Eco. 361 —18-10-2021(Online discussion 5—Understanding Growth Strategies and Growth vs Equity debate)

NAME: JOSEPH CHIOMA MERCY
REG NO. 2018/242205
DEPT. EDUCATION /ECONOMICS

WHAT IS GROWTH STRATEGY
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
Types of growth strategies
1.Theory of balance growth: Balance growth implies that all sectors of the economy should grow simultaneously so as to keep proper balance between industry and agriculture and between production of home consumption and for export. The advantage of this is that it will increase market size, employ productivity and provide an incentive for the private sector to invest.
2.Theory of unbalanced trade: This theory was propounded as a strategy of development by Rostew, singer and co. it emphasizes on the need for investment in strategic sectors of the economy, rather than in all sector simultaneously.
Hirschman argues that when there is growth in some sector, it will create or generate the need for growth in other sector of the economy.
3.Internal growth strategy
Organic (or internal) growth involves expansion from within a business, for example by expanding the product range, or number of business units and location.
Organic growth builds on the business’ own capabilities and resources. For most businesses, this is the only expansion method used.
Organic growth involves strategies such as:
– Developing new product ranges
– Launching existing products directly into new international markets (e.g. exporting)
– Opening new business locations – either in the domestic market or overseas
– Investing in additional production capacity or new technology to allow increased output and sales volumes.
2. GROWTH AND EQUITY
MEANING OF EQUITY
Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. … Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability.
The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.

Name: iheukwumere Chinedu Kingsley
Department: economics/political science
Registration number:2018/243099
Assignment Questions:
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Assignment answer:
Question One:

Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP. while strategy is a relatively new and rapidly developing area of economic consulting, involving the application of economic principles and methods to provide clients with unique insights aimed at addressing specific issues/problems and/or enhancing their long-term performance.
Meanwhile, A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources and so on.
Furthermore, a growth strategy can be said to be an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.

Internal growth strategies are those in which a nation plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a nation plans to grow by combining with others.

Types of Growth Strategies based on Internal growth strategy:

(1) Market Penetration:
Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
a. Aggressive advertising and other sales promotion techniques.

b. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.

c. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.

(2) Market Development:
This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc.
Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.

(3) Product Development:

Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.

(4) Diversification:
Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.
Major dimensions of diversification growth strategy are as follows:
(a) Internal horizontal diversification:
Under this type of diversification, new products – whether related or unrelated to the present business line are developed by the business enterprise on its own. For example, Raymon Woolen Mills have added new product, cement to their existing line of woolen textiles. Similarly, Godrej added refrigerators and later on detergents to their original product lines of steel safes and locks.

(b) Vertical diversification:
Vertical diversification maybe backward or forward. In backward vertical diversification, the aim of a firm is to move backwards in the production process so that it is able to produce its own raw-materials/basic components. For example, a TV manufacturer may start producing picture tubes, built-in-voltage stabilizers and other similar components.

In forward vertical diversification, the aim of a firm is to move forward towards distribution process so as to reach the final consumer. For example, many textile mills like Mafatlal, Reliance, Raymond etc. have set up their own retail distribution systems.

(c) Concentric diversification:
in case of market related concentric diversification, new product/service is sold through existing distribution system. For example, addition of lease-financing for buying cars to the existing hire-purchase business is market related concentric diversification.
In technology related concentric diversification, new products are provided by using technologies similar to the present product line. For example, Food Specialties Ltdh as added ‘Tomato Ketchup’ to the existing ‘Maggi’ produced by them.

(d) Conglomerate diversification:
This growths strategy involves addition of dissimilar new products to the existing line of business. DCM Ltd. is a good example of conglomerate diversification. There has been an addition of a wide range of products such as fertilizers, sugar, chemicals, rayon, trucks etc. to their basic line of textiles. ITC, Godrej, Kirloskars etc. are other examples of conglomerate diversification.

(5) Modernisation:
Modernisation involves replacing worn-out and obsolete machines etc. by modern machines and equipment’s operated according to latest technology; to achieve objectives like better quality, cost reduction etc. Modernisation is a growth strategy in the sense that it helps to achieve more and qualitative production at lower costs; thus helping to increase sales and profits for the enterprise.

Modernisation may be a pre-requisite to the adoption of other growth strategies like product development, diversification (of many dimensions) etc. In fact, it is a background growth strategy.

(6) Joint Ventures:
Joint venture is a growth strategy in which two or more companies, establish a new enterprise (or organisation) by participating in the equity capital of the new organisation and by agreeing to participate in its management in an agreed manner.
A firm or a company may have a joint venture with another company of the same country or a foreign country. Some examples of joint ventures: Tata Iron and Steel Co. joined hands with IPICOL of Orissa to form IPITATA Sponge Iron Ltd; Hindustan Computers Ltd. and Hewlett Packard of USA formed a joint venture named HCL-HP Ltd; Tungabhadra Industries Ltd. of India and Yamaha Motor Company Ltd. of Japan formed a joint-venture Birla Yamaha Ltd. etc.
For ensuring success of a joint venture, the co-venturers must agree in advance on:
1. Objectives of joint venture
2. Equity participation of co-venturers
3. Management pattern etc.

(7) Mergers:
Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover
Mergers are of the following four types:

(a) Horizontal Mergers:
In this type of merger, different business units which have been competing with one another in the same business line join together and form a combination. The Indian Jute Mills Association, the Indian Paper Mill Makers’ Association and Associated Cement Companies (ACC) are some popular examples of horizontal merger.

(b) Vertical Mergers:
Vertical merger arises as a result of integration of those units which are engaged in different stages of production of product. It is also known as sequence or process merger. Vertical merger may be backward or forward. When manufacturers at successive stages of production integrate backwards up to the source of raw materials; it is known as backward merger.

On the other hand, when manufacturing units combine with business units which distribute their product; it is known as forward integration or merger.
Backward merger is adopted to have a control over sources of raw-materials; while forward merger aims at attaining control over channels of distribution eliminating middlemen’s profits.

(c) Concentric Merger:
(Concentric means having the same centre) Concentric merger takes place when companies which are similar either in terms of technology or marketing system, combine with each other i.e. combining units do production with the same technology or use the same distribution channels.

(d) Conglomerate Merger:
(Conglomerate means a larger company that is formed by joining together different firms). When two or more unrelated or dissimilar firms combine together; it is known as a conglomerate merger. It implies dissimilar products or services under common control. When e.g. a footwear company combines with a cement company or a ready-made garment manufacturer etc.; a conglomerate merger comes into existence.

Question Two:

There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s. Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality.

Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes.

The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity.

DIFFERENCES BETWEEN GROWTH AND EQUITY

Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.

Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

CAN GROWTH EXIST WITH INEQUALITY?
Several research shows that, in the long term, inequality has a negative relationship with economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.

According to the utilitarian view, income inequality must exist along with economic growth in order to maximize social welfare. This is in sharp contrast to the egalitarian view according to which, all members of the society should have equal access to all economic resources in terms of economic power, wealth and contribution. Kuznets (1955) introduced the inverted U-shaped Kuznets curve that showed that in an economic system, at the initial level of low economic growth, income inequality is low and as growth occurs, income inequality increases till a threshold, after which, income inequality decreases with increased economic growth.

Name:CHIMA PRINCE CHUKWUEMEKA
Reg No:2018/243755
Department: Economics Department
Asssignment on Development Economics (ECO 361)
A growth strategy refers to an organization’s plan for overcoming current and future challenges to realize its goals for expansion. This strategy uses different goals which include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
b) Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth
Growth strategies commonly utilized by most businesses are:
*Balanced growth strategies
*unbalanced growth strategies
* market penetration
*market development
*product expansion
* acquisition
*diversification.
I will discuss them fully below;
-Balanced growth
This is a growth strategy where all the sectors of the economy are carried along, there are equal growth, no sector is neglected.There is simultaneous growth in all sectors of the economy. But this strategy can slow economic growth since some of the sectors that are lagging behind are being financed by the resources generated by the sectors that are doing well.
-Unbalanced growth
This is a type of growth strategy where few sectors of the economy are concentrated on instead of all the sectors .In this strategy there are no equal growth. The sectors that are doing well are invested more on and then neglect the ones that has slow growth.

-Market Penetration
This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
-Market Development
Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
-Product Expansion
If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
-Acquisition
A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
-Diversification
The goal aimed to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
2. What do you understand by growth and equity debate in development economics?
Growth and equity debate is an argument on whether equal distribution of nation’s wealth in other to reduce poverty will lead to low economic growth or not. It is believed that public expenditure needed for reduction of poverty would entail the reduction in the rate of growth. The concerns that concentrated efforts to lower poverty would slow the rate of growth paralleled the argument that countries with lower inequality would experience slower growth. In particular, if there were redistribution of income or assets from rich to poor, even through progressive taxation, the concern was that savings would fall, which will lead to low investment and reduce economic growth. The debate is that there shouldn’t be equity in income distribution.
b) What are differences between Growth and Equity in the economy? Equity, or economic equality refers to the concept or idea of fairness in economies, more especially with regard to taxation or welfare economics. In a better term i can see it as equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. Then Economic growth is an increase in the production of economic goods and services over a given time period.
C) Can growth exist with inequality? If yes, how? If no, why?
YES….I can say that growth can exist with inequality but that occurs in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP. This has been particularly the case for poorer households: in nearly all OECD countries for which data are available, GDP growth was substantially higher than households’ income growth in the lowest quintile. But In the long run inequality may hinder development and economic growth
Thanks

Drugstore Online

NAME: OFILI BELUCHI JOAN
RET NO: 2018/241862
DEPARTMENT: ECONOMICS MAJOR

1)Governments have adopted a broad variety of policies to promote economic development.The purpose of economic development is to increase the material standards of living by raising the absolute level of per capita incomes.
Entrepreneurial approach focusing on new firm and technology development; An industrial recruitment strategy emphasizing financial incentives for the relocation or expansion of existing enterprises; and deregulation approach that minimizes governmental control over private enterprise. The entrepreneurial strategy appears to boost new business incorporations, and the recruitment approach reduces business failures.

2) In developed countries, the levels of production and consumption are already environmentally unsustainable. Further growth in these countries can only come at enormous cost to the environment. For achieving improvement in their lives, economic growth is necessary. The enormity of the problems these people face is such that even though more equitable sharing of currently-produced output levels will improve their living conditions somewhat but it may not take them very far. there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity.

Name: Ekpe Esther Chidinma
Reg.number: 2018/250324
Course code:Eco361

14) Firstly what is Education: Education is learning skills and knowledge. It also a means of helping people to learn how to do things and support them to think about what they learn.
The question now is, do educational system in developing countries really promote economic development, or are they simply a mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence?

Education in every sense is one of the most fundamental factors of development. Education enriches people’s understanding of themselves and world. It improves the quality of lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition, education plays a very crucial role in securing economic and social progress and improving income distribution with this points above I will say educational system promote economic development and not mechanism to enable certain select groups or classes of people to maintain positions of wealth, power, and influence.
15. As more than half the people in developing countries still reside in rural areas, how can agricultural and rural development best be promoted?
Agriculture and Rural areas can be developed by:
i)Employment. In countries that unemployment has higher percentage government should make use of the opportunity by creating a very big farmlands and supply machineries and tools that will enable workers to work in the farm.
ii) Construction of good roads. Government should construct good roads to enable smooth moving out of farm products for sales to the markets.
iii) Construction of industries: There should be Construction of industries in rural area so as to make rural areas developed and to give dwellers of rural areas the opportunity to be employed.
iv) Construction of schools: Government should put construction of schools in rural area in their budget. This will make construction of schools in rural area as part of their priority and it will not be left out, by this rural areas will be developed.
Are higher agricultural prices sufficient to stimulate food production, or are rural institutional changes (land redistribution, roads, transport, education, credit, etc.) also needed? Higher agricultural prices are needed to stimulate food production because in the last few years high and unstable food and agricultural commodity prices are concerns about population growth, increasing per capita food demands and environmental constraints have pushed agriculture and food production up making the price of agricultural production high and this will make rural institutional changes
16. What do we mean by “environmentally sustainable development”? Are there serious economic costs of pursuing sustainable development as opposed to simple output growth, and who bears the major responsibility for global environmental damage—the rich North or the poor South?What Is Environmental Sustainability?Environmentally Sustainable development is the practice of developing land and construction projects in a mainner that reduces their impact on the environment by allowing them to create energy-efficient models of self-sufficiency. This can take the form of installing solar panels or wind generators olfactory sites, costs geothermal heating techniques, or even participating in cap and trade agreements.
Sustainable development has 3 goals: to minimize the depletion of natural resources, to promote development without causing harm to the environment, and to make use of environmentally friendly practices.
Are there serious cost?
The sustainable development cost is the environmental costs caused by the environmental disruption in the process of socio-economic sustainable development, including the cost of man-made destruction resources or the difference costs due to environmental differences, including the unreasonable use of resources

17. Are free markets and economic privatization the answer to development problems, or do governments in developing countries still have major roles to play in their economies? No
Free markets and economic privatization is partly the answer of development problems.
Privatisation is a means of improving economic performance in developing countries and the free market is an economic system demand and supply, buying and selling or exchange of goods takes place with little or no government control.
Government in developing countries still have major role to play because there some people that are so poor and they solely depend on the government for employment or giving them capital to start a petty trade.
The privatization of state-owned enterprises (SOE) in transition economies has often been found to improve employment and productivity of privatized SOEs, despite policymakers’ fears regarding possible job cuts. This positive effect can be enhanced if privatization also promotes firms’ exports. A recent firm-level analysis of China reveals thatpropensity, employment, and productivity in both the short and long term. The effect mostly stems from changes in firms’ attitudes about profits and risks due to competitive pressure.
Privatisation is widely promoted as a means of improving economic performance in developing countries. However, the policy remains controversial and the relative roles of ownership and other structural changes, such as competition and regulation, in promoting economic performance remain uncertain. This article reviews the m upain empirical evidence on the impact of privatisation on economic performance in developing economies. The evidence suggests that if privatisation is to improve performance over the longer term, it needs to be complemented by policies that promote competition and effective state regulation, and that privatisation works best in developing countries when it is integrated into a broader process of structural reform.

18. Why do so many developing countries select such poor development policies, and what can be done to improve these choices? Developing countries select poor development policies because they believe that as an developing economy they need to start up with policies that will not be so demanding and costly.
To improve these choice the developing economy will seek for help from the deveped economy.

19. Is expanded international trade desirable from the point of view of the development of poor nations? Who gains from trade, and how are the advantages distributed among nations?

20. When and under what conditions, if any, should governments in developing countries adopt a policy of foreign-exchange control, raise tariffs, or set quotas on the importation of certain “nonessential” goods in order to promote their own industrialization or to ameliorate chronic balance of payments problems? Governments in developing countries
What has been the impact of International Monetary Fund “stabilization programs” and World Bank “structural adjustment” lending on the balance of payments and growth prospects of heavily indebted less developed countries?

21. What is meant by globalization, and how is it affecting the developing countries?According to WHO, globalization is defined as ” the increased interconnectedness and interdependence of peoples and countries. It is generally understood to include two interrelated elements: the opening of international borders to increasingly fast flows of goods, services, finance, people, and ideas; and the changes in institutions and policies at national and international levels that facilitate or promote such flows.”
Effects on Developing Countries
Globalization is playing an increasingly important role in the developing countries. It can be seen that, globalization has certain advantages such as economic processes, technological developments, political influences, health systems, social and natural environment factors. It has a lot of benefit on our daily life.
Globalization has created a new opportunities for developing countries. Such as, technology transfer hold out promise, greater opportunities to access developed countries markets, growth and improved productivity and living standards.
However, it is not true that all effects of this phenomenon are positive. Because, globalization has also brought up new challenges such as, environmental deteriorations, instability in commercial and financial markets, increase inequity across and within nations.

22. Should exports of primary products such as agricultural commodities be promoted, or should all developing countries attempt to industrialize by developing their own manufacturing industries as rapidly as possible? Yes export of primary products should be promoted in developing countries.

23. How did so many developing nations get into such serious foreign-debt problems; Governments of developing countries borrowing in quantities beyond their ability to repay.
Governments borrow heavily to purchase politically essential supplies and these put the nation into a serious debt
what are the implications of debt problems for economic development? It negatively affect capital stock accumulation and economic growth via heightened long-term interest rates, higher distortionary tax rates, inflation, and a general constraint on countercyclical fiscal policies, which may lead to increased volatility and lower growth rates.
How do financial crises affect development?
The financial crisis affect primarily by trade and financial flows forcing millions back into poverty and this makes development

24. What is the impact of foreign economic aid from rich countries? Should developing countries continue to seek such aid, and if so, under what conditions and for what purposes? The role of foreign aid in the growth process of developing countries has been a topic of intense debate. It is estimated that Africa has received more than one trillion US dollars during the last 50 years (Moyo, 2009). However, many countries are still under-developed and depend on foreign aid to run themselves, indicating that this aid has not been effective.
Middle- income countries in Africa have a substantial quantity of natural resources that are economical and act as a “pulling” factor for FDI. However, the majority of low-income African countries have very low levels of economic infrastructure such as transportation and basic services as well as low levels of human capacity in terms of elementary and secondary enrollment ratios as well as vocational and technical training opportunities. These economic and social environments make it difficult for low-income African countries to achieve economic development. Consequently, most of the low-income African countries are heavily dependent upon foreign aid which is mostly channeled through humanitarian aid such as food and emergency needs, with only a small portion being utilized for economic infrastructure
Should developed countries continue to offer such aid, and if so, under what conditions and for what purposes?

25. Should multinational corporations be encouraged to invest in the economies of poor nations, and if so, under what conditions? Yes, multinational corporation are encouraged to invest in poor nations because of it boost the country’s income. How have the emergence of the “global factory” and the globalization of trade and finance influenced international economic relations? The global factory is a structure through which multinational enterprises integrate their global strategies through a combination of innovation, distribution and production of both goods and services. The global factory is analysed within a Coasean framework with particular attention to ownership and location policies using methods that illustrate its power in the global system. Developing countries are constrained by the existence and power of global factories. Firms in developing countries are frequently constrained to be suppliers of labour intensive manufacturing or services into the global factory system. Breaking into this system is difficult for emerging countries. It requires either a strategy of upgrading or the establishment of new global factories under the control of focal firms from emerging countries. The implementation of these strategies is formidably difficult.

26. What is the role of financial and fiscal policy in promoting development? Fiscal policy promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and moderating economic activity during periods of strong growth.
Do large military expenditures stimulate or retard economic growth?Military spending according to the Keynesian approach is a component of government consumption, which stimulates economic growth by expanding demand for goods and services.

27. What is microfinance, and what are its potential and limitations for reducing poverty and spurring grassroots development?Microfinance is a banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
The scope of microfinance to lift poor people out of poverty and provide mechanisms of empowerment is being challenged as questions are raised about the supporting evidence.

NAME: EZEMA CHARITY CHIADIKOBI
REG NO :2018/245943
DEPARTMENT: ECONOMICS

1:What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.
GROWTH STRATEGY
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Growth strategies can also be understood to be the different ways which the government of developing countries can adopt to help them in theirbid to get rid of poverty or reduce it while also developing the state and the different sectors of the economy. There are two main growth strategies; balanced and unbalance growth strategies.

