TEORI PEMBANGUNAN 2

KULIAH 4 PEMBANGUNAN INTERNASIONAL ANDRE ARDI

Wednesday, October 17, 12

WHAT WE ARE GOING TO SEE?

BIG PUSH THEORY O-RING THEORY GROWTH DIAGNOSTIC FRAMEWORK

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BIG PUSH THEORY

Economic of scale
Industrialization would happen

Oligopolistic market

RodensteinRodan

Bit-by-bit investment wont impact growth lead to wastage of resource

To take off, an airplane need a critical ground speed

BIG PUSH

underdeveloped

Large amount of investment

developed

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IN PRODUCTION FUNCTION

Economic of scale NEED HEAVY INVESTMENT Oligopolistic market So worker on one industry consume the output of other industry

INDIVISIBILITY IN UNDERDEVELOPED COUNTRY

In complementary demand

A large number of industry need to be set up

In the supply of saving

For investment

Need higher marginal rate of saving

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Enlargement market size

Centralized pan-industrial planning

Cluster or agglomeration of industry

Skilled labour

The role of state

The private sector cant undertake such planning

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O-RING THEORY
MICHAEL KREMER

SMALL DIFFERENCE IN WORKER SKILL

WAGES
LARGE DIFFERENCES

OUTPUT

So wage & productivity differential between countries with different skill levels are enormous

The solution is subsidies to investment in human capital

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Poor countries have higher shares of primary production in GNP Worker will be paid more in the industries with high value input If rms can choose among technologies, the highest skill worker will use the highest technology The rich countries tend to specialized in complicated products. Thus subsidies to investment in human capital may be very efcient. Small differences between countries in human capital investment subsidies and the quality of educational system will lead to multiplier effects that create large differences in worker skill.
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eturns The profof an investment in oth costs and benefits unted for from the tive of the society as a

which the main problem is a low underlying rate of return and those for w the problem is an abnormally high cost of finance. Let us consider the fo case first, following the left arrow pointing to Low return to economic activity Low returns to investors may be due to the fact that there are intrinsi low underlying social returns to economic activities. Alternatively, low turns may be caused by what is termed low private appropriability, mea

DANI RODRIK

THE HAUSMANN-RODRIKVELASCO GROWTH DIAGNOSTIC FRAMEWORK

URE 4.3 Hausmann-Rodrik-Velasco Growth Diagnostics Decision Tree

Problem: Low levels of private investment and entrepreneurship
Possible causes

Low return to economic activity High cost of finance

Low social returns

Low appropriability

Poor geography

Bad infrastructure

Government failures

Market failures

Bad international finance

Bad local finance

Low human capital

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Micro risks: property rights, corruption, taxes

Macro risks: financial, monetary, fiscal instability

Information externalities: self-discovery

Coordination externalities

Low domestic saving

Poor intermediation