Question

Problem 9: Which of the stateme owing statements about the role of institutions in economic and which of the following statements is FALSE? Explain. levels of human and public capital in poor d by Europeans is corre- ated with whether climate/disease allowed European settlers to live in w-quality institutions make it difficult to protect property rights and -quality institutions are central to the theory of poverty traps that ion risk due to low-quality governance and poor insti- tutions might account for low nations (b) The quality of institutions in countries colonize those areas enforce contracts (d) Low push' to facilitate convergence in living states that countries need a 'big standards to the developed world Problem 10: The reason why the Romer model predicts sustained economic growth, unlike the Solow model, is that a) Ideas, unlike physical capital, are non-rivalrous b) Ideas, unlike physical capital, do not depreciate c) The accumulation of new ideas, unlike the accumulation of physical cap- ital, does not run into diminishing returns to scale d) All of the above

Answer 1

  Answer 9 (a) : Expropriation has Truly been a major concern for the Government through out the globe, as the when an entity or body which is supposed to work for the good of the poor people by making use of the Government property starts dealing in illegal ways to grab it as private or work on other properties which are private in nature, it is referred to as expropriation. When there is expropriation, the real needy and poor people do not get the necessary support or help, for which the Government is spending the money. The cream of the financial aid is molded to the private institutions and the public institutions suffer. The lack of Government initiate in this regard is very eminent. The Government should keep a strict vigil on the movements and actions of the bodies or institutions who are allowed to function on the Government property, so that the real needy people in the society can benefit from the government aid.

Answer 9 (b) : The European invasion of the many countries across the globe had initially been to gain ,more and more wealth and power through business. However, it is true that the quality of the institutions colonized by the Europeans is related to whether the climate or the diseases in the colonized regime allowed the European settlers to live in those areas. This can be evident from the fact that, we can find very good institutions of government and education set ups in some of the colonized countries, for example India. Many important institutions of Government and education were set up, as the British were in India for a very long period. However, in more climatic drastic areas such as some of the African nations, we will find that no proper institution of Government or no proper medical or education facility avails. This is partly due to the climatic conditions and the diseases of the area that did not allow the Europeans to settle down and develop those institutions.

  Answer 9 (c): It is true that the low quality institutions make it difficult to protect property rights and enforce contracts. The rights of the people are all dependent on how the State allows the people to enjoy them. If the institutions of the state are not strong enough to uphold the rights of the people, in that case the people would not be able top enjoy them. The State should have formidable policies to protect the needy when there is an encroachment upon the legitimate property or social life of an individual. The Law can only help an individual when the State has those laws enacted and there are policies for the safeguard of those laws.

Answer 9 (d): It is true that the low-quality institutions are central to the theory of poverty traps that states that countries need a big push to felicitate convergence in living standards to the developed world. This means that when the Government machinery or institutions are not strong enough to protect the right of the people, the people of the country would slowly move toward poverty, as they would have no legitimate rights on their territory. Moreover, the Law of the land would also not be able to help these individuals if the Government machinery and institutions are not strong enough to enact the decisions of the Judicial process. Also, it is the State that formulates the laws that Govern the society. Therefore, if State is weak, all the institutions would be weaker too, and hence lead to an overall annihilation of the human rights.