Balanced growth: This strategy advocates for the uniform growth of all sectors of the economy at the same time. It says that the distribution of resources should be done at each stage of development and be distributed equally to all sectors. It argues that because all sectors are developing together, they would produce raw materials for each other. A few reasons as to why this strategy should be adopted were given:

* In the absence of balanced growth, prices of goods in one sector will be higher than others.
* With balance growth the income of individuals in the economy will increase.

Unbalanced growth strategy: This strategy says that not all sectors of the economy should be developed at the same time, rather strategic sectors should be focused on and developed. This is because a growth in some sectors will bring about a dynamic need to develop other sectors at a later stage. Also development of a few sectors will bring about investments which can be used to further develop those sectors and some others. In addition, the infrastructure that the sector creates can be used by the other sectors to improve.

2:What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
EQUITY OR ECONOMIC EQUALITY is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. It relates to how fairly income and opportunity are distributed between different groups in society.

ECONOMIC GROWTH is “an increase in the amount of goods and services produced per head of the population over a period of time.”
For decades economists have wondered whether inequality is bad or good for long-term growth. On one hand, entrenched inequality threatens to create an underclass whose members’ inadequate education and low skills leave them with poor prospects for full participation in the economy as earners or consumers. It can cause political instability and thus poses risks to investment and growth. On the other hand, some argue that because inequality puts more resources into the hands of capitalists (as opposed to workers), it promotes savings and investment and catalyzes growth. To try to answer this question, we examined economic data from 48 U.S. states for the census years from 1960 to 2000. We discovered new evidence that inequality and growth are entwined in complex ways and found that overall, both high and low levels of inequality diminish growth.
Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality. The single biggest impact on growth is the widening gap between the lower middle class and poor households compared to the rest of society. Education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth.

DIFFERENCE BETWEEN EQUITY AND GROWTH.

The relationship between aggregate output and income inequality is central in macroeconomics. This column argues that greater income inequality raises the economic growth of poor countries and decreases the growth of high- and middle-income countries. Human capital accumulation is an important channel through which income inequality affects growth. To be clear, this finding implies that, on average, increases in the level of income inequality lead to lower transitional GDP per capita growth. Increases in the level of income inequality have a negative long-run effect on the level of GDP per capita.

CAN GROWTH EXIST WITH INEQUALITY?

YES, IT CAN.
This is because inequality has negative effect on growth. For there to be a steady growth, inequality has to be in its minimal.
These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.
The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum. The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.
Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

Name: Chibugo Faith Enyesiobi
Reg no: 2018/247409
Department: Combined Social Science (Economics and Psychology)
Email: adabeauty940@gmail.com
Questions
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
Answer
Growth strategies are plans for overcoming current and future challenges to realize its goals for expansion
Balanced growth theory according to Lewis all sectors of the economy should grow simultaneously and there should be a balance between industry and agriculture and also between industry and agriculture and also between production for home consumption and for exports which will enlarge market size in productivity and encourage private sector to invest
The intersectoral balance and expansion is necessary so that each of these sectors provides a market for the products of the other and in turn supply necessary raw materials for the development and growth of the other for the improvement in development. For instance the agricultural sector provides food required and releases labour from land to engage in industry . Industrial wealth also stimulates market for agricultural growth
Unbalanced growth which was propounded by Fleming, Hirschman, Rostow, and Singer to create development for developing countries
This theory states that the need for investment in strategic sectors and not all sectors of the economy simultaneously. Therefore unbalanced growth refers to a situation where various sectors of a given economy are not growing at the same rate similar to one another. Hirschman arguues that as long as there’s growth in some sectors it will boost the growth in other sectors at a later stage. He further explains that growth in one sector will be a multiplier effect leading to induced investment in related industries

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Answer
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time.
equity debate requires that the state implement policy to attain a more equitable distribution of the economy’s resources. Equity in itself means equality that is to say the government needs to bring out policies that will help the economy grow. These policies must be implemented without any failure.
The differences between growth and equity
1) Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. While Equity in itself means equality that is to say the government needs to bring out policies that will help the economy grow.
2) growth requires more investment and savings that leads to increase productivity what leads to growth while equity debate requires that the state implement policy to attain a more equitable distribution of the economy’s resources
3) Growth talks about GDP,GNI etc while equity talks about equality and reducing gap between rich and poor
PartB
Yes
Because over the years it is proven that rich people get richer and poor people get poorer yet there’s still progress and sustainable growth in the country
Because rich people in private sectors invest in different way which increases productivity and as such increases

Name :Akachukwu Christian Nonso dept:Economics. Reg no :2018/249531 Eco361
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

(ans)

(i ) The Economic Growth Strategy aims to adopt a co-ordinated, corporate approach to prioritise and support ‘good growth’ in the district, to achieve a sustainable and resilient economy by (featuring new higher value jobs, an increase in gross value added (GVA) and a boost in average workplace wages to at least the regional average).

This aim will be achieved by delivering interventions in the following strategic themes:

land and buildings for growth.
targeted business support
conditions for growth: digital and telecoms
conditions for growth: transport
branding and promotion
The interventions within these key themes will focus on four key sectors

creative and digital
financial and professional services
logistics
scientific research and development
This new economic growth strategy is all about providing a long term framework to build on our strengths, address our challenges, create effective partnerships and deliver positive, focused interventions to create a more sustainable economy for the future.

(ii)The orientation of a country’s growth strategy, whether more towards exports or more towards domestic demand, implies differences in the growth contribution of the various elements of the national income accounting identity expressed as: Y=C+I+G+(X-M) (1) where a country’s output (Y) is the sum of household consumption expenditure (C), investment (I), government expenditure (G) and the current-account balance, i.e. the difference between exports (X) and imports (M).1 Each element on the right-hand side of the equation has two components, one of which is autonomous and the other a function of national income, which in turn equals output (Y). An export-oriented growth strategy will pay particular attention to the relationship between exports and imports, while the other three components will be of greater interest in a more domestic-demand-oriented growth strategy. Most models of economic growth pay little attention to the various components of the national income accounting identity. Such models are supply-driven, with output growth being a function of factor inputs and factor productivity.

Aggregate demand for output is assumed to be sufficient for full utilization of capacity. Trade is the one component of the accounting identity that enters supply-based growth analyses, sometimes through the terms of trade (defined as the ratio of export prices to import prices), but more usually on the assumption that “trade openness” contributes to capital accumulation or productivity growth. Different studies measure openness differently: some through tariff rates or non-tariff barriers, but most commonly as some ratio of trade flows to output (Harrison and Rodriguez-Clare, 2010). From such a supply-based perspective, “export-oriented growth” refers to a high ratio of exports and imports relative to output ((X+M)/Y), i.e. being very open to trade.

A high degree of openness to trade may contribute to growth if imported inputs are more productive than domestic inputs, or if there are technological spillovers or other externalities resulting from exporting or importing. The literature on global value chains suggests that a high degree of trade openness will have a positive effect on growth, particularly in countries that export a large proportion of manufactures and succeed in “moving up the value chain”, i.e. they increase the value-added content of their exports.

A high degree of trade openness is also of microeconomic relevance, since it determines the degree to which the sectoral structure of domestic production is delinked from that of domestic demand. This gap will be particularly wide countries that export a high proportion of primary commodities; but it will also be substantial for countries that produce goods, such as consumer electronics, which few domestic consumers can afford.

The national income accounting identity is of immediate relevance for the macroeconomic causation of growth if it is considered from the demand side. From a demand-based perspective, “export-oriented growth” refers to a large difference between exports and imports relative to output ((X-M)/Y), i.e. running a large trade surplus. The reason why this perspective considers the degree of openness as being less relevant for growth is that, focusing on the share of household consumption in output, the national income accounting identity can be rearranged as: Y C = 1 − ( I + G ) ( X − M ) − Y Y (2) where any given share of household consumption in output (i.e. C/Y) is compatible with an unlimited range of values of trade openness (i.e. (X+M)/Y). A country can have a high share of consumption in output and still export most of its output. By contrast, the larger the trade surplus (i.e. (X-M)/Y), the larger will be the growth contribution of exports, and the smaller will be the contributions of the domestic demand elements (i.e. C, I and G) required to attain a given rate of growth.

A related demand-based meaning of export-oriented growth emphasizes the role of the balance-ofpayments constraint in limiting output growth. From this perspective, export orientation is relevant for a country’s growth strategy for at least two reasons (Thirlwall, 2002: 53). First, exports are the only truly autonomous component of demand, i.e. they are unrelated to the current level of national income. The major shares of household consumption, government expenditure and investment demand are dependent on income. Second, exports are the only component of demand whose revenues accrue in foreign currency, and can therefore pay for the import requirements of growth. Growth driven by consumption, investment or government expenditure may be viable for a short time, but the import content of each of these components of demand will need to be balanced by exports. Of course, such balancing is not necessary if a country accumulates external debt, absorbs a rising amount of net capital inflows or lets the real exchange rate depreciate.

However, the length of time any of these three strategies can be pursued depends very much on the external economic environment (e.g. the size of the rate of interest on international capital markets). Adverse changes in the external environment can quickly make them spiral into a balance-of-payments crisis. At what point in time the balance-of-payments constraint is felt depends on the import content of the various components of aggregate demand (YD) which are a part of leakage, i.e. the fraction of a change in national income that is not spent on current domestic production, but instead saved (s), paid in taxes (t) or spent on imports (m). Thus, the determination of aggregate demand can be schematically expressed as: YD = I + s G + t + + X m (3) A special case of this equation is the dynamic version of Harrod’s foreign trade multiplier.

In this case, household consumption, investment, and government expenditure have no autonomous element and trade is assumed to be balanced in the long run (i.e. X=M), because all output is either consumed or exported and all income is consumed either on domestic goods or imports.

This means that savings and taxes must equal investment and government expenditure (i.e. s+t=I+G). Thus, the growth rate of country i (gi) is determined by what is known as “Thirlwall’s law” and is expressed as: g = i ε i π z i (4) where εi is the world’s income elasticity of demand for exports from country i, πi is the income elasticity of demand for imports by country i, and z is the rate of world income growth (Thirlwall, 1979). According to equation (4), a country’s growth rate is determined by the ratio of export growth to the income elasticity of demand for imports.

The growth of a country’s exports (xi) – with xi=εiz – is determined by what is going on in the rest of the world. It relaxes the balance-of-payments constraint and influences the growth of YD, and hence the growth of output (in the short run via the rate of capacity use and in the long run by motivating the expansion of capacity).2 Applied to the current situation of a likely prolonged economic slump in developed countries, equation (4) implies that developing countries that face declining export earnings will find it difficult to sustain a high rate of growth if satisfying accelerating expenditure in the various domestic-demand components triggers a surge in imports. In addition to the impact on the expansion of exports taken as a bundle, the extent to which an exporting country’s growth rate is affected by economic growth in the rest of the world also depends on its pattern of specialization.3 If a country exports goods and services with a relatively large potential for innovation and technological upgrading, output growth could be boosted through improved factor productivity or through an increase in the income elasticity of demand stemming from innovation-based improvements in the quality of goods.

If a country exports from sectors with more rapid international demand growth, it could benefit from a larger income elasticity of demand for its exports, thus boosting output growth by attaining a higher ε/π ratio. Sectors in which there is significant potential for innovation may be called “supply dynamic”, while sectors that benefit from a rapid growth of international demand may be called “demand dynamic” sectors. And there is a significant degree of overlap between the two groups (Mayer et al., 2003).

Compared with primary commodities, manufactures are usually considered as having both greater potential for innovation and technological upgrading as well as better international demand prospects. Export-oriented industrialization is a strategy that exploits this overlap during periods of favourable export opportunities with a view to increasing a country’s ε/π ratio (especially through an increase in ε) and therefore its growth rate. On the other hand, this also means that, in the current context, the adverse impact of slow growth in developed countries is likely to be greater on developing countries that pursue an export-oriented growth strategy that relies mainly on exports of manufactures than on developing countries whose similar strategy relies mainly on exports of primary commodities. B.

A demand-side perspective on the transition from an export-oriented to a more domestic-demand-orientated growth strategy Considered from a demand-side perspective, there are three main challenges in switching from a growth strategy based on exports to one based more on domestic demand. One relates to the size of the domestic market. According to equation (2), the increase in the sum of C, I and G must be sufficiently large to compensate for the decline in the trade surplus caused by a fall in exports without having a negative impact on growth. With Δ denoting changes, this can be expressed as: ∆ ( C + I + G ) = − ∆ ( X − M ) Y Y (5) 2This relationship is subject to a number of assumptions, including constant relative prices (or the real exchange rate), and the Marshall-Lerner condition being just satisfied (i.e. the sum of the price elasticities of demand for imports and exports equals unity), so that the growth of exports is solely determined by the growth of world income. Thirlwall (2013: 87–90) concludes from a review of a “mass of studies applying the model in its various forms to individual countries and groups of countries” that the “vast majority of studies support the balance of payments constrained growth hypothesis for two basic reasons.

The first is that it is shown overwhelmingly that relative price changes or real exchange rate changes are not an efficient balance of payments adjustment mechanism either because the degree of long-run change is small, or the price elasticity of exports and imports is low. … The second reason why the model fits so well is that even if balance of payments equilibrium is allowed … there is a limit to the current account deficit to GDP ratio that countries can sustain”. For further discussion of the debate about this relationship, see McCombie (2011).

For a full discussion about how Thirlwall’s law relates to Kaldorian growth theory and about the robustness of its basic hypothesis to extensions such as taking account of relative price dynamics, international financial flows, multi-sector growth, cumulative causation, and the interaction between the actual and potential rates of growth, see Setterfield (2011). 3For an extension of Thirlwall’s law to a multi-sectoral economy, see Araujo and Lima (2007) and Razmi (2011).

The second challenge concerns the risk that a switch in growth strategy will rapidly become unsustainable by triggering a surge in imports and ensuing balance-of-payments problems.4 Differences in the import intensity of the different components of aggregate demand imply that the relative importance of C, G and I determines the evolution of imports. Rewriting equation (1), with mC, mI, mG, and mX denoting the import intensity of C, I, G, and X, leads to Y=(C-mCC)+(I-mII)+(G-mGG)+(X-mXX) (6) which shows that these differences imply that changes in the composition of a country’s aggregate demand will cause significant changes in imports, which occur even if the level of national aggregate demand does not change.

Statistical evidence indicates that in most countries the import intensities of exports and investment exceed that of consumption, and that the import intensity of household consumption exceeds that of government consumption, since the latter includes a large proportion of non-tradables, such as services (e.g. Bussière et al., 2013). A variation in the import contents of the different elements of aggregate demand implies that changes in the trade balance have different indirect impacts on imports and growth.5 As noted by McCombie (1985: 63), “an increase in exports allows other autonomous expenditures to be increased until income has risen by enough to induce an increase in imports equivalent to the initial increase in exports.” developing countries will most likely need to maintain some export growth in order to finance the imports of primary commodities and capital goods required for ongoing urbanization and for an expansion of domestic productive capacity.

In the current context, maintaining some export growth may be more feasible for exporters of primary commodities, especially energy. For developing countries exporting manufactured goods to developed countries, it will depend on the evolution of import demand in developed countries, but would probably also require seeking other destination markets, mainly in developing countries where consumption expenditure is increasing. Maintaining export growth could also be achieved by the inclusion of more sophisticated goods in the export basket, such as through upgrading in global value chains, but much of the scope for doing so will also depend on the evolution of import demand in developed countries. Indeed, it must be borne in mind that from the perspective of the global economy, any country’s export growth must be absorbed by a commensurate growth in other countries’ imports.

The third challenge relates to the fact that, unlike exports, the bulk of the other components of aggregate demand (i.e. household consumption expenditure, government expenditure and investment) is not autonomous, but induced by income (e.g. C=cY, where c is the marginal propensity to consume). This means that for a shift in growth strategy to be sustainable, an initial increase in expenditure in the, usually small, autonomous segments of C, G and I must trigger an increase in expenditure in those segments of C, G and I that are induced by income, and income itself must be generated in the process.

The following three sections concentrate of the first two challenges, while the remainder of this section discusses how the autonomous segments of the various components of domestic demand can be increased, and how such increases can create income that, in turn, would enable growth in those segments that are a function of income. Some part of government expenditure is autonomous, and can be financed by issuing government bonds or increased taxation of higher income groups. However, much of government expenditure and revenue is endogenous (such as payments for unemployment benefits and tax receipts), and is therefore a function of income.

The income effects of an increase in government expenditure, in turn, depend on its multiplier effects and on the degree of internationally coordinated fiscal expansion. There is an ongoing debate about the size of the multiplier effect, but it is generally agreed to be higher in a slump than in more normal times (Blanchard and Leigh, 2013). In 2008–2009, simultaneous fiscal expansion played a crucial role in compensating for the adverse growth effects of declining export opportunities for developing countries.

However, these countries may not have the fiscal space to adopt such measures a second time (or even on a continuous basis over a given period). Moreover, there are questions as to how much of a country’s f iscal expansion undertaken individually spills over to other countries through rising imports.

Coordinated fiscal expansion would greatly bolster the growth prospects of all participating countries, but this requires considerable solidarity among States and peoples, which is unlikely in the foreseeable future. Investment also has an autonomous component, particularly public investment in infrastructure and housing. However, the bulk of investment is endogenous and determined by the opportunity cost of capital.

This is mainly a function of the short-term interest rate set by the central bank and expectations about future growth of sales. If entrepreneurs expect a strong and sustained increase in demand for what they produce, they will engage in large investment expenditures financed, for example, through the creation of liquidity by commercial banks. This means that a country’s overall share of investment in GDP must be compatible with its overall share of consumption in GDP to achieve a balanced expansion of domestic demand.

If investment continuously outpaces consumption, the productive capacity created will be underutilized, which will depress revenues and, to the extent that investment is debt financed, it will create problems in the domestic financial system. Turning to the third component of domestic demand (i.e. household consumption expenditure), the autonomous part of consumption could be financed by borrowing from abroad, which would appear as an external deficit in the national income accounting identity (equation 1), or through various possibilities that would reduce leakage by increasing the size of s (=1 minus the marginal propensity to consume out of income) in equation (2): a reduction of spending or savings by another class of households, for example by a redistribution of income (through taxes or transfers) from high-income to middle-class households, borrowing from domestic lenders, and/or improved social security systems.

Financing the autonomous part of consumption can also be achieved if a sizeable group of consumers is able to delink, at least temporarily, consumption from current income. Such a delinking might occur, for example, in anticipation of a higher future income or for reasons of social interdependencies in consumption. Both these factors may well be considered key characteristics of middle-class households. Usually, low-income households will not have the discretionary income or the savings required to engage in spending unrelated to current income, even if tax policies and government transfers to low-income households affect consumption spending by this category. High-income households are likely to prefer spending on conspicuous, luxury goods, and their number will generally be smaller than that of middleclass households. Moreover, generally it is middle-class households that seek access to consumer credit which finances purchases of durable consumer goods.

