not adequate imbalances will be created in the economy without causing expansion in the other linked sectors resulting in excess capacity in some industries or sectors. This excess capacity represents waste of resources.
    Lastly, it has been pointed out by Paul Streeten that unbalanced growth strategy neglects the possibility of resistances for adjustment to imbalances created by the unbalanced growth strategy. These resistances to growth may occur in a variety of forms.
    There may come into existence monopolies which have vested interests in restricting expansion in output. In the back­ground of imbalances and shortages private enterprises which are interested in making quick profits will be more willing to raise prices of products rather than expanding their quantities. As Paul Streetion emphasise “the theory of unbalanced growth concentrates on stimuli to ex­pansion and tends to neglect or minimise resistances caused by unbalanced growth.”
    We however conclude that despite some shortcomings in the unbalanced growth strategy, laying stress on the decision-making ability for accelerating economic growth and on the need for building up social overhead capital, Hirschman has made a valuable contribution to devel­opment economics.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.
    There are two sides to the issue of the relationship between inequality and development. One side focuses on the distribution of the benefits of development and the capacity of development to effectively reduce poverty. The other side focuses on how the distribution of economic resources may affect the pace and structure of development.
    Economic growth and improved equity in income distribution are somehow interlinked. Growth itself generates opportunities for lifting up the bottom end of the income distribution, it is said. Moreover, according to this view, there are possibilities for the adoption of redistributive policies in
    the context of a growing economy that would not exist or would be harder to implement in a stagnant economy. What are we to make of this idea? I suppose its appeal lies in two notions. One is the commonsense notion that it is easier to change the way the pie is divided if the size of the pie itself is increasing. In this
    guise, its appeal comes from the suggestion that there is, after all, a relatively painless way of getting redistribution when the possibility exists of an overall improvement for everyone. Otherwise, it may be necessary to take from some and give to others, and that would be both intolerable
    and reprehensible!
    Second, economists themselves are led into the trap of this way of thinking by the neoclassical theorems on Pareto Optimality. Based on the criteria of these theorems, a superior state of the economy is one that
    makes at least someone better off with no one worse off, or allows the gainers to compensate the losers and still come out ahead. It is but a small step from this to the presumption that growth of income is a pre-condition for redistribution of income. One ends up, then, with the essentially conservative position that, in the absence of growth, the existing state of affairs is the best of all possible worlds. Whatever its guise, this idea may be a very comforting one for those who are already well off. But to the poor, underprivileged, and powerless
    it must seem rather perverse and cynical. This consideration alone should inform us, as the theorists of economic welfare should already know, that the real issue concerns the very nature of the social welfare function itself by which a superior allocation is to be judged. In particular, whose votes (preferences) are to count, and with what weights? That is the question and essentially a political one at that.

    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.
    Economic inequality is a function of the distribution of income, wealth, or other economic factors. As such, there are a wide variety of inequality measures that seek to characterize inequality. Each metric reduces inequality to a single number, which limits the information that can be provided. Yet taken together, multiple measures can provide a textured understanding of the shape of the economic distribution for a variety of factors.
    Theoretically, there are different channels through which inequality could affect growth, depending on the political structure of each country. However, given that inequality in the United States looks increasingly similar to the high inequality of developing countries, we may have much to learn from their experiences.
    Fortunately, the data that economists can use to understand this important relationship between inequality and growth has improved over time, as have the methodologies applied to study the relationship between the two trends.

  49. Ocheme Christiana Ene says:

    Name: Ocheme Christiana Ene
    Reg num:2018/249273
    Department :Economics
    Course : Eco 361 assignment

    1). What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services, it is also a plan of action to increase a business’s market share. If your company is looking to expand, a market growth strategy will enable you to chart your path to expansion, taking into account your industry, your target market, and your finances.

    In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. “Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.” Balanced growth makes the possibility of better use of natural resources in a region. As it has been observed that there are abundant natural resources in underdeveloped countries which remain unutilized or under-utilized. Thus, balanced growth doctrine provides basic facilities for its better use and allocation.

    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining.
    Albert Hirschman: Unbalanced Growth Theory. One of the prominent figures of the European émigrés development theorists, Albert Hirschman is notable for the uniqueness of his intellectual approach. Process of Unbalanced Growth:

    Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth. According to many critics, the method of unbalanced growth involves a considerable wastage of resources. Some sectors in the economy will grow at a faster rate while others remains neglected. To achieve the balanced growth, every sector should grow simultaneously and there should be no scope of wastage of resources.

    Market Penetration Strategy:

    A firm pursuing market penetration strategy directs its resources to the profitable growth of a existing products in current markets. It is the most common form of intensive growth strategy.

    Market Development Strategy:

    This strategy involves introducing present products or services into new geographic areas. The marketing efforts are made on existing products, to customers in related market areas, by adding different channels of distribution or by changing the current content of the advertising and promotional efforts.

    The market development can be achieved in any of the following ways:
    (a) By adding new distribution channels to expand the consumer reach of the product.

    (b) By entering new market segments.

    (c) By entering new geographical markets.

    In market development strategy, a firm seeks to increase the sales by taking its product into new markets.

    Product Development Strategy:

    This strategy involves the growth of market through substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels.
    The variants of this strategy are:

    (a) Expand sales through developing new products.

    (b) Create different quality versions of the product.

    (c) Develop additional models and sizes of the product to suit the varied preference of the customers.

    A company can increase its current business by product improvement or introduction of products with new features.

    Integrative Growth Strategies
    The integrative growth strategies are designed to achieve increase in sales, assets and profits.

    There are basically two variants in integrative growth strategy which involves:

    (a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.

    (b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages.

    (a) Horizontal Integration:

    When two or more firms dealing in similar lines of activity combine together then horizontal integration takes place. Many companies expand by creating other firms in their same line of business. A firm is said to follow horizontal integration if it acquires or starts another firm that produce the same type of products with similar production process/marketing practices. When the combination of two or more business units (existing and created) results in greater effectiveness and efficiency than the total yielded by those businesses, when they were operated separately, the synergy has been attained.

    External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    2). What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability. Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. Economic growth is an increase in the production of goods and services in an economy. … Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.

    Growth funds come at a higher risk than value funds. … Taxation in India is the same on both value and growth funds, depending on whether they are equity-dominated or debt-heavy. Equity funds are tax-free on long-term capital gains but debt fund gains are taxed at 20% with indexation and 10% without indexation. PE firms typically invest in more established companies with longer histories. … In contrast, growth equity firms usually take minority stakes in companies. They are focused on providing later stage startups that already have achieved some success with additional capital to fuel expansion.

    Yes, growth can actually exist with inequality….
    High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries. The study finds that both top and bottom inequality are negatively associated with income growth for the poor, and that bottom inequality is also positively associated with income growth for the rich. This may be because high levels of inequality, particularly among the rich, result in societal fragmentation. High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries. High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries, Inequality is necessary to encourage entrepreneurs to take risks and set up a new business. Without the prospect of substantial rewards, there would be little incentive to take risks and invest in new business opportunities. Fairness. It can be argued that people deserve to keep higher incomes if their skills merit

  50. Okoye Adaezechukwu precious says:

    Name: Okoye Adaezechukwu Precious
    Reg No: 2018/241831
    Course Code: Eco 361
    Course title: Development Economics 1
    Dept: Economics
    Date: 24/10/2021

    Assignment
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A GROWTH STRATEGY is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share Andrew revenue, acquiring assets, and improving the organization’s products or services.

    Different Growth Strategies Include:
    In development economics, Balanced Growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    On the other hand, Unbalanced Growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

    2. What do you understand by the growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If not, why?

    ANSWER

    GROWTH VS EQUITY DEBATE

    The debate on growth vs equity is an age-old issue. Several economists have made their contributions to this debate and while many support the supremacy of growth, some other economists like Amartya Sen believe that we should not focus on just growth, but other variables that make for an equitable society. He indicated that certain variables such as inflation, governance, and corruption hinder EQUITY.

    The underlying question this debate leaves us with is this – Is growth in conflict with equity or poverty reduction? Normally, we expect that as GDP increases and we experience a high level of economic growth, more people should cross over from the poverty line and that infrastructure, as well as level of education, should increase.

    However, this is not always the case in developing countries. We continue to observe that even with increased production and GDP, the gap between the rich and the poor continues to increase. Nevertheless, the relationship between equity and growth cannot be ignored. Both variables move hand in hand to promote economic development.

    DIFFERENCES BETWEEN GROWTH AND EQUITY

    Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

    However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.

    Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

    CAN GROWTH EXIST WITH INEQUALITY?
    Certainly, significant growth can exist with inequality. If we refer to growth as the persistent increase in the production of goods and services in a country within a period of time. Then, definitely, growth can exist with inequality. We can observe a persistent increase in GDP and still observe an increasing disparity in income.

    Since 1990, economists have begun to pay attention to the ever-increasing gap between the rich and the poor. And while inequality impacts negatively on the growth process. We can certainly say that significant growth can exist with inequality. In fact, the Kuznet curve depicts such an example where increasing growth stimulates this inequality. However, inequality is reduced in the process of economic development.

    This is why economic development is the ultimate goal of every nation. As development accounts for different variables such as living standards, security, equitable distribution of income, etc.

    In the real world, truly economic growth can be observed with inequality. For example, the activities of monopolists can significantly stimulate growth and increase inequality as well. Inflation is an interesting economic variable that affects income by reducing purchasing power. However, inflation most of the time further widens the gap between the rich and the poor.

  51. Eze Joy Ozioma says:

    Eze Joy Ozioma
    Reg no—2018/242430
    Eco 361 assignment
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Five main growth strategies commonly utilized by most businesses are market penetration, market development, product expansion, acquisition and diversification. This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence.
    * MARKET PENETRATION
The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share.  To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    * MARKET DEVELOPMENT
This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ;  industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    * PRODUCT DEVELOPMENT
The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it;  Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    * DIVERSIFICATION 
This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
Diversification may be divided into further categories:
    Strategies that will enhance the growth and development of developing countries.
    1. New Technology
    A major thrust of post-Marshall Plan, U.S. foreign aid programs has been to introduce advances in agricultura technology. If changes are incorporated by the advancing agricultural sector, interactions lead to changes throughout the econ- omy. Some changes may be judged desirable; some may not.
    When a new technology is introduced to the advancing agricultural sector, food and fiber output from that sector will likely increase. That is the purpose of the program. Impacts are likely to be felt throughout the economy, either directly through forward and backward linkages or indirectly through market forces reflecting changes in product and resource prices. Backward linkages will reflect increased demand by farmers for products from the rural nonfarm and urban sectors as well as for land, labor, and capital. The advancing agricultural sector may bid resources, especially land and capital, away from the traditional sector and reduce output there.
    2. Expanded Markets
    One of the expected consequences of increasing agricultural output is down- ward pressure on prices received by farmers, because a larger quantity is ex- pected to clear the market at a lower price, other things being equal. If the price decrease is large in relation to the quantity increase, this will lead to reduced total receipts in the agricultural sectors. Such markets are called inelastic.
    3.Because up to 80 or 90 percent of the people in a developing country may be engaged in agriculture, economic development is often considered agricultural de- velopment. Or, at least, rural development is assumed synonymous with agricul- tural development. Both assumptions are misleading. There is a tendency for analysts to force such nations into a mold wherein all nonfarm activities occur
    in the urban centers and rural economic activity consists solely of an advanced agriculture. This view has led to a chicken and egg type of argument as to which of the two sectors is the leading edge of development and which the follower.
    2.. what is Growth and Equity debate in Development .
    Economic growth is an increase in the production of goods and services in an economy. … Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. There is a growing recognition of the importance of equity to development, and many development agencies recognise equity as a central goal for their programming. However, while equity is used intuitively in development debates and programming, it seems that its meaning is not clearly understood. This is reflected in often shallow analysis about what equity is and what should be done to achieve it. Its importance is recognised, but the policy priorities for achieving it are not consistently or coherently explored.
    Tackling inequity is crucial for developing country governments and development agencies: as well as being a valuable goal in itself, improving equity constitutes a central place in our understanding of beneficial change and development, driving poverty reduction in combination with growth. Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.
    Can growth exist with inequality?
    Growth cannot exist (NO)
    Reason being that Inequality hurts economic growth, especially high inequality (like ours) in rich nations (like ours). … That makes them less productive employees, which means lower wages, which means lower overall participation in the economy. While that’s obviously bad news for poor families, it also hurts those at the top. inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

  52. Molokwu Chiamaka Goodness says:

    Molokwu Chiamaka Goodness
    2018/242393
    Economics

    1. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
    MARKET PENETRATION
    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    MARKET DEVELOPMENT
    This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    PRODUCT DEVELOPMENT
    The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    DIVERSIFICATION
    This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size while The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income.

    2. Growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy. Economic growth reflects the growth of national or per capita income.
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
    Growth and Equity Debate in Development Economics is simply an argument going on on whether an economy can be developed in the presence of growth and Equity. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.
    The differences between growth and Equity in an economy are as follows;
    An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
    Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
    The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

  53. Ezechukwu Rita Chioma says:

    NAME: Ezechukwu Rita Chioma
    REG NO: 2018/250327
    DEPARTMENT: Economics
    ASSIGNMENT ON ECO 361( DEVELOPMENT ECONOMICS 1)

    QUESTION 1A:
    WHAT DO YOU UNDERSTAND BY GROWTH STRATEGIES?
    ANSWER:
    Growth strategies in regards to Development Economics depicts those methods, steps, plans and strategies adopted by developing countries or in developing economies inorder to get rid of vicious circle of poverty, hereby attaining the same level of living standards prevailing in advanced countries and achieving sustainable economic growth.

    QUESTION 1B:
    CLEARLY DISCUSS DIFFERENT GROWTH STRATEGIES IN THE ECONOMY.
    ANSWER:
    There are different strategies suggested by different theories of growth and development, that developing countries can adopt inorder to reach that maturity stage, that is, growth and development stage. Those theories of growth and development include but not limited to:
    1) Theory if balances growth,
    2) Theory of unbalanced growth,
    3) Linear model,
    4) The Lewis theory of development,
    5) Harrod Domar Growth Model.
    ✓ Theory of Balanced Growth: this theory propose simultaenouse development of all the sectors of the economy, inorder to enlarge market size, increase productivity, and provide an incentive for private sector to invest.
    ✓ Theory of Unbalanced Growth: this theories proposes the development of core sectors of the economy rather than all the sectors simultaneously. This strategies requires not much capital as investments are only mad in strategic sectors of the economy.
    ✓The Linear model: this model proposes that underdeveloped economies can developed by transforming their domestic economy from a high dependency on small subsistence agriculture to a modern agricultural and manufacturing system ( that is, urban or industrialized economy).
    ✓ The Lewis theory of development: Lewis was of the opinion that for an economy to develope, there is great news for the transfer of surplus labour found in rural areas or village to urban areas. Main focus of this model is both on labour transfer and the growth of output that this will bring about and how it will generate more employment in the urban sector. This strategy tends to be enticing as this transfer of labour does not reduce output of labour in the village, since in the rural area the marginal output of surplus labour is zero. However, it will increase output in the urban areas.
    ✓ Harrod Domar Growth Model: Harrod and Domar was of the opinion that for a country to develope, they must first save a portion of their income as savings, inorder to invest them. Hence, Investment and Growth to them has a direct relationship.

    QUESTION 2 A:
    WHAT DO YOU UNDERSTAND BY GROWTH AND EQUITY DEBATE IN ECONOMICS?
    Growth with equity explains ways by which a country thrives to achieve accelerated growth while narrowing the extremes between the rich and the poor.
    Growth and equity debate in economics is all about the argument going on, first started by kuznets about whether an economy or country can develope in the presence of growth and equity. Unbalanced growth is prevalent in most developing country where some few sectors are developing far beyond some sectors, and there is huge gap between the rich and the poor in their income level. Some of this countries are found to have high economic growth amidst this kind of growth, as government usually favour growth to equity.
    Hence, the question is, is growth and equity in conflict? For an economy to achieve eceonomic development, they should pursue equity and growth. Economic growth is necessary but not sufficient for equity to occur.

    QUESTION 2 B:
    WHAT ARE THE DIFFERENCE BETWEEN GROWTH AND EQUITY IN THE ECONOMY?
    In an economy, where the government is after equity, they( government) tend to lower the value of demand and money supply as it implements policies pursuing economic growth and subsequently development, however, a growth driven government will only focus on increasing demand regardless of people’s welfare.
    Furthermore, equity can imply growth but growth does not sufficiently imply equity.

    QUESTION 2C:
    CAN GROWTH EXIST WITH INEQUALITY? IF YES HOW , IF NO, WHY?
    ANSWER:
    Yes, growth can exist with inequality.
    Just like in the Unbalanced growth model, “Hirschman” was of the opinion that it is not possible to always have broad growth across different sectors. He further argued that as long as there is growth in some sector, It will create a dynamic pressure to grow other sectors in the long run. The above assertion implies that growth occurs amidst inequality.
    Furthermore, considering the inequality gap between the rich and poor in the income level. The rich has massive wealth and can take advantage of investment opportunity, thereby increasing output and contributing to growth. The poor on the other hand can’t do so as they lack the capital and does not even have collateral to borrow in the case of trying to use credit facilities. The inability of the poor to invest does not stop growth from occuring. However, we can imagine a situation whereby this gap between the rich and the poor is narrowed down and everyone is able to take advantage of investment opportunities. This situation will give rise to higher economic growth and development.
    Hence, growth can occur amidst inequality, but massive growth/ development cannot occur with inequality. It requires some level of equity( not necessarily “equality”).

  54. Obodoike faith oluchi says:

    Name: Obodoike faith oluchi
    Reg No: 2018/245387
    Department: Education economics
    Course code: Eco 361

    Assignment
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balance and unbalanced and other) that will support and enhance the growth and development of a developing country like Nigeria.
    2. What do you understand by growth and equality debate in development economics? What are difference between growth and equality in the economy, can growth exit with inequality If yes how,if no why?
    ANSWER

    1. A growth strategy can be defined as one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.

    The following are different types of growth strategies:

    (1) Market Development:
    This growth strategy, as the name implies, aims at increasing sales of existing products through a market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products by changing size, packaging, and brand name etc.

    (2) Product Development:
    Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.

    Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.
    (3) Market Penetration:
    Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:

    A. Aggressive advertising and other sales promotion techniques.
    B. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
    C. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.

    (4) Diversification:
    Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.
    (5) Modernisation:
    Modernisation involves replacing worn-out and obsolete machines etc. by modern machines and equipment’s operated according to latest technology; to achieve objectives like better quality, cost reduction etc. Modernisation is a growth strategy in the sense that it helps to achieve more and qualitative production at lower costs; thus helping to increase sales and profits for the enterprise.

    (6) Joint Ventures:
    Joint venture is a growth strategy in which two or more companies, establish a new enterprise (or organisation) by participating in the equity capital of the new organisation and by agreeing to participate in its management in an agreed manner.A firm or a company may have a joint venture with another company of the same country or a foreign country. Some examples of joint ventures: Tata Iron and Steel Co. joined hands with IPICOL of Orissa to form IPITATA Sponge Iron Ltd; Hindustan Computers Ltd.

    (7) Mergers:
    Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover.

    2.Growth and equity debate
    Growth With Equity explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.Equity is free from the biases that occur with equality. It reduces institutional barriers and motivates an individual to strive to be successful. Whereas equality is giving everyone the same thing, equity is giving individuals what they need.

    2b. In simple terms, economic equality is about a level playing field where everyone has the same access to the same wealth. While
    Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.

