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Macroeconomics, 15/e
Campbell R. McConnell, University of Nebraska, Emeritus
Stanley L. Brue, Pacific Lutheran University
Chapter 22 The Economics of Developing Countries
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 Origin of the Idea
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Origin of the Idea
22.1 Economic Development
22.1 Economic Development
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Schumpeter and Solow developed more general theories of economic growth. Other
economists focused specifically on economic growth in developing nations. Among
them was Ragnar Nurske (1907-1959), an Estonian who argued that poor nations
remained poor because of a "vicious circle of poverty." Two others
were Arthus Lewis (1915-1991) and Theodore Schultz (1902-1998), who shared the
Nobel Prize in economics in 1979. Lewis developed the two-sector model, which
divided the economy into a rural subsistence sector and an urban industrial
sector. Lewis argued that surplus labor from the rural sector could be moved
to the urban sector to fuel the development of industry and economic growth.
Schultz focused on investment in human capital (the acquisition of skills and
knowledge, or improvements in health, for example) as a means for poorer nations
to develop and grow.
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