An initial provision of the purchasing power required for accelerated consumption expenditure through sources delinked from wage income would also limit any adverse consequences for international competitiveness that can be due to a shift from an export-oriented growth strategy, which has often relied on low wages, to a growth strategy that relies more on private consumption. However, to be sustainable, this process will eventually require higher wage income. Indeed, boosting domestic purchasing power through the creation of jobs and income is an essential condition for a shift from an export-oriented to a more domestic-consumption-oriented growth strategy to be sustainable, as it will boost the non-autonomous component of household consumption.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

(ans)

(i) Growth has been and increasingly is causally associated with less equality, greater equality with slower growth.

The ineluctable connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies. The enormity of rewards garnered by the innovators and their close associates creates a strong tilt toward increased inequality of income and wealth.

Economists refer to an economy’s maximum output level as defining its “production-possibility frontier.” Expanding the frontier depends on one or more “game-changing” innovations. In the recent past, these have mainly been in information technology. In the future they may emerge from other technologies: biogenetic and stem-cell technology, nanotechnology, robotics, or something else. The effect on growth will likely be large, as will the ensuing disproportionate rewards for the innovators and their close associates—leading to greater inequality.

Evidence to support this proposition is both anecdotal and empirical. Consider Bill Gates/Steve Ballmer and Microsoft; Steve Jobs and Apple; Sergey Brin/Larry Page and Google; Jeff Bezos and Amazon; Larry Ellison and Oracle; Michael Bloomberg and Bloomberg L.P.; Mark Zuckerberg and Facebook—all of these innovators are in the IT domain—but also the Walton family and Walmart, major innovators in global-scaled procurement and retailing. These noteworthy innovators (except for the deceased Jobs) are all in Forbes’s current list of the world’s three-dozen richest billionaires. Their combined wealth is more than a half-trillion dollars; their accumulated wealth equals 3.5 percent of annual U.S. GDP. Their incomes place them comfortably among the “super-rich” 1 percent. Successful innovation spawns inequality.

The link between growth and inequality is also reflected in an accompanying change in the shares of national income represented by wages and profits. Wage income redounds principally to middle-income recipients (notwithstanding the skewing effect of CEO vs. worker pay mentioned earlier), while profits accrue to the owners of capital assets—notably the super-rich who are already upper-income. In the past decade-and-a-half of modest but fluctuating growth, the years of slower or negative growth (2007 to 2009) were accompanied by wage income amounting to 64-65 percent of total income, while the years of relatively higher growth exhibited wage shares reduced by 3 percent with equivalently increased profit shares. Although notably high-income recipients are included in the wage category, profit income is more concentrated among higher-income recipients than is wage income. Hence changes in which the profit share rises and the wage share falls signify increased inequality.

These data do not imply that innovators, as essential drivers of economic growth, are motivated only or even mainly by profit and income incentives. The venture capital industry, however, is laser-focused on these goals, and venture capital is vitally important in seeking, spotting, and financing successful innovation—more so now and in the future than ever before.

Notwithstanding the strong three-sided connections between growth, innovation, and inequality, there are social considerations that warrant measures to moderate the trend toward greater inequality. Herewith three suggestions toward this goal: The first relates directly to the trade-off between growth and equality, while the second and third relate to the separate issue of the huge disparity between CEO and worker pay in the United States compared with other countries.

Stock options for middle- and lower-income workers (as distinct from corporate executives, who, by and large, already have access to stock options). These new option plans would provide vesting over a defined and limited period, along with transferability after vesting if workers decide that equities other than those of their present employer will have higher yields than the assets they’ve acquired. The aim of the options program is to give workers a stake in growth-promoting, innovative companies, while the attendant costs of the program would be shared among employers, middle- and lower-income workers, and state and local government.
On-the-job training to enhance labor skills and enable workers to qualify for higher-skill, higher-paying jobs, thus lowering the CEO-worker pay ratio by raising the denominator. Allowing part of the program’s costs to be expensed or receive tax-exempt status would give employers an incentive to provide such training. Costs could be higher because of the uncertainty over whether the skill-enhanced workers would eventually be employed by the provider of on-the-job training or by another firm.
Closer monitoring of CEO compensation by corporate boards in the interests of reducing the CEO-worker pay ratio by lowering the ratio’s numerator. Recognition of this goal’s importance is already reflected in the increased frequency of shareholder resolutions and proxy voting calling for corporate boards to inform shareholders in advance whether, when, and by how much boards plan to increase CEO pay. Although most of these nonbinding resolutions have been defeated or ignored, their increased number has apparently already had some effect: Today’s high ratio is about 40 percent lower than it was several years ago. Nonetheless, our CEO-worker pay ratio remains high compared with those of other countries—something of which the public should be made more aware.
Needless to say, these and other possible suggestions are easier to list than to implement. While implementation costs would not be negligible, they would be small relative to the gains made. There’s a difficult trade-off between equality and the growth that comes from successful innovation. But one doesn’t have to overwhelm the other.

(ii) Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.
The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.
Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.
On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.
In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.
In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.
(iii) Yes, economic growth can exist with inequality, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity

Name: Onyemelukwe Chinenye Favour
Reg. No: 2018/241854
Dept: Economics
An assignment on Eco 361

1. Economists say that one of the major challenges of underdeveloped countries is the vicious cycle of poverty. Therefore they need strategies to boost income and encourage investment on a large scale. Growth strategies put in perspective, steps to take to increase the National income of a given country.
We briefly discuss the balanced and unbalanced growth theories before delving into others.
A. Balanced Growth Theory: Lewis- “Balanced growth means all sectors of the economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports.” It argues that the pattern of resource allocation should be chosen such that at every development stage, available production capacity is fully utilized.

B. Unbalanced Growth Theory: stresses the need for investment in strategic sectors of the economy rather than in all sectors simultaneously. Hirschman, Rostow and others propounded this theory as a strategy of development for underdeveloped countries like Nigeria. Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a rate similar to one another, but growth in one will stimulate the other.

C. Classical Theory: was a combination of economic work done by Adam Smith, David Ricardo, and Robert Malthus in the eighteenth and nineteenth centuries. The theory states that every economy has a steady state GDP and any deviation off of that steady state is temporary and will eventually return. This is based on the concept that when there is a growth in GDP, population will increase. The increase in population thus has an adverse effect on GDP due to the higher demand on limited resources from a larger population. The GDP will eventually lower back to the steady state. When GDP deviates below the steady state, population will decrease and thus lower demand on the resources. In turn, the GDP will rise back to its steady state.

D. Neo-Classical Theory: Two economists, T.W. Swan and Robert Solow, made important contributions to economic growth theory in developing what is now known as the Solow-Swan growth model. The theory focuses on three factors that impact economic growth: labor, capital, and technology, or more specifically, technological advances. The output per worker (growth per unit of labor) increases with the output per capita (growth per unit of capital) but at a decreasing rate. This is referred to as diminishing marginal returns. Therefore, there will become a point at which labor and capital can be set to reach an equilibrium state.
Since a nation can theoretically determine the amount of labor and capital necessary to remain at that steady point, it is technological advances that really impact the economic growth. The theory states that economic growth will not take place unless there are technological advances, and those advances happen by chance. Once an advance has been made, then labor and capital should be adjusted accordingly. It also suggests that if all nations have access to the same technology, then the standard of living will all become equal.
There were two major concerns with this era of theories. One is the conclusion that continuous economic growth can only occur with technological advances, which happen by chance and therefore cannot be modeled. Secondly, it relies on diminishing marginal returns of capital and labor. However, there is no empirical or real-life evidence to support this claim. Therefore the model is known for identifying technology as a factor in growth but fails to ever substantially explain how.

E. New Growth Theory: is an economic concept, positing that humans’ desires and unlimited wants foster ever-increasing productivity and economic growth. It argues that real gross domestic product (GDP) per person will perpetually increase because of people’s pursuit of profits.
The new growth theory presumes the desire and wants of the populace will drive ongoing productivity and economic growth.
A central tenet of new growth theory is that competition squeezes profit, forcing people to constantly seek better ways to do things or invent new products in order to maximize profitability.
The theory emphasizes the importance of entrepreneurship, knowledge, innovation, and technology, rejecting the popular view that economic growth is determined by external, uncontrollable forces.
Knowledge is treated as an asset for growth that is not subject to finite restrictions or
diminishing returns like other assets such as capital or real estate.

2. Both growth and equity are the two important spectrums to consider in economic planning. While Growth refers to the increase in national income/output over a period of time, Equity refers to an equitable/fair distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about economic justice. Growth is desirable as you must have the cake to distribute it but growth in itself does not guarantee the welfare of society.
Growth is assessed by the market value of goods and services produced in the economy (GDP). Equity on the other hand does not connote equal distribution in itself but discerning what a sector needs to be at par with other thriving sectors of the economy. In other words, the major share of Gross Domestic Product (GDP) might be owned by a small proportion of population which may result in exploitation of weaker sections of society. In such a case, the government reallocates resources so most if not all get a fair share. Hence, growth with equity is a rational and desirable objective of planning. This objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth income.

Definitely growth can exist with inequality. This is because the concept of growth doesn’t by default examplify equality.
I attempt to explain this with the unbalanced growth theory. Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a similar rate (inequality). It argues that investment should be made in strategic sectors of the economy. We assume that with this, sectors of the economy will thus be experiencing growth but not equity.

Asadu Chinyere Favour
2018/248261
Combined Social Science
(Economics/Sociology and Anthropology)
Eco 361 Online Assignment
WHAT IS GROWTH STRATEGY?
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
DIFFERENT GROWTH STRATEGIES IN THE ECONOMY:
The strategy an organization uses to expand its business depends on its financial position, existing competition and any government regulation applicable to that industry. Five main growth strategies commonly utilized by most businesses are market penetration, market development, product expansion, acquisition and diversification.

1, Market Penetration

This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.

2, Market Development

Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.

3, Product Expansion

If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.

4, Acquisition

A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.

5, Diversification

The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.

The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations.
The case study “Creating a Strategy that Smoothes the Path for Growth” by Pacific Crest Group (PCG) illustrates the power of accountability in a strategic plan. PCG developed a business growth plan with well-defined steps, metrics to measure the client’s success and accountability to make sure the plan was executed efficiently. The process included tools for the company to manage their growth, automate administrative functions and assisted them in training existing staff as well as hiring new staff as necessary to optimize effectiveness. The implementation of this system resulted in the accomplishment of an overwhelmingly profitable growth initiative.
The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations.
The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations.
WHAT IS GROWTH AND EQUITY DEBATE IN DEVELOPMENT ECONOMICS
Both growth and equity are the two important objectives of Indian planning. While Growth refers to the increase in national income over a long period of time, Equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice. Growth is desirable as you must have the cake to distribute it but growth in itself does not gurantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production. In other words, the major share of Gross Domestic Product (GDP) might be owned by a small proportion of population which may result in exploitation of weaker sections of society. Hence, growth with equity is a rational and desirable objective of planning. This objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced alongwith growth income.
DIFFERENCES BETWEEN GROWTH AND EQUITY IN THE ECONOMY
Growth is an increase in the size of an organism or part of an organism, usually as a result of an increase in the number of cells. Growth of an organism may stop at maturity, as in the case of humans and other mammals, or it may continue throughout life, as in many plants. In humans, certain body parts, like hair and nails, continue to grow throughout life. While, Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
CAN GROWTH EXIST WITH INEQUALITY?
Yes, In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:

“One might thus assume a long swing in the inequality characterizing the secular income structure: widening in the early phases of economic growth when the transition from the pre-industrial to the industrial civilization was most rapid; becoming stabilized for a while; and then narrowing in the later phases.”

Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.

NAME: Ngadi God’spromise
REG NO :2018/242405
DEPT: Economics

1. a. A Growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
b. Strategy of balanced growth: Nurske put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
In an undeveloped country, the level of per capita income is low which means that the people purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low. As a result of low demand for goods, the inducement for investment is less and capital equipment per capita [i.e., per worker] is small.
Since the amount of capital per capital is small, productivity per worker is low. low per capita productivity means low per capita income, i.e., poverty. In a poor county, the size of the market for goods is small so that sufficient opportunities for profitable investment in industries are lacking. According to Nurske, this is the main reason for lack of inducement to invest.

c. Professor Albert Hirschman in his book ‘Strategy of Economic development’ carried singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving rapid economic growth.
Like singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the poor developing countries.
He characterizes the balanced growth doctrine as ‘the application to underdevelopment of a therapy originally devised for an underemployment situation’ by J.M Keynes. In an advanced country, during depression, ‘industries, machines, managers and workers as well as the consumption habits’ are all present, while in poor developing countries this obviously not so.
After all, he points out, the industrialized countries did not get to where they are now through ‘balanced growth’. True, if you compare the economy of the united states in 1950 with the situation in 1850, you will find that many things have gone, but not everything grew at the same rate through the whole century.

d. Export led growth strategies: The last 40 or so years have been dominated by what has come to be known as Export- led growth or Export promotion strategies for industrialization, at last when it comes to matters of economic development. Export-led growth occurs when a county seeks economic development by engaging in international trade.

e. Market penetration: This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.

2.a. It simply talks about the significant impact of growth in an economy. It states that with growth in an economy the government can distribute income equally and how some sectors grow faster than the other.

b. Firstly, Growth is an increase in the standard of living while equity means equality. Using Korea as a case study, with the trends in employment and income distribution in the Republic of Korean during the last 10-15 years is seen as a country which have been quite successful in combining rapid growth with improved equity, and employment is considered the most important factor in this success.
Therefore, there is no difference between growth and equity because they work hand in hand.

c. No, one of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in the society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result to less investment in human capital by lower- income individuals if, for example there is no suitable stable system of education of grants. For this reason, countries with a high degree of inequality tend to have lower levels of social mobility between generations.
Greater inequality can also negatively affect growth if, for example, it encourages populist policies. Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which end up acting as a brake on growth.

NAME: Nwokobia Adaeze
REG NO: 2018/241865
DEPARTMENT: Economics
EMAIL: nwokobiaadaeze@gmail.com

1) BALANCED GROWTH STRATEGY
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory. No importance should be given to promoting exports.

UNBALANCED GROWTH STRATEGY
The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth.Hirschman contends that deliberate unbalancing of the economy according to the strategy is the best method of development and if the economy is to be kept moving ahead, the task of development policy is to maintain tension, disproportions and disequilibrium. Balanced growth should not be the goal but rather the maintenance of existing imbalances, which can be seen from profit and losses. Therefore, the sequence that leads away from equilibrium is precisely an ideal pattern for development. Unequal development of various sectors often generates conditions for rapid development. More-developed industries provide undeveloped industries an incentive to grow. Hence, development of underdeveloped countries should be based on this strategy.

2) It previously was thought that a trade-off existed between growth and equity – that distributing income too equally would undermine incentives and thus lower everyone’s income. The assumption was that rich needed special encouragement to save and invest more.
Recent evidence suggests that this conventional wisdom is wrong. In addition to an expanded view of the relationship between economic growth and human capital, there now is a deeper understanding of the relationship between growth and equity. Human capital has more impact on growth, for example, if it is equitably distributed. Discussions that link equity with growth have frequently neglected the demand side of the economy. A more equal distribution of income changes the composition of demand towards more labor-intensive products – and this stimulates both growth and employment. Public policy must therefore be directed not only at building up people’s capabilities, but also matching these capabilities with opportunities When the supply of human capital and the demand for it are in balance – when capabilities match opportunities – a dynamic process of cumulative causation is set in motion that can raise growth and lower inequality. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.

CAN GROWTH EXIST WITH INEQUALITY?
Growth can not grow with inequality. Inequality is a major obstacle to sustainable economic growth. extreme income inequality leads to economic inefficiency. Inequality may lead to an inefficient allocation of assets. With high inequality, the overall rate of saving in the economy tends to be lower,
because the highest rate of marginal savings is usually found among the middle
classes. Due to this, poor institutions find it very difficult to improve, because the few
with money and power are likely to view themselves as worse off from socially
efficient reform, and so they have the motive and the means to resist it.

NAME: OHANUKA SOLOMON IKEMEFUNA
REG NO: 2018/243203
DEPT: COMBINED SOCIAL SCIENCE
(ECONOMICS AND POLITICAL SCIENCE)

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWERS
No. 1
A growth strategy is one under which management plans to advance further and achieve growth of the enterprise or economy in fields of manufacturing, marketing, financial resources etc.
As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate the distorting effect of inflation on the prices of goods produced.
The economic growth-rates of countries are commonly compared using the ratio of the GDP to population (per-capita income).
BALANCED GROWTH STRATEGIES
The balanced growth Strategy is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
UNBALANCED GROWTH STRATEGIES
Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.
Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
It is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term ; growth strategies can be long-term, too.

OTHER GROWTH STRATEGY ARE AS FOLLOWS

INTERNAL GROWTH STRATEGIES
The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.

EXTERNAL GROWTH STRATEGIES
Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

DIVERSIFICATION GROWTH STRATEGIES
Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

EXTERNAL GROWTH STRATEGIES
Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

DIVERSIFICATION GROWTH STRATEGIES
Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

EXTERNAL GROWTH STRATEGIES
Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

No. 2
Growth can be seen as the increase in quantity over time. It can be seen as the gradual development in maturity, age, size, weight or height. It is a process that focuses on quantitative improvement.
Equity on the other hand is where income is distributed in a way that is considered to be fair or just. Note that an equitable distribution is not the same as a totally equal distribution and that different people have different views on what is equitable.

B.
WHAT ARE DIFFERENCES BETWEEN GROWTH AND EQUITY IN THE ECONOMY? Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. While Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.

C
CAN GROWTH EXIST WITH INEQUALITY? IF YES, HOW? IF NO, WHY?
Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP. This has been particularly the case for poorer households: in nearly all OECD countries for which data are available, GDP growth was substantially higher than households’ income growth in the lowest quintile. In long run then inequality may hinder growth and economic development.

