Question

Short note on the following;
1. Growth vs Equity
2. Education and economic growth
3. Private Foreign Investment; Some pros and cons for development
4. Three basic types of planning models

Answer 1

Solution -

1. Growth vs Equity

Growth and Equity

Human Devlopment Report 1996
(pp. 52-54)

In addition to an expanded view of the relationship between economic growth and human capital, there now is a deeper understanding of the relationship between growth and equity. Human capital has more impact on growth, for example, if it is equitably distributed.

It previously was thought that a trade-off existed between growth and equity - that distributing income too equally would undermine incentives and thus lower everyone's income. The assumption was that rich needed special encouragement to save and invest more.

Recent evidence suggests that this conventional wisdom is wrong. Many economies in Asia - Hong Kong, Indonesia, Malaysia, the Republic of Korea, Singapore, Taiwan (province of China) and Thailand - have had both rapid growth and relatively low inequality. Between 1960 and 1993 the East Asian economies, excluding China, had annual per capita growth of 7.6%, while income inequality remained stable or declined. Japan and Sweden have also combined rapid growth and low inequality These are important findings, since they contradict the conventional view that it is better to channel income to the rich, who tend to save and invest more

2. Education and economic growth
There are two very basic reasons for expecting to find some link between education and economic growth. First of all at the most general level it is intuitively plausible that living standards have risen so much over the last millennium and in particular since 1800 because of education. Progress of the sort enjoyed in Europe was not observed in the illiterate societies that have gradually merged into the world economy over the last two hundred years. To the most casual observer it must seem that there is a link between scientific advance and the way in which education has facilitated the development of knowledge. Of course the Curies and the Newtons of this world are few and far between. But people with only very limited education often find it difficult to function at all in advanced societies. Education is needed for people to benefit from scientific advance as well as to contribute to it. Secondly, at a more specific level, a wide range of econometric studies indicates that the incomes individuals can command depend on their level of education. If people with education earn more than those without, shouldn’t the same be true of countries? If not the rate of change of output per hour worked, at least the level of output per hour worked in a country, ought to depend on the educational attainment of the population. If spending on education delivers returns of some sort, in much the same way as spending on fixed capital, then it is sensible to talk of investing in human capital, as the counterpart to investing in fixed capital. The process of education can be analysed as an investment decision