Chapter 19 economic growth and development

1. Key terms – matching and translation.

Read aloud the key term and its definition so that they make up a single sentence. (Remember about the agreement between the subject and the predicate!). Translate the sentences you have arrived at from English into Russian.

Set 1

international credit	According to Karl Marx, follows the “dictatorship of the proletariat” and then the “withering away of the state.”
involuntary saving	Boosts investment beyond domestic capabilities.
Rule of “72”	Expansion of productive capacity.
economic development	Individual choice between present and future consumption.
economic growth	Investment is proportionally greater than population growth.
communism	A quick way of estimating “doubling” times.
capital deepening	Qualitative expansion.
capital to labor ratio (K/L)	Associated with underdevelopment.
high birth rates	Accomplished by taxes or inflation.
voluntary saving	A crucial determinant of labor productivity.

Set 2

technological advance	Percentage of a population in the work force.
infrastructure	A stage in Rostow’s growth theory.
“Trap of underdevelopment”	Not investment and population growth are proportional.
high voluntary saving rate	A factor temporarily expanding LFPRs.
Malthusian equilibrium	Difference between wage paid and total value produced by a worker.
“takeoff”	Inhibits Keynesian Aggregate Spending but facilitates economic growth.
Labor Force Participation Rate	The edge of starvation.
surplus value	Producing more from given resources.
capital widening	Low income inhibits capital accumulation.
low birth rates	An integral part of economic development.

2. Text translation.

Translate the text from English into Russian in writing paying particular attention to the translation of the economic terms in bold as well as words and phrases relevant to the subject of the text. Read out your translation in class and introduce the necessary corrections.

Economic growth and development

Chapter Objectives

After you have read and studied this chapter, you should be able to describe the processes of economic growth and development; discuss the special hurdles to development faced in poor countries; and discuss the pros and cons of the “trap of underdevelopment” argument.

Chapter Review: Key Points

1. Economic growth refers to quantitative changes in the capacity to produce goods and services in a country. It occurs through expanding capital or labor resources, discoveries of new sources of raw materials, or development of more productive technologies. Economic development refers to improving the qualitative aspects of economic growth, including changes in the quality of life.

2. The Rule of 72 is a rule of thumb for estimating how long it takes for a variable to double in value given some percentage growth rate. Simply divide 72 by the growth rate. For example, if growth in GNP is occurring at 6 percent per year, GNP will double in approximately 12 years (72/6 = 12).

3. Diminishing returns because of the fixity of land cause output to grow more slowly, even if labor and capital increase in fixed proportions.

4. Reverend Thomas Malthus and other nineteenth-century economists were convinced that population growth is almost uncontrollable, and theorized that equilibrium is attained only when bare subsistence is common to all.

5. Population growth tends to slow as a country develops. The least developed countries of the world tend to have the highest rates of population growth.

6. Capital formation requires high saving rates. If voluntary saving is used to finance development, greater incomes, higher interest rates paid to savers, and (perhaps) less equal income distributions will lead to higher rates of investment. Involuntary saving may be used to free investment resources through confiscation, taxation, or inflation.

7. Capital widening, capital stock and labor force grow at the same rates. Capital deepening requires the capital stock to grow faster than the labor force.

8. Technological advances occur when given amounts of resources acquire greater productive capacity.

9. Rapid development requires a strong social infrastructure—education, communications, transportation, and other networks that facilitate production.

3. Vocabulary practice: switching.

Get ready for an oral (written) translation exercise based on the economic terms in bold, as well as other relevant words and phrases from the text.

Economic growth; капиталовооруженность (рабочего); capital widening; достигать равновесия; источник сырья, сырьевая база; expand LFPRs; прибавочная (меновая) стоимость; “takeoff”; скудный прожиточный минимум; communism; накопление основного капитала; facilitate production; изъятие, реквизиция, конфискация; crucial determinant; убывающая доходность; double in value; интенсивное увеличение капитала, углубление капитала; процесс образования основного капитала; accomplish; основные фонды за вычетом амортизации и списаний; quality of life; развитие экономики, процесс повышения уровня жизни и благосостояния населения; социальная инфраструктура; free investment resources through sth; темпы роста; at the edge of starvation; расширение производственных мощностей; facilitate economic growth; неизменяемость ресурса земля; hurdles to development; распределение доходов; rule of thumb; infrastructure; сдерживать совокупные расходы; involuntary saving; доля рабочей силы (работающих и зарегистрированных безработных) в общей численности данной половозрастной группы; integral part of economic development; равновесие согласно теории Мальтуса; технологический прогресс; “trap of underdevelopment”; добровольное сбережение; withering away of the state; упрощённый способ вычисления суммы при начислении сложных процентов по фиксированной ставке; network; темпы роста в процентном выражении; population growth; аргументы за и против; labor force; высокий уровень рождаемости; high voluntary saving rate; качественное расширение; международные кредиты; количественные изменения; низкий процент (уровень) рождаемости.