    2c. According to recent study by international monetary fund (IMF) there is a negative relationship between inequality and Economics growth. An increase inequality is harmful to economic growth in the sense that inequality reduces the opportunity available to the most disadvantage persona in the society.
    Moreover, most study shows that the most negative effect of inequality on is caused by the system inefficiency which affect the lowest income

  55. Hassan Fadhilah Olamide says:

    Hassan Fadhilah Olamide
    Education Economics
    2019 /245672 (2/3)
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.
    Answer : A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
    MARKET PENETRATION:The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    MARKET DEVELOPMENT:This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
    PRODUCT DEVELOPMENT:The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    DIVERSIFICATION:This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
    Diversification may be divided into further categories:
    HORIZONTAL DIVERSIFICATION
    This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.

    VERTICAL DIVERSIFICATION
    The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.
    CONCENTRIC DIVERSIFICATION
    Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
    CONGLOMERATE DIVERSIFICATION
    Is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answer :
    Growth equity (also known as growth capital or expansion capital) is a type of investment opportunity in relatively mature companies that are going through some transformational event in their lifecycle with potential for some dramatic growth. There is some truth in Prof Sen’s statement about “obsession with growth” as, for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation, corruption, governance, etc. Yet, the interesting feature of the debate (which at the current level could continue for the next 50 years without any conclusion) is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.

  56. Ikechukwu Mmesoma Maryann says:

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Answers:
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. It is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    Some theories and types of growth strategies would include:
    Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
    Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.
    Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory. No importance should be given to promoting exports.
    Unbalanced growth strategy: The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth. Hirschman contends that deliberate unbalancing of the economy according to the strategy is the best method of development and if the economy is to be kept moving ahead, the task of development policy is to maintain tension, disproportions and disequilibrium. Balanced growth should not be the goal but rather the maintenance of existing imbalances, which can be seen from profit and losses. Therefore, the sequence that leads away from equilibrium is precisely an ideal pattern for development. Unequal development of various sectors often generates conditions for rapid development. More-developed industries provide undeveloped industries an incentive to grow. Hence, development of underdeveloped countries should be based on this strategy.
    The path of unbalanced growth is described by three phases:
    Complementary
    Induced investment
    External economies
    Singer believed that desirable investment programs always exist within a country that represent unbalanced investment to complement the existing imbalance. These investments create a new imbalance, requiring another balancing investment. One sector will always grow faster than another, so the need for unbalanced growth will continue as investments must complement existing imbalance. Hirschman states “If the economy is to be kept moving ahead, the task of development policy is to maintain tensions, disproportions and disequilibrium”.
    Now, Complementarity is a situation where increased production of one good or service builds up demand for the second good or service. When the second product is privately produced, this demand will lead to imports or higher domestic production of the second product, as it will be in the interests of the producers to do so. Otherwise, the increased demand takes the form of political pressure. This is the case for such public services such as law and order, education, water and electricity that cannot reasonably be imported.
    Complementarity allows investment in one industry or sector to encourage investment in others. This concept of induced investment is like a multiplier, because each investment triggers a series of subsequent events. Convergence occurs as the output of external economies diminishes at each step. Growth sequences tend to move towards convergence or divergence and the policy is usually concerned with preventing rapid convergence and promoting the possibility of divergence.
    New projects often appropriate external economies created by preceding ventures and create external economies that may be utilized by subsequent ones. Sometimes the project undertaken creates external economies, causing private profit to fall short of what is socially desirable. The reverse is also possible. Some ventures have a larger input of external economies than the output. Therefore, Hirschman says, “the projects that fall into this category must be net beneficiaries of external economies”.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answers:
    Growth in an economy can be referred to as the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period. Growth can best be described as a process of transformation. Whether one examines an economy that is already modern and industrialized or an economy at an earlier stage of development, one finds that the process of growth is uneven and unbalanced.
    The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity. The complementaries between equity and prosperity arise for two main reasons. Firstly, market failures, notably in credit, insurance, land and human capital, mean that resources may not flow where returns are highest and may lead to unequal opportunities. Secondly, high levels of economic and political inequalities tend to result in inequitable institutions that systematically favour the interests of those with more influence.
    We should note that equity and equality has two different meanings. Equality means each individual or group of people is given the same resources or opportunities. Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome.
    I believe growth can still exist even with the presence of inequality. Growth entails increase in overall wealth of a nation. So I dont think it matters where is contributing to this growth. If person A has more access to resources than person B and still efficiently uses these resources to the benefit of the economy, growth still occurs.

  57. Ikechukwu Mmesoma Maryann says:

    Reg no : 2018/241875
    DEPARTMENT OF ECONOMICS
    ECO 361: DEVELOPMENT ECONOMICS

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Answers:
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. It is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    Some theories and types of growth strategies would include:
    Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
    Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.
    Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory. No importance should be given to promoting exports.
    Unbalanced growth strategy: The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth. Hirschman contends that deliberate unbalancing of the economy according to the strategy is the best method of development and if the economy is to be kept moving ahead, the task of development policy is to maintain tension, disproportions and disequilibrium. Balanced growth should not be the goal but rather the maintenance of existing imbalances, which can be seen from profit and losses. Therefore, the sequence that leads away from equilibrium is precisely an ideal pattern for development. Unequal development of various sectors often generates conditions for rapid development. More-developed industries provide undeveloped industries an incentive to grow. Hence, development of underdeveloped countries should be based on this strategy.
    The path of unbalanced growth is described by three phases:
    Complementary
    Induced investment
    External economies
    Singer believed that desirable investment programs always exist within a country that represent unbalanced investment to complement the existing imbalance. These investments create a new imbalance, requiring another balancing investment. One sector will always grow faster than another, so the need for unbalanced growth will continue as investments must complement existing imbalance. Hirschman states “If the economy is to be kept moving ahead, the task of development policy is to maintain tensions, disproportions and disequilibrium”.
    Now, Complementarity is a situation where increased production of one good or service builds up demand for the second good or service. When the second product is privately produced, this demand will lead to imports or higher domestic production of the second product, as it will be in the interests of the producers to do so. Otherwise, the increased demand takes the form of political pressure. This is the case for such public services such as law and order, education, water and electricity that cannot reasonably be imported.
    Complementarity allows investment in one industry or sector to encourage investment in others. This concept of induced investment is like a multiplier, because each investment triggers a series of subsequent events. Convergence occurs as the output of external economies diminishes at each step. Growth sequences tend to move towards convergence or divergence and the policy is usually concerned with preventing rapid convergence and promoting the possibility of divergence.
    New projects often appropriate external economies created by preceding ventures and create external economies that may be utilized by subsequent ones. Sometimes the project undertaken creates external economies, causing private profit to fall short of what is socially desirable. The reverse is also possible. Some ventures have a larger input of external economies than the output. Therefore, Hirschman says, “the projects that fall into this category must be net beneficiaries of external economies”.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answers:
    Growth in an economy can be referred to as the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period. Growth can best be described as a process of transformation. Whether one examines an economy that is already modern and industrialized or an economy at an earlier stage of development, one finds that the process of growth is uneven and unbalanced.
    The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity. The complementaries between equity and prosperity arise for two main reasons. Firstly, market failures, notably in credit, insurance, land and human capital, mean that resources may not flow where returns are highest and may lead to unequal opportunities. Secondly, high levels of economic and political inequalities tend to result in inequitable institutions that systematically favour the interests of those with more influence.
    We should note that equity and equality has two different meanings. Equality means each individual or group of people is given the same resources or opportunities. Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome.
    I believe growth can still exist even with the presence of inequality. Growth entails increase in overall wealth of a nation. So I dont think it matters where is contributing to this growth. If person A has more access to resources than person B and still efficiently uses these resources to the benefit of the economy, growth still occurs.

  58. Omeke Chinenye Joy says:

    Name: omeke Chinenye Joy
    Reg. no: 2018/244290
    Department: education economics
    Assignment on Eco 361(development economics)
    Growth strategy
    A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    The different growth strategies in the economy that will support and enhance the growth and development of developing countries like Nigeria includes:
    Balanced Growth Strategies
    The advocates of the balanced growth doctrine are economists such as Rosenstein Rodan, Ragnar Nurkse and Arthur Lewis, with different interpretations to the theory. To some, it means investing in a lagged sector or industry, to others it means simultaneous investment in all sectors, especially manufacturing industries and agriculture (Kindleberger as cited in Jhingan, 2011). The balanced growth theory entails a balance between social and economic overheads (power and energy, drainage system, etc,) and directly productive investment so that all sectors grow in unison (Ahuja 1980 as cited in Metu et al 2018). They believe that there should be simultaneous investment in a number of industries, that is a balanced growth of different industries or investment in lagged sectors of the economy until all sectors are equally developed. Balanced growth strategy recognises the need for expansion and inter-sectoral balance between agriculture and manufacturing so that each of these sectors provides a market for the product of the other and in turn, supplies the necessary raw materials for the development and growth of the other. For instance, in the simultaneous development of agriculture and industrial sector, employment in the industrial sector will lead to increase in the demand for food stuff and raw materials provided by the agricultural sector.
    The Unbalanced Growth Strategy
    Economists such as Singer and Hirschman argue that for development to take place in an economy, there should be an unbalanced growth strategy by concentrating on investment in certain strategic industries. Hirschman advocated for big push in selected sectors of the economy (Onwuka, 2011). According to the paper, underdeveloped countries may follow the method of unbalanced growth by undertaking initial investment in either social overhead capital (SOC) or investment in direct productive activities (DPA) rather than simultaneous investment. Social overhead capital includes investment on education, public health, communication, public utilities such as light, water, drainage and irrigation schemes (Ahuja, 2016; Jhingan 2011). Simultaneous investment in DPA and SOC is not possible due to limited resources and because of the inability of underdeveloped countries to secure adequate resources. Therefore, there is need to determine the sequence of expansion that will maximize induced decision-making. According to Hirschman, the sequence of investment could be from investing in SOC or from investing in DPA first. If investment is first undertaken in DPA, the shortage of SOC will raise production costs and with time political pressure will stimulate investment in SOC.
    Import Substitution Industrialisation Strategy
    Import substitution industrialisation strategy (ISI)is a conscious attempt by developing countries to domestically produce commodities that were formerly imported from developed countries (Todaro & Smith, 2015). It involves promoting the emergence and expansion of domestic industries by replacing major imports especially consumer goods such as household appliances, food, textile materials, etc., with locally produced substitutes. That is why it is also referred to as inward-looking development strategy (Onwuka, 2011).
    Countries resort to import substitution industrialisation strategy due to balance of payment difficulties and due to negative impact of such imports on the foreign exchange earnings of developing countries. For industries established under ISI to function governments must have to protect them through the use of tariffs and non-tariff barriers to trade. Tax exemptions and subsidies are also used to reduce costs in import competing industries. Import substitution usually begins with the manufacture of durable consumer goods at the final stages of production.
    Export Promotion or Export-Led Strategy
    The promotion of exports of developing countries, either primary or secondary, has long been considered a major ingredient in any viable long-run development strategy. Export promotion strategy is a trade strategy in which there is bias of incentive towards production of import substitutes (Metu et al., 2018). Export promotion is a purposeful governmental effort to expand the volume of a country’s exports through export incentives and other means in order to generate more foreign exchange and improve the current account of its balance of payments. The essence of promoting exports in developing countries is to overcome disequilibria in the balance of payment (Onwuka, 2011).
    Todaro and Smith (2015) opine that before embarking on export promotion, comprehensive market surveys are carried out to ascertain potential markets. Also, promotion of dynamic commodities that command demand in the world market and price elasticity should be sought and encouraged; while those with doubtful demand abroad and hence low foreign exchange earnings base should be discouraged.
    Similarly, while it is encouraged to increase the production of non-traditional items needed by both developed and developing countries, it is equally essential that a careful examination of the composition of these exports in items and their prospects in the world market be carried out. This is necessary to decide which exports should be increased, promoted or be left out of consideration (Onwuka, 2011).
    Growth vz equity debate
    Growth and Equity Debate in Development Economics is simply an argument going on on whether an economy can be developed in the presence of growth and Equity or not.
    The theme of the 2006 World Development Report (WDR) published by the World Bank was “Equity and Development.” This was probably the first major attempt at answering the preceding questions with a policy focus. Interestingly, the report used the word “equity” rather than “equality” or “inequality.” This distinction was conceptual, not rhetorical. An important contribution of the report was to emphasize the ambiguity and, often, the confusion associated with the concept of “inequality” in the debate on inequality and development. In line with the theoretical contributions in this area, the main message of the report was that inequality in terms of opportunities rather than economic outcomes can hinder economic efficiency and growth. Thus, the distribution of income, which had been the exclusive focus of empirical analyses, should be seen more as a consequence of how opportunities are distributed in the population and an imperfect marker of the inequality of opportunities than as the single target of policies aimed at generating equity, economic efficiency, and faster growth.
    The difference between growth and equity in the economy is explained thus:
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It also relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy. Economic growth reflects the growth of national or per capita income.
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
    Yes growth can exist with inequality, this is because any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.

  59. EZEA SOPULUCHUKWU LUKE says:

    NAME:EZEA SOPULUCHUKWU LUKE
    REG NO:2018/251024
    DEPARTMENT: ECONOMICS
    COURSE: ECO 361(DEVELOPMENT ECONOMICS)
    EMAIL: sopuluchukwuluke@gmail.com
    ASSIGNMENT

    1a)
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    b)
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors.

    2)
    Growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy. Economic growth reflects the growth of national or per capita income.
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal

  60. Ileme Obinna Patrick says:

    Reg no: 2018/242297
    DEPARTMENT OF ECONOMICS
    ECO 361: DEVELOPMENT ECONOMICS I

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too. It is a collection of business initiatives that seek the maximization of a company’s value within a period.
    Types of growth startegies.
    We have
    1. Balanced growth strategy
    2. Unbalanced growth strategy
    Balanced growth strategy : According to Rodan, Nurkse and Lewis, these economies should make simultaneous investment in all sectors to achieve balance growth. Fredrick List was first to put forward the theory of balance growth. According to him, a balance could be established among agriculture, industries and trade.
    In the year 1928, Arthur Young gave the concept of different industries were mutually interdependent, then all of them should be developed simultaneously. A strategy of growth with an equal emphasis on agriculture and industry. Agricultural development provides the food required and releases labour from the land to engage in industry. Industrial wealth stimulates markets for agricultural growth or such is the theory.
    According to Lewis “Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.”
    Different Views Regarding Balanced Growth
    1. Explanation of Rodan’s Theory of Balanced Growth.According to an article ‘Notes on Big Push’(1957) by Rodan, indivisibilities of supply side are concerned with social overhead capital. Indivisibilities of demand side means restricting the desirability and profitability of economic activities due to the narrow extent of the market.Rodan has referred to three kinds of indivisibilities:
    (i) Indivisibility in the production function or in the supply of social overhead costs
    (ii) Indivisibility of Demand
    (iii) Indivisibility of Supply of savings
    2. Explanation of Nurkse’s Theory of Balance Growth
    According to Prof. Nurkse in the development of underdeveloped countries the greatest obstacle is Vicious Circle of Poverty. The Vicious Circle shows that income is low in underdeveloped countries. Because of low income, saving is low. There for investment and output is low. Low output means low income.
    (i) Complementarity of Demand
    (ii) Intervention by the Government
    (iii) External Economies
    (iv) Accelerated Rate of Growth

    3. Explanation of Lewis’s Theory of Balanced Growth
    Lewis has given the following two arguments in favour of balanced growth:
    (i) In the absence of balanced growth, price in one sector may be more than the prices in others.
    (ii) When the economy grows then several bottlenecks appear in different sectors.
    Balance between the sectors
     Balance between Agriculture and Industries
     Balance between Human and Physical Capital
     Balance between Domestic Trade and Foreign Trade
     Role of Government in the Balance Growth
    Advantages of Balanced growth strategy.
    Large size of Market
    External Economies
    Horizontal Economies
    Vertical Economies
    Better Division of Labour
    Better Use of Capital
    Rapid Rate of Development
    Encouragement of Private Enterprises
    Breaking of Vicious Circle of Poverty
    Encouragement of International Specialization
    Development of Social Overhead Costs
    Criticisms of the unbalanced growth
    This theory Criticized by Fleming, Singer, Hirschman and Kurihara.
    • Unrealistic or Ignores Scarcity of Resources
    • Ignores the Need of Planning
    • External Diseconomies
    • Development from Scratch
    • Not a Theory of Development
    • Same Policy for Developed and Underdeveloped countries
    • Not supported by History
    • Scarcity of Factors of Production
    • Inflation
    • Contrary to the Theory of Comparative Costs
    Unbalanced growth: Hirschman, Rostow, Fleming, Singer have propounded the concept of unbalanced growth as a strategy of development for the underdeveloped nations. The theory stresses the need for investment in strategic sectors of the economy, rather than in the all sectors simultaneously.
    Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a rate similar to one another. Specific sectors of the economy will be growing at a rapid rate, while other sectors are either stagnant or experiencing a significantly reduced rate of growth. When economic growth patterns such as unbalanced growth appear, the phenomenon usually indicates that major shifts in the overall economy are about to take place.
    Prof.Hirschman states in his book,”Strategies of Economic Development”, that creating imbalances in the system is the best strategy of growth. Accordingly , strategic sectors of the economy should get priority in matters of investment:
    • External Economies
    • Compementries
    • Social Overhead Capital or (SOC)
    • Direct productive Activities or (DPA)
    • Unbalancing the Economy through (SOC)
    • Unbalancing the Economy with direct productive Activities(DPA)
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Growth is an increase in the amount of goods and services produced per head of the population over a period of time. Equity in economics is defined as process to be fair in economy which can range from concept of taxation to welfare in the economy and it also means how the income and opportunity among people is evenly distributed.
    Growth can exist with inequality because everyone need not be equal for growth to take place in a country.

  61. Eze Amarachi Ruth says:

    Name: Eze Amarachi Ruth
    Reg no: 2018/248529
    Department: Economics
    Assignment Questions:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    Answers:
    1a). A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.

    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    b)
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors.

    2). Equity comes from the idea of moral equality, that people should be treated as equals. Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens. Applying these ideas in a specific country context involves hard choices, and embedding discussions of distributive justice into domestic political and policy debates is central to national development.
    Economic growth, the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.
    Yes growth can exist with inequality, there could be a situation the the economy grows but the resources in the country are not distributed equally a situation where some selected people keep enriching themselves while others are being impoverished.while retaining enough depth to give something meaningful and inspiring to work with.
    It is even more unlikely that growth can be attained with equity.

