Economic Development

3 . What be the essential features of scantiness traps ? Give an simulation of a pauperism trap . Discuss the empirical bear out for and against the theory that poverty traps argon a good means to interpret the differences in economical processA poverty trap occurs when a country is too poor to be able to besides enough to grow , or the country s population augment is so high that it prevents the country from emerging from poverty . fit in to Jeffrey Sachs , the most destitute countries need all of their income , if non much to survive , and they wee nonhing left over to confide for the prox . They atomic number 18 too poor to save for the future and accumulate enough capital to pull them out of poverty (pp . 56-57 , End of Poverty Essential features of poverty traps are increase returns to scale such(prenominal) as lumpy fixed be of infrastructure or strong complementarities between investmentsPoverty traps are non a good way to understand the differences in economic development because they do non account for other factors , such as corrupt politicss . The African continent provides us with examples of countries that are impoverished and also have high levels o governmental corruption . If we study countries that are rated as having the lowest growth and the worst corruption rating during the period of 1985 to 2001 , it appears that bad government is a significant indicator of poor growthIn an experiment on takeoffs , three of eight countries made a good miscue for the use of poverty traps as a tool to understand economic growth Indonesia , South Korea , and Taiwan all go through substantial growth after receiving economic religious service . even so , there were other countries that received aid , but they did not take off . Consequently , we may conclude that the countries that did not take off were experiencing poor growth due to factors that are not explained by poverty trap .

In 2000 , mutton chop and Dollar claimed to have put together data which indicates that aid does win growth in an environment where good policies are in place . But in 2003 , Easterly , Roodman , and Levine found that by applying new data tests , the Burnside and Dollar s findings are no longer accurate . The following year , Clemens , Radelet , and Bhavani argued that short-impact aid raises growth in any environment , even when good policies are not in place . On the contrary , Rajan and Subramanian found not evidence that short-impact aid or any gracious of aid raises growthAlthough numerous studies suggest that poverty traps are not adequate tools for understanding economic growth , there have been calls for policies that are designed to specifically address and remedy the poverty trap . In the 1950s , Walt Rostow argued that by providing aid to assistance countries increase investment , countries receiving the aid could emerge from stagnation . Sachs after proposed the Big Push which called for a doubling of foreign aid to 100 billon a year and another doubling in 2015 . In 2005 , the UN Millennium Project recommended the Big Push to help African countries break out of...If you want to get a full essay, order it on our website: Ordercustompaper.com

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