Big push

This, thus, constitutes the third indivisibility.

the big push band

The result is that the incentives to invest are increased. A big thrust of a certain minimum size is needed in order to overcome the various discontinuities and indivisibilities in the economy and offset the diseconomies of scale that may arise once development begins. Moreover, these services are only indirectly productive and involve long gestation periods.

This is on the implicit assumption that these services are totally non-existent in these economies. If the industry A expands in order to overcome the technical indivisibilities, it shall derive certain internal economies. But in the developing countries, the most dominant sector is composed of agricultural and primary production.

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Big push theory in india

If an underdeveloped nation had ample capital supply and scarce factors , it would not be classified as underdeveloped at all. I also thank the Fulbright Commission for financial support. Indivisibilities and external economies[ edit ] The concept of externalities is relevant for the Industrialization of underdeveloped countries , where decisions are to be made regarding distribution of savings among alternative investment opportunities. As a result, industry X's production and profits also expand. Google Scholar Krugman, P. It has to take into consideration the various balances — horizontal as well as vertical. The private sector's activities are simultaneously inhibited due to lack of information of government policies and the general economic situation [4] Neglect of methods of production: Rather than capital formation, it is productive techniques which determine the success of a country in economic development. This in turn will give rise to profits and call for further investment and expansion of industry A. And the market prices have to be corrected if an account of these external economies is to be taken. Inflationary pressures: It follows from the neglect of the agricultural sector that food shortages are likely to occur with industrialization.

A certain minimum of initial speed is essential if at all the race is to be run. Thus, due to the inherent capital scarcity in the developing countries, it is really a matter of dubious wisdom to require these countries to overstrain their meagre resources in the provision of a complete outfit of infrastructures.

implication of big push theory

Cost escalations may even cause projects to be postponed and the development process in general to slow down. The crux of this theory is that the obstacles of development are formidable and pervasive. This is a challenging task for the governments of developing countries. All errors are my own responsibility.

big push theory of foreign aid

This is not achievable by mere establishment of a few industries, but requires a large program of industrial growth.

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