  62. Peter Emmanuel says:

    Name: Peter Emmanuel
    Reg no : 2018/246577
    Department: Economics education
    QUESTIONS:
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answers
    1. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Different growth strategies in the economy
    I. Balanced growth: this refers to a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending. Balanced growth is the opposite of volatile boom and bust economic cycles.
    Features of balance growth
    a, Economic growth close to the long run trend rate of growth This is the average sustainable growth rate. (in the UK this is about 2.5% a year)
    b, Low inflation. High inflationary growth causes increased uncertainty and volatility and can discourage investment. Inflationary growth often leads to recession as the government seek to control inflation.
    c, Balanced between different sectors of the economy e.g. both export and domestic consumption should be part of growth. If growth is just financed by consumer spending and imports – this causes a current account deficit and an imbalance.
    d, Balanced between different regions of the country. e.g. China’s breakneck growth is focused on the South, but the north is more left behind. Balanced growth shouldn’t leave some regions behind. (e.g. US rust belt)
    e, A balance between consumption and investment. eg. growth in UK and US has often been focused on consumer spending leading to low savings ratios and high current account deficits. Low investment has implications for the long-term productive capacity.
    Ii. Unbalance growth: According to H.W.Singer, “Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand.”
    Meier and Baldwin are also of the opinion that “Planners should concentrate on certain focal points, so as to achieve the goal of rapid economic development. The priorities should be given to those projects which ensure external economies to the existing firms, and those which could create demand for supplementary goods and services.
    Iii. Product Expansion Strategy :A small company may also expand its product line or add new features to increase its sales and profits. When small companies employ a product expansion strategy, also known as product development, they continue selling within the existing market. A product expansion growth strategy often works well when technology starts to change. A small company may also be forced to add new products as older ones become outmoded.
    iv. Market Expansion or Development
    A market expansion growth strategy, often called market development, entails selling current products in a new market. There several reasons why a company may consider a market expansion strategy. First, the competition may be such that there is no room for growth within the current market. If a business does not find new markets for its products, it cannot increase sales or profits.
    A small company may also use a market expansion strategy if it finds new uses for its product. For example, a small soap distributor that sells to retail stores may discover that factory workers also use its product.
    V. Acquisition of Other Companies :
    Growth strategies in business can also includes an acquisition. In acquisition, a company purchases another company to expand its operations. A small company may use this type of strategy to expand its product line and enter new markets. An acquisition growth strategy can be risky, but not as risky as a diversification strategy. One reason is that the products and market are already established. A company must know exactly what it wants to achieve when using an acquisition strategy, mainly because of the significant investment required to implement it.
    2. Growth in economics refers to an increase in the size of a country’s economy over a period of time. The size of an economy is typically measured by the total production of goods and services in the economy, which is called gross domestic product (GDP).Economic growth can be measured in ‘nominal’ or ‘real’ terms. Nominal economic growth refers to the increase in the dollar value of production over time. This includes changes in both the volume of production and the prices of goods and services produced. Economists normally talk about real economic growth – that is, increases in the volume produced only, which takes away the effect of prices changing. This is because it better reflects how much a country is producing at a given time, compared with other points in time. While equity represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off.
    Growth cannot exist with inequality because,
    First, the mechanisms that link growth and inequality are likely to differ depending on the location of inequality, i.e. at the bottom, in the middle, or at the top of the income distribution (Barro, 2000). Hence, a single inequality measure such as the Gini coefficient may end up capturing relatively unimportant average effects. Second, the mechanisms that link growth and inequality are likely to differ depending on the sources of growth, in particular whether growth in GDP per capita is driven by growth in productivity or growth in employment. Third, they are also likely to differ depending on whether one considers income inequality before or after government redistribution, that is, inequality in market incomes, i.e. income derived before taxes and transfers, or inequality in disposable income, that is, income after taxes and transfers.

  63. OBETA MAGRET UZOCHUKWU says:

    Name: Obeta magret uzochukwu
    Reg number:2018/243669
    Dept: social science education
    Answer number 1
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    1. A growth strategy is a set of actions and plans that make a company expand
    its market share than before.
    It’s completely opposite to the notion that
    growth doesn’t focus on short-term earnings; its focus is on long-term goals.
    A successful growth strategy is an integration of product management, design,
    leadership, marketing, and engineering. It’s important to remember that your
    growth strategy would only work if you implement it into your entire
    organization.
    The growth strategy is not a magic button. If you want to increase the growth,
    productivity, activation rate, or customer base, then you have to develop a
    strategy relevant to your product, customer market, any problem that you’re
    dealing with.

    1:Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy.He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.

    Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.[4]

    Nurkse’s theory discusses how the poor size of the market in underdeveloped
    countries perpetuates its underdeveloped state. Nurkse has also clarified the
    various determinants of the market size and puts primary focus on productivity.
    According to him, if the productivity levels rise in a less developed country,
    its market size will expand and thus it can eventually become a developed
    economy. Apart from this, Nurkse has been nicknamed an export pessimist,
    as he feels that the finances to make investments in underdeveloped countries
    must arise from their own domestic territory. No importance should be given to
    promoting exports.

    ii. Unbalanced growth strategy is a natural path of economic development.
    Situations that countries are in at any one point in time reflect their
    previous investment decisions and development. Accordingly, at any point in
    time desirable investment programs that are not balanced investment packages
    may still advance welfare. Unbalanced investment can complement or correct
    existing imbalances. Once such an investment is made, a new imbalance is likely
    to appear, requiring further compensating investments. Therefore, growth need
    not take place in a balanced way. Supporters of the unbalanced growth doctrine
    include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof.
    Rostov and J. Sheehan.
    The theory is generally associated with Hirschman. He presented a complete
    theoretical formulation of the strategy. Underdeveloped countries display
    common characteristics: low levels of GNI per capita and slow GNI per capita
    growth, large income inequalities and widespread poverty, low levels of
    productivity, great dependence on agriculture, a backward industrial structure,
    a high proportion of consumption and low savings, high rates of population
    growth and dependency burdens, high unemployment and underemployment,
    technological backwardness and dualism{existence of both traditional and modern
    sectors}. In a less-developed country, these characteristics lead to scarce
    resources or inadequate infrastructure to exploit these resources. With a lack
    of investors and entrepreneurs, cash flows cannot be directed into various
    sectors that influence balanced economic growth.
    Hirschman contends that deliberate unbalancing of the economy according to the
    strategy is the best method of development and if the economy is to be kept
    moving ahead, the task of development policy is to maintain tension,
    disproportions and disequilibrium. Balanced growth should not be the goal but
    rather the maintenance of existing imbalances, which can be seen from profit
    and losses. Therefore, the sequence that leads away from equilibrium is
    precisely an ideal pattern for development. Unequal development of various
    sectors often generates conditions for rapid development. More-developed
    industries provide undeveloped industries an incentive to grow. Hence,
    development of underdeveloped countries should be based on this strategy.
    The path of unbalanced growth is described by three phases:
    a. Complementary
    b. Induced investment
    c. External economies
    Singer believed that desirable investment programs always exist within a
    country that represent unbalanced investment to complement the existing
    imbalance. These investments create a new imbalance, requiring another
    balancing investment. One sector will always grow faster than another,
    so the need for unbalanced growth will continue as investments must
    complement existing imbalance. Hirschman states “If the economy is to be kept
    moving ahead, the task of development policy is to maintain tensions,
    disproportions and disequilibrium”. This situation exists for all societies,
    developed or underdeveloped.
    a. Complementary: Complementarity is a situation where increased production of
    one good or service builds up demand for the second good or service. When the
    second product is privately produced, this demand will lead to imports or
    higher domestic production of the second product, as it will be in the
    interests of the producers to do so. Otherwise, the increased demand takes the
    form of political pressure. This is the case for such public services such as
    law and order, education, water and electricity that cannot reasonably be
    imported.
    b. Induced investment: Complementarity allows investment in one industry or
    sector to encourage investment in others. This concept of induced investment
    is like a multiplier, because each investment triggers a series of subsequent
    events. Convergence occurs as the output of external economies diminishes at
    each step. Growth sequences tend to move towards convergence or divergence and
    the policy is usually concerned with preventing rapid convergence and
    promoting the possibility of divergence.
    Answer number 2
    Growth and Equity Debate in Development Economics is simply an argument going on on whether an economy can be developed in the presence of growth and Equity. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.
    Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability.
    The differences between growth and Equity in an economy are as follows;
    An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
    Yes, growth can exist with inequality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
    The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

  64. Onwujiuba Obianuju Nnenna says:

    NAME: ONWUJIUBA OBIANUJU NNENNA
    REG NO: 2018/247080
    DEPARTMENT: ECONOMICS AND POLITICAL SCIENCE
    ASSIGNMENT

    Eco. 361 —18-10-2021(Online discussion/Quiz 5—Understanding Growth Strategies and Growth vs Equity debate) –
    WHAT IS A GROWTH STRATEGY
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    TYPES OF GROWTH STRATEGIES
    MARKET PENETRATION STRATEGY
    One growth strategy in business is market penetration. A small company uses a market penetration strategy when it decides to market existing products within the same market it has been using. The only way to grow using existing products and markets is to increase market share, according to small business experts. Market share is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors.
    One way to increase market share is by lowering prices. For example, in markets where there is little differentiation among products, a lower price may help a company increase its share of the market.
    MARKET EXPANSION OR DEVELOPMENT
    A market expansion growth strategy, often called market development, entails selling current products in a new market. There several reasons why a company may consider a market expansion strategy. First, the competition may be such that there is no room for growth within the current market. If a business does not find new markets for its products, it cannot increase sales or profits.
    A small company may also use a market expansion strategy if it finds new uses for its product. For example, a small soap distributor that sells to retail stores may discover that factory workers also use its
    PRODUCT EXPANSION STRATEGY
    A small company may also expand its product line or add new features to increase its sales and profits. When small companies employ a product expansion strategy, also known as product development, they continue selling within the existing market. A product expansion growth strategy often works well when technology starts to change. A small company may also be forced to add new products as older ones become outmoded.
    GROWTH THROUGH DIVERSIFICATION
    Growth strategies in business also include diversification, where a small company will sell new products to new markets. This type of strategy can be very risky. A small company will need to plan carefully when using a diversification growth strategy. Marketing research is essential because a company will need to determine if consumers in the new market will potentially like the new products.
    ACQUISITION OF OTHER COMPANIES
    Growth strategies in business can also includes an acquisition. In acquisition, a company purchases another company to expand its operations. A small company may use this type of strategy to expand its product line and enter new markets. An acquisition growth strategy can be risky, but not as risky as a diversification strategy.
    One reason is that the products and market are already established. A company must know exactly what it wants to achieve when using an acquisition strategy, mainly because of the significant investment required to implement it.

    GROWTH VS EQUITY DEBATE
    Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.

  65. Ezeh Uchechukwu Evelyn says:

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

    Assignment;
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level. The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly. Growth Strategy is pursued to reduce the cost of production per unit.
    Growth strategies involve a significant increase in performance objectives.
    Types of growth strategies;
    1) INTERNAL STRATEGY
    2) EXTERNAL STRATEGY

    1. Internal Growth Strategies:
    The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.
    These strategies are broadly classified as:
    i. Intensive Growth Strategies:
    The firm pursues intensive growth strategies with an objective to achieve further growth of existing products and/or existing markets.
    The basic classification of intensive growth strategies:
    (a) Market penetration strategy
    (b) Market development strategy
    (c) Product development strategy
    These strategies are also called ‘organic growth strategies’.
    (a) Market Penetration Strategy:
    A firm pursuing market penetration strategy directs its resources to the profitable growth of a existing products in current markets. It is the most common form of intensive growth strategy
    (b) Market Development Strategy:
    This strategy involves introducing present products or services into new geographic areas. The marketing efforts are made on existing products, to customers in related market areas, by adding different channels of distribution or by changing the current content of the advertising and promotional efforts.
    (c) Product Development Strategy:
    This strategy involves the growth of market through substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels.

    ii) Integrative growth strategies
    There are basically two variants in integrative growth strategy which involves:
    (a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.
    (b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages.
    Diversification Growth Strategies:

    iii) Diversification means going into an operation which is either totally or partially unrelated to the present operations.

    2. External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    The expansion or growth strategies are further classified as:
    i. Concentration Expansion Strategy
    ii. Integration Expansion Strategy
    iii. Internationalization Expansion Strategy
    iv. Diversification Expansion Strategy
    v. Cooperation Expansion Strategy

    Question 2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    Growth and equity debate is a debate largely among non-resident indian economists and some indian watchers about the age old issue of growth versus equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.
    The differences between growth and equity in the economy
    GROWTH is the increase in the value of an economy’s goods and services, which creates more profit for businesses. As a result, stock prices rise. WHILE Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.

    CAN GROWTH EXIST WITH INEQUALITY
    YES, Economic growth may not reduce income inequality because Economic growth often creates the best opportunities for those who are highly skilled and educated. Modern economies are creating an increased number of part-time/flexible service sector jobs. In these sectors, wages have been lagging behind average earnings.

  66. Nwoke Eberechi says:

    Market Penetration
    This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence.  The goal is to increase its market share in a predefined vertical channel.  Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market.  Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
    Market Development
    Development refers to expanding the sales of existing products in new markets.  Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising.  It may be much more efficient to develop new markets to increase profitability.  The company may also develop new uses for its products.  For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
    Product Expansion
    If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products.  The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
     Acquisition
    A business can purchase another company in the same industry in order to expand its sales in that market.  The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes.  For this reason, an acquisition strategy can be very risky.  However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
    Diversification 
    The goal is to sell novel products to new markets.  Market research is essential to the success of this strategy because the company must determine the potential demand for its new products.  Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist.  Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.

    2.) The end is that there is no inescapable struggle between these two objectives, given that economic policy advances the spaces of complementarity among growth and equity. It thusly dismisses the methodologies which expect that there is an insoluble struggle between these destinations, for example, the “stream down” hypothesis (which unemotionally acknowledges that such a contention exists and recommends that those influenced should stand by insofar as is fundamental for their circumstance to improve); and the differentiating “equal” approach (which proposes that growth ought to be forfeited for equity, with social policy being depended with the remedy of the most exceedingly terrible distributive impacts of economic policy). Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.

  67. Ugochukwu Ugonnaya Judith says:

    Name: Ugochukwu Ugonnaya Judith
    Dept: social science education (education economics)
    Reg no: 2018/244297

    1. GROWTH STRATEGY
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximizing gains and minimizing risk and untoward consequences.
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Growth strategies may be classified into two categories:
    (I) Internal growth strategies are those in which a firm plans to grow on its own, without the support of others.
    (II) External growth strategies are those in which a firm plans to grow by combining with others.
    BALANCED GROWTH STRATEGY
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    UNBALANCED GROWTH STRATEGY
    Unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
    COOPERATIVE EXPANSION GROWTH STRATEGY
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.
    DIVERSIFICATION INTEGRATED GROWTH STRATEGY
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification.
    Integrative Growth Strategies
    An integrative growth strategy is a growth strategy that emphasizes blending businesses together through acquisitions and mergers Integrative growth strategies are typically more expensive than intensive growth strategies and are usually practiced by mature businesses with large cash flow. horizontal integration involves the acquisition of one or more competitors. Integration of the different levels/stages of the same industry is known as vertical integration.

    2. GROWTH AND EQUITY DEBATE
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real terms. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
    Equity is a key a stabilizing force in societies that make it possible for people to pursue the futures they want. Equity means being fair and impartial. Specifically in debate, equity means assuring that debaters, judges, and spectators are all comfortable with what is being discussed. While debate is about challenging controversial topics. Who are the needy in our society? Are rources going to the most vulnerable or needy? Should resources be distributed on the basis of age and/or need? What are the appropriate roles of government, the private sector, and family in responding to individual and family needs.

  68. ADEGBOLA SEUN SAMUEL says:

    Name: Adegbola Seun Samuel
    REG NO: 2018/241869
    DEPT: Economics
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximizing gains and minimizing risk and untoward consequences.
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Growth strategies may be classified into two categories:
    (I) Internal growth strategies
    (II) External growth strategies.
    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.
    BALANCED AND UNBALANCED GROWTH STRATEGY
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
    Cooperation Expansion Strategy:
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.
    Diversification Growth Strategies:
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification.
    Integrative Growth Strategies:
    An integrative growth strategy is a growth strategy that emphasizes blending businesses together through acquisitions and mergers Integrative growth strategies are typically more expensive than intensive growth strategies and are usually practiced by mature businesses with large cash flow. horizontal integration involves the acquisition of one or more competitors. Integration of the different levels/stages of the same industry is known as vertical integration.

    2 Growth equity firms have been one of the fastest growing segments of the private equity industry. This industry lies somewhere at the intersection of the private equity and venture capital industries, carrying elements of both. In many ways, they offer the best of both worlds. They fall in between private equity and venture capital on the risk-return spectrum.
    Growth equity involves investing in privately-held, growth-oriented companies. An investment of this type is a private equity transaction sponsored by a growth equity investment firm. The sponsor firm invests in the illiquid, non-publicly traded securities of the growth-oriented company in question.
    Growth equity investments can be either majority or minority investments in a company, depending on the percentage of voting securities acquired. Typically, these funds make large minority investments.
    Some notable companies that have recently accepted minority investments from growth equity firms include Duolingo, Quizlet, Box, and Club Pilates. These firms are particularly keen on investing in companies focused on technology, healthcare, financial services, and consumer goods and services.
    Companies seeking growth capital often are looking to finance an extraordinary company event in order to further accelerate growth. Examples of such events include expanding product development, building new factories, entering new markets, or undergoing financial restructuring. These steps may provide the foundation for an eventual merger or IPO.
    WHILE venture capital firms tend to focus on high-growth companies at the earlier stages of their development, growth equity firms invest in high-growth companies at more mature stages of their life cycle. In other words, these companies are approaching profitability or positive cash flows, yet they are still in a phase of rapid growth.
    As a result, this type of investing requires a different mindset from venture capital investing. Venture capitalists usually have a portfolio of early-stage startups, most of which will ultimately fail. They are betting that a couple of the startups in their portfolio will soar through the roof. In the case of growth equity, the companies have already passed the earlier stage of testing the feasibility of their business model. The companies usually have a specific growth activity in mind for which they need funding. he relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective.

    2. In general terms, a negative relationship can be observed between the level of inequality1 and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.
    At a theoretical level, the prevailing view in the 1950s and
    60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.
    However, several voices have subsequently warned of the negative effects of inequality on growth.
    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).
    Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).
    Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.2
    Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth; in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.3
    A recent study by the IMF4 suggests that an increase in inequality is harmful to economic growth. By way of example, the historical relationship (1980-2012) observed between inequality and growth in the 159 countries analysed shows that, if the income share of the richest 20% of the population increases by 1 pp (a rise in inequality), GDP growth slows down by 0.08 pps during the next five years. On the other hand, if the income share of the poorest 20% of the population increases by 1 pp (a reduction in inequality), GDP growth is 0.38 pps higher during the next five years on average.
    Along the same lines, a study by the OECD5 estimates that an increase in the Gini coefficient of three points (which coincides with the average increase recorded in OECD countries in the last two decades) would have a negative impact on economic growth of 0.35 pps per year over 25 years, representing a cumulative loss of 8.5% of GDP. Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution). For example, if the bottom inequality in the UK were changed to be like that in France, or that of the US to become like that of Japan or Australia, the average annual growth in GDP would improve by almost 0.3 pps over the next 25 years, representing a cumulative rise in GDP of more than 7%.6 Once again, it should be noted that these estimates are for illustrative purposes only and must not be interpreted as the actual effect a change in equality can have on growth in each country.
    Lastly, the report concludes that one of the key channels through which inequality acts as a brake on economic performance is by reducing the investment opportunities, primarily in education, of the poorest segments of the population. In fact, social mobility has deteriorated significantly in countries such as the US, where the percentage of children who receive a higher income than their parents has fallen from 90% for the cohort of 1940 to 50% for people born in the 1980s.7
    In fact, less social mobility can act as an indicator of a rise in inequality. Several empirical studies have revealed a negative relationship between inequality and social mobility (see the second graph) precisely because inequality, particularly when this occurs within the lowest income groups, reduces the chances of the more disadvantaged segment of the population to invest in education, which is the main way to increase social status.8 Spain is no exception: university graduates from a lower social background record rates of access to professional and managerial jobs that are 14 times higher than those who do not finish secondary education (see the third graph).9
    By way of conclusion, it should be noted that, although inequality is, to some extent, an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth.

