Proximate sources of divergence

Question 1

3 causes of different income per capita

Answer 1

Differences in land per person
Differences in capital per person
Differences in efficiency

Question 2

Proportion of divergence from capital vs. efficiency

Answer 2

1/4 to 3/4 (GB 5x’s more efficient with 8x’s the income)

Question 3

Advantages of LEDC’s in free market competition (2)

Answer 3

GB wage rate was $5 per 55 hours vs. Indian $0.8

Less red tape

Question 4

How GB countered disadvantages

Answer 4

Greater efficiency in labour productivity meant less labour hours per unit of output

Question 5

At what point did LEDC’s have technology matching the west?

Answer 5

1910

Question 6

Low wages a problem?

Answer 6

Wage rate is strongly correlated with output

Question 7

3 reasons the whole world isn’t developed

Answer 7

Post Malthusian era social differences= wealth differentials
Lower DR from medicine has lowered the subsistence wage
Modern tech unforgiving towards deficiencies at work

Question 8

Poor labour practices (3)

Answer 8

Over-staffing due to lack of incentive to rationalise
Presence of children
Absenteeism

Question 9

Effect of TNC’s

Answer 9

Many TNC’s hesitant to set up i LEDC’s due to security or quality issues