NAME: EKE SUNDAY.
REG NO:.2018/245405
UNIT: ECONOMICS EDUCATION.
EMAIL: ekesunday81@gmail.com

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWERS
GROWTH STRATEGY

• A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services. A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.
DIFFERENT GROWTH STRATEGIES.
BALANCED GROWTH STRATEGY
The advocates of the balanced growth doctrine are economists such as Rosenstein Rodan,Ragnar Nurkse and Arthur Lewis, with different interpretations to the theory. To some, it means investing in a lagged sector or industry, to others it means simultaneous investment in all sectors, especially manufacturing industries and agriculture (KindleBerger as cited in Jhingan, 2011). The balanced growth theory entails a balance between social and economic overheads (power and energy, drainage system, etc,) and directly productive investment so that all sectors grow in unison (Ahuja 1980 as cited in Metu et al 2018). They believe that there should be simultaneous investment in a number of industries, that is a balanced growth of different industries or investment in lagged sectors of the economy until all sectors are equally developed. Balanced growth strategy recognises the need for expansion and inter-sectoral balance between agriculture and manufacturing so that each of these sectors provides a market for the product of the other and in turn, supplies the necessary raw materials for the development and growth of the other. For instance, in the simultaneous development of agriculture and industrial sector, employment in the industrial sector will lead to increase in the demand for food stuff and irrigation, intermediate goods, etc. The demand side relates to the provision of employment opportunities and incomes so as to induce investment through improved savings resulting from increase in employment and income. According to Lewis as cited in Todaro and Smith (2015), development programmes Should include a balance between agriculture and industry; balance between production For consumption and exports and a balance between the domestic sector and the foreign employment opportunities and incomes so as to induce investment through improved savings resulting from increase in employment and income.According to Lewis as cited in Todaro and Smith (2015), development programmes should include a balance between agriculture and industry; balance between production for consumption and exports and a balance between the domestic sector and the foreign sector.
UNBALANCED GROWTH STARTEGY
Economists such as Singer and Hirschman argue that for development to take place in an Economy, there should be an unbalanced growth strategy by concentrating on investment In certain strategic industries. Hirschman advocated for big push in selected sectors of the Economy (Onwuka, 2011). According to the paper, underdeveloped countries may follow The method of unbalanced growth by undertaking initial investment in either social Overhead capital (SOC) or investment in direct productive activities (DPA) rather than Simultaneous investment. Social overhead capital includes investment on education, Public health, communication, public utilities such as light, water, drainage and irrigation Schemes (Ahuja, 2016; Jhingan 2011). Simultaneous investment in DPA and SOC is not Possible due to limited resources and because of the inability of underdeveloped countries To secure adequate resources. Therefore, there is need to determine the sequence of Expansion that will maximize induced decision-making. According to Hirschman, the Sequence of investment could be from investing in SOC or from investing in DPA first. If investment is first undertaken in DPA, the shortage of SOC will raise production costs and with time political pressure will stimulate investment in SOC.
OTHER STARTEGIES INCLUDE
• Market Penetration
This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
• Market Development
Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
• Product Expansion
If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
• Acquisition
A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
• Diversification
The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
• Internal Growth Strategies:
The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.
• External Growth Strategies:
Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.
• Diversification Growth Strategies:
Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).
Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.
• External Growth Strategies:
Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

GROWTH IN DEVELOPMENT ECONOMICS
The term economic growth has been variously defined. Nafziger (2006) explains Economic growth as increases in a country’s production or income per capita, while the Production is usually measured by gross national product (GNP) or gross national income (GNI); they are used interchangeably to measure an economy’s total output of goods and Services.
According to Haller (2012) economic growth, in a narrow sense, is an increase of the National income per capita in quantitative terms with a focus on the functional relations Between the endogenous variables. Then in a wider sense, it involves the increase of the GDP, GNP and NI, including the production capacity, expressed in both absolute and Relative size, per capita. By this definition, it means that economic growth involves the Process of increasing the sizes of national economies, the macro-economic indications, Especially the GDP per capita.
Todaro and Smith (2015) defines economic growth as the steady process by which the Productive capacity of the economy is increased over time to bring about rising levels of National output and income. While Mladen (2015) view economic growth as constantly Increasing the volume of production or the increase in gross domestic product over a Period of time, usually one year. Economic growth is a long-term rise in the capacity to supply increasingly diverse Economic goods to its population. The growing capacity is based on advancing Technology as well as institutional adjustments. Economic growth occurs whenever People take resources and efficiently rearrange them in ways that make them more Productive overtime (Metu et al., 2017). It is the continuous improvement in the capacity To satisfy the demand for goods and services, resulting from increased production scale, And improved productivity i.e. innovations in products and processes. Aggregate economic growth is measured in terms of gross national product (GNP) or Gross domestic product (GDP), although alternative metrics are sometimes used. In a Nutshell, economic growth is an increase in the capacity of an economy to produce goods And services, compared from one period of time to another.
EQUITY IN DEVELOPMENT ECONOMICS
Equity, is the concept or idea of fairness in particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution

DIFFERENCE BETWEEN GROWTH AND EQUITY
I) Equity on the other hand is a more normative concept that concerns the ‘justness’ or ‘fairness’ of resource allocation.
While GROWTH in an economy means the process by which a nation’s wealth increases over time.
ii) Equity, is the concept or idea of fairness in particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution
While GROWTH in an economy is the increase in the value of an economy’s goods and services, which creates more profit for businesses
iii).Can growth exist with inequality? If yes, how? If no, why?
No growth cannot exist in an economy. Inequality is negatively related to economic growth greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph). Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.

NAME: GWOM PAUL JACOB
REG.NO. 2018/243820
EMAIL: gwompauljacob@gmail.com
DEPARTMENT: ECONOMICS

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
Growth strategies are strategies used to get rid of the vicious circle of poverty and develop the economies.
Types of growth strategies:
Balanced growth strategies: “Balanced Growth refers to growth in all kinds of capital stock constant rates,” according to P.A Samuelson.
Balanced growth is defined by the United Nations as full employment, strong investment, and overall expansion in productive capacity, or balance.
(Alak Ghosh) Balanced growth means that all sectors of the economy will grow at the same rate, i.e., consumption, investment, and income will all increase at the same rate.
According to W.A. Lewis, balanced growth theory states that all sectors of the economy should grow at the same time in order to maintain a good balance between industry and agriculture, as well as between domestic and export production.

Unbalance growth strategies: This is a situation in which some sectors of the economy grow at a faster rate than others. Banking, for example, may be expanding rapidly while manufacturing is slowing or even shrinking. Unbalanced growth foreshadows a future economic slowdown or recession, while analysts vary on how to deal with it.
Unbalanced growth is a better development strategy to focus available resources on types of investment that serve to make the economic system more elastic, more capable of expansion under the stimulus of enlarged market and expanding demand,” according to H.W.Singer.
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Difference between Growth and Equity in the economy -growth refers to a rise in national income over time, while equity refers to an equal distribution of that money so that the benefits of increased economic growth can be passed on to all segments of the population, resulting in social justice.
Growth can coexist with inequality if the national income rises without a corresponding rise in societal well-being. The market value of goods and services produced in the economy (GDP) is used to evaluate growth, but this does not guarantee a fair distribution of revenue. In other words, a small number of people may own the majority of GDP.

Name: Onyekwelu Collins Obinna

Reg No: 2018/251026

Dept: Economics

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

In an economy, growth strategies are economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries. In business, a growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services. Growth strategy is a collection of business initiatives that seek the maximization of a company’s value within a period. Despite what many people believe, a comprehensive growth strategy is not only about getting more clients and selling more stuff. Although, getting clients is super important but there’s much more in a strategic growth plan than just expansions and market development.

In an ideal world, we’d expect executives to only go after growth initiatives that are beneficial to their organization, but in reality, we’ve all seen how pressure from demanding shareholders and investors, and misguided incentives, can lead a company to sometimes pursue growth at all costs even if doing so destroys value over the long term. In general, we say that a growth strategy is comprehensive if a combination of the following conditions is met:

a)It increases the company’s bottom line over time,
b)It produces an attractive return on investment (ROI),
c)It leverages the company’s value chain,
d)It builds a new critical capability, or It improves the business’s strategic positioning.
Not all growth is created equal, and sometimes more sales don’t necessarily means that you are growing profitably.

Growth strategies:

a) Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse. The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously. It refers to a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending.
Balanced growth theory requires proper balance between investment in industry and agriculture. As a result of it, economic development of a country is accelerated. It encourages savings which turn into capital and thereby investment. In this way, it leads to better utilisation of capital. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.

b) Unbalanced growth strategy: Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments.
According to Hirschman, “Development is a chain of disequilibria that must be kept alive rather than eliminate the disequilibrium of which profits and losses are symptoms in a competitive economy.
If economy is to keep moving ahead, the task of development policy is to maintain, tension, disproportions and disequilibria.” Albert O. Hirschman in his strategy of economic development said that for accelerating the pace of economic development in the underdeveloped countries, it is advisable to create imbalances deliberately. He also recognized the inter-relatedness of different economic activities as done by Ragnar Nurkse. But he asserts that investment in selected industries or sectors would accelerate the pace of economic development.
According to Prof. Hirschman, the series of investment can be classified into two parts:

1. Convergent Series of Investment:
It implies the sequence of creation and appropriation of external economies. Therefore, investment made on the projects which appropriate more economies than they create is called convergent series of investment.

2. Divergent Series of Investment:
It refers to the projects which appropriate less economies than they create. These two series of investment are greatly influenced by particular motives. For instance, convergent series of investments are influenced by profit motive which are undertaken by the private entrepreneurs. The later is influenced by the objective of social desirability and such investment are undertaken by the public agencies.
In the words of Prof. Hirschman, “When one disequilibrium calls forth a development move which in turn leads to a similar disequilibrium and so on and infinitum in the situation private profitability and social desirability are likely to coincide, not because of external economies, but because input and output of external economies are same for each successive venture.” Thus, growth must aim at the promotion of divergent series of investment in which more economies are created than appropriated.

c) Market Penetration:
This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.

d) Market Development:
Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.

e) Product Expansion:
If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.

f) Acquisition:
A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.

g) Diversification:
The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

The growth and equity debate in development economics argues about the possibility of combining economic growth and inequality between the rich and the poor. Thus, It is difficult to argue that high growth of GDP (which measures economic growth) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter. What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy like Nigeria, will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.

Differences between growth and equity.

Economic growth is an increase in the production of goods and services in an economy. It is an expansion of the economic output of a country. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP. In economics, growth is commonly modeled as a function of physical capital, human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital, and raw materials, will lead to increased economic output.
While,
The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity. The complementaries between equity and prosperity arise for two main reasons. Greater equity contributes to poverty reduction through potential beneficial effects on aggregate long-term development and through enhanced opportunities for poorer groups within society. When incomes are more evenly distributed, the number of individuals below the poverty line decreases. Equity-enhancing policies, particularly investment in human capital, can, in the long run, boost economic growth, which, in turn, has been shown to alleviate poverty.

Growth can exist with inequality because economic growth refers to the increase in the production of goods and services in an economy measured by GDP thus, it does not reduce inequality between the rich and poor. An increase in economic growth leads to little or no increase in the welfare of the poor.

Name: Folarin Gift Funmilayo
Reg No: 2018/241234
Department: Education/ Economics
Course Code: Eco 361
Course Title: Development Economics 1

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.
A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. In the fast expanding economies of today, adoption of growth strategies by business enterprises is a must for the survival, in the long-run; lest they should be swept away by environmental influences, especially competition, technology and governmental regulations. Growth strategies may be classified into two categories:
(I) Internal growth strategies
(II) External growth strategies.
Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a firm plans to grow by combining with others.
Strategies of Unbalanced Growth
The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth.

Explanation of Nurkse’s Theory of Balance Growth
According to Prof. Nurkse in the development of underdeveloped countries the greatest obstacle is Vicious Circle of Poverty. The Vicious Circle shows that income is low in underdeveloped countries. Because of low income, saving is low. There for investment and output is low. Low output means low income.
(i) Complementarity of Demand
(ii) Intervention by the Government
(iii) External Economies
(iv) Accelerated Rate of Growth
Nurksian Strategy of Balanced Growth:
We have explained above how, in the underdeveloped countries, the small size of the market or the limited demand for goods acts as a hindrance in the way of their economic growth or capital formation. When an entrepreneur wants to set up a factory or install plant and ma¬chinery, he makes sure whether there is enough demand for the goods he proposes to manu¬facture and whether the investment will be profitable.
We have seen that owing to low demand for industrial goods investment is discouraged because of low profitability. That is why the vicious circle of poverty operates on the demand side of capital formation. The people in the under-developed countries are poor and their per capita income is low. This keeps the demand limited and size of the market small. Since the market is small, the entrepreneurs are discouraged from investment in plant and machinery in which only large-scale production is possible and economical.
Three Strategies of State Economic Development: Entrepreneurial, Industrial Recruitment, and Deregulation Policies.
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Growth is the irreversible increase of an organism’s size over a given period. It is a stage or condition in increasing, developing or maturing. Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
Notwithstanding the strong three-sided connections between growth, innovation, and inequality, there are social considerations that warrant measures to moderate the trend toward greater inequality. Herewith three suggestions toward this goal: The first relates directly to the trade-off between growth and equality, while the second and third relate to the separate issue of the huge disparity between CEO and worker pay in the United States compared with other countries.
A) Stock options for middle- and lower-income workers (as distinct from corporate executives, who, by and large, already have access to stock options). These new option plans would provide vesting over a defined and limited period, along with transferability after vesting if workers decide that equities other than those of their present employer will have higher yields than the assets they’ve acquired. The aim of the options program is to give workers a stake in growth-promoting, innovative companies, while the attendant costs of the program would be shared among employers, middle- and lower-income workers, and state and local government.
B) On-the-job training to enhance labor skills and enable workers to qualify for higher-skill, higher-paying jobs, thus lowering the CEO-worker pay ratio by raising the denominator. Allowing part of the program’s costs to be expensed or receive tax-exempt status would give employers an incentive to provide such training. Costs could be higher because of the uncertainty over whether the skill-enhanced workers would eventually be employed by the provider of on-the-job training or by another firm.
C) Closer monitoring of CEO compensation by corporate boards in the interests of reducing the CEO-worker pay ratio by lowering the ratio’s numerator. Recognition of this goal’s importance is already reflected in the increased frequency of shareholder resolutions and proxy voting calling for corporate boards to inform shareholders in advance whether, when, and by how much boards plan to increase CEO pay. Although most of these nonbinding resolutions have been defeated or ignored, their increased number has apparently already had some effect: Today’s high ratio is about 40 percent lower than it was several years ago. Nonetheless, our CEO-worker pay ratio remains high compared with those of other countries—something of which the public should be made more aware.
Needless to say, these and other possible suggestions are easier to list than to implement. While implementation costs would not be negligible, they would be small relative to the gains made. There’s a difficult trade-off between equality and the growth that comes from successful innovation. But one doesn’t have to overwhelm the other.
References
1. https://www.yourarticlelibrary.com/business/growth-strategies/growth-strategy-meaning-and-types-enterprise-management/69744
2. http://magadhmahilacollege.org/wp-content/uploads/2020/07/balanced_and_unbalanced_growth_theory.pp2_.pdf
3. https://www.appcues.com/blog/growth-strategies
4. https://www.merriam-webster.com › dictionary › growth
5. https://www.rand.org/blog/2015/01/growth-versus-equality-striking-the-right-balance.html

Nnamani Dorathy nchido
2018/245843
Economic
Growth Strategy
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
As an action plan, your growth strategy should include the following components:
Goal: What do you want to achieve?
People: How is each department impacted by your goal?
Product: Is your product positioned to help you achieve your goal?
Tactics: How will you work toward your goal?
Types of growth strategies
THEORY OF BALANCED GROWTH
According to Lewis”Balanced growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for export. The truth is all sectors should be expanded simultaneously”. This will enlarge the market size, increase productivities, and provide an incentive for the private sector to invest.
Ragnar Nurkse’s balanced growth theory
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy.[3] He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
Fredrick List according to him a balance could be established among agriculture, industries and trade, but with an equal emphasis on agriculture and industry. The expansion and inter-sectoral balance between agriculture on manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw material for the development and growth of the other.
W.A LEWIS has advocated the theory of balanced growth on the basic of the following reason
1.the absence of Balanced growth, price in one sector may be higher than the price in other sectors.
2.when the economy grows,then several bottleneck appear in different sectors. As a result of Economics development, income of the people also increases.
3.He suggested that the strategy of balance between domestic and foreign trade should be adopted
SOME CRICITCISMS OF BALANCED GROWTH STRATEGY
1. Danger of inflation
2. Wrong Assumption
3.Administrative Difficulties
4. Rise in costs
THEORY OF UNBALANCED GROWTH
According to H.W.Singer, “Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand.”
Meier and Baldwin are also of the opinion that “Planners should concentrate on certain focal points, so as to achieve the goal of rapid economic development. The priorities should be given to those projects which ensure external economies to the existing firms, and those which could create demand for supplementary goods and services.”
Explanation of the Theory:
Albert O. Hirschman in his strategy of economic development goes a step further from Singer when he says that for accelerating the pace of economic development in the underdeveloped countries, it is advisable to create imbalances deliberately. He also recognized the inter-relatedness of different economic activities as done by Ragnar Nurkse. But he asserts that investment in selected industries or sectors would accelerate the pace of economic development.
MERIT OF THE UNBALANCED GROWTH THEORY
1.Realistic Theory
2. More important to basic industries
3.Economies of large scale production
3.Encouragemet to new invention
4.Self reliance
5.Economic surplus
Product development strategy—growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
Market development strategy—growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.
Market penetration strategy—growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
Diversification strategy—growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.
QUESTIONS 2
Growth and Equity debate are discussions or argument that arise due to equal distribution of Economics goods and services in country, business and organisation.
Q2b
Growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
While
Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome.

Q2c
One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).
Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).
Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.2

Name- CHIDOZIE JULIETH CHISOM
Reg no- 2018/250055
Department- EDUCATION ECONOMICS
Email – chidoziejulieth165@gmail.com

No(1)a, What do you understand by growth strategies?
Answer:
A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
No(1)b, clearly discuss different growth strategies in in the economy that will support and enhance the growth and development of developing countries like Nigeria.
Answer:
(1)Strategy of Balanced Growth:
Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low. As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small.
Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty. This completes the vicious circle of poverty. In a poor country, the size of the market for goods is small so that sufficient opportunities for profitable investment in industries are lacking. According to Nurkse, this is the main reason for lack of inducement to invest.
It may be clearly understood that in the developing countries, according to Nurkse, demand for consumer goods cannot be increased merely by the expansion of money supply in the country. The real demand will increase only if there is increase in the productivity per worker and as a result thereof there is increase in the real per capita income. But mere expansion of money supply and thus putting more money into people’s pockets demand for goods increases which will result in inflation or higher prices, but not increase in the real effective demand and expansion in the capacity to produce goods.
e level of people’s income in any country can be raised and consequently their purchasing power can be increased by increasing productivity and aggregate output or, in other words, by increasing productive employment. A situation of higher productivity, the greater employment and incomes and high purchasing power of the people will provide a profitable field for investment. It may be said that the size of the market can be enlarged by lowering the price of the products. But, according to Nurkse this is no solution of the problem. The real solution of the problem is only an increase in productivity of the people by raising productive employment. Only as a result of increase in productivity, there is increase in income and increase in purchasing power which will increase demand and enlarge the size of the market.

Say’s Law propounded by classical economists tells us that production or supply creates its own demand. But this law cannot be accepted in the sense that the production of cloth creates its own demand because the workers engaged in the making of cloth will not spend their entire earnings on the purchase of cloth. In the same way, production of shoes cannot create its own demand. The reason lies in the variety of man’s wants.
But, according to Nurkse, Say’s Law can be applied to the developing countries if investment is made simultaneously in a large number of industries in a way that incomes of a large number of workers engaged in these industries will increase. This will create demand for goods produced by one another. In other words, if investment is made simultaneously in a number of industries and production is increased, the supply will create its own demand. Say’s Law will hold well in such a situation.
The strategy of unbalanced growth has come in for severe criticism. First, it has been pointed out that unbalanced growth strategy is based on wrong assumption that only factor constraining economic growth is the scarcity of decision-making ability in respect of investment. According to it, all that is needed for accelerating growth in less developed countries is to provide inducements and incentives to private enterprise to undertake investment projects.