  69. Mbah Chisom Mary says:

    NAME: Mbah Chisom Mary
    DEPARTMENT: Economics Education
    REG NO: 2018/244295
    EMAIL: chisommary111@gmail.com

    ANSWERS

    (1) A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level. The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly. Growth Strategy is pursued to reduce the cost of production per unit. Growth strategies involve a significant increase in performance objectives.These strategies are adopted when firms remarkably broaden the scope of their customer groups, customer functions and alternative technologies either singly or in combination with each other. Growth strategy can be adopted in the form of expansion, vertical integration, diversification, merger, acquisition and joint venture.
    Types of Growth Strategies in the Economy
    1. Internal Growth Strategy
    2. External Growth Strategy
    3. Concentration Expansion Strategy
    4. Integration Expansion Strategy
    5. Internationalization Expansion Strategy
    6. Diversification Expansion Strategy
    7. Cooperation Expansion Strategy
    8. Intensive Growth Strategy
    9. Integrative Growth Strategy
    10. Diversification Growth Strategy
    :
    1. Internal Growth Strategies: The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.
    2. Integrative Growth Strategies: The integrative growth strategies are designed to achieve increase in sales, assets and profits.
    3. Diversification Growth Strategies: Diversification means going into an operation which is either totally or partially unrelated to the present operations.
    4. External Growth Strategies: Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.
    5. Concentration Expansion Strategy : Concentration involves expansion within the existing line of business. Concentration expansion strategy involves safeguarding the present position and expanding in the current product-market space to achieve growth targets. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain. A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business. Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development is first suggested in Ansoff’s model. Concentration strategy is followed when adequate growth opportunities exist in the firm’s current products- market space.
    Some other types includes:
    (a) Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan.
    (b) Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.

    2a. There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s. Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality. Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.
    2b. The differences between growth and equity it that while Economic growth means the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP. Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable . The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity. The complementaries between equity and prosperity arise for two main reasons. Firstly, market failures, notably in credit, insurance, land and human capital, mean that resources may not flow where returns are highest and may lead to unequal opportunities. Secondly, high levels of economic and political inequalities tend to result in inequitable institutions that systematically favour the interests of those with more influence.Inequalities tend to persist over time due to the interaction between different forms of inequality.Greater equity contributes to poverty reduction through potential beneficial effects on aggregate long-term development and through enhanced opportunities for poorer groups within society. Government institutions should ensure equal opportunities for all individuals by promoting a level playing field both politically and economically in the domestic and global arena.

    2c. A certain degree of income and wealth inequality is a characteristic of market economies, which are based on trust, property rights, enterprise and the rule of law. The notion that one can enjoy the benefits from one’s own efforts has always been a powerful incentive to invest in human capital, new ideas and new products, as well as to undertake risky commercial ventures. But beyond a certain point, and not least during an economic crisis, growing income inequalities can undermine the foundations of market economies. They can eventually lead to inequalities of opportunity. This smothers social mobility, and weakens incentives to invest in knowledge. The result is a misallocation of skills, and even waste through more unemployment, ultimately undermining efficiency and growth potential. On the face of it, all of this may seem to make perfect sense, but finding supporting evidence of a clear relationship between growth and inequality is far from straightforward. Knowing the initial level of inequality as well as the shape of income distribution, for instance, whether there is a relatively large middle class or if inequality is driven relatively more by income development in the bottom or upper part of the distribution, is important. Indeed, inequality in different parts of income distribution can affect GDP differently: in developing countries, inequalities in the upper end are sometimes associated with positive effects on GDP, while inequalities in the bottom end can induce negative effects.

  70. Ezeaku anderson esomchukwu says:

    Name: Ezeaku Anderson Esomchukwu
    Reg No: 2018/242413
    Dept: Economics
    Course Code: Eco 361
    1. A growth strategy is one under which management plans to advance further and achieve growth of the enterprise in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth maximising gains and minimizing risk and untoward consequences.
    a. Balanced economic growth: Balanced economic growth refers to specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending.
    b. Unbalanced economic growth: unbalanced economic growth recommends that investment should be made only in leading sectors of the economy. It requires less amount of capital, making investment in only leading sectors.
    c. an entrepreneurial approach: focuses on new firm and technology development.
    d. an industrial recruitment strategy emphasizing financial incentives for the relocation or expansion of existing enterprises
    e. a deregulation approach that minimizes governmental control over private enterprise.
    2. There is no inevitable conflict between these two goals provided that economic policy promotes the area of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives

  71. Eze Ugochukwu Ethel says:

    Name: Eze Ugochukwu Ethel
    Reg.no: 2018/245419
    Dept: Social Science Education (Education Economics)
    ASSIGNMENT :
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWERS :

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    It is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term ; growth strategies can be long-term, too.

    Different growth strategy are as follows :

    1. Internal Growth Strategies:

    The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.

    2. External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    3 Diversification Growth Strategies:

    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

    Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

    4. External Growth Strategies:

    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    5. Strategy of Balanced Growth:

    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

    In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low. As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
    6. Strategy of Unbalanced Growth:

    Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth. Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
    As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy
    .GROWTH AND EQUITY DEBATE
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real terms. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
    Equity is a key a stabilizing force in societies that make it possible for people to pursue the futures they want. Equity means being fair and impartial. Specifically in debate, equity means assuring that debaters, judges, and spectators are all comfortable with what is being discussed. While debate is about challenging controversial topics. Who are the needy in our society? Are rources going to the most vulnerable or needy? Should resources be distributed on the basis of age and/or need? What are the appropriate roles of government, the private sector, and family in responding to individual and family needs.
    DIFFERENCES BETWEEN GROWTH AND EQUITY
    Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).
    However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.
    Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

  72. Chime Doris chinenye says:

    Chime Doris chinenye
    2018/250191
    Economics major

    1a. What do you understand by growth strategies?

    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
    As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    A growth strategy is a collection of business initiatives that seek the maximization of a company’s value within a period.
    Despite what many people believe, a comprehensive growth strategy is not only about getting more
    clients and selling more stuff. I mean, getting clients is super important but there’s much more in a strategic growth plan than just expansions and
    market development.

    b. Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    Strategy of Balanced Growth:
    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
    In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.
    As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
    Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
    As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.

    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way.
    Other types of growth strategy

    Product development strategy—growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.

    Market development strategy—growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.

    Market penetration :strategy—growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.

    Diversification strategy: growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.

    2.What do you understand by growth and equity debate in development economics?

    The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity.

    B.What are differences between Growth and Equity in the economy?

    Concerns about inequality and efforts to reverse or at least mitigate its rise derive partly from its causes—whether they’re deemed legitimate, attributed to differences in productivity and “value-added,” or illegitimate, attributed instead to discrimination, favoritism, unfairness, or some other corruption—and partly from its effect on social stability.
    In macroeconomic literature, it is widely held that persuasion of economic growth and more equitable distribution of income (wealth) is not possible at the same time. The basic reason put forward is that to aim for more equitable distribution will reduce total savings in short and medium terms by reducing the weighted average of propensities to save of the different strata of the society. Therefore, the main objective for countries in transitional period is to have a higher economic growth rather than a fairer distribution of income. Recent developments on economic growth studies from a longer perspective and with sustainability criterion has put above idea in real jeopardy. It is shown that by paying more attention to justifiable distribution especially among different generations will promote a higher genuine savings which results in a higher rate of steady economic growth. To the extent inequality is seen as legitimate, its adverse effects on social harmony are minimized: People generally focus on enhancing their own living standards rather than comparing themselves with the “super-rich” 1 percent or “rich” 5 percent. But if inequality is deemed illegitimate, unfair, discriminatory, or due to corruption, its impact on social harmony is magnified. Countervailing interventions—protests, laws, and regulations—become unavoidable, as well as warranted.
    Conservatives and liberals, unsurprisingly, differ over those interventions. Conservatives focus on supply-side measures, favoring economic growth by reforming and lowering taxes, lighter and smarter regulations, and a business-friendly environment. The accompanying rhetoric intones that “a rising tide lifts all boats”; critics assail this as “trickle-down economics,” expressing concerns about those who are left behind—-the boats left on the beach.

    C. Can growth exist with inequality? If yes, how? If no, why?

    No, in the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.

  73. Eberechi Nwoke says:

    NAME : NWOKE EBERECHI ANGEL
    REG NO: 2018/251570
    ECONOMICS MAJOR

    Market Penetration
    This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence.  The goal is to increase its market share in a predefined vertical channel.  Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market.  Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
    Market Development
    Development refers to expanding the sales of existing products in new markets.  Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising.  It may be much more efficient to develop new markets to increase profitability.  The company may also develop new uses for its products.  For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
    Product Expansion
    If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products.  The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
     Acquisition
    A business can purchase another company in the same industry in order to expand its sales in that market.  The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes.  For this reason, an acquisition strategy can be very risky.  However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
    Diversification 
    The goal is to sell novel products to new markets.  Market research is essential to the success of this strategy because the company must determine the potential demand for its new products.  Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist.  Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.

    2.) The end is that there is no inescapable struggle between these two objectives, given that economic policy advances the spaces of complementarity among growth and equity. It thusly dismisses the methodologies which expect that there is an insoluble struggle between these destinations, for example, the “stream down” hypothesis (which unemotionally acknowledges that such a contention exists and recommends that those influenced should stand by insofar as is fundamental for their circumstance to improve); and the differentiating “equal” approach (which proposes that growth ought to be forfeited for equity, with social policy being depended with the remedy of the most exceedingly terrible distributive impacts of economic policy). Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.

  74. Orungbemi Timothy Anuoluwapo 2018/241848 says:

    REG NO: 2018/241848
    DEPARTMENT: ECONOMICS
    COURSE: ECO 361(DEVELOPMENT ECONOMICS 1)

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.
        Growth strategies is simply the plans, policies designed to increase the production of goods and services over a specific period in other to remove the effect of inflation.
    The following are some of the growth strategies in the economy and how implementing them will enhance the growth and development in a developing country like Nigeria:

      (1) Balanced growth: it aims at harmony, consistency and equilibrium. The implementation of balanced growth requires huge amount of capital. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period.

    (2) Unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. Unbalanced economy growth requires less amount of capital, making investment in only leading sectors. The unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    (3) Monetary strategy in economic development: This strategy uses monetary policy to correct a malfunctioning system. Techniques used within this strategy include adjusting debt interest rate, currency exchange rates, and the price of gold. The Nigerian government can develop the country by putting money into the country’s economic system in an effort to get it working relatively autonomously.

    (4) Fiscal economic development strategy: Uses a reallocation of government resources to positively affect a developing or ailing economy. Changes in this type of strategy can influence the tax levels paid by people and businesses and the funding and existence of government facilities and programs. The Nigerian government might include closing tax loopholes used by citizens who are underpaying their taxes this will enhance growth in the country.
    (5) Trade or commercial development strategies: This strtegy make changes to the way a country deals with other countries, mainly in a financial sense. This can include increasing or reducing aid to countries in need of economic assistance or changing policies, costs, and rules relating to international trade. Techniques used in this type of economic development strategy include limiting import amounts or setting tariffs to raise the cost of importing certain products and applying subsidies to promote the trading of desirable items.  The Nigerian government can imbibe this strategy by so doing it will open up local production of the imported goods thereby increasing productivity and growth.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
     
       Growth can be defined as an increase in production of goods and services in an economy. It is the steady increase in the GDP of the of a country for the period of one year.
      Equity in economics whereas is a situation where individuals or citizens of a country have equal access to the resources  available. According to Wikipedia it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
        
          Growth deals with increase in the GDP how output of a country can be increased and not dealing with the individuals in the country while equity deals with general individual welfare whereby every Individual welfare is being taken care of equally with no particular cadre of the society benefiting more than another, it can be seen as towing the line of development.
          
      Well growth will  always exist with inequality because growth deals mainly with the nations increase in output and not individual. Even if few individuals in the country amass the countries wealth i.e wealth is not generally distributed, and the country output is increasing it simply means the country is growing meaning growth exist with inequality

  75. Kalu Melody Chinaza says:

    NAME: KALU MELODY CHINAZA
    DEPARTMENT: ECONOMICS
    REG NUMBER: 2018/245127
    AN ASSIGNMENT ON ECO 361(DEVELOPMENT ECONOMICS)
    1. In the most simple light, a growth strategy is a few tactics or a plan of action one can use to grow his or her company revenue and market share. It’s what makes your position more dominant, stable and ready for market expansion. And most importantly, it’s critical to a company’s overall direction and success.
    Simply put, A growth strategy is a strategy that an enterprise pursues when it increases or raises its level of objectives upward, much higher than an exploration of its past achievement level. The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly.
    Growth Strategy is pursued to reduce the cost of production per unit. Growth strategies involve a significant increase in performance objectives.

    WE have different growth strategies but our focus will be on BALANCED and UNBALANCED growth strategies
    A. BALANCED GROWTH STRATEGY: The central idea of the Balanced Growth Strategy (BGS)
    is that the best strategy to accelerating the growth process in the Undeveloped Countries(UDCs) is to make investments in a large number of
    industries/sectors that are technologically and market-wise related.
    The doctrine of Balanced Growth Strategy (BGS) has been ascribed by a galaxy of scholars. This concept was first used by a leading 19th-century German-American economist ‘Friedrich List’ and then by American
    economist ‘Allyn Abbott Young’ in 1928. There are three approached to the theory of Balanced Growth that
    are commonly followed- First given by Nurkse, second given by W.A. Lewis and third approach is given by P.N.R.Rodan.
    Advantages of Balanced Growth Strategy
    Large size of Market
    Better Division of Labour
    Better Use of Capital
    Encouragement of Private Enterprises
    Breaking of Vicious Circle of Poverty
    Encouragement of International Specialization
    Development of Social Overhead Cost

    Criticisms of Balanced Growth Strategy
    This theory Criticized by Fleming, Singer, Hirschman
    and Kurihara.
    Unrealistic or Ignores Scarcity of Resources.
    Ignores the Need of Planning.
    External Diseconomies.
    Development from Scratch.
    Not a Theory of Development.
    Same Policy for Developed and Underdeveloped
    countries.
    Not supported by History.
    Contrary to the Theory of Comparative Costs

    B. Unbalanced Growth Strategy: the central idea of the Unbalanced Growth Strategy (UGS) is that the best strategy to accelerating the growth process in the UDCs is deliberate unbalancing of the economy as per a pre-designed strategy. Scholars like A.O. Hirschman, Rostow, Fleming and Singer
    propounded the theory of unbalanced growth as a strategy of
    development to be used by the UDCs.
    This theory stresses on the need of investment in strategic sectors
    of the economy instead of all the sectors simultaneously. According to this theory the other sectors would automatically develop themselves through what is known as “linkages effect”. Competitions, tensions, pressures as well as inducements are inevitable outcomes of unbalancing growth.
    Merits of the Theory of Unbalanced Growth
    • The developing countries do not have the adequate capital to invest in all sectors of economy. So if investment is concentrated at the potential and selective sector only, then the developing countries can get their economy with better growth.
    • The unbalance condition of economy creates the balanced condition which further makes the economy unbalance and finally economy is balanced. It is a non- ending process.
    • This theory decentralizes the mechanism of decision making and hence will be more useful for the underdeveloped areas.

    Demerits of Unbalanced Growth Theory
    • This theory puts undue emphasis on industrialization
    notwithstanding the significance of agriculture sector. This reflects the possibility of lop-sided development in the society.
    • Due to long gestation period in the industries, in the short-run there might be some degree of inflationary pressures.
    • Thirlwall criticizes the theory by arguing that it may lead to concentration of production in one or two commodities and this may adversely affect the BOP if these commodities are price inelastic and income inelastic in demand.

    We have other growth strategies which includes: 1. Internal Growth Strategy 2. External Growth Strategy 3. Concentration Expansion Strategy 4. Integration Expansion Strategy 5. Internationalization Expansion Strategy 6. Diversification Expansion Strategy 7. Cooperation Expansion Strategy 8. Intensive Growth Strategy 9. Integrative Growth Strategy 10. Diversification Growth Strategy.

    2. The difference between growth and equity in the economy is that: Growth is an increase in the production of goods and services in an economy. Increases in capital goods, labor force, technology, and human capital can all contribute to economic growth. While equity in an economy or Economic equality is the concept or idea of fairness in an economy, particularly in regard to taxation or welfare economics.

    CAN GROWTH EXIST WITH INEQUALITY? My answer is NO!
    Studies have shown that slow growth is associated with rising inequality, and inequality today is greater than it has ever been. High inequality means that many must do with less in order that some can have more and this can impede growth in a society.

  76. AGBO LOVETH AMARACHI says:

    NAME: AGBO LOVETH AMARACHI
    REG NO: 2018/ 248 680
    DEPARTMENT: EDUCATION ECONOMICS
    EMAIL: lovethamarachi84@gmail.com

    ECO 361 online discussion 5- understanding Growth strategies and Growth vs Equity debate.
    QUESTION:

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    QUESTION 1
    To my own understanding, Growth strategies are measures that the government of an economy can adopt to attain growth and development in a developing economy like Nigeria.
    It includes all the possible techniques that can be applied to ensure or bring about growth of part or all sectors of a growing economy.
    There are different types of growth strategies and they include:
    1. Theory of balanced growth strategies : This was propounded by W. A. Lewis. This theory emphasizes on the development of all sectors of an economy. Lewis advocated this theory based on two reasons.
    Firstly, in the absence of balanced growth, prices in one sector may be higher than the prices in the other sector. On account of unfavourable terms of trade in the domestic market, they might suffer heavy losses. As a result, no investment will be made there in and their growth will be halted. Because of balanced growth, equality in comparative prices in all the sectors will be made and thereby all the sectors will continue to grow.
    Secondly, when the economy grows, then several bottlenecks appear in different sectors. As a result of economic development, income of the people also increases. Due to increase in income, demand of those goods rises whose demand is income-elastic. If the production of these goods does not increase, there may appear several bottlenecks. However, in case of balanced growth, it is possible to increase production of those goods whose income elasticity of demand is more. Thereby, chances of bottlenecks in different sectors will be quite remote.

