CHAPTER TWO
LITERATURE REVIEW
2.1 Theoretical framework
The theoretical basis of this study centers on:
Big push theory
Balance growth theory
Unbalance growth theory
2.1.1 The Big push theory
According to PaulRosensten-Rodan (1943), Big push model is a theory that emphasizes that underdeveloped countries required large amount of investments to embark on the path of economic development from the present state of backwardness.
This theory is of the view that ‘bit by bit’ investment programmed will not lead to the path of economic development, rather through investing a specific amount can help in economic development.
The theory is also of the view that in order for a country to achieve economic development, there must exist three indivisibilities in underdeveloped countries:
i. Indivisibilities in production function: In establishing so many
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Social overhead comprises of those basic activities, without which primary, secondary, tertiary productive activities cannot functions, this includes communication, investment in public health, education, transportation and conventional public utilities such as electricity, water etc. this theory suggest that investing so much in social overhead activities will bring about increase in private investment in the form of direct productive activities (DPA). SOC investment indirectly subsidizes agriculture by cheapening various inputs which they use or reducing costs. The SOC approach to economic development is explained that by unbalancing the economy, investment in DPA will be stimulated.
For the sake of this study, the unbalance growth theory of economic development will be adopted; this is because the unbalance growth theories of economic development explained that unbalancing the economy using a pre-design strategy will lead to the path of economic
Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability.
This descriptive report will be described two objects which designed by Scott Jarvie The first chair is the ‘One Cut Chair’ and following by this will be ‘The Atlas Chair’. Both chairs are unique comparing to the old tradition chair design. After this paragraph will be a biography of the designer, following by his design philosophy. After that it will be describing first product ‘One Cut Chair’, form there on will be another product ‘The Atlas Chair’, and finally is a conclusion of this report.
Development: It is increasing the standard of living by considering economics is the key function. Every theory of development has functions of economics. It plays a vital role in social science. It is widely considered as “committed” i.e., serves an interest especially class interest. Economists have equal important like scientists, because these people concern with important issues like economic growth, employment and development etc., Economic theories of development have own way of History, projections, philosophical bias, practice, language and relations. These properties of theories depend on particular
The two theories which shall be compared are the modernisation theory and Neo Liberalism. The modernisation theory is a market oriented development theory which states that low income countries can develop economically if they give up their traditional ways which often can be dated back centuries and take on more modern economic principles, technologies and cultural values which comprise of an emphasis on productive investment and savings.
The first of these theories is Andre Gunder Frank’s Dependency Theory, which revolves around the idea of resources from poor, underdeveloped states (the periphery) going to the wealthy states (core), giving the wealthy states most of the benefits.
Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability.
Theory, whether in economics or sciences, helps ones predict and succeed in explaining on what they intend to explain relies on convincing assumptions. However, accuracy and validity of theories are important as the more accuracy in the theory, the more success in whatever business or science. Hence, all theories should be tested whether they are practical in the reality. If they are not, we should develop and modify them so that ones can make good predictions with current circumstance and match reality, otherwise these theories will be useless.
that an economy can be below full capacity in the long-run. This theory, on the other hand,
Such position is centered on a two-step argument that recognizes the growth-enhancing potential of openness and, in its turn, growth's relevance to poverty reduction. Furthermore, it is also recognized the necessity of prudent, gradual and sustainable openness in order to dissociate the link between economic growth and social disruptions. This means that both trade and investment are here considered to be "engine[s] of growth" (Robertson, 1940) and that growth must be the principal (although not the only) strategy for reducing scarcity, increasing employment opportunities, and minimizing poverty. According to Bhagwati (2007,
He pointed out that different economic levels have their own requirements and they may not follow the same process of industrialization. Moreover, he raised the most influential theory related to late industrialization that the economically backward states may have rapider growth rate as they are late comers, and the national development process relied on the degree of economic backwardness. That is to say the more backward a country, the faster it will advance (ibid).
Taking into consideration the trickle-down theory of economics by Lewis, if the growth in economy is not sufficient to satisfy the needs and wants of the upper sections, nothing or very little shall trickle down to the lower sections in the hierarchy of society. Thus, the gap between the rich and poor widens and though economic growth has impacted a certain section of society, this cannot be considered development. Another example is an increase in the defence output of a nation, which accounts for an increased GDP but does not in any way contribute to economic development. Economic growth is not enough in itself to measure economic development as even if there has been a leap in the income of people in a particular nation,
The third theory is underdevelopment theory. This theory have explain three types of country which is core, semi-periphery and periphery country. Immanuel Wallerstein also classificies the positions of country, which is based on the developed and developing countries according to their economics in the global level. This theory is about the “capitalist world economy” that means the people or the rich country who have the control of economy in certain places or a country (Sorinel, 2010). This level can be divided into core (rich country), semi-periphery (developing country) and periphery (poor country) (Sorinel, 2010). This theory show that how the capitalist or rich country manage the economy of the semi-periphery and the periphery country. This types have their own function in this theory.
c. Theory of economic growth: who present it? What are the main assumptions, strength, and weaknesses?
development of critical play a key role in this situation when they take the form of claims, either for better implementation, or for models, theories or alternative frameworks. "Damage Control", "sustainable development" or the "reform of development institutions" become the slogans of a school of thought; "Development taking into account the human factor," "alternative development", "replace the capitalist model," those of another (Baylis et al: 2013). According to the first theory, negative feedback loops terminate chess and development lies: development institutions are considered super tankers painfully advancing on the wrong road but that will however meet, perhaps slowly but to linearly, the warning signs of edge devices in order to change course and to gradually resume the right direction (Bailey & Maresh: 2009).