Economic Development and Dualism Concepts

The video tutorial discusses trade policies in developing countries, focusing on import substitution industrialization (ISI) and economic dualism. It explores the infant industry argument, which suggests protecting nascent industries to develop a comparative advantage. However, challenges such as imperfect capital markets and inefficient production scales are highlighted. The tutorial also examines economic dualism, where modern and traditional sectors coexist with significant disparities. The link between ISI and dualism is debated, with arguments for and against ISI's effectiveness in reducing unemployment and fostering economic growth.

What is one of the main beliefs about economic development in developing countries?

• A strong agricultural sector is key.

• A strong manufacturing sector is key.

• A strong service sector is key.

• A strong tourism sector is key.

Which countries historically benefited from infant industry protection?

• Brazil and Argentina

• South Korea and Japan

• China and India

• US and Germany

What is a potential downside of protecting an industry for too long?

• It may never develop a comparative advantage.

• It will become too competitive.

• It will always have a comparative advantage.

• It will reduce unemployment immediately.

What was observed in India after lowering tariff rates in the 90s?

• Industries shifted focus to agriculture.

• Industries remained unaffected.

• Industries struggled to compete globally.

• Industries thrived and became competitive.

What is a consequence of adopting import substitution industrialization?

• Increased agricultural productivity

• Higher rates of effective protection

• Efficient production scales

• Decreased income inequality

What characterizes economic dualism?

• Coexistence of modern and traditional sectors

• Equal productivity in all sectors

• Low urban unemployment

• High agricultural wages

How does import substitution industrialization relate to economic dualism?

• It only affects rural areas.

• It has no impact on dualism.

• It worsens dualism by increasing urban unemployment.

• It eliminates dualism completely.

What is a suggested solution to address economic dualism?

• Increase productivity in traditional sectors

• Decrease wages in modern sectors

• Increase urban migration

• Reduce agricultural output

What is a counter-argument to using import substitution to address dualism?

• It decreases urban unemployment.

• It fosters excess capital intensity in modern sectors.

• It increases rural productivity.

• It reduces wage disparities.

What is a key factor in the rural-to-urban migration issue?

• High productivity in rural areas

• Low wage disparity between sectors

• Lack of improvement in traditional sector productivity

• Excessive urban employment opportunities