    Criticism
    This theory is criticized based on the fact that all sectors of economy cannot have a balanced growth especially in developing countries, some sectors grow faster than others and hence, the income of the sectors more suitable for production will grow faster than others.
    2. Theory of unbalanced growth strategies: The theory of unbalanced growth is the opposite of the doctrine of balanced growth. It was propounded by Hirschman. This theory emphasizes that investment should be in some selected sectors rather than all sectors of the economy for growth and development of such economy. According to Hirschman, investments in strategically selected industries or sectors of the economy will lead to new investment opportunities and so pave the way to further economic development. Development can only take place by unbalancing the economy according to Hirschman because , it is not possible to have abroad growth in all sectors of the economy.
    Criticism of this theory
    This theory is being criticised on the bases that concentrating resources in some particular sector will lead to wastage of resources and neglect of the sectors that are not invested in.
    Some Other growth strategies are:
    3. Internal Growth Strategy : This refers to internal growth strategy of an organization. It is achieved by expanding operations through diversification, increase of existing capacity, market growth strategies etc. These strategies are broadly classified as:
    • Intensive Growth Strategies which has to do with Market penetration strategy ,Market development strategy and Product development strategy.
    • Integrative Growth Strategies: The integrative growth strategies are designed to achieve increase in sales, assets and profits.
    There are basically two variants in integrative growth strategy which involves:
    (a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.
    (b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages
    • Diversification Growth Strategies: Diversification means going into an operation which is either totally or partially unrelated to the present operations. Before opting for diversification, the following basic questions must be seriously considered:
    (a) Whether it brings a positive synergy, to the company?
    (b) Whether the market wants the new product or service which we offer?
    (c) Whether the product or service has a good growth potential?
    Before selecting diversification strategy, one must have a clear understanding of the new product/service, the technology and the markets. Diversification strategies are used to expand firm’s operations by adding markets, products, services or stages of production to existing operations. The purpose of diversification is to allow the company to enter lines of business that are somewhat different from current operations.
    4. External Growth Strategies: These are adopted when a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.
    5. Concentration Expansion Strategy : This involves expansion within the existing line of business. It entails safeguarding the present position and expanding in the current product-market space to achieve growth targets
    6. Internationalization Expansion Strategy: This occurs when firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacently businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.
    QUESTION 2
    I understand growth and Equity debate in development economics as an argument or a debate on the relationship between growth and how the masses are treated interms of distribution of national income in a growing economy.
    DIFFERENCE BETWEEN GROWTH AND EQUITY IN THE ECONOMY
    Growth centers only on increase in Gross Domestic product ( GDP) of an economy while equity looks at how all group of individual are fairly treated in such a way that no group will feel cheated in the distribution of national income inoder to bridge the gap between the rich and the poor.
    Growth do not take into account the social welfare of the people masses used in the production of the goods and services that lead to increase in GDP. For example, it doesn’t look at whether the labour used are underpaid ( exploited), the working environment , it only takes into account the rate of increase in the GDP while equity on the other hand, takes into account the social welfare, whether workers are exploited in the cause of pursuing economic growth. Equity has to do with giving every individual support that is peculiar or that suit them so that they all can have the opportunity to achieve their potential while growth does not.

    Can growth exist with inequality?
    Yes, growth can exist with inequality. The poor masses can be exploited through low wage, bad working environment and other negative conditions to produce more goods and services which will increase the GDP( national income) but this form of economic growth lead to decrease in the social welfare of the masses as the method of this distribution of national income redistribute income in such a way that bring a large gap between the rich and the poor. That is, the rich continues to get richer and poor becomes poorer. This form of growth impedes economic development as development has to do with improvement of the welfare of the masses.

  77. OKPUZOR EMMANUEL CHIDERA. Registration number: 2018/242433. Economics department says:

    NAME: OKPUZOR EMMANUEL CHIDERA
    REG. NUMBER: 2018/242433
    DEPARTMENT: ECONOMICS.
    ECO 361 ASSIGNMENT.

    1.) What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria…
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. It is a plan of action to increase a business’s market share. If your company is looking to expand, a market growth strategy will enable you to chart your path to expansion, taking into account your industry, your target market , and your finances. Growth strategy can be adopted in the form of expansion, vertical integration, diversification, merger, acquisition and joint venture. The basic objective in all these cases is growth but the basic problem in each case is insignificantly different which needs more elaborate discussion.
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources, etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximizing gains and minimizing risk and untoward consequences.
    BALANCED AND UNBALANCED GROWTH STRATEGIES.
    Balanced growth strategies seeks to accelerate the process of growth through simultaneous investment across all sectors of the economy. It requires a lot of capital investment right from the beginning of the growth process. It is a long strategy of growth. According to Lewis, “Balanced growth strategy means that all sectors of the economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports.”
    Frederick list was the first to put forward this balanced growth strategy. According to him, a balance could be established among agriculture, industries and trade, but with equal emphasis on agriculture and industry. The expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn supplies the necessary raw materials for the development and growth of the other.
    The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.
    Unbalanced growth strategies : Hirschman, rostow, fleming and singer propounded the concept of unbalanced growth as a strategy of development for the underdeveloped nations. The strategy stresses the need for investment in strategic sectors of the economy, rather than in the all sectors simultaneously. Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a rate similar to one another. The strategy is most suitable in breaking the vicious circle of poverty in underdeveloped countries.
    GROWTH STRATEGIES IN BUSINESS
    MARKET PENETRATION: The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. This can be accomplished by a price decrease, an increase in promotion and distribution support to attract customers away from competitors and/or make sure that your own customers buy your existing products or services more often.
    MARKET DEVELOPMENT: This means increasing sales of existing products or services on previously unexplored markets. It involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market.
    Other strategies in business include Product development and diversification.
    Internal or organic growth strategy involves expansion from within a business. It relies on the company’s own resources by reinvesting some of the profits.
    External growth or inorganic growth strategies are about increasing output or business reach with the aid of resources and capabilities that are not internally developed by the company itself rather these resources are obtained through the merger with/acquisition of or partnership with other companies.
    2.) What do you understand by growth and equity debate in development economics? What are the differences between growth and equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Development economics in its early years created the image of a fierce fight between advocates of contrasting theories or approaches- “balanced growth” vs. “unbalanced growth” or “program loans” vs. “project loans.” This view has the merit to highlight such conflicts in great detail; yet it fails to take into account the reality of development economics as it was practiced in the field. This paper reassesses these old conflicts by complementing the traditional focus on theoretical debates with an emphasis on the practice of development economics.A particularly interesting example is the debate between Albert Hirschman, one of the fathers of the “unbalanced growth” approach, and Lauchlin Currie, among the advocates of “balanced growth” on how to foster iron production in Colombia in the 1950s. An analysis of the positions held by these two economists shows that they were in fact much less antithetical than is usually held and, indeed, were in some fundamental aspects surprisingly similar. Debates among development economists during the 1950s thus must be explained-at least partially-as the natural dynamics of an emerging discipline that took shape when different groups tried to achieve supremacy-or at least legitimacy-through the creation of mutually delegitimizing systemic theories.
    Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.
    Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate the distorting effect of inflation on the prices of goods produced. Measurement of economic growth uses national income accounting. Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure. The economic growth-rates of countries are commonly compared using the ratio of the GDP to population (per-capita income).
    The “rate of economic growth” refers to the geometric annual rate of growth in GDP between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend. Economists refer to an increase in economic growth caused by more efficient use of inputs (increased productivity of labor, of physical capital, of energy or of materials) as intensive growth.
    Equity represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off. Generational equity refers to the concept that different generations should be treated in similar ways and should have similar opportunities. It is often invoked as an issue by those who criticize the share of societal resources that elderly persons consume today and are predicted to consume in the future, when the baby boomers have retired. According to these critics, a trade-off exists between meeting the needs of children and the elderly, and too many resources go to the elderly. This entry presents the history of the debate about generational equity, evaluates the evidence that there is conflict between age groups, and presents an alternative formulation of the notion of generational equity.
    Private firms typically invest in more established companies with longer histories. … In contrast, growth equity firms usually take minority stakes in companies. They are focused on providing later stage startups that already have achieved some success with additional capital to fuel expansion.
    Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability.

  78. AMAHIRI UCHENNA CATHERINE says:

    NAME: Amahiri uchenna catherine
    REG NO: 2018/250139
    DEPARTMENT: ECONOMICS AND POLITICAL SCIENCE
    ASSIGNMENT

    Eco. 361 —18-10-2021(Online discussion/Quiz 5—Understanding Growth Strategies and Growth vs Equity debate) –
    WHAT IS A GROWTH STRATEGY
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Growth strategies may be classified into two categories:
    (I) Internal growth strategies

    (II) External growth strategies.

    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.

    BALANCED AND UNBALANCED GROWTH STRATEGY
    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    Cooperation Expansion Strategy:
    A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.

    Diversification Growth Strategies:
    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification.

    Integrative Growth Strategies:
    An integrative growth strategy is a growth strategy that emphasizes blending businesses together through acquisitions and mergers Integrative growth strategies are typically more expensive than intensive growth strategies and are usually practiced by mature businesses with large cash flow. horizontal integration involves the acquisition of one or more competitors. Integration of the different levels/stages of the same industry is known as vertical integration.
    2) Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
    Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.

  79. Onyilo Joseph dominic says:

    Name: onyilo Joseph Dominic
    Reg: 2018/250101
    Dept: education/economics
    ECO 361
    Assignment

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
    In the fast expanding economies of today, adoption of growth strategies by business enterprises is a must for the survival, in the long-run; lest they should be swept away by environmental influences, especially competition, technology and governmental regulations.

    Categories of Growth strategies
    (I) Internal growth strategies
    (II) External growth strategies.
    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.
    Some popular internal growth strategies are described below:
    (1) Market Penetration: Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
    1. Aggressive advertising and other sales promotion techniques.
    2. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
    3. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.
    (2) Market Development:
    This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc.
    Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.
    (3) Product Development:
    Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
    Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.
    4) Diversification:
    Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.

    External Growth Strategies:
    Some popular external growth strategies are described below:
    (1) Joint Ventures:
    Joint venture is a growth strategy in which two or more companies, establish a new enterprise (or organisation) by participating in the equity capital of the new organisation and by agreeing to participate in its management in an agreed manner. A firm or a company may have a joint venture with another company of the same country or a foreign country. Some examples of joint ventures: Tata Iron and Steel Co. joined hands with IPICOL of Orissa to form IPITATA Sponge Iron Ltd; Hindustan Computers Ltd. and Hewlett Packard of USA formed a joint venture named HCL-HP Ltd; Tungabhadra Industries Ltd. of India and Yamaha Motor Company Ltd. of Japan formed a joint-venture Birla Yamaha Ltd. etc.
    For ensuring success of a joint venture, the co-venturers must agree in advance on:
    1. Objectives of joint venture
    2. Equity participation of co-venturers
    3. Management pattern etc.

    Advantages of Joint Ventures:
    As a growth strategy, joint-venture provides the following advantages:
    (i) In case joint venture involves a foreign partner, the problem of foreign exchange is solved to a great extent; if the foreign partner brings latest machines etc. from the other country.
    (ii) Through joint venture approach, risk of business is shared among partners. In fact, high risk involved in a new project can be reduced considerably by mutual sharing of such risk.

    (2) Mergers:
    Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover. Specially in the Indian conditions, industrialists Vijaya Mallaya, R.P. Goenka and Manu Chabria are described as “take-over kings.”

    Types of Growth/Expansion Strategies:
    The expansion or growth strategies are further classified as:
    1. Concentration Expansion Strategy
    2. Integration Expansion Strategy
    3. Internationalization Expansion Strategy
    4. Diversification Expansion Strategy
    5. Cooperation Expansion Strategy
    Type # 1. Concentration Expansion Strategy:
    Concentration involves expansion within the existing line of business. Concentration expansion strategy involves safeguarding the present position and expanding in the current product-market space to achieve growth targets. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain.
    A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business.
    Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development is first suggested in Ansoff’s model. Concentration strategy is followed when adequate growth opportunities exist in the firm’s current products-market space.

    Type # 2. Integration Expansion Strategy:
    When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.
    In contrast to the intensive growth, integration strategy involves expanding externally by combining with other firms. Combination involves association and integration among different firms and is essentially driven by need for survival and also for growth by building synergies.

    Type # 3. Internationalization Expansion Strategy:
    International strategy is a type of expansion strategy that requires firms to market their products or services beyond the domestic or national market. Firm would have to assess the international environment, evaluate its own capabilities, and devise appropriate international strategy. An organisation can “go international” by crossing domestic borders international expansion involves establishing significant market interests and operations outside a company’s home country. foreign market can have a significant impact on a firm.

    Type # 4. Diversification Expansion Strategy:
    Diversification is defined as the entry of a firm into new lines of activity, through internal or external modes. Diversification is the process of entry into a business which is new to an organisation either market-wise or technology-wise or both. In diversification, firm acquires ownership or control over another firm against the wishes of the latter’s management. But in practice it can be both, hostile or friendly. The primary reasons a firm pursues increased diversification are value creation through economies of scale and scope, or market dominance.
    In some cases firms choose diversification because of government policy, performance problems and uncertainty about future cash flow. In one sense, diversification is a risk management tool, in that it’s successful use reduces a firm’s vulnerability to the consequences of competing in a single market or industry. Risk plays a very vital role in selecting a strategy and hence, continuous evaluation of risk is linked with a firm’s ability to achieve strategic advantage. Internal development can take the form of investments in new products, services, customer segments, or geographic markets including international expansion. Diversification is accomplished through external modes through acquisitions and joint ventures.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    First of all, we talk about Growth.
    Growth can be seen as the increase in some quantity over time. It can be seen as the gradual development in maturity, age, size, weight or height. It is a process that focuses on quantitative improvement.
    Equity on the other hand is where income is distributed in a way that is considered to be fair or just. Note that an equitable distribution is not the same as a totally equal distribution and that different people have different views on what is equitable.
    In the last month or so, there has been a fascinating debate on the internet about the old issue of growth vs equity. The inspiration seems to be a media statement by Prof. Amartya sen that in India we should end our “obsession with growth”.
    Expectedly, the riposte comes from the “Prof Jadish Bhagwati group (for want of a better term) stressing the importance of high growth. There is some truth in Prof sen’s statement about “Obsession with growth” as for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their Trump card whenever confronted with other issues like, Inflation, Corruption, governance etc.
    Yet, the interesting feature of the debate is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms.

    * First, a question. Are growth and poverty in conflict? It is difficult to argue that high growth of GDP has no impact on bringing at least some people above the poverty line. After all, it is clear that with a 15% growth, government measures to redistribute income will meet with less political resistance.

    * While growth refers to the increase in national income over long period of time, equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice.

    * Growth is desirable as you must have the cake to distribute it but growth in itself does not guarantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production.
    In other words, the major share of Gross Domestic product (GDP) might be owned by a small proportion of population which mai result in exploitation of weaker sections of society.
    Hence, growth with equity is a rational and desirable objective of planning. The objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth in income.
    In conclusion, there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between Growth and equity. It is even more unlikely that growth can be attained with equity.

  80. Aziude favour ifunanya says:

    Department: Economics sociology and anthropology.
    Reg:2018/246568

    What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

                      

                      Answers

    Growth strategies are techniques used to get rid of the vicious circle of poverty in an economy.

    Different Growth strategies;
    *Internal Growth Strategies- this is a growth strategy of an organisation through expanding operations throughout diversificaton , increase of already existing capacity.

    * External Growth strategy:
    This comes in form of mergers, takeovers , strategic alliances of a firm towards its rivals or competitors.

    * Diversificaton Growth Strategy

    *Intensive Growth Strategy such as
    Market penetration strategy
    Product development strategy
    Market development strategy
    These strategies can also be regarded as the Organic Growth Strategies.

    The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.

    On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

      The difference between growth and equity.
    Value funds gives you steady returns over a longer period of time,while growth funds could give higher returns both in the long -term and short-term.  Equity funds are tax free on long-term capital gains but debt fund gains  are taxed at 20% with indexation  and 10% without  indexation.

  81. Asadu Francisca Somtochukwu says:

    NAME: ASADU FRANCISCA SOMTOCHUKWU

    REG NO: 2018/241230

    DEPARTMENT: EDUCATION ECONOMICS

    ASSIGNMENT ON ECO 361

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    ANSWER

    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.

    Growth strategies may be classified into two categories:

    (I) Internal growth strategies

    (II) External growth strategies.

    Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.

    TYPES OF GROWTH STRATEGIES

    Some popular internal growth strategies are described below:

    (1) MARKET PENETRATION: Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:

    1. Aggressive advertising and other sales promotion techniques.

    2. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.

    3. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.

    (2) MARKET DEVELOPMENT: This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc.

    Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.

    (3) PRODUCT DEVELOPMENT: Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
    Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.

    (II) EXTERNAL GROWTH STRATEGIES: Some popular external growth strategies are described below:

    (1) JOINT VENTURES: Joint venture is a growth strategy in which two or more companies, establish a new enterprise (or organisation) by participating in the equity capital of the new organisation and by agreeing to participate in its management in an agreed manner.

    A firm or a company may have a joint venture with another company of the same country or a foreign country. Some examples of joint ventures: Tata Iron and Steel Co. joined hands with IPICOL of Orissa to form IPITATA Sponge Iron Ltd

    (2) MERGERS: Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover. Specially in the Indian conditions, industrialists Vijaya Mallaya, R.P. Goenka and Manu Chabria are described as “take-over kings.”

    BALANCED GROWTH STRATEGY: Balanced growth’ has at least two different meanings in economics. In macroeconomics, balanced growth occurs when output and the capital stock grow at the same rate. This growth path can rationalize the long-run stability of real interest rates, but its existence requires strong assumptions. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.

    The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.

    UNBALANCED GROWTH STRATEGY: The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth.

    The only strategy of economic development in such a country is to break this low level equilibrium by deliberately planned unbalanced growth.

    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWER

    There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s. Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality.

    Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes.

    The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity.

    DIFFERENCES BETWEEN GROWTH AND EQUITY

    Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

    However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.

    Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

    CAN GROWTH EXIST WITH INEQUALITY?
    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

    According to the utilitarian view, income inequality must exist along with economic growth in order to maximize social welfare. This is in sharp contrast to the egalitarian view according to which, all members of the society should have equal access to all economic resources in terms of economic power, wealth and contribution. Kuznets (1955) introduced the inverted U-shaped Kuznets curve that showed that in an economic system, at the initial level of low economic growth, income inequality is low and as growth occurs, income inequality increases till a threshold, after which, income inequality decreases with increased economic growth.

    On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

  82. AJULUCHUKWU JOY IFEOMA says:

    NAME: AJULUCHUKWU JOY IFEOMA
    REG. NO. 20018/21840
    EMAIL: ajuluifeoma1@gmail.com
    DEPARTMENT: ECONOMICS.
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Growth strategies are policies or methods adopted by developing countries in order to eliminate the vicious circle of poverty and develop economies.
    Types of growth strategies:
    Balanced growth strategies: According to P.A Samuelson, “Balanced Growth refers to growth in every kind of capital stock constant rates.”
    U.N Publication defines Balanced Growth as full employment, a high level of investment, and overall growth in productive capacity, equilibrium.
    ( Alak Ghosh) balanced growth indicates that all sectors of the economy will expand in the same proportion, so that consumption, investment, and income will grow at the same rates.
    According to W.A. Lewis, Balanced growth theory implies that all sectors of the economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports the truth is that all sectors should be expanded simultaneously.
    According to C.P. Kindleberger, Balanced Growth implies that investment takes place simultaneously in all sectors or industries at once, more or less along the lines of the slogan, ‘You can’t do anything until you can do everything.
    Balanced Growth aims at equality between the growth rate of income, growth rates of output, and growth rate of natural resources.
    Unbalance growth strategies: This is a situation in which some sectors of the economy grow at a faster rate than others. Banking, for example, maybe expand rapidly while manufacturing is slowing or even shrinking. Unbalanced growth foreshadows a future economic slowdown or recession, while analysts vary on how to deal with it.
    Unbalanced growth is a better development strategy to focus available resources on types of investment that serve to make the economic system more elastic, more capable of expansion under the stimulus of the enlarged market and expanding demand,” according to H.W.Singer.
    2. What do you understand by the growth and equity debate in development economics? What are the differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If not, why?

    Growth and Equity debate in development economics is an ongoing debate between economists, inspired by the statement of Prof Amartya Sen ‘’ Indian should stop the obsession with growth’’ and that of Prof Jagdish Bhagroati ‘’(for want of a better term) stressing the importance of high growth.
    The debate is stressed upon whether growth has the capacity to eradicate poverty and redistribute income equally. That is if an increase in the growth of the economy’s output will bring about a proportionate increase in societal well-being.
    Difference between Growth and Equity in the economy -growth refers to a rise in national income over time, while equity refers to an equal distribution of that money so that the benefits of increased economic growth can be passed on to all segments of the population, resulting in social justice.
    Growth can exist with inequality in a situation whereby there is an increase in national income without a corresponding increase in societal well-being. Growth is measured by the market value of goods and services produced in the economy (GDP), but this does not guarantee a fair distribution of the revenue generated. In other words, the majority of GDP might be owned by a few people.

