UNIT 3

Question 1

What are some characteristics of growth in peripheral countries?

Answer 1

Peripheral countries display relatively low per capita GDP, varying levels of Human Development Index (HDI), and other development areas not fully covered. There are vast differences between regions.

Question 2

How does the non-endogeneity of growth in peripheral countries affect their economic development?

Answer 2

Growth in peripheral countries is often considered external.

-More on L growth than in developed countries

-Growth of Y/L relies more in growth of Y/K.

This limits their capacity for productivity-increasing innovations and sources of endogenous growth

Question 3

What factors hinder structural change in countries with low per capita income?

Answer 3

Low per capita income hinders structural change by:

Supply:
-Development of new sectors
-Limiting resources for capital formation
-Technological innovation
-Education
-Training
-Diversification and sophistication of production.

Demand:
-Savings
-Investment
-Public expenditure
-Redistribution towards wages.

Question 4

How do dependent external relations impact the development of peripheral countries?

Answer 4

Peripheral countries experience dependency on:
-Foreign direct investment (FDI) and foreign technology
-External demand and certain high-value imports.
-They also rely on foreign savings, leading to debt.

Question 5

Examples of structural change that does not sustain growth

Answer 5

A) Concentration of production in sectors intensive in natural resources or labor (agriculture or mining)

B) Modern productive sectors in enclaves

C) Extreme income inequality, and
dependence on:
foreign technology, trade, and debt