Problems in Economic Development's - Assignment Example

ISSUES AND TOPICS IN ECONOMIC DEVELOPMENT HOMEWORK Section 1. c 2. d 3. e 4. d 5. b 6. c 7. c 8. b 9. d 10. a Section 21. poverty traps(a) .(b) Sachs believes that poverty traps exists extensively in the developing world.(c) He suggests that large initial investments should be offered to developing countries in form of incentives.2. Gini Coefficients(a) Badlandia has more inequality since its Gini coefficient is very high and closer to 1 which is the measure of perfect inequality. (b) .Gini= A/(A+B)=0.5, A/(A+0.25)=0.5, A= 0.25(c) The Lorenz curve for Tylandia will be below that of Badlandia since it has less inequality compared to Badlandia.3. Growth Vs Developemnt(a) Economic growth refers to the increase in an economies output level or the market value of final goods and services over a period of one year.

On the other hand economic development is the qualitative and quantitative changes in the economy which is evident by increased infrastructural developments, environmental sustainability and other social factors.(b) Economic development is hard to measure because it is made up of several factors that cannot be easily quantified or expressed in monetary terms. For example changes in social behavior cannot be measured accurately. (c) Human Development Index.(d) The indices include:- Life Expectancy Index -Education Index-Mean Years of Schooling Index (MYSI) -Expected Years of Schooling Index -Income Index All these indices are used to measure development since only one or two indces cannot provide accurate results. (e) Growth rate 20,000=10,000(1.0718+gy)20,000=10718+10,000gy20,000-10,718=9282/10,000=0.

9282% ~1%4. GDP calculations.(a) U.S GDP: 100*100=10,00020*50= 1,0002*100= 200Total= 11,200Thai GDP18,000*10=180,000400*40 =16,00050*200 =10,000Total =206,000(b) Thai’s real GDP in U.S dollars= 206,000/30=6,866.67(c) Thai’s real GDP in U.S dollars using PPP:1000*10=10,00020*40= 8002*200= 400Total =11,200(d) 11,200/6,866.67=1.635. (a) The main channel by which inequality may increase growth according to Simon Kuznets and W. Arthur Lewis is the fact that rich individuals will invest their wealth in the economy which will further increase output resulting in economic growth. (b) Four factors why inequality may decrease growth include;-Changing institutions- Political instability- Dampening aspirations-Low birth rates.

Work CitedAbhijit Banerjee and Esther Duflo. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Public Affairs. 2011.William Easterly. The Elusive Quest for Growth. MIT Press. 2002.