Econ-Unit 4 DQ1: Economic Comparison of Countries
Comparative Economic Responses of Unit 4’s Countries
Respond to two pupils
ECO-201
Comparative Economics of Countries
The Catch-up model predicts that economies will expand when the quantity of capital per hour of labor increases alongside technological progress. It is more likely that developing countries will acquire technological advances in the near future than they do currently. Developed nations, such as Japan, already possess these technologies, so their economic growth is not entirely dependent on them, unlike developing nations, whose GDP per capita may grow by a greater percentage once they acquire these technologies.
The model’s predictions have been quite accurate. As work conditions, education, and new economic models have been implemented, many countries in Asia and South America have experienced rapid growth in their GDP per capita, allowing them to globalize and invest more in new technologies.
Particularly in Africa and Latin America, some nations have failed to “catch up” over time. The causes include poor governance, high fertility rates, and high income inequality, but corruption is the primary cause. The majority of nations that have not been developing and/or growing their per capita GDP are governed by dictatorships. These dictators only use their countries’ funds for personal gain, and they have no regard for the economy or the well-being of their people.
I believe that in order to resolve these economic problems, the governments of these poor countries should invest more in education. Education is the foundation of progress and a better life for all people. An alternative method for resolving these issues would be to test a new economic model. If their current model is ineffective, they should replace it. The majority of these nations rely on a single resource, which means that if for any reason the world no longer requires that resource, their economies will collapse.
References:
R. Glenn Hubbard and Anthony Patrick O’Brien. The seventh edition of Macroeconomics was published by Pearson in 2018.
“Which Nations Experienced Economic Growth? And Why Is It Important?” Economic growth since 1950, Our World in Data, ourworldindata.org.
ISSAfrica.org. Africa is currently losing the war against extreme poverty. Africa is losing the battle against extreme poverty, ISS Africa, 13 July 2022, issafrica.org/iss-today/.
ECO-201
Comparative Economics of Countries
The catch-up model predicts that poorer nations will experience a higher rate of economic growth and will grow faster than wealthy nations. In other words, there will be a narrowing of the gap between the rich and the poor as a result of the increased likelihood of rapid economic growth in low-income nations. Possible causes of the catch-up effect include better growth opportunities, technological advancements from other nations, and the movement of labor and capital.
The article “Why don’t poor countries catch up?” describes how the model’s predictions have not necessarily been accurate in every case. Due to technological advancements and diminishing returns on capital, the catch-up model predicts that poor countries will grow faster than wealthy countries. Based on their analysis, they conclude that poor countries are falling behind rather than catching up. Institutional environment efficiencies may reduce investment and a nation’s capacity to absorb foreign technological advances. Without these advancements, countries may experience slower growth.
Less-skilled labor force may be the reason why countries have not caught up over time. This occurs when workers lack the necessary skills, resulting in a slower catch-up model compared to other developed nations. According to the article, poor countries are falling further behind rather than catching up. Using a variety of institutional quality indicators, such as the rule of law, the prevalence of corruption, and the risk of expropriation and contract repudiation, we demonstrate that the institutional environment in which economic activity occurs in poor countries is largely responsible for their inability to catch up.
Utilizing technologies and resources differently in the future is what these nations will do differently in the future in order to benefit. As a result of low-cost access to advanced technology or diminishing returns experienced by wealthier nations, poorer nations may be able to produce more goods to their advantage. The government can provide more resources to motivate individuals to accelerate economic growth.
Bibliography: “The Catch-Up Effect” |8 November 2019 | Tejvan Pettinger | Web.
Why don’t developing nations catch up? A cross-national examination of an institutional explanation