Once this is done, supply of financial resources will adequately flow into investment projects. This is not a realistic assumption to make in the context of the developing economies. In the developing countries supply of financial resources is scarce due to low rate of saving and this hampers economic growth. Hirschman paid little attention to overcome this bottleneck to accelerate growth. Thus, not only the supply of physical resources are limited but also the availability of financial resources for funding the developmental projects is scarce.

(2), Strategy of Unbalanced Growth:
Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving rapid economic growth.

Like Singer, he argues that balanced growth theory require huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the poor developing countries.

He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers and workers as well as the consumption habits” are all present, while in poor developing countries this obviously not so.
As a developing country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an underdeveloped economy from a position of stagnation, Hrishman prescribes big push in strategic selected industries or sectors of the economy.
After all, he points out, the industrialised countries did not get to where they are now through “balanced growth”. True, if you compare the economy of the United States in 1950 with the situation in 1850, you will find that many things have grown, but not everything grew at the same rate through the whole century.
Development has proceeded “with growth being communicated from the leading sectors of the economy to the followers, one from industry to another; from one firm to another.

(3). Millennium Development Goals

The United Nations turning to the MDGs in 2000 signified a paradigm shift in the policies of supranational institutions (UN, 2014). Quantitative goals were set in great detail, with a fixed atimeframe, identical for all developing countries and in conjunction with the support of developed countries, whereby income distribution was addressed in part for the first time. However, the MDGs, translated in poverty reduction strategy papers as medium-term national strategies, were confined to goal-setting, although they missed economic strategies, apart from the verbal commitment of donor countries to markedly increase official development aid. Perhaps strategies had been deliberately left out by the initiators of the MDGs to find global consent and delegate the choice of strategy to the respective country. Ironically, the usual set of policy advice as shown above was not really changed, with the exception of the IMF’s initiative to include capital flow management (alias capital controls) into the official toolbox of the Fund from 2010. Hence, the MDGs can be considered as a social policy complement of the mainstream roadmap for broad-based liberalisation of markets in the “South”. While setting proper goals is an important part of defining development strategies, the MDGs miss a production view on development so that the eradication of absolute poverty and the related other goals can be

achieved sustainably and eventually self-reliantly. Development has often been interpreted and reduced to simply overcoming poverty, predominantly understood as absolute poverty, as well as reaching the other goals to enable “capabilities” (Sen, 2001) and open opportunities for individual freedom for all citizens. Accordingly, the MDGs can be understood as a reduced substitute for genuine, broader development as perceived in traditional development discourses (e.g. Chang, 2010). From this perspective, the advent of the MDGs was a reduction of developmental ambitions in disguise.

(4)Neo-liberalism

The ambiguity of the Washington Consensus was often used to interpret it as plain neoliberalism. The imperatives would then be to free all goods, labour and financial markets as much as possible from regulations, reducing the size of governments, avoiding counter-cyclical fiscal policies, giving priority to price stability over growth and employment objectives and keeping taxation low. The legal framework of economic systems has to be geared to securing property rights, including privatising public enterprises and promoting market-friendly institutions. The implicit rationale of the neoliberal philosophy is the notion that developing countries suffer from manifold market distortions, similar to transition economies, whereby the unleashing of the invisible hands of markets could drive growth and development. From this perspective, the main drivers for development are seen in free trade and free cross-border financial flows, supported by institutional reforms towards what is considered as “good governance”. Trade and capital flows follow the comparative advantage theory in the Heckscher-Ohlin form, where developing countries can exploit their cheap labour and natural resources while rich countries provide capital, technology and knowledge. Openness for foreign direct investment and all other capital flows is a key ingredient of this conception (e.g. Mishkin, 2006). The classical view that capital accumulation and related technical progress are engines of growth is out of focus, as well as the Keynesian idea of active macroeconomic management. The notion of public goods, and particularly education, training, research and development, which are considered as key for development by endogenous growth theories, do not form the centrepiece of this concept. Nonetheless, this philosophy is sufficiently vague and flexible to adjust to special needs or combine it with other ingredients, as long as it remains the backbone for a growth and development strategy.

(5) Washington Consensus

As is well-known, John Williamson summarised in 1989 (Williamson, 1990) what he believed to be the consensus of four Washington-based institutions regarding economic policies in Latin America at the time: the State Department, the Treasury, the World Bank and the International Monetary Fund (IMF). Easily understandable, it was used as a set of ten commandments that were more or less applicable to the rest of the world, including the collapsing countries of the former Soviet Union and in Eastern Europe. It was a much-needed makeshift in the absence of sound and coherent strategies of western nations for development. The ten guidelines do not truly sound like a full-fledged neoliberal agenda. In hindsight, many postulates seem innocuous and not particularly controversial, yet sufficiently ambiguous for a broad range of interpretations:
– Reduction of budget deficits to a non-inflationary level.
– Redirection of public expenditure to areas such as education, infrastructure, etc. As tax increases are ruled out, lower marginal tax rates and a broadened tax base are advised, similar to what was practised in the United States of America (the United States) at the time.
– Domestic financial liberalisation towards “market-determined interest rates”, with no mention that interest rates are largely determined by central banks, and hence tight monetary policy might be the key idea in disguise. Moreover, there is no mention that domestically liberalised interest rates likely also trigger cross-border liberalisation of capital flows. Again, much discretion for interpretation remains.
– Sufficiently competitive exchange rates that induce rapid growth in non-traditional exports. In plain text, avoiding the over-valuation of exchange rates is demanded, which makes industrialisation difficult. Alternatively, it could be read as currency under-valuation, as well as a plea for market-determined flexible rates. Regarding trade, quantitative restrictions should be lifted and tariff reductions be instituted.
– The privatisation of state-owned enterprises. One of the few unequivocal quests, similar to the better protection of property rights and the liberalisation of foreign direct investment inflows.
– More competition for start-ups and other enterprises. In hindsight, it is stunning how narrow the range of the consensus was and how much ambiguity can be found in the wording. Williamson, not a plain neoliberal, used a wording that left sufficient room for interpretation and hence risked strong misunderstanding

No (2)a ; what do you understand by growth and equity debate in development economics
Answer:
Growth and equity debate in development economics is an argument on the relationship between and equity

No (2b) differentiate between growth and equity
Answer:
(1) Growth is the process by which a nation’s wealth increases over time. While ,Equity is the quality of being fair and reasonable in a way that gives equal treatment to everyone
(2) Growth is the increase in a country’s production of goods and services which are considered scarce, while equity is the equitable distribution of this scarce resources in a fair manner
(3) Growth does not necessarily consider the well being and happiness of the people ,while Equality takes into account people’s well being and happiness

No (2c)Can growth exist with inequality,if yes ,how,if no,why

Answer: YES
This is because high levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries.for poor countries, the escape from poverty is made more difficult because rising per capita income induces more inequality, which retards growth in this range. For rich countries, rising per capita income tends to reduce inequality, which lowers growth in this range.

NAME: AJAH, ANGELA N.
REG. NO.: 2019/246659
EMAIL: ajahangelanelly@gmail.com
DEPARTMENT : LIBRARY & INFORMATION SCIENCE/ECONOMIC
COURSE CODE : Eco. 361 (Online Discussion Quiz 5—Understanding Growth Strategies and Growth vs Equity debate)
COURSE: DEVELOPMENT ECONOMICS.
LECTURER: MISS IFEAYINWA

1.What do you understand by growth strategies?
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
b) Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth
Growth strategies commonly utilized by most businesses are balanced, unbalanced growth strategies, market penetration, market development, product expansion, acquisition and diversification.
1. Balanced growth
this is a growth strategy where all the sectors of the economy are carried along, there are equal growth, no sector is neglected, but this strategy can slow economic growth since some of the sectors that are lagging behind are being financed by the resources generated by the sectors that are doing well.
2. Unbalanced growth
This is a type of growth strategy where some of the economic sector are concentrated on, not all the sectors are carried a lot, there are no equal growth. The sectors that are doing well are invested more on and then neglect the ones that has slow growth.
3. Market Penetration
This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
4. Market Development
Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
5. Product Expansion
If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
6. Acquisition
A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.
7. Diversification
The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
Diversification may be divided into further categories:
a.) HORIZONTAL DIVERSIFICATION
This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.
b.) VERTICAL DIVERSIFICATION
The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.
c.) CONCENTRIC DIVERSIFICATION
Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
d.) CONGLOMERATE DIVERSIFICATION
This is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio.
This article presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology. Finally, the article notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity.

2. What do you understand by growth and equity debate in development economics?
Growth and equity debate is an argument on whether equal distribution of nation’s wealth in other to reduce poverty will lead to low economic growth or not. It is believed that public expenditure needed for reduction of poverty would entail the reduction in the rate of growth. The concerns that concentrated efforts to lower poverty would slow the rate of growth paralleled the argument that countries with lower inequality would experience slower growth. In particular, if there were redistribution of income or assets from rich to poor, even through progressive taxation, the concern was that savings would fall, which will lead to low investment and reduce economic growth. The debate is that there shouldn’t be equity in income distribution.
b.) What are differences between Growth and Equity in the economy?
Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. While Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
C.) Can growth exist with inequality? If yes, how? If no, why?
Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP. This has been particularly the case for poorer households: in nearly all OECD countries for which data are available, GDP growth was substantially higher than households’ income growth in the lowest quintile. In long run then inequality may hinder growth and economic development. There is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

JULIUS LOVETH OLACHI
2018/242294
juliusloveth2002@gmail.com
DEPARTMENT OF ECONOMICS

NO 1

GROWTH STRATEGY is an economic conception that defines the priority goals, coherently explains how set goals can be reached, identifies the policy tools and explores trade-offs and the time frame.
A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. There are several different types of economic growth strategies, from actions that encourage development to methods of solving problems that block economic progress. The overall goal of these strategies is usually to effectively raise a nation out of poverty. This can include strategies for both short and long-term improvements.

BALANCED GROWTH STRATEGY

The concept of balanced growth is subject to various interpretations by various authors. It was Fredrick List who for the first time put forward the theory of balanced growth. According to Fredrick List the theory of balanced growth is of great significance by which a balance could be established between agriculture, industry and trade.
Accepted meaning of balanced growth is that there should be simultaneous and harmonious development of different sectors of the economy, so as to make available a ready market for the products of different sectors. It is, thus, confirmed that balanced growth is not a static term, but it refers to its dynamism.

UNBALANCED GROWTH STRATEGY

Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand-H.W.Singer.
The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries like Nigeria. The poor countries are in a state of equilibrium at a low level of income. Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth. The only strategy of economic development in such a country is to break this low level equilibrium by deliberately planned unbalanced growth.

NO 2

EQUITY OR ECONOMIC EQUALITY is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. It relates to how fairly income and opportunity are distributed between different groups in society.

ECONOMIC GROWTH is “an increase in the amount of goods and services produced per head of the population over a period of time.”
For decades economists have wondered whether inequality is bad or good for long-term growth. On one hand, entrenched inequality threatens to create an underclass whose members’ inadequate education and low skills leave them with poor prospects for full participation in the economy as earners or consumers. It can cause political instability and thus poses risks to investment and growth. On the other hand, some argue that because inequality puts more resources into the hands of capitalists (as opposed to workers), it promotes savings and investment and catalyzes growth. To try to answer this question, we examined economic data from 48 U.S. states for the census years from 1960 to 2000. We discovered new evidence that inequality and growth are entwined in complex ways and found that overall, both high and low levels of inequality diminish growth.
Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality. The single biggest impact on growth is the widening gap between the lower middle class and poor households compared to the rest of society. Education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth.

DIFFERENCE BETWEEN EQUITY AND GROWTH.

The relationship between aggregate output and income inequality is central in macroeconomics. This column argues that greater income inequality raises the economic growth of poor countries and decreases the growth of high- and middle-income countries. Human capital accumulation is an important channel through which income inequality affects growth. To be clear, this finding implies that, on average, increases in the level of income inequality lead to lower transitional GDP per capita growth. Increases in the level of income inequality have a negative long-run effect on the level of GDP per capita.

CAN GROWTH EXIST WITH INEQUALITY?

YES, IT CAN.
This is because inequality has negative effect on growth. For there to be a steady growth, inequality has to be in its minimal.
These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.
The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum. The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.
Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

NNADEBE JANE AMARACHI
2018/241863
amarajayne12@gmail.com
DPARTMENT OF ECONOMICS

NO 1.

A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. There are several different types of economic growth strategies, from actions that encourage development to methods of solving problems that block economic progress. The overall goal of these strategies is usually to effectively raise a nation out of poverty. This can include strategies for both short and long-term improvements.
One of the most important economic growth strategies is to ensure that the population is free to better its circumstances. This can include addressing everything from inadequate healthcare to issues that threaten safety. The common factor among these roadblocks is that they prevent progress. Another important economic growth strategy is the strengthening of existing industries. This activity is typically focused on ventures with the potential for growth due to factors such as a strong work force, readily available resources, and a good cultural fit. By expanding these industries, both the economy and the job market can grow. Changes in governmental structure can also be an effective economic growth strategy. This can include small changes such as creating laws that encourage or ease the function of industry. It can also involve major structural changes which allow the government to operate more efficiently.
One of the most effective economic growth strategies is to give the population of a nation as much access as possible to opportunity. This includes education, healthcare, nourishment, and employment. By detecting the barriers to providing these things to the population and making a plan for eradicating them, the population will be better equipped to lead the economic growth of a nation.

BALANCED GROWTH STRATEGY

The concept of balanced growth is subject to various interpretations by various authors. It was Fredrick List who for the first time put forward the theory of balanced growth. According to Fredrick List the theory of balanced growth is of great significance by which a balance could be established between agriculture, industry and trade.
Accepted meaning of balanced growth is that there should be simultaneous and harmonious development of different sectors of the economy, so as to make available a ready market for the products of different sectors. It is, thus, confirmed that balanced growth is not a static term, but it refers to its dynamism.

UNBALANCED GROWTH STRATEGY

Scholars such as Hirschman, Rostow, Fleming andSinger propounded the theory of unbalanced growth as a strategy of development to be used by the underdeveloped countries.This theory stresses on the need of investment in strategic sectorsof the economy instead of all the sectors simultaneously.According to this theory the other sectors would automatically develop themselves through what is known as “linkages effect”. The theory balanced growth advocates the simultaneous growth of all sectors of the economy. The theory of unbalanced growth, on the other hand, focuses on the growth of some key sectors of the economy to begin with
The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries Nigeria. The poor countries are in a state of equilibrium at a low level of income. Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth. The only strategy of economic development in such a country is to break this low level equilibrium by deliberately planned unbalanced growth.

NO. 2

EQUITY OR ECONOMIC EQUALITY: Equity in economics is defined as process to be fair in economy which can range from concept of taxation to welfare in the economy and it also means how the income and opportunity among people is evenly distributed.
ECONOMIC GROWTH is a macro-economic concept which refers to a rise in real national income, which is sustained over two consecutive quarters of a year.
There has been a lot of sayings about equity or economic equality and growth. Economists erring their different view about it. A lot of economic issues centres on income inequality and growth.
The title of this session assumes a trade-off between growth and equity, and a need to choose a point on that trade-off. Indeed, a recurring issue in development circles is whether countries should focus their development strategies on growth or on poverty reduction strategies. The trade-off could come from a possible influence of growth on the distribution of wealth; or from a possible influence of the distribution of wealth on growth (presumably through an investment channel). A third possibility for a trade-off is that some policies that favor growth could have an increase in inequality as a direct byproduct; or that policies that favor equity could have a decrease in growth as a direct byproduct. 1975 publication of Arthur Okun’s book Equality and Efficiency: that there is a tradeoff between an efficient, growing economy and an equitable economy. Furman questions several aspects of this basic premise.
Most subversively, Furman asks if economists are even measuring growth correctly. Forget the whole idea of “growth” for a moment and imagine instead that the question is simply “is inequality good or bad for society?” How can economists evaluate the good or bad part of this statement? Should they be interested in total economic output or something more granular such as wage growth for the middle class? Should they include noneconomic phenomena such as the health of citizens? Furman believes that insufficient thought has been given to this question as it relates to the study of inequality.
Some inequality is needed to properly growth, economists reckon. Without the carrot of large financial rewards, risky entrepreneurship and innovations would grind to a halt. Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality. The single biggest impact on growth is the widening gap between the lower middle class and poor households compared to the rest of society. Education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth.
This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate,” said OECD Secretary-General Angel Gurría. “Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”

DIFFERENCE BETWEEN EQUITY AND GROWTH
High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries. This finding implies that, on average, increases in the level of income inequality lead to lower transitional GDP per capita growth. Increases in the level of income inequality have a negative long-run effect on the level of GDP per capita.
Identification of the causal effect of income inequality on aggregate output is complicated by the endogeneity of the former variable. Income inequality may be affected by countries’ GDP per capita as well as other variables related to deep-rooted differences in their geography and history.
Why would widening income disparities matter for growth? Higher inequality lowers growth by depriving the ability of lower-income households to stay healthy and accumulate physical and human capital (Galor and Moav 2004; Aghion, Caroli, and Garcia-Penalosa 1999). For instance, it can lead to underinvestment in education as
poor children end up in lower-quality schools and are less able to go on to college. As a result, labor productivity could be lower than it would have been in a more equitable world (Stiglitz 2012). In the same vein, Corak (2013) finds that countries with higher levels of income inequality tend to have lower levels of mobility between generations, with parent’s earnings being a more important determinant of children’s earnings (Figure 1). Increasing concentration of incomes could also reduce aggregate demand and undermine growth, because the wealthy spend a lower fraction of their incomes than middle- and lower-income groups.

CAN GROWTH EXIST WITH INEQUALITY?
YES, IT CAN.
This is because inequality has negative effect on growth. For there to be a steady growth, inequality has to be in its minimal.
For example, In most OECD countries, the gap between rich and poor is at its highest level since 30 years. Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since. However, the rise in overall income inequality is not (only) about surging top income shares: often, incomes at the bottom grew much slower during the prosperous years and fell during downturns, putting relative (and in some countries, absolute) income poverty on the radar of policy concerns. This paper explores whether such developments may have an impact on economic performance.
It follows that policies to reduce income inequalities should not only be pursued to improve social outcomes but also to sustain long-term growth. Redistribution policies via taxes and transfers are a key tool to ensure the benefits of growth are more broadly distributed and the results suggest they need not be expected to undermine growth. But it is also important to promote equality of opportunity in access to and quality of education. This implies a focus on families with children and youths – as this is when decisions about human capital accumulation are made — promoting employment for disadvantaged groups through active labour market policies, childcare supports and in-work benefits.
The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum. The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.

