Smith, Malthus, Ricardo) a concern with the heavy variables of capital population, and the objective of what Adam Smith termed the “progress of opulence” in the progressive state. But the new development economists went beyond their classical and neoclassical predecessors to consider the kind of policies that an active state and international community could adopt to accelerate a country’s rate of development (Meier and Rauch, 2005). The post-World War II literature on economic development has been dominated by four major and some times competing strands of thought; The linear stage of growth which included Rostow’s stages of development; Theories and patterns of structural change; The international dependence revolution and new classical, and free market counter-revolution (Meier and Rauch, 2005). In addition, Todaro (1999) stated that, the emergence of a fifth approach that has been witnessed - an approach called the new or endogenous theory of economic growth. It was primarily an economic theory of development in which the right quantity and mixture of saving, investment, and foreign aid were all that was necessary to enable Third World nations to proceed along an economic growth path that historically had been followed by the more developed countries (Meier and Rauch, 2005).
Austerity policy is not good in the current situation, because it could cause revolution, increasing unemployment, decreasing GDP,export and government cannot afford money on education, so poor people became not to be able to go to school. I think austerity policy is for when country is in a good time, not recession. (Pettinger, 2013). Stimulus policy is much better than austerity policy though there is some problem. It leads to increase GDP, inflation, economic growth and decrease unemployment.
The main target of an administrative reform is to produce improvement and advancement at a public sector, which is the society (Newman, 2002). In a similar manner, there might be some impacts which are negative in terms of economical growth. The developmental state theory does produce an increase in the economic growth, but its limitations can lead towards negative impacts such as inequality and social injustice (Park, 1979). Literature Review Adrian Left which has mentioned that the factor of developmental states that separates them from others, this specific characteristic is that their political aim and their institutional structures, they are being developmentally managed, and relatively their developmental objectives are being positioned and managed politically (Leftwich, 2000). Leftwhich further states and cites that the main purposes of these states,
As aggregate demand affects the supply (production, employment and inflation) they saw it as the government's role to build it back up using monetary and fiscal policies. Similar to Classical economists, Keynesian believe the economy comprises the same part: consumer spending, government spending, and business investments. However the major difference is that Keynesians believed government spending could help account for the lack of consumer spending and investment. The Keynesian theory also was based on the idea that wages and prices were sticky and that is would give aggregate supply a horizontal line in the short run. Overall, the main idea of the Keynesian Economist was to save and create jobs and
However, I suggest that the public spending should focus on infrastructure and construction activities that can lead to economic growth. Excessive spending on bailouts, unemployment benefits, and subsidy programs, in order to increase spending will not have a long term impact. Short term objectives and spending will only worsen future growth. Additionally, I think that bankers have to work together with the government in implementing new policy and follow closely to the regulations set by the government. Financial institutions play an important role in trigger the growth of economy.
This can be achieved by providing a conducive environment that provides incentives to work, promotes risk taking and inculcates a culture of saving. The path towards an optimal tax system is littered with trade-offs and in cannot therefore be viewed in isolation. The impact of fiscal policy is more potent when it is implemented in conjunction with monetary policy. Several theories on how income taxes affect work effort, risk taking and saving have been development but the collection of empirical evidence to support these theories has lagged somewhat. Below are some of the reasons why conclusions have been difficult to draw.
Moreover one of the advantages of using the Gini coefficient is that it provides a way to quantify and track the direction in which a society is moving, by recording poverty levels. This may open the door for a dialogue and potential solutions within governments allowing them to concentrate more into the issue of inequality and also to determine its causes. In addition, the Gini index can be compared to gross domestic product figures. If GDP rises, for example, this might mean that the people in a country are doing better. However, if the Gini index is rising as well, it suggest that the majority of the population may not be experiencing an increase in income.
The focus is on increasing the national income of a country and the trade-offs between environmental protection and accumulation of wealth and maintain inter-generational equity are tackled with market prices that is used as a corrective mechanism for social, distributional and environmental concerns. This growth model is a means to a larger end that is- human development and how people can aspire to what they wish to be exercising their real freedoms. This model puts people before the market economy and revolves around the development of the individual to its full potential. According to Dre`ze and Sen, “In recent years, development economics has been also taking a more inclusive view of the nature of economic development. One way of seeing development is in terms of the expansion of the real freedoms that the citizens enjoy to pursue the objectives they have reason to value, and in this sense the expansion of human capability can be, broadly, seen as the central feature of the process of development ” (Dre`ze & Sen,
Annika Alexius and Daniel Spång in their paper “Stock prices and GDP in the long run” have tried to show that stock prices are dependent on output (domestic and foreign) in the G7 countries, which according to them is a more viable relationship than that between consumption and dividends. 3. Philip Arestis and Panicos Demetriades look at the empirical evidence on the relationship between development in the financial sector and growth in the economy in their paper “Financial development and economic growth: assessing the evidence” to identify the outstanding issues and put forward a few suggestions about how to deal with them in the
Amartya Sen favours redistribution which in turn would lead to growth according to him whereas Bhagwati talks about growth and believes that redistribution cannot be the answer for growth. Amartya Sen considers growth important for poverty alleviation. He says “Economic growth is indeed important, not for itself, but for what it allows a country to do with the resources that are generated, expanding both individual incomes and the public revenue that can be used to meet social commitments.” Sen considers economic growth as a mean and not as an end. He talks about spending more in social spheres like education, health etc. He strongly favours delivery by the state: food through public distribution system, education through government run school, education through government run schools and health through government run health centres.