  83. Igbokwe Cynthia Esther says:

    Igbokwe Cynthia Esther
    2016/234606
    Economics

    Growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    It is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term ; growth strategies can be long-term, too.

    Different growth strategy are as follows :

    -Strategy of Balanced Growth:

    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation.It will be useful to have again a cursory look at this vicious circle.

    In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

    As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.

    -Strategy of Unbalanced Growth:

    Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.

    Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.

    As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.

    -Internal Growth Strategies:

    The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.
    -External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    -Diversification Growth Strategies:

    Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

    Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

    -External Growth Strategies:

    A firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

    NUMBER 2
    What I understand by growth and equity debate :
    growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

    Ii. Different between growth and equity in the economy :

    Private Equity has come a long way since KKR’s 1988 takeover of RJR Nabisco. Over the past four years, private equity activity in Europe alone totalled an impressive €489 billion. What is less recognised, however, is the role of growth-focused private equity firms, i.e. private equity firms investing in smaller, growth stage companies — particularly as it relates to the technology sector where Venture Capital has become the front-of-mind funding channel.
    What is Growth-Stage Private Equity?
    Growth-stage Private Equity sits at the intersection of private equity and venture capital. Growth-focused PE firms typically invest in transactions valued between €10–100 million in exchange for either a minority or majority stake in the target company. And it is not uncommon for the invested capital to provide some level of liquidity to current owners.
    Working together with the management team, growth equity PE firms help create value through accelerated operational improvements and revenue growth, whether organic or acquisitive. And, unlike in larger leveraged buyouts, debt is not used extensively.
    Growth equity can be used to accelerate growth, fund acquisitions or offer liquidity to current shareholders.
    Which Companies Typically Receive Growth Equity?
    VC’s tend to target early-stage businesses with limited historical financials. On the other end of the spectrum, LBO investors acquire mature companies with a long track-record of cash generation.
    Growth equity investors fit somewhere in the middle, backing companies in established markets and with proven unit economics, even if their track record is relatively short. Companies best suited for growth equity exhibit potential for profitable revenue growth through a repeatable and scalable customer acquisition process and customer lifetime value that exceeds the cost of acquisition.
    Growth Equity firms invest in well-run, growing businesses with proven business models and solid management teams looking to continue driving the business.
    Founders are likely to consider a growth equity deal when they don’t feel it is quite time to sell 100%, but also realize it is prudent to seek some level of liquidity.

    Iii. Yes, growth can exist with inequality.

    In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:

    “One might thus assume a long swing in the inequality characterizing the secular income structure: widening in the early phases of economic growth when the transition from the pre-industrial to the industrial civilization was most rapid; becoming stabilized for a while; and then narrowing in the later phases.”

    Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
    Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

    These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.

    The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.

    Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.

    On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

    In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.

    In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.

    Important as well for the purposes of this paper is this—the latest economic research we reviewed only examines the outcome of whether there are results for regressions that demonstrate positive or negative relationships between inequality and economic growth and stability. This means the paper cannot provide clear guidance for policymakers on exactly how to address inequality or mitigate its effects on growth. In other words, the research examined in this paper generally does not identify the channels or mechanisms by which inequality affects growth.

    An additional issue (above and beyond the challenges of how to specify a model) is the paucity of data to evaluate questions about inequality and growth. Ideally, economists would want a variety of measures for inequality, including earnings, income, and wealth, that can be compared across a large number of countries over a long period of time. Sadly, such a perfect data set does not exist. Therefore, econ- omists are left to do the best estimates with the data at hand. Over time, though, the data sets that have been used to perform these analyses have been improving.

  84. NAME: Obiora Chidinma Jennifer
    COURSE : Development Economics I(ECO 361)
    REG NO :2018/241834
    DEPT: Economics Department
    DATE: 20/10/2021
    1. a. A Growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    b. Strategy of balanced growth: Nurske put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
    In an undeveloped country, the level of per capita income is low which means that the people purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low. As a result of low demand for goods, the inducement for investment is less and capital equipment per capita [i.e., per worker] is small.
    Since the amount of capital per capital is small, productivity per worker is low. low per capita productivity means low per capita income, i.e., poverty. In a poor county, the size of the market for goods is small so that sufficient opportunities for profitable investment in industries are lacking. According to Nurske, this is the main reason for lack of inducement to invest.

    c. Professor Albert Hirschman in his book ‘Strategy of Economic development’ carried singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving rapid economic growth.
    Like singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the poor developing countries.
    He characterizes the balanced growth doctrine as ‘the application to underdevelopment of a therapy originally devised for an underemployment situation’ by J.M Keynes. In an advanced country, during depression, ‘industries, machines, managers and workers as well as the consumption habits’ are all present, while in poor developing countries this obviously not so.
    After all, he points out, the industrialized countries did not get to where they are now through ‘balanced growth’. True, if you compare the economy of the united states in 1950 with the situation in 1850, you will find that many things have gone, but not everything grew at the same rate through the whole century.

    d. Export led growth strategies: The last 40 or so years have been dominated by what has come to be known as Export- led growth or Export promotion strategies for industrialization, at last when it comes to matters of economic development. Export-led growth occurs when a county seeks economic development by engaging in international trade.

    e. Market penetration: This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.

    2.a. It simply talks about the significant impact of growth in an economy. It states that with growth in an economy the government can distribute income equally and how some sectors grow faster than the other.

    b. Firstly, Growth is an increase in the standard of living while equity means equality. Using Korea as a case study, with the trends in employment and income distribution in the Republic of Korean during the last 10-15 years is seen as a country which have been quite successful in combining rapid growth with improved equity, and employment is considered the most important factor in this success.
    Therefore, there is no difference between growth and equity because they work hand in hand.

    c. No, one of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in the society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result to less investment in human capital by lower- income individuals if, for example there is no suitable stable system of education of grants. For this reason, countries with a high degree of inequality tend to have lower levels of social mobility between generations.
    Greater inequality can also negatively affect growth if, for example, it encourages populist policies. Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which end up acting as a brake on growth.

    References
    – economictimes-indiatimes-com.cdn.ampproject.org
    http://www.economicsdiscussion.net
    http://www.pcg-services.com
    http://www.investopedia.com

  85. Igweh Irene chidubem says:

    Name: Igweh Irene Chidubem
    Reg no: 2018/241400
    Department: Economics
    Course: Eco 361 (Development Economics)
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    Answers
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    Various growth strategies include:
    Market Penetration
    Market penetration is a strategy aimed at building sales among customers who already purchase the firms’ products. It assumes that these buyers can also be convinced to buy the same goods in larger volume or with increased frequency. Market penetration strategies are commonly implemented through discounts, advertising and other promotions targeted to repeat purchasers.

    Market Development
    If the firm believes there is untapped potential in the marketplace for its products, it may choose a market development strategy. This means pursuing new customers for existing products or promoting new uses for existing products, like suggesting the use of soup mix as a general flavouring ingredient.

    Product Development
    This alternative means creating new products for current customers. It enables marketers to build on its knowledge of existing buyers, as well as build on present networks of salespeople, vendors and distributors. For example, Fast food companies have also chosen this approach to add salads and other healthy selections to its original hamburger-based product lines.

    Diversification
    A diversification strategy is generally considered the most risky alternative, because it involves both creating new products and seeking new customers. Marketers must carefully study the competition as well as the needs and wants of people they have not previously served. However, diversification can pay off handsomely for firms that carve out a niche in a promising market.

    The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answers
    • Growth is an increase in the production of goods and services in an economy with a fiscal period of time. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
    • Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics..
    Differences between Growth and Equity
    The “rate of economic growth” refers to the geometric annual rate of growth in GDP between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend.
    Economists refer to an increase in economic growth caused by more efficient use of inputs (increased productivity of labour, of physical capital, of energy or of materials) as intensive growth. In contrast, GDP growth caused only by increases in the amount of inputs available for use (increased population, for example, or new territory) counts as extensive growth. Development of new goods and services also generates economic growth.

    Equity, or economic equality, on the other hand is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.

    [ ] Yes, growth can exist with inequality.
    The reason is because income inequality is a condition that prevails along with economic growth. According to the utilitarian view, income
    inequality must exist along with economic growth in order to maximize
    social welfare.

  86. Chukwu Precious Ada says:

    NAME: CHUKWU PRECIOUS ADA
    REG NO: 2018/244278
    DEPT: ECONOMICS EDUCATION
    COURSE NO: ECO 361
    COURSE TITLE: DEVELOPMENT ECONOMICS
    EMAIL: chukwuprecious09@gmail.com

    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    1a. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    bi. Theory of Balanced Growth: Here, all sectors of the economy grows equally in order to create balance which will enlarge the market size of the economy, increase productivity, create incentives, e.t.c. For it to take place, all resources should be allocated equally. There shouldn’t be shortages or surpluses. This requires a lot of capital investment.
    bii. No Theory of Unbalanced Growth: Unbalanced Growth focuses on the growth on some key sectors in the economy and Here, certain of the economy’s sector grows more than others. The sectors that have been chosen will in the long run, create a dynamic pressure to grow other sectors which according to some economists, helps to speed up economic development.

    Different models of economic growth

    I. Mercantilism: Wealth of a nation determined by the accumulation of gold and running trade surplus
    ii. Classical theory: Adam Smith placed emphasis on the role of increasing returns to scale (economies of scale/specialisation)
    iii. Neo-classical-theory: Growth based on supply-side factors such as labour productivity, size of the workforce, factor inputs.
    iv. Endogenous growth theories – Rate of economic growth strongly influenced by human capital and rate of technological innovation.
    v. Keynesian demand-side: Keynes argued that aggregate demand could play a role in influencing economic growth in the short and medium-term. Though most growth theories ignore the role of aggregate demand, some economists argue recessions can cause hysteresis effects and lower long-term economic growth.
    Vi. Limits to growth– reminiscent of Malthus theories: From an environmental perspective, some argue in the very long-term economic growth will be constrained by resource degradation and global warming. This means that economic growth may come to an end.

    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    Growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

  87. Oguegbu chiamaka maureen says:

    Name: Oguegbu chiamaka Maureen
    Dept.: Economics
    Reg no:2018/242309
    Course code: Eco 361
    No 1
    Meaning of Growth Strategies
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services. A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. Financially sound, bold and adventurous managements vote for growth strategies. In the fast expanding economies of today, adoption of growth strategies by business enterprises is a must for the survival, in the long-run; lest they should be swept away by environmental influences, especially competition, technology and governmental regulations.
    Having critically examined the comparative analysis of balanced and unbalanced growth strategies, a logical question arises: which of these two strategies provide greater stimulus of economic growth? The unbiased and impartial opinion is that there is no need to the debate on the controversy. It is strictly based on empirical evidence and political motivation. While Paul Streeten contends that it is possible to reformulate the choice between balanced and unbalanced growth. But Ashok Mathur argues that, “balanced and unbalanced growth need not be mutually conflicting and an optimum strategy of development should combine some elements of balance as well as unbalance.” Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. Underdeveloped countries have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital. On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
    The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium. If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations. This is not true as underdeveloped country lacks in supply of capital, skills, infrastructures and other resources which are- inelastic in supply. Similarly, unbalanced growth doctrine also neglects the role of supply limitations and supply in elasticity’s. Under such situations, a judicious compromise has to be made between the benefits from balanced growth and unbalanced growth. There is no second opinion that the developing countries are wedded to democracy who should try to control the twin evils of inflation and adverse balance of payments during the course of pursuing any strategy of economic development. The need of the hour is that it should be done to make the doctrine effective as a vehicle of economic development with added strength and vigour. In this context, Prof. Meier has rightly observed that, “From the discussion we may also now recognize that the phrases balanced growth and unbalanced growth initially caught on too readily, and that each approach has been overdrawn. After much reconsideration, each approach has become so highly qualified that the controversy is essentially barren. Instead of seeking to generalize either approach we should more appropriately look to the conditions under which each can claim some validity. It may be concluded that while a newly developing country should aim at balance in an investment criterion, this objective will be attained only by initially following, in most case, a policy of unbalanced investment.”
    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan.
    The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth.
    Hirschman contends that deliberate unbalancing of the economy according to the strategy is the best method of development and if the economy is to be kept moving ahead, the task of development policy is to maintain tension, disproportions and disequilibrium. Balanced growth should not be the goal but rather the maintenance of existing imbalances, which can be seen from profit and losses. Therefore, the sequence that leads away from equilibrium is precisely an ideal pattern for development. Unequal development of various sectors often generates conditions for rapid development. More-developed industries provide undeveloped industries an incentive to grow. Hence, development of underdeveloped countries should be based on this strategy.
    The path of unbalanced growth is described by three phases:
    1. Complementary
    2. Induced investment
    3. External economies

    Complementarity
    Complementarity is a situation where increased production of one good or service builds up demand for the second good or service. When the second product is privately produced, this demand will lead to imports or higher domestic production of the second product, as it will be in the interests of the producers to do so. Otherwise, the increased demand takes the form of political pressure. This is the case for such public services such as law and order, education, water and electricity that cannot reasonably be imported.
    Induced investment
    Complementarity allows investment in one industry or sector to encourage investment in others. This concept of induced investment is like a multiplier, because each investment triggers a series of subsequent events. Convergence occurs as the output of external economies diminishes at each step. Growth sequences tend to move towards convergence or divergence and the policy is usually concerned with preventing rapid convergence and promoting the possibility of divergence.[clarification needed]
    External economies
    New projects often appropriate external economies[clarification needed] created by preceding ventures and create external economies that may be utilized by subsequent ones. Sometimes the project undertaken creates external economies, causing private profit to fall short of what is socially desirable. The reverse is also possible. Some ventures have a larger input of external economies than the output. Therefore, Hirschman says, “the projects that fall into this category must be net beneficiaries of external economies”.[citation needed]
    The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
    Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy.[3] He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
    Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.[4]
    Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state.[5][6] Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity.[3][7] According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory.[1] No importance should be given to promoting exports.[8]
    Size of market and inducement to invest
    The size of a market assumes primary importance in the study of what induces investment in a country. Ragnar Nurkse referenced the work of Allyn A. Young to assert that inducement to invest is limited by the size of the market.[9] The original idea behind this was put forward by Adam Smith, who stated that division of labour (as against inducement to invest) is limited by the extent of the market.[7]
    According to Nurkse, underdeveloped countries lack adequate purchasing power.[7] Low purchasing power means that the real income of the people is low, although in monetary terms it may be high. If the money income were low, the problem could easily be overcome by expanding the money supply; however, since the meaning in this context is real income, expanding the supply of money will only generate inflationary pressure. Neither real output nor real investment will rise. A low purchasing power means that domestic demand for commodities is low. Apart from encompassing consumer goods and services, this includes the demand for capital as well.
    The size of the market determines the incentive to invest irrespective of the nature of the economy.[6] This is because entrepreneurs invariably take their production decisions by taking into consideration the demand for the concerned product. For example, if an automobile manufacturer is trying to decide which countries to set up plants in, he will naturally only invest in those countries where the demand is high.[7] He would prefer to invest in a developed country, where though the population is lesser than in underdeveloped countries, the people are prosperous and there is a definite demand.
    Private entrepreneurs sometimes resort to heavy advertising as a means of attracting buyers for their products. Although this may lead to a rise in demand for that entrepreneur’s good or service, it does not actually raise the aggregate demand in the economy. The demand merely shifts from one provider to another.[5] Clearly, this is not a long-term solution.
    Ragnar Nurkse concluded,
    “The limited size of the domestic market in a low income country can thus constitute an obstacle to the application of capital by any individual firm or industry working for the market. In this sense the small domestic market is an obstacle to development generally.”[3]
    (I) Internal Growth Strategies:
    (1) Market Penetration:
    Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
    1. Aggressive advertising and other sales promotion techniques.
    2. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
    3. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.
    (2) Market Development:
    This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc. Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.
    (3) Product Development:
    Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
    (4) Diversification:
    Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.

    No 2.
    Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor. While recognizing that some of their recommendations may be politically painful, the authors stress the importance of adopting a purposeful, long-range policy to encourage growth, ensure equity, and reduce the government’s equity. This article presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.
    The relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective. In general terms, a negative relationship can be observed between the level of inequality1 and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.
    At a theoretical level, the prevailing view in the 1950s and
    60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.
    However, several voices have subsequently warned of the negative effects of inequality on growth.
    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).
    Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).
    Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.2
    Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth; in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.3
    A recent study by the IMF4 suggests that an increase in inequality is harmful to economic growth. By way of example, the historical relationship (1980-2012) observed between inequality and growth in the 159 countries analysed shows that, if the income share of the richest 20% of the population increases by 1 pp (a rise in inequality), GDP growth slows down by 0.08 pps during the next five years. On the other hand, if the income share of the poorest 20% of the population increases by 1 pp (a reduction in inequality), GDP growth is 0.38 pps higher during the next five years on average.
    Along the same lines, a study by the OECD5 estimates that an increase in the Gini coefficient of three points (which coincides with the average increase recorded in OECD countries in the last two decades) would have a negative impact on economic growth of 0.35 pps per year over 25 years, representing a cumulative loss of 8.5% of GDP. Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution). For example, if the bottom inequality in the UK were changed to be like that in France, or that of the US to become like that of Japan or Australia, the average annual growth in GDP would improve by almost 0.3 pps over the next 25 years, representing a cumulative rise in GDP of more than 7%.6 Once again, it should be noted that these estimates are for illustrative purposes only and must not be interpreted as the actual effect a change in equality can have on growth in each country. Lastly, the report concludes that one of the key channels through which inequality acts as a brake on economic performance is by reducing the investment opportunities, primarily in education, of the poorest segments of the population. In fact, social mobility has deteriorated significantly in countries such as the US, where the percentage of children who receive a higher income than their parents has fallen from 90% for the cohort of 1940 to 50% for people born in the 1980s.7 In fact, less social mobility can act as an indicator of a rise in inequality. Several empirical studies have revealed a negative relationship between inequality and social mobility (see the second graph) precisely because inequality, particularly when this occurs within the lowest income groups, reduces the chances of the more disadvantaged segment of the population to invest in education, which is the main way to increase social status.8 Spain is no exception: university graduates from a lower social background record rates of access to professional and managerial jobs that are 14 times higher than those who do not finish secondary education (see the third graph).9
    By way of conclusion, it should be noted that, although inequality is, to some extent, an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth.

