Explain this last sentence of the last paragraph ‘companies want to see their partner countries healthy enough to provide work, but not so healthy as to establish a threat’. Dependency TheoryDependency theory was created in part as a response to the Western-centric mindset ofmodernization theory. It states that global inequality is primarily caused by core nations (or high-income nations) exploiting semi-peripheral and peripheral nations (or middle-income and low-income nations), which creates a cycle of dependence (Hendricks 2010). As long as peripheralnations are dependent on core nations for economic stimulus and access to a larger piece of theglobal economy, they will never achieve stable and consistent economic growth. Further, thetheory states that since core nations, as well as the World Bank, choose which countries to makeloans to, and for what they will loan funds, they are creating highly segmented labor markets thatare built to benefit the dominant market countries.At first glance, it seems this theory ignores the formerly low-income nations that are nowconsidered middle-income nations and are on their way to becoming high-income nations andmajor players in the global economy, such as China. But some dependency theorists would statethat it is in the best interests of core nations to ensure the long-term usefulness of their peripheraland semi-peripheral partners. Following that theory, sociologists have found that entities aremore likely to outsource a significant portion of a company's work if they are the dominantplayer in the equation; in other words, companies want to see their partner countries healthyenough to provide work, but not so healthy as to establish a threat (Caniels and Roeleveld 2009).

Several eminent economists and policymakers have argued that both the volume as well as the…

Answered: companies want to see their partner…

companies want to see their partner countries healthy enough to provide work, but not so healthy as to establish a threat’.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Using the one factor Ricardian model concept and the unit labor requirements information in the table below, determine d) In what commodity production, foreign has a comparative advantage.Explain.e) Which country has an absolute advantage. Explainf) If PC is the price of Cheese and PW is the price of Wine, and PC = PW, thenWhat commodities will domestic specialize in?g) If PC is the price of Cheese and PW is the price of Wine, and PC = PW, thenwhat commodities will foreign specialize in?h) Using the comparative advantage information above, determine the commodity thatexported and imported by domestic and foreign respectively?i) If PC = PW or PC/PW = 1, what is the gain from trade obtaineddomestic and foreign if each country specializes inwhich production has a comparative advantage? Explain.j) If if PC = PW = $9, what is the wage relative to trade.Which country's workforce benefits from the trade?
In the model of the poverty trap used by Sachs (also known as the Lewis model), Y=min(AK,BL). (where Y is GDP, K is capital stock, L is labor, and A and B are model parameters). Using this model, give an algebraic expression for the minimum amount of aid necessary to exit a poverty trap for a country. The necessary aid should be as a ratio to the recipient’s GDP. Show how this amount depends on the depreciation rate for the capital stock, the population growth rate for the country, the rate of return to capital (A), and the recipient country’s saving rate. Now calculate the required amount of aid if the depreciation rate = .05, the population growth rate =.02, A=0.2, B=0.4, and the saving rate = 0.15. Explain why the country would remain in poverty without this amount of aid. Discuss what assumptions on surplus labor and aid effects are necessary for the model to be correct on how aid is both necessary and sufficient to end the poverty trap. Discuss what the model says about…
. Ricardian Model. Consider two countries: A and B. Labour is the only factor of production for goods X and Y. Consider the following matrix of unit labour requirements. X Y Labor Endowments Country A aLx = 8 aLy = 4 240 Country B aLx* = 6 aLy* = 2 120 Which country has an absolute advantage in producing good X? Good Y? Which country has comparative advantage in producing good X? What is the autarky relative price of good X for country A? For country B? Draw the world relative supply curve RS for good X. Label all the axes (relative price of good X on the vertical axis and world output of x relative to y on the horizontal axis) and the relevant points. Suppose that the world relative demand RD for good X is given by: (Px/Py) = 7 – 9 * ( ( Qx +Q*x) / (Qy + Q*y) ). With free trade: (i) What will be the equilibrium world relative price of good X be equal to? (ii) Calculate the equilibrium wage rate w in A relative to that…
A country (Country X) that only produces two goods (good A) and (good B) in a closed market with another country (Country Y) that only produces the same two goods. Country X has 1000 workers and Country Y has 4000 and no workers can migrate. It takes Country X 2 workers to produce good A and 3 workers to produce good B whereas it takes Country Y 3 workers to produce good A and 1 worker to produce good B. Labour is the only factor of production and both follow a standard Ricardian model that has an identical utility function. Country X decides to adopt an import substitution strategy to improve the efficiency of productivity of good B. Explain what this means and provide an opinion on this strategy?
What determines growth in post-Kaleckian (post-Kaleckian) models? What are the effects of inequalities in functional income distribution and gender on the economy? Discuss both the demand and supply side effects.
Please explain why the Classical School started to advocate liberal economic policies towards the end of the eighteenth century, despite the rapid growth of England in the Mercantilist period
Outline the basic assumptions of McGregor’s Theory X and Theory Y. Hofstede has pointedout that discussion about McGregor’s Theory X and Theory Y is based on observations inWestern societies – which are different in many ways from the new economic powers inthe East. What is your opinion?
Using the ideas of Andre Gunder Franks’ Dependency theory and that of David Slater’s spatial theory of underdevelopment in Africa, explain how globalisation promotes or constraints the development process in sub-Saharan Africa
If countries specialize according to their absolute advantage then the Ricardian model statesthata. the. trade is beneficial for all trade partners.b. trade is a stupid idea anyway.c.it is ambiguous whether trade is beneficial for all trade partners.d. trade is only beneficial for those who have absolute advantage as well
Ricardo’s economic growth model can be recognized as an endogenous model. True or False
“Dependency Theory belongs to a school of thinking that is not isolated from world events but took shape immediately after Latin American disappointment that the commercial benefits guaranteed by neoclassical theory failed to eventuate. Todaro (2000, p. 91) believed that, according to international dependence patterns, Third World countries are basically under the rule of the politics, institutions, and the economy of the developed countries themselves or of other countries of the world that are controlled by dominant wealthy countries” – critically explain how and why dependency theory emerged and also explain the importance of world system theory in the field of international and strategic relations?
relationship of Globalization and the Mcdonaldization model