DEVELOPMENT ECONOMICS Lecture Notes - Lecture 1: Harrods, Roy Harrod, Albert O. Hirschman
9 Jul 2021
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Study of economic structure and behaviour of poor and underdeveloped countries (lewis, 1984) Need for a different theoretical framework attuned to speci c features of underdeveloped countries. Mutually bene cial relationship between developed and underdeveloped. Neoclassical approach - follow comparative advantage and let markets allocate resources - industrialization needs to happen in poorer countries - it forms the basis of development. Resulting in international d. o. l - agriculture and primary product in underdeveloped; manufactures in developed. Prebisch-singer hypothesis - secular fall in terms of trade of primary commodities vis-a-vis manufacturers. Causes - structural asymmetry in production conditions in what the developing and developed countries are producing, product and labour markets. Consequence - the erosion of purchasing power of exports and impoverishment - Industrialisation should not happen on the cost of the environment. Robert lucas, the 1995 nobel laureate, stated that once you start thinking about economic growth, it is hard to think about anything else .