NAME: IK-UKENNAYA EZEKIEL
REG NO: 2018/249 788
DEPARTMENT: ECONOMICS

ECO 361 online discussion 5- understanding Growth strategies and Growth vs Equity debate.
QUESTION:

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

QUESTION 1
Growth strategies in my own understanding are measures by which the government of an economy can adopt to achieve growth and development in a developing country like Nigeria.
It includes all the approaches or techniques that can be applied to ensure
growth of part or all sectors of a growing economy.
There are different types of growth strategies and they include:
1. Theory of balanced growth strategies : This was propounded by W. A. Lewis. This theory emphasizes on the development of all sectors of an economy. Lewis advocated this theory based on two reasons.
Firstly, in the absence of balanced growth, prices in one sector may be higher than the prices in the other sector. On account of unfavourable terms of trade in the domestic market, they might suffer heavy losses. As a result, no investment will be made there in and their growth will be halted. Because of balanced growth, equality in comparative prices in all the sectors will be made and thereby all the sectors will continue to grow.
Secondly, when the economy grows, then several bottlenecks appear in different sectors. As a result of economic development, income of the people also increases. Due to increase in income, demand of those goods rises whose demand is income-elastic. If the production of these goods does not increase, there may appear several bottlenecks. However, in case of balanced growth, it is possible to increase production of those goods whose income elasticity of demand is more. Thereby, chances of bottlenecks in different sectors will be quite remote.

Criticism
This theory is criticized based on the fact that all sectors of economy cannot have a balanced growth especially in developing countries, some sectors grow faster than others and hence, the income of the sectors more suitable for production will grow faster than others.
2. Theory of unbalanced growth strategies: The theory of unbalanced growth is the opposite of the doctrine of balanced growth. It was propounded by Hirschman. This theory emphasizes that investment should be in some selected sectors rather than all sectors of the economy for growth and development of such economy. According to Hirschman, investments in strategically selected industries or sectors of the economy will lead to new investment opportunities and so pave the way to further economic development. Development can only take place by unbalancing the economy according to Hirschman because , it is not possible to have abroad growth in all sectors of the economy.
Criticism of this theory
This theory is being criticised on the bases that concentrating resources in some particular sector will lead to wastage of resources and neglect of the sectors that are not invested in.
Some Other growth strategies are:
3. Internal Growth Strategy : This refers to internal growth strategy of an organization. It is achieved by expanding operations through diversification, increase of existing capacity, market growth strategies etc. These strategies are broadly classified as:
• Intensive Growth Strategies which has to do with Market penetration strategy ,Market development strategy and Product development strategy.
• Integrative Growth Strategies: The integrative growth strategies are designed to achieve increase in sales, assets and profits.
There are basically two variants in integrative growth strategy which involves:
(a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.
(b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages
• Diversification Growth Strategies: Diversification means going into an operation which is either totally or partially unrelated to the present operations. Before opting for diversification, the following basic questions must be seriously considered:
(a) Whether it brings a positive synergy, to the company?
(b) Whether the market wants the new product or service which we offer?
(c) Whether the product or service has a good growth potential?
Before selecting diversification strategy, one must have a clear understanding of the new product/service, the technology and the markets. Diversification strategies are used to expand firm’s operations by adding markets, products, services or stages of production to existing operations. The purpose of diversification is to allow the company to enter lines of business that are somewhat different from current operations.
4. External Growth Strategies: These are adopted when a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.
5. Concentration Expansion Strategy : This involves expansion within the existing line of business. It entails safeguarding the present position and expanding in the current product-market space to achieve growth targets
6. Internationalization Expansion Strategy: This occurs when firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacently businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.
QUESTION 2
I understand growth and Equity debate in development economics as an argument or a debate on the relationship between growth and how the masses are treated interms of distribution of national income in a growing economy.
DIFFERENCE BETWEEN GROWTH AND EQUITY IN THE ECONOMY
Growth centers only on increase in Gross Domestic product ( GDP) of an economy while equity looks at how all group of individual are fairly treated in such a way that no group will feel cheated in the distribution of national income inoder to bridge the gap between the rich and the poor.
Growth do not take into account the social welfare of the people masses used in the production of the goods and services that lead to increase in GDP. For example, it doesn’t look at whether the labour used are underpaid ( exploited), the working environment , it only takes into account the rate of increase in the GDP while equity on the other hand, takes into account the social welfare, whether workers are exploited in the cause of pursuing economic growth. Equity has to do with giving every individual support that is peculiar or that suit them so that they all can have the opportunity to achieve their potential while growth does not.

Can growth exist with inequality?
Yes, growth can exist with inequality. The poor masses can be exploited through low wage, bad working environment and other negative conditions to produce more goods and services which will increase the GDP( national income) but this form of economic growth lead to decrease in the social welfare of the masses as the method of this distribution of national income redistribute income in such a way that bring a large gap between the rich and the poor. That is, the rich continues to get richer and poor becomes poorer. However, growth with inequality prevents economic development as development takes into account the general improvement in the standard of living and social welfare of the masses rather than mere increase in GDP of an economy.

Name: Offor Chukwuebuka Donaldson
Reg no: 2018/246940
Department: Economics department
Question
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country
like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why
Solution1
What is growth strategies
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
Different Growth strategies;
*Internal Growth Strategies- this is a growth strategy of an organisation through expanding operations throughout diversificaton , increase of already existing capacity.

* External Growth strategy:
This comes in form of mergers, takeovers , strategic alliances of a firm towards its rivals or competitors.

* Diversificaton Growth Strategy

*Intensive Growth Strategy such as
Market penetration strategy
Product development strategy
Market development strategy
These strategies can also be regarded as the Organic Growth Strategies.

The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
It can also be strategies

Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.

Balance growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.

Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.

On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

Solution 2

growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

ERHIJAKPOR FLOURISH OGHENEOCHUKOME
2018/242450
ECONOMICS DEPARTMENT

QUESTION 1
What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

QUESTION 1 ANSWER
Growth strategies refer to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.

Which strategies and policies are best for an individual country wishing to see sustained economic growth and development? 

In order to get rid of vicious circle of poverty, underdeveloped countries need investment on a large-scale.
There are two theories concerning strategy of economic development:
1.THEORY OF BALANCED GROWTH: According to Rodan, Nurkse and Lewis, these economies should make simultaneous investment in
all sectors to achieve balance growth.
Fredrick List was first to put forward the theory of balance growth. According to him, a balance could be established among agriculture, industries and trade.
In the year 1928, Arthur Young gave the concept of different industries were mutually interdependent, then all of them should be developed simultaneously.
According to Lewis, Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.
Lewis has given the following two arguments in favour of balanced growth:
(i) In the absence of balanced growth, price in one sector may be more than the prices in others.
(ii) When the economy grows then several bottlenecks appear in different sectors.

ADVANTAGES OF THEORY OF BALANCED GROWTH
1. Large size of Market
2. External Economies
3. Horizontal Economies
4. Vertical Economies
5. Better Division of Labour
6. Better Use of Capital
7. Rapid Rate of Development
8. Encouragement of Private Enterprises
9. Breaking of Vicious Circle of Poverty
10.Encouragement of International
Specialization

CRITICISM OF THEORY OF BALANCED GROWTH
This theory has been criticized by Fleming, Singer, Hirschman and Kurihara.
• Unrealistic or Ignores Scarcity of Resources
• Ignores the Need of Planning
• External Diseconomies
• Development from Scratch
• Not a Theory of Development
• Same Policy for Developed and Underdeveloped
countries
• Not supported by History
• Scarcity of Factors of Production
• Inflation
• Contradictory to the Theory of Comparative costs

2.THEORY OF UNBALANCED GROWTH :
According to Hirschman, Singer, Fleming, economies should create a situation of unbalance by making large investment in any one sector.
Hirschman, Rostow, Fleming, Singer have propounded the concept of unbalanced growth as a strategy of development for
the underdeveloped nations. The theory
stresses the need for investment in
strategic sectors of the economy, rather
than in the all sectors simultaneously.
Unbalanced growth is a situation in which the various sectors of a given economy
are not growing at a rate similar to one
another. Specific sectors of the economy will be growing at a rapid rate, while other sectors are either stagnant or experiencing a significantly reduced
rate of growth. When economic
growth patterns such as unbalanced growth appear, the phenomenon usually indicates that major shifts in the overall economy are about to take place.

Prof.Hirschman states in his book, ”Strategies of Economic Development”, that creating imbalances in the system is the best strategy of growth.
Accordingly , strategic sectors of the economy should get priority in matters of investment:
• External Economies
• Social Overhead Capital
• Direct productive Activities
• Unbalancing the Economy through Social Overhead Capital
• Unbalancing the Economy with direct productive Activities

FEATURES OF THE THEORY OF UNBALANCED GROWTH
1. Investment should first be made in the key sectors of the economy.
2. Based on the principle of inducement & pressures.
3. Big Push
4. Real life observations
5. Significance of the Public sector with
regard to Social Overhead Cost activities

OTHER THEORIES ARE:
1. Rodan’s Theory of Balanced Growth.
According to an article ‘Notes on Big Push’(1957) by Rodan, indivisibilities of supply side are concerned with social overhead capital. Indivisibilities of demand side means restricting the desirability and profitability of economic activities due to the narrow extent of the market. Rodan has referred to three kinds of indivisibilities:
(i) Indivisibility in the production function or in the supply of social overhead costs
(ii) Indivisibility of Demand
(iii) Indivisibility of Supply of savings
2. Nurkse’s Theory of Balance Growth
According to Prof. Nurkse in the
development of underdeveloped countries the greatest obstacle is Vicious Circle of Poverty. The Vicious Circle shows that income is low in underdeveloped countries. Because of low income, saving is low. There for investment and output is low. Low output means low income.
(i) Complementarity of Demand
(ii) Intervention by the Government
(iii) External Economies
(iv) Accelerated Rate of Growth

QUESTION 2
What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWER TO QUESTION 2
This debabe discusses the relationship of economic growth with income distribution and poverty reduction. The inspiration seems to be a media statement by Prof Amartya Sen that in India we should end our “obsession with growth”.

There is some truth in Prof Sen’s statement about “obsession with growth” as, for some reason, the ruling party managers trumpet the high growth rates of the last decade or so as their trump card whenever confronted with other issues like inflation, corruption, governance, etc.

Yet, the interesting feature of the debate (which at the current level could continue for the next 50 years without any conclusion) is that none of the protagonists in this debate seem to have moved on to micro issues.

Specifically, what are the sectoral implications of the debate and how does this impact on the future pace of economic reforms in India? First, are growth and poverty in conflict? This seems absurd.

It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance. One has to be a communist to argue that a high growth rate does not matter.

What about growth and income distribution? Here the arguments are not so clear-cut. It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade.

On the possibility of achieving growth with equity, YES THEY CAN COEXIST. There is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);.

Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities.

Name:- Ani Obinwanne Fortune
Reg.No;- 2018/243744
Department:- Economics
Course:- Eco 361
Questions
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Answers
1. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy. … On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors.
Three Strategies of State Economic Development:Entrepreneurial, Industrial Recruitment, and Deregulation Policies in the American States.
To Increase Economic Growth
Lower interest rates – reduce the cost of borrowing and increase consumer spending and investment.
Increased real wages – if nominal wages grow above inflation then consumers have more disposable to spend.
Higher global growth – leading to increased export spending.
2. Economic growth is an increase in the production of goods and services in an economy. … Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.
Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor.
Higher economic growth leads to higher tax revenues and this enables the government can spend more on public services, such as health care and education e.t.c. This can enable higher living standards, such as increased life expectancy, higher rates of literacy and a greater understanding of civic and political issues.
There is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.Both growth and equity are the two important objectives of Indian planning. … Hence, growth with equity is a rational and desirable objective of planning. This objective ensures that the benefits of nigh growth are shared by all the people equally and hence inequality of Income is reduced along with growth in income.One of the important objectives of planning is to get stable growth with equity in the economy. Growth refers to an increase in the level of national income over a period of time and equity refers to equitable distribution of the national income.
Top 8 Features of Economic Planning
The most cherished elements involved in a good plan are as under:
(i) Definite Objective:
(ii) Central Planning Authority:
(iii) Democratic Character:
(iv) Only an Advisory Role of Planning Commission:
(iv) Comprehensiveness:
(v) Planning for Consumption:
Economic growth is defined as the increase in the market value of the goods and services produced by an economy over time. It is measured as the percentage rate of increase in the real gross domestic product (GDP). To determine economic growth, the GDP is compared to the population, also know as the per capita income.
Can Growth exist with inequality?
Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.
A recent study by the IMF4 suggests that an increase in inequality is harmful to economic growth. … Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution).
For decades economists have wondered whether inequality is bad or good for long-term growth. … We discovered new evidence that inequality and growth are entwined in complex ways and found that overall, both high and low levels of inequality diminish growth.
Why inequality cannot exist with growth
Inequality hurts economic growth, especially high inequality (like ours) in rich nations (like ours). … That makes them less productive employees, which means lower wages, which means lower overall participation in the economy. While that’s obviously bad news for poor families, it also hurts those at the top.

Name: Uche Constance chidera
Reg. No.: 2018/250689
Level: 300l
Course code: Eco 361
Dept.: Economics(major)

1i. What is a growth strategy?
A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings; growth strategies can be long-term, too.
Your growth strategy needs to be communicated across your organization, so everyone is on the same page and can share ideas on the plan.If you’re clear about your growth strategy and the path to achieve it, teams will feel they can contribute to the company’s success.

1ii. Types of growth strategies
There are four classic types of growth strategies, and companies may use one or more of the following.

development strategy—growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.

Market development strategy—growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.

Market penetration strategy—growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.

Diversification strategy—growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.

What do you mean by a balanced economy?
A balanced economy suggests that economic growth is sustainable in the long-term, and the economy is also growing across different sectors – and not focused on one particular industry or area.Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.

What do you mean by unbalanced growth?
A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining..unbalanced growth requires less amount of capital, making investment in only leading sectors. the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
Differences of balanced and unbalanced growth
a.Balance growth occurs when output and the capital stock grow at the same rate. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors.This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest. While According to this concept, investment should be made in selected sectors rather than simultaneously in all sectors of the economy.
b. The balanced growth strategy is actually about consistency an balance with in the economy. While Unbalanced growth is related to the inconsistency.
c. There are more capital require for this strategy While Unbalanced growth,only the less money for capital is required here because investment done in leading sectors only.

2. Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. … Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.In economics, economic growth refers to the growth of potential output. It shows how a country is developing its economy. Economic growth is directly impacted by human capital, which is the level of school or knowledge attainment in a country. The cognitive skills of a population directly impact economic growth. In general, economic growth is recorded and studied over the short-run and long-run.
For economic purposes, the economic growth is calculated and compared to the population, also know as per capita income (indicator of a country’s standard of living). When the per capita income increases it is called intensive growth. When the GDP growth is only caused by increases in population or territory it is called extensive growth.
Equity debate: Equity in the WDR 2006 was defined in terms of two basic principles. The first is “equal opportunities or that a person’s life achievements should be determined primarily by his or her talents and efforts, rather than by predetermined circumstances such as race, gender, social, or family background.” The second principle is the “avoidance of deprivation in outcomes, particularly in health, education, and consumption levels.”
A strong argument in favor of inequality generating inefficiency and slowing down economic growth relies on the imperfection of the credit market and the inequality of the wealth distribution. The argument is simple. People without enough wealth cannot undertake potentially profitable investment projects because they lack collateral to offer to lenders, who are imperfectly informed about their project and their determination to make it successful. In contrast, richer people can undertake projects with less private and social profitability because they have the collateral, or simply because they do not need to borrow. Clearly, it would be better for society if the most profitable projects in the former group were undertaken rather than the least profitable in the latter group. Yet, it is the latter that are actually implemented. It follows that redistributing wealth from the top of the distribution to those in need of collateral at the bottom would improve the efficiency of the economy and accelerate growth by encouraging investment and making the economy more productive, on average.

b. Differences between growth and equity in the economy
Firstly,There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite.
On the economic growth is an increase in the production of goods and services in an economy.Increases in capital goods, labor force, technology, and human capital can all contribute to economic growth.Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimate such as GSP. While Equity on the other hand deals with the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.

c. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. Though in my own view I would say that growth in an economy cannot thrive even without equity in the society based on Equity theory, popularly known as Adam’s equity theory, aims to strike a balance between an employee’s input and output in a workplace. If the employee is able to find his or her right balance it would lead to a more productive relationship with the management.

Name :ANEKE Nelson Maduakonam
Reg no: 2018/242192
Det: Education Economics
Gmail: nelsonmadu80@gmail.com
No:1
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc. A growth strategy is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term earnings.

Balanced and Unbalanced Economic Growth!
The theory of balanced growth: According to Lewis Balanced growth means that all sector of the economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for export. It entails that all sector should be expanded simultaneously. This will lead to increase in market size, increase in productivity and also provide an incentive for the private sector to invest.

As regards the choice of the pattern of resources allocation, the balanced growth theory argues that the pattern of resources allocation should be choosen such that at every stage of development the available production capacity is fully utilised in all the economic sectors therefore no surplus or shortage should exist. the choice production techniques under balanced growth is emphasised by Lewis who discuss the problem in relation to overpopulated underdeveloped economies and region.
He contain that since the marginal productivity of labour is low it would be advantages for the countries in question to adopt intensive techniques wherever feasible.

Fredrick list was first put forward the theory of balance growth. According to him a balance could be established among agriculture, industry and trade but with an equal emphasis on agriculture and industry. The expansion and the inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sector provide a market for the product of the other and in turn, supplies the necessary raw material for the development and growth of the other. Agriculture development provide the food required and releases labour from the land to engage in industry. Industrial wealth stimulate market for agricultural growth.

Theory of unbalanced growth:
According to Hirschman, Rostow, Fleming, singer who have propounded the concept of unbalanced growth as a strategy of developments for the undeveloped nations. The theory stressed the need for investment in strategic sector of the economy rather than in the all sector simultaneously. Unbalanced growth is a situation in which the various sector of a given economy are not growing at a rate similar to one another. According to Hirschman, it is not possible to always have broad growth across different sectors. He argues that as long as there is growth in some sector it will create a dynamic pressure to grow other sector at a later stage. Hirschman even argues that unbalanced growth and the dynamic tension it creates helps to speed up economic development. In this case, if there is growth in primary products sector this create a complimentary investment in transport to get the goods to the exports markets. Secondly, if there is growth in one sector, there will be a multiplier effect, and this will cause induced investments in related industries

There are four classic types of growth strategies, and companies may use one or more of the following.

1. Product development strategy—growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.

2. Market development strategy—growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.
3. Market penetration strategy—growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
4. Diversification strategy—growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have.
Growth strategy can also be:
(a) Horizontal Integration:

When two or more firms dealing in similar lines of activity combine together then horizontal integration takes place. Many companies expand by creating other firms in their same line of business. A firm is said to follow horizontal integration if it acquires or starts another firm that produce the same type of products with similar production process/marketing practices. When the combination of two or more business units (existing and created) results in greater effectiveness and efficiency than the total yielded by those businesses, when they were operated separately, the synergy has been attained.

(b) Vertical Integration:

A vertical integration refers to the integration of firms in successive stages in the same industry. The integration of different levels/stages of the industry is known as vertical integration. Vertical integration may be either backward integration or forward integration.

