TEST BANK FOR ECONOMIC
DEVELOPMENT 12TH EDITION
TODARO
, Economic Development 12th Edition Todaro Test Bank
Chapter 3
Classic Theories of Economic
Growth and Development
Key Concepts
The overall aim of the chapter is to provide a historical overview of the major development theories put
forth during the past half century. The theories are presented in historical sequence. The key features of
each theory are presented, along with a discussion of its major contributions and limitations. It is emphasized
that, while the theories are often competing in nature, each offers valuable insights into the development
process. The comparative case study of South Korea and Argentina at the end of this chapter emphasizes
the theories. The chapter also retains the three appendices from the previous edition on Components of
Economic Growth, the Solow neoclassical growth model and Endogenous growth theory.
The theories discussed in this chapter include:
Rostow’s theory.
The Harrod-Domar model. (k variable has been changed to c in the capital-output ratio)
The Lewis model.
Chenery’s patterns of development.
Dependency theory.
Neoclassical theory.
The chapter also emphasizes the basic concepts of economic growth theory, using the production
possibilities frontier (Appendix 3.1). The basics of economic growth are covered with a discussion of the
role played by capital accumulation, labor force growth, and technological progress. The discussion uses
the production possibilities frontier for illustration purposes. Neutral, capital saving and labor saving
technological progress are also compared.
The linear stages of growth models share the central role of savings and capital formation as their basic
theme. The two examples given are W.W. Rostow’s theory and the Harrod-Domar model. The text finds
this approach limited since the structural and institutional conditions necessary to effectively utilize
savings are often lacking, and the possibilities of development are often conditioned on international
factors beyond a developing country’s influence. It also draws a distinction between necessary and
sufficient condition for economic growth to occur.
Structural change models stress the transformation from a traditional, agricultural economy to a modern,
industrial economy. The Lewis model is carefully developed and analyzed as the key theoretical illustration
of this approach. Though important for its emphasis on labor transfer between traditional agriculture and
modern industry, it is criticized for assuming that real urban wages are constant and that migration and
modern sector employment grow proportionately (with urban full employment). Chenery’s findings of
the patterns of development are presented as an illustration of an empirical approach, and include the shift
©2015 Pearson Education, Inc.
Visit TestBankDeal.com to get complete for all chapters
DEVELOPMENT 12TH EDITION
TODARO
, Economic Development 12th Edition Todaro Test Bank
Chapter 3
Classic Theories of Economic
Growth and Development
Key Concepts
The overall aim of the chapter is to provide a historical overview of the major development theories put
forth during the past half century. The theories are presented in historical sequence. The key features of
each theory are presented, along with a discussion of its major contributions and limitations. It is emphasized
that, while the theories are often competing in nature, each offers valuable insights into the development
process. The comparative case study of South Korea and Argentina at the end of this chapter emphasizes
the theories. The chapter also retains the three appendices from the previous edition on Components of
Economic Growth, the Solow neoclassical growth model and Endogenous growth theory.
The theories discussed in this chapter include:
Rostow’s theory.
The Harrod-Domar model. (k variable has been changed to c in the capital-output ratio)
The Lewis model.
Chenery’s patterns of development.
Dependency theory.
Neoclassical theory.
The chapter also emphasizes the basic concepts of economic growth theory, using the production
possibilities frontier (Appendix 3.1). The basics of economic growth are covered with a discussion of the
role played by capital accumulation, labor force growth, and technological progress. The discussion uses
the production possibilities frontier for illustration purposes. Neutral, capital saving and labor saving
technological progress are also compared.
The linear stages of growth models share the central role of savings and capital formation as their basic
theme. The two examples given are W.W. Rostow’s theory and the Harrod-Domar model. The text finds
this approach limited since the structural and institutional conditions necessary to effectively utilize
savings are often lacking, and the possibilities of development are often conditioned on international
factors beyond a developing country’s influence. It also draws a distinction between necessary and
sufficient condition for economic growth to occur.
Structural change models stress the transformation from a traditional, agricultural economy to a modern,
industrial economy. The Lewis model is carefully developed and analyzed as the key theoretical illustration
of this approach. Though important for its emphasis on labor transfer between traditional agriculture and
modern industry, it is criticized for assuming that real urban wages are constant and that migration and
modern sector employment grow proportionately (with urban full employment). Chenery’s findings of
the patterns of development are presented as an illustration of an empirical approach, and include the shift
©2015 Pearson Education, Inc.
Visit TestBankDeal.com to get complete for all chapters
