1. What are the main differences between the linear stages and international dependency models of development?
2. Does it follow from the false-paradigm model that World Bank economists are intentionally trying to keep developing countries from realizing genuine development? Why or why not?
3. Assume a closed economy, perfectly elastic labor supply, and linear technology. Suppose the incremental capital-output ratio (ICOR) is 3, the depreciation rate is 3%, and the gross savings rate is 10%. Use the Harrod-Domar growth equation to determine the rate of growth. What would the gross savings rate have to be to achieve 5% growth? Assuming a perfectly elastic labor supply, state one criticism of this model from an exogenous growth theory viewpoint and another criticism of this model from an endogenous growth theory viewpoint.
4. What are the key assumptions of the Lewis model that give rise to its conclusions? How would the theory’s conclusions differ if these assumptions do not hold?