I. Backward Integration:

In case of backward integration, it extends to the suppliers of raw materials. A vertical integration is one in which the company expands backwards by diversification into supplying raw materials. This allows for smooth flow of production, reduced inventory, reduction in operating costs, increase in economies of scale, elimination of bottlenecks, lower buying cost of materials etc.

It is a diversification engaged at different stages of production cycle within the same industry. Firms adopting this strategy can have a regular and uninterrupted supply of raw materials components and other inputs and the quality is also assured.

II. Forward Integration:

It is a case of down-stream integration extends to those businesses that sell eventually to the consumer. The purpose of such diversification is to attain lower distribution costs, assured supplies to the market, increasing or creating barriers to entry for potential competitors.

The firm expands forward in the direction of the ultimate consumer. For example- a cement manufacturing company undertakes the civil construction activity; it will be a case of diversification with forward linkage. With forward integration, firms can acquire greater control over sales, distribution channels, prices, and can improve its competitive position through differentiation and customer support.
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion while the concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation.
Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services while equity is complementary to the pursuit of long-term prosperity.

NO 2
Yes, growth can exist with inequality reason because of the following:

In the first class, the selection models, associated most prominently
Models with threshold effects form a third class of models where
sector, inequality diminishes again. This gives rise to th ecelebrated of the urban sector, for example). Movement into that sector is slow (due to some friction in the labor market, for example), and inequality initially increases as more and more people join the more productive sector. Overtime, as more and more people join the productive sector, inequality diminishes again.
This gives rise to the celebrated
inverted U-shaped Kuznets curve. Different selection models, however, have different predictions on the shape of this curve.
A second class of model, which leads to a prediction that growth will affect inequality, is that of human capital based models.
Growth may be skill-biased, i.e., lead to an increase in the returns to education, managerial ability, or other dimensions of human capital who were already presumably earning more, earn even more, and this lead to an increase in inequality. Skill-biased technological progress has been proposed as an explanation for part of the inequality increase in the United States during the last few decades (Katz and Autor, 1999;Katz and Murphy,1992).

REFERENCE:
https://www.investopedia.com/terms/e/economicgrowth.asp

https://gsdrc.org/document-library/equity-and-development/

https://www.gartner.com/en/finance/glossary/growth-strategy/

Name: Nduka Olisazoba Chiebuniem
Department: Economics
ReG No: 2018/241844
Course: ECO 361
ANSWERS
A growth strategy is one that an enterprise or country pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.
economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
1) In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.
Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand.
2)

books.google.com

Equity and growth in developing countries: old and new perspectives on the policy issues

Michael Bruno, Martin Ravallion, Lyn Squire

World Bank Publications, 1996

Do the poor lose—either absolutely or relatively—from policies that promote aggregate economic growth? Does the answer differ between middle-income newly industrialized economies and low-income developing countries? These questions are not new and were very much at the center of the development debate some twenty years ago in the discussion of how to achieve* redistribution with growth'(Chenery et al., 1974). They have recently achieved renewed prominence as many countries adjust from the growth crises of the last two decades, and as others switch from centrally-planned systems to market-based ones. The claim has been made that growth-oriented reform policies of the kind usually advocated by the International Financial Institutions have worsened the lot of the poor.

The first section of this paper reviews recent evidence indicating that while income inequality differs significantly across countries, there is no discernable systematic impact over time of growth on inequality. Though there are exceptions, as a general rule sustainable economic growth benefits all layers of society roughly in proportion to their initial levels of living. Based on the evidence of the last three decades, there seems to be no credible support for the Kuznets Hypothesis. And there have been few cases of immiserizing growth. In the second section we switch from long-run growth to issues of adjustment and transition. Here we argue that the key components linking growth, as a necessary condition for sustained poverty reduction, and adjustment (stabilization plus structural reform) as a necessary condition for aggregate growth recovery, come out strengthened from the recent growth crises and associated reform efforts. Obviously necessity is not sufficiency and we do not argue that growth always benefits’ the poor, or that none of the poor lose from any pro-growth policy reform. But we do contend that macroeconomic adjustment and structural reform are essential for sustainable growth recovery which in turn is necessary for a sustained reduction in aggregate poverty. The first two sections of the paper support and strengthen the case for policies conducive to broad-based economic growth as part of a comprehensive poverty reduction strategy, as argued in the World Development Report on poverty (World Bank, 1990), and the associated Policy Paper (World Bank, 1991) on Assistance Strategies to Reduce Poverty. But a macro-policy environment conducive to growth is not enough. The second part of the poverty reduction strategy outlined in World Bank (1990)—namely promoting universal access to basic education, health and social

Growth strategies refers to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
Types of Growth Strategies –
Concentration Expansion Strategy, Integration Expansion Strategy, Diversification Expansion Strategy and a Few Others
Types of Growth/Expansion Strategies:
The expansion or growth strategies are further classified as:
1. Concentration Expansion Strategy
2. Integration Expansion Strategy
3. Internationalization Expansion Strategy
4. Diversification Expansion Strategy
5. Cooperation Expansion Strategy
Type # 1. Concentration Expansion Strategy:
Concentration involves expansion within the existing line of business. Concentration expansion strategy involves safeguarding the present position and expanding in the current product-market space to achieve growth targets. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain.
A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business.
Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development is first suggested in Ansoff’s model. Concentration strategy is followed when adequate growth opportunities exist in the firm’s current products-market space.

Type # 2. Integration Expansion Strategy:
When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.
In contrast to the intensive growth, integration strategy involves expanding externally by combining with other firms. Combination involves association and integration among different firms and is essentially driven by need for survival and also for growth by building synergies.
Combination of firms may take the merger or consolidation route. Merger implies a combination of two or more concerns into one final entity. The merged concerns go out of existence and their assets and liabilities are taken over by the acquiring company. A consolidation is a combination of two or more business units to form an entirely new company.
All the original business entities cease to exist after the combination. Since mergers and consolidations involve the combination of two or more companies into a single company, the term merger is commonly used to refer to both forms of external growth. As is the case in all the strategies, acquisition is a choice a firm has made regarding how it intends to compete.

Type # 3. Internationalization Expansion Strategy:
International strategy is a type of expansion strategy that requires firms to market their products or services beyond the domestic or national market. Firm would have to assess the international environment, evaluate its own capabilities, and devise appropriate international strategy. An organisation can “go international” by crossing domestic borders international expansion involves establishing significant market interests and operations outside a company’s home country.
Foreign markets provide additional sales opportunities for a firm that may be constrained by the relatively small size of its domestic market and also reduces the firm’s dependence on a single national market.
Firms expand globally to seek opportunity to earn a return on large investments such as plant and capital equipment or research and development, or enhance market share and achieve scale economies, and also to enjoy advantages of locations. Other motives for international expansion include extending the product life cycle, securing key resources and using low-cost labour.
However, to mould their firms into truly global companies, managers must develop global mind-sets. Traditional means of operating with little cultural diversity and without global competition are no longer effective firms.
International expansion is fraught with various risks such as, political risks (e.g., instability of host nations) and economic risks (e.g., fluctuations in the value of the country’s currency). International expansions increases coordination and distribution costs, and managing a global enterprise entails problems of overcoming trade barriers, logistics costs, cultural diversity, etc.
There are several methods for going international. Each method of entering an overseas market has its own advantages and disadvantages that must be carefully assessed. Different international entry modes involve a trade-offs between level of risk and the amount of foreign control the organisation’s managers are willing to allow.
It is common for a firm to begin with exporting, progress to licensing, then to franchising finally leading to direct investment. As the firm achieves success at each stage, it moves to the next. If it experiences problems at any of these stages, it may not progress further.
If adverse conditions prevail or if operations do not yield the desired returns in a reasonable time period, the firm may withdraw from the foreign market. The decision to enter a foreign market can have a significant impact on a firm. Expansion into foreign markets can be achieved through- exporting, licensing, joint venture strategic alliance or direct investment.

Type # 4. Diversification Expansion Strategy:
Diversification is defined as the entry of a firm into new lines of activity, through internal or external modes. Diversification is the process of entry into a business which is new to an organisation either market-wise or technology-wise or both.
In diversification, firm acquires ownership or control over another firm against the wishes of the latter’s management. But in practice it can be both, hostile or friendly. The primary reasons a firm pursues increased diversification are value creation through economies of scale and scope, or market dominance.
In some cases firms choose diversification because of government policy, performance problems and uncertainty about future cash flow. In one sense, diversification is a risk management tool, in that it’s successful use reduces a firm’s vulnerability to the consequences of competing in a single market or industry.
Risk plays a very vital role in selecting a strategy and hence, continuous evaluation of risk is linked with a firm’s ability to achieve strategic advantage. Internal development can take the form of investments in new products, services, customer segments, or geographic markets including international expansion. Diversification is accomplished through external modes through acquisitions and joint ventures.
Firms choose expansion strategy when their perceptions of resource availability and past financial performance are both high. The most common growth strategies are diversification at the corporate level and concentration at the business level.
Reliance Industry, a vertically integrated company covering the complete textile value chain has been repositioning itself to be a diversified conglomerate by entering into a range of businesses such as power generation and distribution, insurance, telecommunication, and information and communication technology services.
Tata Tea’s takeover of Consolidated Coffee (a grower of coffee beans) and Asian Coffee (a processor) are the examples of related diversification.

Type # 5. Cooperation Expansion Strategy:
A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategies are used to gain competitive advantage by joining with one or two competitors against other competitors of the industry. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms use to grow, develop value-creating competitive advantages, and create differences between them and competitors.
Thus, cooperating with other firms is another strategy that is used to create value for a customer that exceeds the cost of creating that value and to create a favourable position in the marketplace relative to the five forces of competition.
Increasingly, cooperative strategies are formed by firms competing against one another, as shown by the fact that more than half of the strategic alliances (a type of cooperative strategy) established within a recent two-year period were between competitors such as FedEx and the U.S. Postal Service.
BALANCED GROWTH STRATEGIES
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy. He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.
Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory.[1] No importance should be given to promoting exports.
UNBALANCED GROWTH THEORY
According to Hirschman, “Development is a chain of disequilibria that must be kept alive rather than eliminate the disequilibrium of which profits and losses are symptoms in a competitive economy.
If economy is to keep moving ahead, the task of development policy is to maintain, tension, disproportions and disequilibria.”
“Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand”-H.W.Singer.
According to Alak Ghosh, “Planning with unbalanced growth emphasizes the fact that during the planning period investment will grow at a higher rate than income and income at a higher rate than consumption.”
It explains the unbalanced growth in terms of the growth rates of investment, income and consumption. If ∆I/I, ∆Y/Y and ∆C/C denote the rate of investment, income and consumption, then unbalanced growth implies ∆I/I > ∆Y/Y > ∆C/C i.e., the growth rates are not uniform.
According to Benjamin Higgin, “Deliberate unbalancing of the economy, in accordance with a pre-designed strategy is the best way to achieve the economic growth.”
According to H.W.Singer, “Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand.”
Meier and Baldwin are also of the opinion that “Planners should concentrate on certain focal points, so as to achieve the goal of rapid economic development. The priorities should be given to those projects which ensure external economies to the existing firms, and those which could create demand for supplementary goods and services.”
Explanation of the Theory:
Albert O. Hirschman in his strategy of economic development goes a step further from Singer when he says that for accelerating the pace of economic development in the underdeveloped countries, it is advisable to create imbalances deliberately. He also recognized the inter-relatedness of different economic activities as done by Ragnar Nurkse. But he asserts that investment in selected industries or sectors would accelerate the pace of economic development.
He regarded, “Development is a chain disequilibria that must keep alive rather than eliminate the disequilibria, of which profits and losses are symptoms in a competitive economy”. There would be ‘seasaw advancement’ as we move from one disequilibrium to another new disequilibrium situation. Thus Hirschman argued that, “To create deliberate imbalances in the economy, according to a pre-designed strategy, is the best way to accelerate economic development.” Hirschman is of the confirmed view that underdeveloped countries should not develop all the sectors simultaneously rather one or two strategic sectors or industries should be developed by making huge investment. In other words, capital goods industries should be preferred over consumer goods industries.
It is because capital goods industries accelerate the development of the economy, where development of consumer goods industries is the natural outcome. Hirschman has stated that, “If the economy is to be kept moving ahead, the task of development policy is to maintain tensions, disproportions and disequilibria.”
Process of Unbalanced Growth:
The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth. The only strategy of economic development in such a country is to break this low level equilibrium by deliberately planned unbalanced growth. Prof. Hirschman is of the opinion that shortages created by unbalanced growth offer considerable incentives for inventions and innovations. Imbalances give incentive for intense economic activity and push economic progress.
According to Prof. Hirschman, the series of investment can be classified into two parts:
1. Convergent Series of Investment:
It implies the sequence of creation and appropriation of external economies. Therefore, investment made on the projects which appropriate more economies than they create is called convergent series of investment.
2. Divergent Series of Investment:
It refers to the projects which appropriate less economies than they create. These two series of investment are greatly influenced by particular motives. For instance, convergent series of investments are influenced by profit motive which are undertaken by the private entrepreneurs. The later is influenced by the objective of social desirability and such investment are undertaken by the public agencies.
In the words of Prof. Hirschman, “When one disequilibrium calls forth a development move which in turn leads to a similar disequilibrium and so on and infinitum in the situation private profitability and social desirability are likely to coincide, not because of external economies, but because input and output of external economies are same for each successive venture.” Thus, growth must aim at the promotion of divergent series of investment in which more economies are created than appropriated.
Development policy, therefore, should be so designed that may enhance the investment in social overhead capital (SOC) is created external economies and discourage investment in directly productive activities (DPA).

Unbalancing the Economy:
Development, according to Hirschman, can take place only by unbalancing the economy. This is possible by investing either in social overhead capital (SOC) or indirectly productive activities (DPA). Social overhead capital creates external economies whereas directly productive activities appropriate them.
(i) Excess of investment in Social Overhead Capital:
Social over-head capital are concerned with those series without which primary, secondary and tertiary services cannot function. In SOC we include investment on education, public health, irrigation, water drainage, electricity etc. Investment in SOC favorably affect private investment in directly productive activities (DPA). Investment in SOC is called autonomous investment which is made with the motive of private profit. Investment in SOC provide, for instance, cheap electricity, which would develop cottage and small scale industries. Similarly irrigation facilities lead to development of agriculture. As imbalance is created in SOC, it will lead to investment in DPA.
(ii) Excess of Investment in Directly Productive Activities:
Directly productive activities include those investments which lead to direct increase in the supply of goods and services. Investment in DPA means investment in private sector which is done with a view to maximize profit. In those projects, investment is made first where high profits are expected. In this way, DPA are always induced by profits. Priorities: Excess SOC or Excess DPA:
(a) Unbalancing the economy with SOC:
Imbalance can be created both by SOC and DPA. But the question before us is that in which direction the investment should be made first so as to achieve continuous and sustained economic growth. The answer is quite simple. The government should invest more in order to reap these economies, the private investors would make investment in order to enjoy profits. This would raise the production of goods and services. Thus investment in SOC would bring automatically investment in DPA.
(b) Unbalancing the economy with DPA:
In case investment is made first in DPA, the private investors would be facing a lot of problems in the absence of SOC. If a particular industry is setup in a particular region, that industry will not expand if SOC facilities are not available. In order to have SOC facilities, the industry has to put political pressure. That is really a tough job. Thus, excess DPA path is full of strains or pressure- creating whereas excess SOC path is very smooth or pressure relieving.

2.
Growth and equity debate refers to the arguments as regards to the coexistence of growth and equity in an economy.

CAN GROWTH AND INEQUALITY EXIST?
Yes, growth and inequality can exist.
Firstly, because there is no inevitable conflict between these two goals, provided that economic policy promotes the area of complementarity between growth and equity.
In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall.
Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
Many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.
On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.
WHAT IS EQUITY
Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
WHAT IS GROWTH
Growth relates to a gradual increase in one of the components of GDP: consumption, government spending, investment and net export.

Onyemalu ogochukwu Maryanne
2018/242424
Eco 361
1.What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Answers
1a. Growth strategy: A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
1b.. Navigation
Strategy of Economic Development in Developing Countries
In the nineteen fifties and sixties there were among the development specialists the two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced development of the various sectors of the economy. They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries.
Size of Market and Inducement to Invest:Investment means the expenditure on the making and installation of capital goods, e.g., construction of factories and the making of machines and their installation in industries. Obviously, an entrepreneur will be induced to invest in factories, machinery, etc., if he expects sufficient return on his investment. Businessmen invest only from a motive of earning a profit. It is the expectations of profits which is a fundamental factor influencing the amount of investment in a country at a given time. In a poor country, the low level of investment is due to low expectations of making profits because of less demand for goods or a small size of the market.
Nurksian Strategy of Balanced Growth:
We have explained above how, in the developing countries, the small size of the market or the limited demand for goods acts as a hindrance in the way of their economic growth or capital formation. When an entrepreneur wants to set up a factory or install plant and machinery, he makes sure whether there is enough demand for the goods he proposes to manufacture and whether the investment will be profitable.We have seen above that owing to low demand for industrial goods investment is discouraged because of low profitability. That is why the vicious circle of poverty operates on the demand side of capital formation. The people in the developing countries are poor and their per capita income is low. This keeps the demand limited and size of the market small. Since the market is small, the entrepreneurs are discouraged from investment in plant and machinery in which only large-scale production is possible and economical.
External Economies and Balanced Growth:It will be proper to refer in this connection to external economies. When one industry creates demand for another, it will be profitable to the other industry. When one industry benefits from the growth of another industry, then we say that external economies are available from one industry to another. We have seen above that it proves profitable to make investment in complementary industries, because people engaged in such industries become one another’s customers or create demand for one another. It is clear, therefore that the doctrine of balanced growth is based on the concept of external economies.It should, however, noted that here we do not use the term ‘external economies’ in the sense in which Marshall used it. By ‘external economies’ Marshall meant those economies which arise from the localisation of a certain industry in a particular place and these economies are enjoyed by each firm in the industry by the establishment of numerous other firms there. But in development economics, by external economies we mean those benefits which accrue to the industries by the establishment of new other industries or the expansion of the other existing industries.
Hirschman’s Strategy of Unbalanced Growth
Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving rapid economic growth.Like Singer, he argues that balanced growth theory require huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the poor developing countries.He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers and workers as well as the consumption habits” are all present, while in poor developing countries this obviously not so.
The building of it by the government will lead to a spurt of investment and production in a variety of fields both in the stages before and after this industry. In this way, it accelerates economic growth. The investment in iron and steel industry will reveal deficiencies in the preceding and succeeding sectors of industry that the government must fill up. To remove these deficiencies and obstacles, further investment will be stimulated. When these deficiencies are filled up, further private investment will take place, and so the process of growth goes on.

