How could the developed world be of assistance in these cases? Could developed countries do more?
1. Can you think of additional examples of complementarities from everyday life? Does the S-shaped curve of Figure 4.1 shed any light on them? Do you think your examples help as a metaphor for economic development problems?
2. What role do you think international trade and foreign investment can play in solving some of the problems identified in the big push model? In the O-ring model? What limitations to your arguments can you think of?
3. The word trap suggests that there may be a way to escape. Do you think developing countries can escape all of the traps described in this chapter? Which ones would be most difficult to escape? How could the developed world be of assistance in these cases? Could developed countries do more?
4. Why might high levels of inequality lead to lower rates of growth and development? Why might it be difficult to get out of this kind of trap?
5. Why is the government sometimes a part of the problem of coordination failure rather than the solution? Does this make the problem hopeless? What could be done in this case?
6. One of the characteristics of some developing economies is the relatively low level of trust of people outside one’s extended family. How might the models explored in this chapter shed light on this problem?
7. Can you think of an example of O-ring production from everyday life? Do you think your example is a good metaphor for development problems?
8. Modern economic models sometimes require strong assumptions. What do you think are some of the trade-offs between a more rigorous, logically cohesive model with strong assumptions but clear inferences and a description of problems followed by a verbal discussion of possible implications? Do you think the two approaches can be used together to inform each other?
9. As you read later chapters, think about whether the models described in this chapter are useful in shedding additional light on the nature of problems considered. Some of the later problems you might consider are child labor, poor health and nutrition among the poor, high fertility, environmental degradation, availability of credit for the poor, urbanization, protectionism in international trade by developed and developing countries, reform of government, and land reform.
10. Select a developing country that interests you and search for evidence suggesting which factors are the binding constraint on growth. (For inspiration, see the sources in Box 4.2.)
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