EconomicsDevelopmentM04TodaroSmith01393411EconC04

1、copyright 2012 pearson addison-wesley. all rights reserved.chapter 4contemporary models of development and underdevelopmentcopyright 2012 pearson addison-wesley. all rights reserved. 4-24.1 underdevelopment as a coordination failure a newer school of thought on problems of economic development coord

2、ination failures occur when agents inability to coordinate their actions leads to an outcome that makes all agents worse off. this can occur when actions are complementary, i.e., actions taken by one agent reinforces incentives for others to take similar actions copyright 2012 pearson addison-wesley

3、. all rights reserved. 4-34.2 multiple equilibria: a diagrammatic approach often, these models can be diagrammed by graphing an s-shaped function and the 45 line equilibria are stable: function crosses the 45 line from above unstable: function crosses the 45 line from belowcopyright 2012 pearson add

4、ison-wesley. all rights reserved. 4-4figure 4.1 multiple equilibriacopyright 2012 pearson addison-wesley. all rights reserved. 4-54.3 starting economic development: the big pushsometimes market failures lead to a need for public policy interventionthe big push: a graphical model, 6 assumptions one f

5、actor of production two sectors same production function for each sector consumers spend an equal amount on each good closed economy perfect competition with traditional firms operating, limit pricing monopolist with a modern firm operatingconditions for multiple equilibriaa big push may also be nec

6、essary when there are: intertemporal effects urbanization effects infrastructure effects training effectscopyright 2012 pearson addison-wesley. all rights reserved. 4-6figure 4.2 the big pushcopyright 2012 pearson addison-wesley. all rights reserved. 4-7why the problem cannot be solved by a super-en

7、trepreneur super entrepreneur? capital market failures cost of monitoring managers- asymmetric information communication failures limits to knowledge lack of any empirical evidence that would suggest this is possiblecopyright 2012 pearson addison-wesley. all rights reserved. 4-8in a nutshell: big pu

8、sh mechanisms raising total demand reducing fixed costs of later entrants redistributing demand to later periods when other industrializing firms sell shifting demand toward manufacturing goods (usually produced in urban areas) help defray costs of essential infrastructure (a similar mechanism can h

9、old when there are costs of training, and other shared intermediate inputs) copyright 2012 pearson addison-wesley. all rights reserved. 4-94.4 further problems of multiple equilibria inefficient advantages of incumbency behavior and norms linkages inequality, multiple equilibria, and growthcopyright

10、 2012 pearson addison-wesley. all rights reserved. 4-104.5 michael kremers o-ring theory of economic development the o-ring model production is modeled with strong complementarities among inputs positive assortative matching in production implications of strong complementarities for economic develop

11、ment and the distribution of income across countriescopyright 2012 pearson addison-wesley. all rights reserved. 4-114.6 economic development as self-discoveryhausmann and rodrik: a problem of informationnot enough to say developing countries should produce “l(fā)abor intensive products,” because there a

12、re thousands of themindustrial policy may help to identify true direct and indirect domestic costs of potential products to specialize in, by:encouraging exploration in first stageencouraging movement out of inefficient sectors and into more efficient sectors in the second stage copyright 2012 pears

13、on addison-wesley. all rights reserved. 4-124.6 economic development as self-discovery three building blocks of the theory; and case examples of their reasonableness in practice: uncertainty about products can produce efficiently (evidence: indias success in information technology was unexpected; re

14、asons for bangladeshs efficiency in hats vs pakistans in bedsheets is not clear) need for local adaptation (evidence: seen in cases such as shipbuilding in south korea) imitation can be rapid (e.g. the spread of cut flower exporting in colombia)copyright 2012 pearson addison-wesley. all rights reser

15、ved. 4-134.7 the hausmann-rodrik-velasco growth diagnostics framework focus on a countrys most binding constraints on economic growth no “one size fits all” in development policy requires careful research to determine the most likely binding constraintcopyright 2012 pearson addison-wesley. all right

16、s reserved. 4-14figure 4.3 hausmann-rodrik-velasco growth diagnostics decision treecopyright 2012 pearson addison-wesley. all rights reserved. 4-15concepts for reviewagency costsasymmetric informationbig pushcomplementaritycongestioncoordination failuredeep interventioneconomic agentgrowth diagnosticsinformation externalitylinkagemiddle-income trapmultiple equilibriao-ring modelo-ring produ