  88. Ugwu Cynthia Ugochukwu says:

    Name: Ugwu Cynthia Ugochukwu
    Dept.: Economics
    Reg no:2018/245470
    Course code: Eco 361
    Answer No 1
    Meaning of Growth Strategies
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services. A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. Financially sound, bold and adventurous managements vote for growth strategies. In the fast expanding economies of today, adoption of growth strategies by business enterprises is a must for the survival, in the long-run; lest they should be swept away by environmental influences, especially competition, technology and governmental regulations.
    Having critically examined the comparative analysis of balanced and unbalanced growth strategies, a logical question arises: which of these two strategies provide greater stimulus of economic growth? The unbiased and impartial opinion is that there is no need to the debate on the controversy. It is strictly based on empirical evidence and political motivation. While Paul Streeten contends that it is possible to reformulate the choice between balanced and unbalanced growth. But Ashok Mathur argues that, “balanced and unbalanced growth need not be mutually conflicting and an optimum strategy of development should combine some elements of balance as well as unbalance.” Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. Underdeveloped countries have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.
    Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital. On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
    The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium. If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations. This is not true as underdeveloped country lacks in supply of capital, skills, infrastructures and other resources which are- inelastic in supply. Similarly, unbalanced growth doctrine also neglects the role of supply limitations and supply in elasticity’s. Under such situations, a judicious compromise has to be made between the benefits from balanced growth and unbalanced growth. There is no second opinion that the developing countries are wedded to democracy who should try to control the twin evils of inflation and adverse balance of payments during the course of pursuing any strategy of economic development. The need of the hour is that it should be done to make the doctrine effective as a vehicle of economic development with added strength and vigour. In this context, Prof. Meier has rightly observed that, “From the discussion we may also now recognize that the phrases balanced growth and unbalanced growth initially caught on too readily, and that each approach has been overdrawn. After much reconsideration, each approach has become so highly qualified that the controversy is essentially barren. Instead of seeking to generalize either approach we should more appropriately look to the conditions under which each can claim some validity. It may be concluded that while a newly developing country should aim at balance in an investment criterion, this objective will be attained only by initially following, in most case, a policy of unbalanced investment.”
    Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan.
    The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth.
    Hirschman contends that deliberate unbalancing of the economy according to the strategy is the best method of development and if the economy is to be kept moving ahead, the task of development policy is to maintain tension, disproportions and disequilibrium. Balanced growth should not be the goal but rather the maintenance of existing imbalances, which can be seen from profit and losses. Therefore, the sequence that leads away from equilibrium is precisely an ideal pattern for development. Unequal development of various sectors often generates conditions for rapid development. More-developed industries provide undeveloped industries an incentive to grow. Hence, development of underdeveloped countries should be based on this strategy.
    The path of unbalanced growth is described by three phases:
    1. Complementary
    2. Induced investment
    3. External economies

    Complementarity
    Complementarity is a situation where increased production of one good or service builds up demand for the second good or service. When the second product is privately produced, this demand will lead to imports or higher domestic production of the second product, as it will be in the interests of the producers to do so. Otherwise, the increased demand takes the form of political pressure. This is the case for such public services such as law and order, education, water and electricity that cannot reasonably be imported.
    Induced investment
    Complementarity allows investment in one industry or sector to encourage investment in others. This concept of induced investment is like a multiplier, because each investment triggers a series of subsequent events. Convergence occurs as the output of external economies diminishes at each step. Growth sequences tend to move towards convergence or divergence and the policy is usually concerned with preventing rapid convergence and promoting the possibility of divergence.[clarification needed]
    External economies
    (I) Internal Growth Strategies:
    (1) Market Penetration:
    Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
    1. Aggressive advertising and other sales promotion techniques.
    2. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
    3. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.
    (2) Market Development:
    This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc. Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.
    (3) Product Development:
    Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
    (4) Diversification:
    Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.

    Answer No 2.
    Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor. While recognizing that some of their recommendations may be politically painful, the authors stress the importance of adopting a purposeful, long-range policy to encourage growth, ensure equity, and reduce the government’s equity. This article presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.
    The relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective. In general terms, a negative relationship can be observed between the level of inequality1 and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.
    At a theoretical level, the prevailing view in the 1950s and
    60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.
    However, several voices have subsequently warned of the negative effects of inequality on growth.
    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).
    Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).
    Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.2
    Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth; in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.3
    A recent study by the IMF4 suggests that an increase in inequality is harmful to economic growth. By way of example, the historical relationship (1980-2012) observed between inequality and growth in the 159 countries analysed shows that, if the income share of the richest 20% of the population increases by 1 pp (a rise in inequality), GDP growth slows down by 0.08 pps during the next five years. On the other hand, if the income share of the poorest 20% of the population increases by 1 pp (a reduction in inequality), GDP growth is 0.38 pps higher during the next five years on average.
    Along the same lines, a study by the OECD5 estimates that an increase in the Gini coefficient of three points (which coincides with the average increase recorded in OECD countries in the last two decades) would have a negative impact on economic growth of 0.35 pps per year over 25 years, representing a cumulative loss of 8.5% of GDP. Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution). For example, if the bottom inequality in the UK were changed to be like that in France, or that of the US to become like that of Japan or Australia, the average annual growth in GDP would improve by almost 0.3 pps over the next 25 years, representing a cumulative rise in GDP of more than 7%.6 Once again, it should be noted that these estimates are for illustrative purposes only and must not be interpreted as the actual effect a change in equality can have on growth in each country. Lastly, the report concludes that one of the key channels through which inequality acts as a brake on economic performance is by reducing the investment opportunities, primarily in education, of the poorest segments of the population. In fact, social mobility has deteriorated significantly in countries such as the US, where the percentage of children who receive a higher income than their parents has fallen from 90% for the cohort of 1940 to 50% for people born in the 1980s.7 In fact, less social mobility can act as an indicator of a rise in inequality. Several empirical studies have revealed a negative relationship between inequality and social mobility (see the second graph) precisely because inequality, particularly when this occurs within the lowest income groups, reduces the chances of the more disadvantaged segment of the population to invest in education, which is the main way to increase social status.8 Spain is no exception: university graduates from a lower social background record rates of access to professional and managerial jobs that are 14 times higher than those who do not finish secondary education (see the third graph).9
    By way of conclusion, it should be noted that, although inequality is, to some extent, an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth.

  89. Anyanta Minah Ngozi says:

    NAME: ANYANTA MINAH NGOZI
    REG NO: 2018/249540
    DEPT: COMBINED SOCIAL SCIENCES ( ECONOMICS/SOCIOLOGY AND ANTHROPOLOGY)
    COURSE: ECO 361
    Gmail: ngozianyanta10@gmail.com
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    ANSWER
    A. A growth strategy is a comprehensive breakdown of institutional, Firm’s and organization’s plan for combating current and future challenges to actualize its goals for for adequate expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services amongst others.
    B. DIFFERENT TYPES OF GROWTH STRATEGIES
    1. Balanced Growth Strategies: According to Lewis Postulation Balanced growth means that all sectors of the economy is growing simultaneously in order to keep a proper balance between industry and Agriculture and between production for home consumption and production for exports, this will enlarge the market size, increase it’s productive capacity and provide incentives for the private sector to invest. The intersectorial balance between Agriculture and Manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn , supplies the necessary raw materials for the Development and growth of the other. The Agricultural sector would see to the production of needed goods for labour consumption to enable their efficiency in the industry while the industry will stimulate markets for Agricultural growth. However according to Ranger, in order to break the vicious circle of poverty in the underdeveloped countries, there’s need to have a balance between demand and supply and through breaking of the vicious circle of poverty through the Development of the different sectors in the economy.
    Some of their major criticisms however includes: a) Danger of inflation b) Wrong Assumptions c) Administrative difficulties and d) Rise in costs.
    2. Unbalanced growth strategy: This theory was propounded by Fleming, Singer, Rostow and Hirdchman and they postulated that it is a strategy of Development for the underdeveloped Nations. The theory advocates for the need of investment in strategic sectors of the Economy, rather than in all the sectors simultaneously.
    Their advantages includes the following : a) it gives more Importance to Basic Industries b) Encourages New inventions and Innovations c) Encourages Economies of large scale production. d) Self_Reliance etc.
    Their major criticisms however includes: I) wastage of resources ii) increase in uncertainty iii) exclusion of obstacles iv) inflation.
    3. Intensive Growth Strategies:
    The firm pursues intensive growth strategies with an objective to achieve further growth of existing products and/or existing markets.
    The basic classification of intensive growth strategies:
    (a) Market penetration strategy
    (b) Market development strategy
    (c) Product development strategy
    These strategies are also called ‘organic growth strategies’.
    4. Integrative Growth Strategies:
    The integrative growth strategies are designed to achieve increase in sales, assets and profits.
    There are basically two variants in integrative growth strategy which involves:
    (a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.
    (b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages.
    5. Strategic Alliances:
    An ‘alliance’ is defined as associations to further the common interests of the members. Strategic alliance is an arrangement or agreement under which two or more firms cooperate in order to achieve certain commercial objectives. The motives behind strategic alliances are to reduce cost, technology sharing, product development, market access, availability of capital, risk sharing etc. The concept of ‘alliance is gaining importance in infrastructure sectors, more particularly in the areas of power, oil and gas. The basic objective is to facilitate transfer of technology while implementing large objectives. The resultant benefits are shared in proportion to the contribution made by each party in achieving the targets. In strategic alliance, two or more firms that unite to pursue a set of agreed upon goals; remain independent subsequent to the formation of an alliance.
    The strategic alliances are generally in the forms like joint venture, franchising, supply agreement, purchase agreement, distribution agreement, marketing agreement, management contract, technical service agreement, licensing of technology/patent/trade mark/design etc. The strategic alliance agreement contains the terms like capital contribution, infrastructure, decision making, sharing of risk and return etc.A strategic alliance integrates the synergetic talents of alliance partners. Mutual understanding and trust are the basic tenets of strategic alliances. For smooth functioning of an alliance, partners are required to have preset priorities and expectations from each other. This strategy seeks to enhance the long-term competitive advantage of the firm by forming alliances with its competitors existing or potential in critical areas instead of competing with others.
    6. Licensing Agreement:

    A licensing agreement is a commercial contract whereby the licenser gives something of value to the licensee in exchange of certain performance and payments.
    7. Diversification Growth Strategies:
    Diversification means going into an operation which is either totally or partially unrelated to the present operations.
    8. External Growth Strategies:
    Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    ANSWER
    A. Firstly Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.
    While
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
    Therefore Growth and Equity debate in Economics explains the concept of fairness in the distribution of social services, infrastructure, economic welfare, taxation, produced goods and services and how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.
    B. DIFFERENCES BETTER GROWTH AND EQUITY IN THE ECONOMY
    The difference between growth and Equity is that Growth refers to the increase in the Gross Domestic product (GDP), Growth is also a narrow measure of Economic welfare that neglects important non economic aspect such as leisure time, access to health and education. Economic growth is about income while Equity in Economics postulate the distribution of these products to the consumers and members of the nation, the equitable distribution of these social welfare and basic amenities to ensure improve standard of living and to bridge the gap of class division.
    C. CAN GROWTH EXIST WITH INEQUALITY?
    YES. This is because in my opinion, Growth is an increase in the production capacity of a country or nation over a period of time. It is inevitable to experience inequality in every nation. Every Developed or developing Economy has traces of inequality. This is because most individuals are more creative, advanced productively, has the knowledge of investment and seeks for opportunities for investment in order to improve in their production capacity. It is however impossible to have equitable distribution of resources. However, Growth despite inequality can thrive, howbeit, the more advanced productive individuals can actually help in the liberation of those who are lagging behind in order to improve them and help them grow. Some lacks necessary information needed to grow, those who have already embraced these information will help in the uplifting of others who are still pre informed and still on the road to Economic growth.
    Therefore Economic growth is possible with inequality, because the gap of inequality is a thriving motivation to do better rather than promoting laziness, reliance and dependants on the distribution of national resources.

  90. Ugwuoke Godwin Izuchukwu says:

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

    1.
    Growth stratagies are basic plans, ideas, principles and actions which a firm, organization adopts in other to spur up growth in business and attain a success in the present and future. These are ideas that help to shape their decision to stand firm in acompetitive business environment and explore the market.

    Different growth statagies imclude

    1. Market penetration
    Market penetration aims to increase market share for an existing product, or to successfully promote a new product. Useful strategies include advertising, bundling products into attractive, saleable packages, offering discounts on larger orders and lowering prices to beat competitors.

    Although it may seem unappealing, lowering prices can be a good short-term expansion strategy for businesses selling products similar to those sold by their competitors. For example, businesses with relatively generic products (such as household cleaning supply businesses or stationers) can benefit from adopting this market penetration strategy

    2. Market development
    A market development strategy pertains to promotion of existing products or services to new customers, or launching them in a new geographical area. It might be that your usual market has been saturated or you’re struggling to attract new customers or clients in your local region.

    Sales and profits are apt to suffer unless a business finds new markets for its products. A larger-scale example of this would be leading footwear companies Nike, Adidas, and Reebok, which successfully expanded into international markets with original, attractive marketing campaigns.

    Small businesses budgets may not be comparable, but it is certainly possible to find new uses for current products or branch out into similar markets. For example, a restaurant owner might consider private catering, or doing some B2B marketing to get well-packaged signature products onto local grocery store shelves.

    3. Alternative channels
    Utilising alternative channels is one of the best methods of growth in business. Many small businesses already use more than one online platform for marketing, but sometimes switching platforms achieves better results.

    The top three marketing channels are email marketing, social media and business websites. 54% of small businesses use email and 48% use social media; it might be surprising to know that less than two thirds (equating to 64%) of small businesses has its own website, according to B2B research firm Clutch.co – yet customers tend to expect to find a website for informational purposes at the very least!

    For exclusively offline businesses, it may be time to launch a website with an online product store to gain national or international reach. Trends in recent years show that having both an offline and online presence leads to optimum growth, so it is worth considering.

    Small businesses with quality products usually benefit from using alternative channels. Five commonly used channels are Google Ads (pay-per-click/cost-per-click advertising), Facebook, email marketing and remarketing. To give you an idea, remarketing is email-based and relates to the collection of user information for list creation; the lists are then used for future promotional emails.

    4. Product expansion
    Small businesses can benefit hugely from expansion of product lines or adding new features to appeal to their existing markets. You may be experiencing a lull in sales or profits due to outdated technology or outmoded products. If so, it could be time to expand your product line.

    Drinks giant Coca Cola are a good example: in order to outperform competitors, they launched Cherry Coke in 1985. As the first adaptation of the original drink, it refreshed the interest of previous customers and attracted the attention of many more.

    Gilette is another company with many variants of similar products in their range. When your product sales start to decline, it’s time to phase out weaker products and introduce newer versions to your loyal customers as a starting point. Any business with products no longer hitting targets can benefit from product or service expansion, but remember that pre-expansion research is key in order to avoid failure.

    5. Market segmentation
    Another of the small business growth strategies is market segmentation. This simply means to divide your market into various groups (segments) according to customer preferences, interests, locations and other characteristics. These segments allow you to create targeted campaigns according to specific variables, giving the campaigns a much higher chance of success.

    2.
    Growth can simply imply an increase in the gdp of an economy. It involves the over all increase int the quantity of God’s and service Produced in an economy within a specific period of time
    Equity has to do with a way of ensuring effective allocation of the income and resources to achieve an even development in all sectorss. This has to do with ensuring diversity in resources allocation to discard the challenges of focusing the resources in One sector making it to be more advanced than others in the economy. When one sector is advanced and the others are lagging behind, development has not fully taken place. However, some of the technologies in the advanced sector can be transferred to the lagging sector to boost Development there and also move on together with others.

    This article presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.

  91. Nwokolo Emmanuel Chibuike says:

    Nwokolo Emmanuel Chibuike
    Economics department
    2018/248270
    Eco 361: Development Economics
    No 1: What is a growth strategy?
    A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    an action plan, your growth strategy should include the following components:
    Goal: What do you want to achieve?
    People: How is each department impacted by your goal?
    Product: Is your product positioned to help you achieve your goal?
    Tactics: How will you work toward your goal?
    Your growth strategy needs to be communicated across your organization, so everyone is on the same page and can share ideas on the plan. As Mailchimp saw in its 2014 all-hands meeting, teams can become uneasy if they don’t understand the company strategy.
    If you’re clear about your growth strategy and the path to achieve it, teams will feel they can contribute to the company’s success.
    Types of growth strategies
    i: Market Penetration Strategy
    One growth strategy in business is market penetration. A small company uses a market penetration strategy when it decides to market existing products within the same market it has been using. The only way to grow using existing products and markets is to increase market share, according to small business experts. Market share is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors.
    One way to increase market share is by lowering prices. For example, in markets where there is little differentiation among products, a lower price may help a company increase its share of the market.

    ii: Market Expansion or Development
    A market expansion growth strategy, often called market development, entails selling current products in a new market. There several reasons why a company may consider a market expansion strategy. First, the competition may be such that there is no room for growth within the current market. If a business does not find new markets for its products, it cannot increase sales or profits. A small company may also use a market expansion strategy if it finds new uses for its product. For example, a small soap distributor that sells to retail stores may discover that factory workers also use its product.

    iii: Product Expansion Strategy
    A small company may also expand its product line or add new features to increase its sales and profits. When small companies employ a product expansion strategy, also known as product development, they continue selling within the existing market. A product expansion growth strategy often works well when technology starts to change. A small company may also be forced to add new products as older ones become outmoded.

    iv: Growth Through Diversification
    Growth strategies in business also include diversification, where a small company will sell new products to new markets. This type of strategy can be very risky. A small company will need to plan carefully when using a diversification growth strategy. Marketing research is essential because a company will need to determine if consumers in the new market will potentially like the new products.

    v: Acquisition of Other Companies
    Growth strategies in business can also includes an acquisition. In acquisition, a company purchases another company to expand its operations. A small company may use this type of strategy to expand its product line and enter new markets. An acquisition growth strategy can be risky, but not as risky as a diversification strategy. One reason is that the products and market are already established. A company must know exactly what it wants to achieve when using an acquisition strategy, mainly because of the significant investment required to implement it.
    vi: Balanced Growth
    It refers to a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending. Balanced growth is the opposite of volatile boom and bust economic cycles.
    Features of balanced growth
    Economic growth close to the long run trend rate of growth This is the average sustainable growth rate. (in the UK this is about 2.5% a year)Low inflation. High inflationary growth causes increased uncertainty and volatility and can discourage investment. Inflationary growth often leads to recession as the government seek to control inflation.
    Balanced between different sectors of the economy e.g. both export and domestic consumption should be part of growth. If growth is just financed by consumer spending and imports – this causes a current account deficit and an imbalance.
    Balanced between different regions of the country. e.g. China’s breakneck growth is focused on the South, but the north is more left behind. Balanced growth shouldn’t leave some regions behind. (e.g. US rust belt)
    A balance between consumption and investment. eg. growth in UK and US has often been focused on consumer spending leading to low savings ratios and high current account deficits. Low investment has implications for the long-term productive capacity.
    Concern for the environment. Balanced growth should use a mix of renewable resources as well as non-renewable growth. If growth is focused on the use of non-renewable resources, then it became less sustainable in the long-term.
    A balance between different sectors e.g. manufacturing vs retail sector vs primary sector. An economy that relies on the primary sector (mining, agriculture) may be at greater risk of fluctuations in the prices and output of primary products. For example, Venezuela and Russia experienced economic difficulties from relying on high oil prices. Also, an oil-based economy may deter investment in manufacturing which gives more balanced growth in the long-term. (see – Dutch Disease)
    Sustainable debt levels. If growth is financed by unsustainable debt, then it is always at risk from debt-deleveraging – a period where firms and consumers seek to pay back the debt. For example, between 2002-2006, the US economy saw an increase in subprime mortgages – with households buying a house and relying on low-interest rates. When interest rates rose, households defaulted, banks lost money and it led to a credit crunch.
    vii: Unbalanced growth
    It is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way.
    No 2: In the last month or so, there has been a fascinating debate on the internet (largely among non-resident Indian economists and some India watchers) about the age-old issue of growth vs equity. The inspiration seems to be a media statement by Prof Amartya Sen that in India we should end our “obsession with growth”. Expectedly, the riposte comes from the ‘Prof Jagdish Bhagwati group’ (for want of a better term) stressing the importance of high growth. There is some truth in Prof Sen’s statement about “obsession with growth” as, for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation, corruption, governance, etc. Yet, the interesting feature of the debate (which at the current level could continue for the next 50 years without any conclusion) is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.
    Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used. While equity means fairness or evenness, and achieving it is considered to be an economic objective. Despite the general recognition of the desirability of fairness, it is often regarded as too normative a concept given that it is difficult to define and measure. However, for most economists, equity relates to how fairly income and opportunity are distributed between different groups in society.
    Growth can’t exist with inequality because: the relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective.
    In general terms, a negative relationship can be observed between the level of inequality1 and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship. At a theoretical level, the prevailing view in the 1950s and 60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.
    However, several voices have subsequently warned of the negative effects of inequality on growth.
    One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations

  92. Okoye favour says:

    Name:okoye favour
    Reg no:2018/249186
    Department:Economics

    1.growth strategy is a collection of business initiatives that seek the maximization of a company’s value within a period.

