Explain the below by providing viable explanations to illustrate the below:- Dutch Disease Rybczinski’s theorem Leontief’s Paradox Immizerizing Growth
Explain the below by providing viable explanations to illustrate the below:-
- Dutch Disease
- Rybczinski’s theorem
- Leontief’s Paradox
- Immizerizing Growth
Answer-
1. Dutch Disease - With the discovery of natural gas in Netherlands in 1977 lead to decline in manufacturing activity in other manufacturing sector while overutilisation of resource in one sector while under utilisation of resources in other sectors.
So, with expansion of few sector lead to underutilistion of other sectors in country which has effect on country's import and export as the product of developed sector lead to increase in export and help country to earn foregin currecny . This lead to a trade imbalance among trading country .
As this effect first observed in Netherlands that's why it is called Dutch diease .This usually occurs with some kind of discovery of natutal resources .
This phenomenon first explain by W.Max.Corden and J. Peter .Neary in 1982.
2.Rybczincki's theorem - According utilisation or value of one resource increase the market will try to fully utilise it while lower the utilisation of other resources .
This means certain sector of economy become developed while other stay under utilisation this lead to unbalanced growth in an economy.
Step by step
Solved in 2 steps
