need to understand the causes of widespread absolute poverty and the
prescription of strategies to foster economic growth has always been at
the core of development studies.
Growth is perceived as the principal means of escaping poverty.
is a close connection between high levels of poverty and low levels of
the initial growth will do little to alleviate poverty, since it often
only benefits those who are better off.
despite the fact that the immediate benefits of growth might be unequally
distributed, all sections of society would benefit by the trickle
The Role of Both Physical and Human Capital
price of capital controls the amount of growth that occurs.
capital such as buildings and machinery restricts the production, which
also restricts growth.
capital, labour, also controls the level of production. Higher wages mean
less production, but higher demand.
developing countries, the lower costs of both types of capital mean that
more development can occur.
is closely linked to industrialisation.
quality of physical capital means that industry is becoming less
leads to underemployment and disguised
unemployment with surplus workers in the agricultural sector adding
little or nothing to output.
technological progress is seen by many as the only way for developing
countries to become internationally
progress can come at a cost to the agricultural sector.