    Despite what many people believe, a comprehensive growth strategy is not only about getting more clients and selling more stuff. I mean, getting clients is super important but there’s much more in a strategic growth plan than just expansions and market development.

    Market Penetration Strategy

    One growth strategy in business is market penetration. A small company uses a market penetration strategy when it decides to market existing products within the same market it has been using. The only way to grow using existing products and markets is to increase market share, according to small business experts.
    Newsletters

    Growth Strategies in Business

    • Small Business

    |

    • Business Planning & Strategy

    |

    • Growth Strategies

    ByRick SuttleUpdated February 12, 2019

     

     

     

     

     

    Most small companies have plans to grow their business and increase sales and profits. However, there are certain methods companies must use for implementing a growth strategy. The method a company uses to expand its business is largely contingent upon its financial situation, the competition and even government regulation. Some common growth strategies in business include market penetration, market expansion, product expansion, diversification and acquisition.

    Market Penetration Strategy

    One growth strategy in business is market penetration. A small company uses a market penetration strategy when it decides to market existing products within the same market it has been using. The only way to grow using existing products and markets is to increase market share, according to small business experts. Market share is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors.

    One way to increase market share is by lowering prices. For example, in markets where there is little differentiation among products, a lower price may help a company increase its share of the market.

    Market Expansion or Development

    A market expansion growth strategy, often called market development, entails selling current products in a new market. There several reasons why a company may consider a market expansion strategy. First, the competition may be such that there is no room for growth within the current market. If a business does not find new markets for its products, it cannot increase sales or profits.

    A small company may also use a market expansion strategy if it finds new uses for its product. For example, a small soap distributor that sells to retail stores may discover that factory workers also use its product.

    Product Expansion Strategy

    A small company may also expand its product line or add new features to increase its sales and profits. When small companies employ a product expansion strategy, also known as product development, they continue selling within the existing market. A product expansion growth strategy often works well when technology starts to change. A small company may also be forced to add new products as older ones become outmoded.

    Growth Through Diversification 

    Growth strategies in business also include diversification, where a small company will sell new products to new markets. This type of strategy can be very risky. A small company will need to plan carefully when using a diversification growth strategy. Marketing research is essential because a company will need to determine if consumers in the new market will potentially like the new products

    2.There are two sides to the issue of the relationship between inequality and development. One side focuses on the distribution of the benefits of development and the capacity of development to effectively reduce poverty. The other side focuses on how the distribution of economic resources may affect the pace and structure of development.

    The first side of the issue, namely who benefits from development, centers around Simon Kuznets’ famous hypothesis, according to which income inequality tends to increase in the first stage of development, and then decreases beyond some threshold. This hypothesis motivated many studies in the 1970s and the 1980s. On the one hand, it provided an explanation for the mechanisms that determine the distributional consequences of economic growth. On the other hand, it allowed us to test whether the hypothesis of an inverted-U, or Kuznets curve between inequality and average income per capita could be justified empirically. As it turns out, there seems to be no empirical evidence of a systematic relationship between the level of development (e.g., as measured by GDP per capita) and income inequality (e.g., as measured by the Gini coefficient). The recent increase in inequality in developed countries may support this conclusion, as well as demonstrate the complexity of the multiple mechanisms and policies that determine the evolution of inequality.

    The other side of the issue of the inequality-development relationship has attracted much attention over the last 20 years or so, even though the modern discussion on the topic dates back to Kaldor [1955]. He observed that if capitalists saved more than the workers, a faster rate of growth was associated with a higher share of profit. In the 1990s, renewed interest in the theory and empirics of economic growth led to various alternative views on whether and how inequality could affect the rate of economic growth. These views departed somewhat from the pure macroeconomic functional distribution framework in classical, neo-classical, and Keynesian (i.e., Kaldor’s contribution) economics. From a theoretical perspective, the prevailing belief included the existence of a tradeoff between the equality of the distribution of economic resources and economic efficiency. However, many authors showed that inequality could actually cause inefficiency and slower growth through various channels, including market imperfections, endogenous redistribution, and political economy mechanisms. From an empirical perspective, the growth regression wave of the 1990s generated a flurry of econometric tests of the effect of the initial Gini coefficient of income distribution [2] on economic growth during some period. Heterogeneous results were obtained, although a slight majority favored a negative relationship.

    Despite the considerable work and energy expended by the economic profession on this matter, there are few conclusions on whether inequality has a positive or negative effect on economic growth and development, or what the policy implications of the effect might be. Of course, equality may be seen as an objective worth pursuing per se, for ethical reasons. Even so, however, it seems important to know something about the economic cost of reducing inequality. Is the cost substantial, or perhaps even prohibitive, as some claim? Alternatively, are there situations in which the objectives of equality and economic growth are complementary?

    The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.

     

     

     

     

     

  93. Eze chidera Aloysius says:

    Eze chidera Aloysius
    2018/242420

    1) growth strategies refers to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
    Economic development strategies also relate closely to planning and redevelopment strategies. Vibrant, clean, and safe places make the perfect environment for economic growth. And strategies necessarily include an effective use of public incentives to catalyze growth and encourage business retention.

    2) In the last half century, economic growth in the East Asian region was an unprecedented success story. Between 1960 and 1987 per capita income in Japan quadrupled from $4,000 to $16,000 (these and all following income figures in US$). Similarly impres- sive growth took place in South Korea and Taiwan somewhat later. In South Korea per capita income quadrupled from $2,000 to $8,000 between 1969 and 1989. In the next 15 years it doubled again, to $16,000 by 2003. Income increased at a similar speed in Taiwan with per capita income reaching $16,000 in 1999, having quadrupled from around $4,000 in 1977. In China, the last of these economies to show massive improvement, per capita income also quadru- pled in about two decades time, from around $1,000 in 1980 to over $4,000 by 2002. And, since early in the first decade of 2000, the rate of rise in Chinese per capita income has continued to accelerate.
    For the early economic successes in this region— Japan, South Korea, and Taiwan—the acclaimed model of “growth with equity” indeed finds empirical support, at least until the mid-1980s (Figure 1). In all three locales the degree of economic inequality, measured by the Gini index of inequality of per capita gross income, declined in the initial stages of increas- ing GDP. The Gini index of inequality ranges from 0 to 1, with 0 being total equality (every member of the population receiving exactly the same income) and 1 being total inequality (all income being in the hands of only one individual).
    b) Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

  94. Ezeamenyi chinonso ifesorochukwu says:

    NAME: EZEAMENYI CHINONSO IFESOROCHUKWU
    REG: 2018/251370
    DEPT: EDUCATION/ECONOMICS
    EMAIL ADDRESS: nonsofavour732@gmail.com
    GROWTH STRATEGY
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    I: Market Penetration Strategy
    One growth strategy in business is market penetration. A small company uses a market penetration strategy when it decides to market existing products within the same market it has been using. The only way to grow using existing products and markets is to increase market share, according to small business experts. Market share is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors. One way to increase market share is by lowering prices. For example, in markets where there is little differentiation among products, a lower price may help a company increase its share of the market.
    Ii: Market Expansion or Development
    A market expansion growth strategy, often called market development, entails selling current products in a new market. There several reasons why a company may consider a market expansion strategy. First, the competition may be such that there is no room for growth within the current market. If a business does not find new markets for its products, it cannot increase sales or profits. A small company may also use a market expansion strategy if it finds new uses for its product. For example, a small soap distributor that sells to retail stores may discover that factory workers also use its product.
    iii: Product Expansion Strategy
    A small company may also expand its product line or add new features to increase its sales and profits. When small companies employ a product expansion strategy, also known as product development, they continue selling within the existing market. A product expansion growth strategy often works well when technology starts to change. A small company may also be forced to add new products as older ones become outmoded.
    iv: Growth Through Diversification 
    Growth strategies in business also include diversification, where a small company will sell new products to new markets. This type of strategy can be very risky. A small company will need to plan carefully when using a diversification growth strategy. Marketing research is essential because a company will need to determine if consumers in the new market will potentially like the new products.
    V: Acquisition of Other Companies
    Growth strategies in business can also includes an acquisition. In acquisition, a company purchases another company to expand its operations. A small company may use this type of strategy to expand its product line and enter new markets. An acquisition growth strategy can be risky, but not as risky as a diversification strategy. One reason is that the products and market are already established. A company must know exactly what it wants to achieve when using an acquisition strategy, mainly because of the significant investment required to implement it

    2: What do you understand by growth and equity debate in development economics?
    Answer
    a: Growth and equity debate is an argument on whether equal distribution of nation’s wealth in other to reduce poverty will lead to low economic growth or not. It is believed that public expenditure needed for reduction of poverty would entail the reduction in the rate of growth. The concerns that concentrated efforts to lower poverty would slow the rate of growth paralleled the argument that countries with lower inequality would experience slower growth. In particular, if there were redistribution of income or assets from rich to poor, even through progressive taxation, the concern was that savings would fall, which will lead to low investment and reduce economic growth. The debate is that there shouldn’t be equity in income distribution.
    b: Growth refers to the increase in national income over a long period of time while equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice. Growth is desirable as you must have the cake to distribute it but growth itself does not guarantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production. In otherwords, the major share of GDP might be owned by a small proportion of the population which may result in exploitation of weaker sections of the society. This objective ensures that the benefits of high growth are shared by all people equally and hence inequality of income is reduced along with growth income.
    c: Growth can not exist with inequality because Inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential.

  95. Sochima Anne Nwosu says:

    NAME: Nwosu Sochima Anne
    DEP: Economics
    REG NO:2018/242291
    Eco 361 Assignment .
    1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
    2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answers .
    1a. A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, growth strategy can also be described as an organization’s plan, safest strategy or policy put into action with visible results or changes for the sake of overcoming current and future challenges ;maximizing gains and minimizing risks, to realize its goals for expansion.
    1b. Different growth strategies in the economy include;
    i. Balanced growth strategy: In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.
    ii. Unbalanced growth strategy: A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining.
    iii. Market penetration: The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share.  To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
    iv. Market development: This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ;  industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets.
    v. Product development: Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it;  Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
    vi. Diversification: This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
Diversification may be divided into further categories:
    * HORIZONTAL DIVERSIFICATION
This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups.  These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.
    * VERTICAL DIVERSIFICATION
The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.
    * CONCENTRIC DIVERSIFICATION
Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
    * CONGLOMERATE DIVERSIFICATION
Is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio.
    2a. Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability. High levels of inequality reduce growth in relatively developing countries like Nigeria but encourage growth in richer countries. Tackling inequity is crucial for developing country governments and development agencies: as well as being a valuable goal in itself, improving equity constitutes a central place in our understanding of beneficial change and development, driving poverty reduction in combination with growth.
    2b. What are the difference between growth and equity in the economy? Equity is free from the biases that occur with equality. It reduces institutional barriers and motivates an individual to strive to be successful. Whereas equality is giving everyone the same thing, equity is giving individuals what they need. Growth on the other hand is defined as the increase in the market value of the goods and services produced by an economy over time.
    2c. Can growth exist with inequality? If yes, how? If no, why? Yes growth can exist with inequality especially in a country like ours with corrupt leaders, but it wouldn’t be rapid or consistent. Inequality to some extent, is an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth. Greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations but that doesn’t not mean the economy will completely shut down, it means that growth would be limited because the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution).

  96. Onah munachimso modester says:

    ONAH MUNACHIMSO MODESTER
    2018/242421; ECONOMICS DEPARTMENT
    No:1a
    Growth strategies are organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    No:1b
    i):Market Penetration strategy
    Growth through market penetration does not involve moving into new markets or creating new products; it’s an attempt to increase market share using your current products or services. Carry out this strategy by lowering the price of a product or service, or by increasing marketing efforts to lure customers away from competitors.
    ii):Product Development strategy
    Product development means creating new products to serve the same market. For example, a company that produces ice cream for institutional buyers expands its line to include gelato and sorbet. The company can sell these new products to existing customers and grow its business without tapping new markets.
    iii)Market Development
    Market development involves introducing your products or services to new markets. You may want to enter a new city, state or even country. Or you can target a market segment. For instance, a bakery that produces breads for the consumer market could enter into the commercial market by baking breads for restaurants and retailers.
    iv):Diversification
    Diversification is the most radical form of growth. It involves creating a totally new product for a completely new market. This is the riskiest growth strategy because it’s the most uncertain. Failure is a distinct possibility, although the potential of a high payoff may be worth the risk for companies with sufficient financial means.
    v): Strategy of balanced Growth
    We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
    In an underdeveloped country, the level of per capita income is low which means that the
    people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.
    As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
    vi): Strategy of Unbalanced Growth:
    Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.
    Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
    As an under-developed country is incapable of financing and managing simultaneously a
    balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.
    No:2a
    In the last month or so, there has been a fascinating debate on the internet (largely among non-resident Indian economists and some India watchers) about the age-old issue of growth vs equity. The inspiration seems to be a media statement by Prof Amartya Sen that in India we should end our “obsession with growth”. Expectedly, the riposte comes from the ‘Prof Jagdish Bhagwati group’ (for want of a better term) stressing the importance of high growth. There is some truth in Prof Sen’s statement about “obsession with growth” as, for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation, corruption, governance, etc. Yet, the interesting feature of the debate (which at the current level could continue for the next 50 years without any conclusion) is that none of the protagonists in this debate seem to have moved on to micro issues. Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, willnot automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.
    2b:
    Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. While Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
    No2c
    The relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective.
    In general terms, a negative relationship can be observed between the level of inequality1 and economic growth. But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.Greater inequality can also negatively affect growth if, for example, it encourages populist policies. Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth

  97. ISIGUZO PURITY EZINNE says:

    ISIGUZO PURITY EZINNE
    2018/242353
    ECO 391

    (1) What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.
    Answer

    (A) A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

    By “growth strategies” I refer to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.

    (B) The following are the main types of Growth Strategies in an economy-

    (1) Market penetration- Market penetration is about developing uniqueness about your product or service that you’re offering through price differentiation. Either you offer products at cheaper prices to capture the market share, or you charge higher prices to grab a completely different segment of the market.
    You could also differentiate your brand by promoting and making your product more attractive. Here you only change the marketing and advertisement strategy, so that your target customer would perceive your products from a different perspective. It would lead to an increase in market share.

    The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share.

    (2) Market Expansion-
    The market expansion allows you to grab the market share of a completely new and different market. Here you target the unserved or underserved customers. It means expanding your market and reaching a global audience. It would include the customers of the new demographic that you haven’t served before.

    For example, a watch is your product and you’re selling it in the US. You could go global and offer the same watches in Asia and Europe. It would help you to become a global play and expand your market share and customer base.

    (3) Product Development Strategy-
    Product development strategy means improving your product/service in order to meet the expectations of customers. If customers are happy with your product, then they’ll keep using it and share their experience with their social circle. It would create a repetitive loop of sale, and you’ll keep getting new customers through referrals.

    For instance, smartphone companies like Apple iPhone follow product development strategies. They introduce a new model of the iPhone series with a new design, feature, and more powerful than the previous model. Just like they launched HomePod with smart speakers voice-enabled last year, and it was a completely a new product.

    Product development strategy helps you to attract new customers, increasing sales, and expand your market share.

    (4) Diversification Strategy-
    Diversification strategy means introducing a new product/service in an unexplored market. It’s a highly risky strategy because it involves the marketing of the new product/service in a completely new market.

    Some businesses are competing with each other in the same market and targeting the same audience, but they offer different solutions to the customers’ problems.

    (5) Balanced Growth Strategy- In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors of the economy. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.

    (6) Unbalanced Growth Strategy-
    This strategy proposes the creation of disharmony, inconsistency, and disequilibrium in the development process of the sectors of the economy.

    Unbalanced growth suggests that economic policies and measures should focus investment only on leading sectors of the economy.

    The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. Imbalances give incentive for intense economic activity and push economic progress.

    (2) What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
    Answer

    (A) Growth in Economics, can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.

    -The equity-efficiency tradeoff is when there is some conflict between maximizing pure economic efficiency and achieving other social goals. Most economic theory uses a utilitarian approach as its ethical framework, but this may conflict with other moral values that people hold, leading to an equity-efficiency tradeoff.

    (B) Differences between Growth and Equity-

    – There is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy).

    According to Per hypothesis Kuznets, in the early stages of growth, income inequality increases and then it declines in later stage.

    Also,
    Growth in economics refers an increase in the production of economic goods and services in a country.

    Economic growth is also an increase in technological Improvement.

    While Equity in Economics, is a concept of fairness, particularly in regards to taxation or welfare economics.

    Equity in Economics, refers to fairness in the allocation of resources or goods to a group of people.

    (C) Yes,
    Growth can exist with inequality in an economy.
    The reason is because income inequality is a condition that prevails along
    with economic growth.
    According to the utilitarian view, income
    inequality must exist along with economic growth in order to maximize
    social welfare.

    Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

  98. Eco. 361 —18-10-2021(Online discussion 5—Understanding Growth Strategies and Growth vs Equity debate)
    NAME: Ugwuoke cornelius chinemeogo
    REG NO: 2018/241852
    DEPT: ECONOMICS
    LEVEL: 300L
    EMAIL: chinemeogocornelius40@gmail.com
    QUESTION:
    What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

    What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

    ANSWER
    A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
    therefore, Growth strategies is a plan or course of actions that permit you or an organization to attain or achieve a bigger or higher goal or objectives in other to reach a targeted market shares. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
    The various growth strategies that Will spur growth and development in Nigeria economy are as follows:
    Product development strategy :growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
    Market development strategy :growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.
    Market penetration strategy:growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
    Diversification strategy: growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.
    Balanced growth strategy: this theory posits that all sectors of the economy should grow simultaneously so as to keep a proper balance between industry and agricultural and between production for home consumption and production for exports. It also entails that balance could be established among agriculture, industries and trade, but with an equal emphasis on agriculture and industry.
    Unbalance growth strategy: propounded by various scholar like Robstown, Fleming and others. The theory stresses the need for investment in strategic sector of the economy, rather than in all sectors simultaneously. Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a rate similar to one another.
    2a Growth and equity debate:
    This presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by the united nations Economics commission for latin America and the Caribbean (ECLAC): the need for the rapid, large-scale spread of technology. Finally, notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity
    2b Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. WHILE Growth or Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time.
    2c. According to recent study by international monetary fund (IMF) there is a negative relationship between inequality and Economics growth. An increase inequality is harmful to economic growth in the sense that inequality reduces the opportunity available to the most disadvantage persona in the society.
    Moreover, most study shows that the most negative effect of inequality on is caused by the system inefficiency which affect the lowest income individuals ( those at the bottom of income distribution)