miércoles, 26 de mayo de 2010

Economic Development: Economic Development

Topics: Development of Economic Thought EconómicoHistoria

After the Great Depression of the thirties and the disasters caused by the Second World War, the obvious gap in economic and social terms of the underdeveloped countries, became an object of political and theoretical concerns. Thus emerged what has been called the Development Economics, mainly neo-classical inspiration, and among the main theorists highlighted Raul Prebisch, Ragnar Nurske, Gunnar Myrdall and Rosestein Rodan, among others.

These authors were given the task of interpreting the existence of what we now call underdeveloped and developed proposals of different types, but virtually all identified the need to rush the process of industrialization which ensure substantially raise economic growth rates and volumes of accumulation essential for this.

Keynesian influence in the thinking of the time, it was revealed that several authors focus their attention on the narrowness of the domestic market of developing countries. Rosenstein Rodan, for example, noted that the lack of demand caused the shortage of investment in the modern sector, hence the poor rates of economic growth. For its part, Nurkse stressed the presence of a vicious circle of poverty, ie the cause-effect relationships between various phenomena. On the supply side warned: a low per capita income, low savings propensity, lack of capital and low productivity. While, on the demand side showed the presence of a low purchasing power, lack of production in the modern sector, low productivity, medium and low purchasing power. It was necessary to increase the market size expected to increase profitability, investment and the exploitation of economies of scale, and to mobilize existing resources towards the modern sector and generate more incentives to save for example, through controls on consumer demand.

Most of these authors agreed on the need for foreign savings inflows, particularly foreign capital investment as a way to address internal constraints of the accumulation process. The idea of a big push, that is, a wave of simultaneous investments, would be the solution which would promote the development of the domestic market.

Author: Samuel Eloy Ramirez Acosta


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