Economics(Paper-4) - Shivaji University

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4. The Take-off stage is not empirically vindicated in the same manner in which Rostow Presented it: Ian Orummand, Kuznets, David Wightman and Myrdal have examined the economic history of various nations and came to the conclusion that all that is elaborated in the Rostow’s stages is not realized in the same fluid manner. 5. Rostow ignores the “Bumps and Crash-Leadings” of the growth process: Habakkuk, Sen and Streeton have pointed out that if Rostow was keen to use the aeronautical metaphor, ‘take-off, he ought to have taken into consideration some other aeronautical happenings also. There are ‘lumps and crash-leadings and nose-dive’ crashes also. There can be abortive take-offs. 6. An Economy can reach the stage of self-sustained stage without passing through all the five stages: Gerald Meier has even seen the possibility of a country reaching the fifth stage without even passing through one particular stage of economic development, as suggested by Rostow. One complete stage may be skipped over.A country with low population burden and abundant natural resources may reach the stage of self-sustaining stage of mass consumption early, by-passing one stage. 7. The last stage of ‘Mass-consumption’ may not reached at all: Kuznets, Meier and Cairncross have raised doubts whether the last stage of ‘Massconsumption’ can continue eternally. 8. There are limits to growth: Natural resources, manpower and capital set the upper limit of growth. A time comes when a country should be regarded as “fully developed”, even if it has not reached the standards of USA or any other country. Despite of these critics the stages of economic development are most important to know the development of human beings. 2.2.2 Lewis Theory of Unlimited Supplies of Labour : Lewis developed his model to develop less developed countries. Lewis says there is ‘absolute surplus population’ in less developed countries. Labour and natural resources are adequate but capital is lacking here. Lewis wrote in his book “Economic Development with Unlimited Supplies of Labour” in 1954 that using the abundant population less developed countries can grow as developed countries. Lewis developed his model for development of closed as well as open economy discussed as follows. 123456789012345678901234567890121234567 123456789012345678901234567890121234567 18 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
B The Closed Economy : Assumptions : Lewis’ model is based on the following assumptions; 1. There exist unlimited supplies of labour in the economy. 2. The economy is dualistic in nature. 3. The cost of imparting training and skill to the unskilled labour is assumed to remain constant through time. 4. The production in expanding capitalist sector takes place according to the principle of profit maximization. 5. The capitalist sector operates by employing the reproducible capital and wage labour. 6. The subsistence sector does not make use of reproducible capital. 7. The per capita output in the subsistence sector is considerable smaller than that in the capitalist. 8. The relationship between the capitalist and the subsistence sector lies in the fact that as former expands; it draws labour from the latter. 9. The wages which the expanding capitalist sector is not absolutely larger in relation to population growth. B Two Sector Economy : Lewis divides the economy of an underdeveloped country into two sectors the capitalist sector and the subsistence sector. i) Capitalist Sector : The capitalist sector is defined as, “that part of the economy which used reproducible capital and pays capitalists for the use of thereof.” The use of capital is controlled by capitalists, who hire the services of labour.The capitalists sector does not include only manufacturing but also plantations and mines where labour is hired for profit. The capitalist sector may either by private or public. ii) Subsistence Sector : The subsistence sector is that part of the economy which is not using reproducible capital. It can also be designated as the indigenous traditional sector or the “selfemployment sector”. Output per head is much lower in this sector than in the capitalist sector, there is existence of disguised unemployment in the agricultural sector whose marginal productivity is zero in this sector. 123456789012345678901234567890121234567 123456789012345678901234567890121234567 19 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
Page 1 and 2: B. A. Part-III : Economics Paper 4
Page 3 and 4: 7) “ Economic development is a pr
Page 5 and 6: underdeveloped countries in compari
Page 7 and 8: developing states through the progr
Page 9 and 10: 7) Goals : objectives. 8) Disguised
Page 11 and 12: UNIT - 2 Theories of Economic Growt
Page 13 and 14: structure of the traditional societ
Page 15 and 16: help of example, “If we take marg
Page 17: promote and enhance social welfare.
Page 21 and 22: B The Process of Economic Expansion
Page 23 and 24: consider the possibility of the cap
Page 25 and 26: gap between income and expenditure
Page 27 and 28: disequalising force is trade, which
Page 29 and 30: 8. Rostow developed his theory in
Page 31 and 32: UNIT - 3 Domestic Measures for Econ
Page 33 and 34: all kinds. Hence, capital formation
Page 35 and 36: policy. But these trio are and may
Page 37 and 38: 1) Provision of food to evergrowing
Page 39 and 40: the country.The central bank contro
Page 41 and 42: 7) Public Spending : Fiscal policy
Page 43 and 44: 3.3 Conclusion / Summary : Capital
Page 45 and 46: UNIT - 4 International Measures for
Page 47 and 48: Y P S C Import E D P O X1 X2 B X Ex
Page 49 and 50: for the developing countries has al
Page 51 and 52: they are entitled to get dividend a
Page 53 and 54: 4) Infrastructure : Since last thre
Page 55 and 56: III) Advantages of Multi-national C
Page 57 and 58: oundaries of nation states. 2) Mean
Page 59 and 60: 4.3 Summary : 1) Role of Foreign Tr

Economics(Paper-4) - Shivaji University

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