The foregoing discussion leads us to the conclusion that according to Hirschman, the balanced growth doctrine is neither attainable nor desirable. On the other hand, for rapid economic development the developing countries should rely largely on judiciously-planned unbalanced growth. In fact, under the Mahalanobis strategy of development, India followed this course.
2. 2. “Inequality of what?” in the theoretical literature on growth and inequality
This section does not seek to duplicate existing surveys of the growth-inequality literature. [3] Rather, it provides a brief review of this literature, highlighting the fact that it often refers to different inequality concepts and, because of this, may sometimes lack consistency. Some contributions refer to vertical income inequality, without always providing a clear distinction between market or disposable income. Others refer to horizontal inequality among ethnic groups or genders, to wealth inequality, or to inequality in terms of access to credit or education. These different approaches correspond to different aspects of inequality. Yet, to understand how inequality affects economic growth and development, it is necessary to understand the role played by these various dimensions and the channels through which they weigh upon the pace and the structure of growth.
2.1. Saving propensity differential and the Kaldorian mechanism
It is somewhat improper to refer to this channel of transmission of inequality to growth as “Kaldorian” because the causality is opposite to that of Kaldor’s original contribution, where it runs from growth to the functional distribution of income between capital and labor. [4] In fact, the modern literature essentially refers to the idea in Kaldor’s work that capitalists save more than workers. Furthermore, this difference in saving propensity between capital and labor income is taken to be equivalent to there being a higher propensity to save among richer people. Given this argument, and if savings determine investment, more inequality should be associated with faster growth. Then, an important empirical issue is whether it is valid to extend the saving propensity differential between capital and labor income at the macro level to individual incomes. If a substantial part of savings arises from undistributed profits, the observed level of inequality among households will have a negligible impact on savings, investment, and growth. It would then be better to consider aggregate factor shares than inequality measures.
2.2. Endogenous redistribution
Redistribution may also be endogenous, and a response precisely to too much inequality in market incomes. This provides another channel through which income inequality may affect economic growth. If redistribution does reduce investment incentives and entrepreneurship, inequality may indeed be responsible for slower rather than faster growth. The difference with the preceding case is that the relationship now is between the inequality of market incomes and growth, rather than disposable incomes (i.e., after taxes and transfers) and growth.

2.3. Imperfect credit markets and wealth inequality
A strong argument in favor of inequality generating inefficiency and slowing down economic growth relies on the imperfection of the credit market and the inequality of the wealth distribution. The argument is simple. People without enough wealth cannot undertake potentially profitable investment projects because they lack collateral to offer to lenders, who are imperfectly informed about their project and their determination to make it successful. In contrast, richer people can undertake projects with less private and social profitability because they have the collateral, or simply because they do not need to borrow. Clearly, it would be better for society if the most profitable projects in the former group were undertaken rather than the least profitable in the latter group. Yet, it is the latter that are actually implemented. It follows that redistributing wealth from the top of the distribution to those in need of collateral at the bottom would improve the efficiency of the economy and accelerate growth by encouraging investment and making the economy more productive, on average.

2.4. Inequality of “opportunities”
The case of an unequal access to credit can actually be generalized to many other areas. Barring some people in the population from undertaking an activity that would be profitable for both them and society necessarily generates economic inefficiency and, possibly, slower growth. More could be produced in the economy without this particular type of inequality.One can think of many examples of such an inefficient inequality in the income-generating opportunities open to people. Unequal access to quality primary or higher education because families are liquidity constrained would be a special case of the credit rationing case, and a highly relevant one. Children in low-income households may fail to receive quality education or gain access to an upper secondary or university education, even though they may be more talented than others.
2.5. The demand side
The theoretical literature on development tends to emphasize the supply side of the economy and the availability of productive resources as the factor limiting growth. This may be justified in aggregate terms, but it must be recognized that the structure of demand may affect both the sectoral structure of the production side and the overall growth rate of the economy. Not all goods are traded with the rest of the world, and foreign demand may impose constraints on the development of national economies, either through the volume or, more likely, the price of exports. If this is the case, then domestic demand and, therefore, the income distribution, which determines the size of aggregate demand and its composition by type of goods, have a role to play. For example, China’s outward oriented development strategy is affected by the slowing down of demand in developed countries; reorienting this strategy toward the domestic market may require appropriate measures to be taken on the income distribution front.

2.6. Institutions and development
The recent theoretical literature emphasizes, and rightly so, the role that institutions, in a broad sense, play in development. Among them, political institutions and the way political power is distributed in the population are clearly of utmost importance. The way predatory political elites may confiscate the process of development and maintain power, and the bifurcation that would take place if society could democratize, even in a limited way, has been extensively studied by several authors, including Acemoglu and Robinson, in various publications. [9] This is not the place to summarize this voluminous recent literature. Yet, it is important to stress that their discussion about the role of the nature of political institutions in economic development has very much to do with a particular type of inequality, namely that of the distribution of political power or unequal access to public decision making.
3. The ambiguous empirical relationship between growth and inequality
Evidence in support of the various theoretical channels that may link inequality and growth may be sought at two levels: at the aggregate level, considering the relationship between some measure of inequality and growth across countries and/or across periods; at the micro level, gathering observations that confirm the basic hypothesis put forward by the theory. The two approaches will be considered in turn.

3.1. Aggregate evidence on inequality and growth
In the wave of the growth regressions that occurred in development economics in the 1990s, it was no surprise that the Gini coefficient of income inequality appeared on the right-hand side of the equation. Alesina and Rodrik [1994] and Persson and Tabellini [1994] were among the first to test the hypothesis that income inequality has a negative impact on economic growth in a cross-section of countries. However, they both relied on theoretical models where the distribution of wealth or the distribution of a “basic skill” mattered more than the distribution of income per se. [10] Even so, the very rough evidence provided in these early papers favored the hypothesis of a negative impact of inequality of income on growth.

3.2. The micro evidence and the difficulty of aggregating it up
By definition, the relationship between growth and inequality cannot be analyzed at the micro level since growth is essentially an aggregate concept. It is also the case that several of the channels through which inequality may affect growth are typically macro, for instance, the endogeneity of income redistribution or institutions in a broad sense. However, other channels involve constraints that rely on micro behavior. It might be possible to test the existence of such constraints and to measure some of their consequences. For instance, unequal access to the credit market channel may be tested by comparing the returns to capital in SMEs and in larger firms, [16] or asking directly people whether they are credit rationed. Unequal access to education can be measured by the school enrollment of children at schooling age or, when available, the distribution of school achievements. Several dimensions of the inequality of opportunities may also be measured, for instance gender- or ethnic-based inequality in education or in earnings, or the influence of family background on performance at school or on earnings later in life.
, evidence on the impact of policies that aim to correct those inequalities at the aggregate level is difficult to obtain, for a variety of reasons. These include the limited availability of data for a structural approach and the natural limitations of the experimental approach.

If convincing theoretical arguments do exist about the various channels through which different types of inequality affect economic efficiency and growth, quantifying these relationships or the effect of potentially corrective policies is a daunting challenge, given the current statistical knowledge in these areas. Work on integrating the dimensions of this complex relationship is only beginning. In this regard, the WDR 2006 is an interesting landmark.

4. Equality of Opportunities and Income Redistribution in The World Development Report 2006
In the mind of its instigators, “inequality” rather than “equity” was to be the dominant theme of the 2006 World Development Report. Its goal was to challenge the dominant view, in the World Bank and elsewhere, that in aiming to reduce and possibly eradicate poverty, development strategies should focus mostly on aggregate growth. The main idea to be developed in the report was that the overall distribution of income within the population mattered more than just its mean for development, and should be a major concern for policymakers. That is, the degree of inequality of the income distribution affected poverty reduction in two ways: by reducing the share of the gain from growth actually accruing to the poorest of the population, and slowing growth itself.

4.1. The main messages of the “equity and development” WDR
Equity in the WDR 2006 was defined in terms of two basic principles. The first is “equal opportunities or that a person’s life achievements should be determined primarily by his or her talents and efforts, rather than by predetermined circumstances such as race, gender, social, or family background.” The second principle is the “avoidance of deprivation in outcomes, particularly in health, education, and consumption levels.”

Name: Nwankwo chidubem pascal
Reg No: 2018/245467
Email: Nwankwochidubem44@gmail .com
course code: Eco 361.
Assignments
Questions.
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why

Answer.
1A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
1b.
a. Product development strategy— growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
b. Market development strategy —growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales -focused.
c. Market penetration strategy —growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
d. Diversification strategy— growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.
e. The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. … Imbalances give incentive for intense economic activity and push economic progress.
f.In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.
2.
a.
Growth with equity is not just something to which the population which produces the growth and creates the wealth is entitled, it is also a critical element in the long-term interests of the society. Significant income equality is needed for sustained economic growth and for social, as well as political, stability
b.Economic growth
Economic growth
a.
Economic growth, the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an iincwealth over an extended period.

b.Equity is just and fair inclusion into a society in which all can participate, prosper, and reach their full potential. Attaining equity requires eliminating barriers and providing people with the optimal opportunity to thrive.

Name: Obetta Chisom Grace.
Reg no:2018/242216
Dep: Education Economics
Date: 25 October,2021
QUESTION 1.
What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
Answers
First of all we look at Growth which is an increase or advancement from one stage to another ,
In economic sense growth is the increase in total output in a particular country , that is to say that when the GDP is a country is high, the country in question is experiencing high economic growth.
• Growth strategies: A growth strategy is an organization’s, institutions or a countrys plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
 Type of growth strategies includes:
1. Market Development:
This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc. Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.
2.Market Penetration:
Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
a.Aggressive advertising and other sales promotion techniques
B. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.
Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.
3 . Diversification:
Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.
4. Mergers : Mergers as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover.
Development is a chain of disequilibria that must be kept alive rather than eliminate the disequilibrium of which profits and losses are symptoms in a competitive economy.
If economy is to keep moving ahead, the task of development policy is to maintain, tension, disproportions and disequilibria.”
5: Balanced growth theory : this theory means that allecinomy should grow simultaneously so as to keep proper balance between industry and agriculture and between production for home consumption and production for export. The truth is that all sectors should be expanded simultaneously.
6:situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining. If ∆I/I, ∆Y/Y and ∆C/C denote the rate of investment, income and consumption, then unbalanced growth implies
∆I/I > ∆Y/Y > ∆C/C
i.e., the growth rates are not uniform.
According to Benjamin Higgin, “Deliberate unbalancing of the economy, in accordance with a pre-designed strategy is the best way to achieve the economic.
Question 2.
What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Answers:
what I understand by growth and equity debate in development economics is that it tries to argues how people should be treated in an economy or I can say it explains the equal opportunity that should be available for everyone in an economy for enhancement of overall growth. The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary . connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies. The enormity of rewards garnered by the innovators and their close associates creates a strong tilt toward increased inequality of income and weal.
Different between growth and Equity: the major difference between growth and equity is that;
Growth or Economic growth is a macro-economic concept which refers to a rise in real national income, which is sustained over equality o consecutive quarters of a year. While Equity, or economic, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity
C. Yes growth can exist with innequality because even in the inequality state of a country there is still an opportunity for all to progress, people only have to find out the strategy that works for them and make judicious use of it
Moreover there was never a country where everybody is equal, in every economy there is the poor and the rich and both has equal right of growing the economy as long as there is social welfare.
REFRENCES
http://www.yourarticle.library.com
Http/www.onlinelibrary .wiley.com
Http/economics online.com
http://www.Google.com.

Name: Chukwudubem Chinemerem Peace
Reg No: 2018/245426
Department: Education/Economics
What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.
As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse. The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.needs to make large investments in a number of industries simultaneously.This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. … Imbalances give incentive for intense economic activity and push economic progress.
Unbalanced growth strategy is a natural path of economic development. Situations that countries are in at any one point in time reflect theirprevious investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way.
The path of unbalanced growth is described by three phases:
a. Complementary
b. Induced investment
c. External economies
OTHER GROWTH STRATEGIES INCLUDE
1: Market Penetration: This is an excellent strategy to use when a
business wants to market its existing products in the same market where it
already has a presence. The goal is to increase its market share in a
predefined vertical channel. Market share for this purpose is defined as a
percentage of the gross sales in the market in comparison to other businesses
in the same market. Market penetration involves going deeper in an existing
vertical rather than introducing new market channels.
2: Market Development: Development refers to expanding the sales of existing
products in new markets. Competition in the current market may be so tight
there is no room for growth without spending exorbitant amounts on advertising.
It may be much more efficient to develop new markets to increase profitability.
The company may also develop new uses for its products. For example, an
organization that sells medical equipment to hospitals may find that medical
clinics also desire the same product.
3: Product Expansion: If technology changes and advancements begin to reduce
existing sales, the company may expand its product line by creating new
products or adding additional features to their existing products. The
business continues to sell its products in the same market, and it utilizes the
relationships the organization has already established by selling original
products or enhanced products to its current customers.
4: Diversification: The goal is to sell novel products to new markets.
Market research is essential to the success of this strategy because the
company must determine the potential demand for its new products.
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
The differences between growth and Equity in an economy are as follows;
An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

Name: Eya samson Nnemeka
REG NO: 2018/249599
DEPARTMENT: Economics

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
By growth strategies it refers to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advance countries.

Growth strategies  can be seen as policies adopted by the government of a particular country which leads to economic growth and development.

A growth strategy is a plan which is put in place for overcoming current and future challenges to realize its goals for expansion. Growth strategy include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
It can also be strategies

Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.

Balance growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.

Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.

On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

Different strategies in the economy that will support and enhance the growth and development of a developing country like Nigeria.
Ans: we operate an unbalanced growth strategy in Nigeria which has lead to much dependency on our Crude oil, here the problem is not about depending on Crude oil, we don’t refine these oil, rather we extract them in raw form and export to other foreign countries which they tell us how much they are willing to buy our Crude oil and after purchasing these oil, they go and refine it , bring them back to us and tell us the price in which they will sell.

And this dependency has lead to neglects of other sectors in the economy such as Agricultural sector, techological sector security sector etc

2.What do you understand my growth and equity debate in the development economic

B. What’s the differences between Growth and Equity the economy?
Growth in an economy is an increase in the production of economic goods and services in an economy

Growth in an economy is an increase in the production of economic goods and services in an economy

It’s also the increase in capital goods, labourer force,technology, and human capital can all contribute to economic growth.

Economic growth is also an increase in technological Improvement

It’s also increase in human capital. This means laborers become more skilled at their crafts, raising their productivity.

While Equity in Economics is a concept or idea of fairness in economics, particularly in regards to taxation or welfare economics.

Equity in Economics means the fairness of the allocation of resources or goods to a group of people.

C. Can growth exist with inequality? If yes, how? If no, why?

Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP.

Name: Mbakwe Temple Alex
Reg Number: 2018/242400
Department: Economics
Course Code: Eco 361

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
Underdeveloped countries have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.

Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.

If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations.

This is not true as underdeveloped country lacks in supply of capital, skills, infrastructures and other resources which are- inelastic in supply. Similarly, unbalanced growth doctrine also neglects the role of supply limitations and supply in elasticity’s. Under such situations, a judicious compromise has to be made between the benefits from balanced growth and unbalanced growth.
There is no second opinion that the developing countries are wedded to democracy who should try to control the twin evils of inflation and adverse balance of payments during the course of pursuing any strategy of economic development.
It may be concluded that while a newly developing country should aim at balance in an investment criterion, this objective will be attained only by initially following, in most case, a policy of unbalanced investment.

2 What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

One of the important objective of planning is to get stable growth and equity in the economy. Growth refers to an increase in the level of national income over a period of time and equity refers to equitable distribution of national income.
For every nation it is important to have growth together with equity. If there is only growth (without equity) in the economy, then it means everyone is enjoying the benefit of growth. In this regard, planners have to ensure that the prosperity of economic growth should reach all the people. Every individual should be able to fulfil his or her own basic need of food, house, education and healthcare. So, the government should ensure appropriate allocation of wealth among the people to reduce economic inequality in the economy.Therefore ‘growth with equity’ is a more rational and desireable objective of planning for a nation.
With the above, we can see that growth can exist with inequality and also with equity but the latter is more desirable.

Name:Onah Chisom Benita

Reg No: 2018/248527

Assignment Questions:
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Growth strategies can be defined as measures or policies adopted by the government of a particular country to move the country forward which leads to economic growth and development

Growth Strategies include:

* Diversificaton Growth Strategy

* Intensive Growth Strategy such as
Market penetration strategy
Product development strategy
Market development strategy
These strategies can also be regarded as the Organic Growth Strategies.

The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.

* Internal Growth Strategies- this is a growth strategy of an organisation through expanding operations throughout diversificaton , increase of already existing capacity.

* External Growth strategy:
This comes in form of mergers, takeovers , strategic alliances of a firm towards its rivals or competitors.

2.Growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

Name: Ukaejiofo Kenechukwu Victor
Reg No: 2018/250521
Dept: Economics
Course: Eco 361
Question
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Answers
1. Growth strategies  can be seen as measures or policies adopted by the government of a particular country to move the country forward which leads to economic growth and development.

A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
It can also be strategies

Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.

Balance growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.

Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.

On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

Different strategies in the economy that will support and enhance the growth and development of a developing country like Nigeria.

Ans: we operate an unbalanced growth strategy in Nigeria which has lead to much dependency on our Crude oil, here the problem is not about depending on Crude oil, we don’t refine these oil, rather we extract them in raw form and export to other foreign countries which they tell us how much they are willing to buy our Crude oil and after purchasing these oil, they go and refine it , bring them back to us and tell us the price in which they will sell.

And this dependency has lead to neglects of other sectors in the economy such as Agricultural sector, techological sector security sector etc

2.What do you understand by growth and equity debate in the development economic

B. What’s the differences between Growth and Equity the economy?
Growth in an economy is an increase in the production of economic goods and services in an economy

Growth in an economy is an increase in the production of economic goods and services in an economy

It’s also the increase in capital goods, labourer force,technology, and human capital can all contribute to economic growth.

Economic growth is also an increase in technological Improvement

It’s also increase in human capital. This means laborers become more skilled at their crafts, raising their productivity.

While Equity in Economics is a concept or idea of fairness in economics, particularly in regards to taxation or welfare economics.

Equity in Economics means the fairness of the allocation of resources or goods to a group of people.

C. Can growth exist with inequality? If yes, how? If no, why?

Yes, growth can exist with inequality but that is in the short run, within countries, indicators of inequality, such as the Gini coefficient, say little about who has benefited or lost from these trends. A closer look at the situation of households provides a more complete picture and shows that in many OECD countries, gains in disposable incomes have fallen short of increases in GDP.

Name: obasi Chidera Godwin
Dept: Economics major
Reg num: 2018/250687

A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

THE FOUR GROWTH STRATEGIESFour types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
MARKET PENETRATION
The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
MARKET DEVELOPMENT
This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets

DIVERSIFICATION
This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.Diversification may be divided into further categories:

VERTICAL DIVERSIFICATION
The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.

PRODUCT DEVELOPMENT
The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
CONCENTRIC DIVERSIFICATION
Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
HORIZONTAL DIVERSIFICATION
This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.

Growth and Equity debateOne of the most important objectives of planning is to get stable Growth with Equity in an Economy.Growth is an increase in the level of national income over a period of time, while Equity refers to Equitable distribution of the national income .For every nation, it is very important to have growth alongside with Equity.If there’s only growth without equity in an Economy, it means that everyone is not enjoying the benefits of growth.Hence, planners has to ensure that prosperity of economic growth should reach everyone. So the government should ensure appropriate allocation of wealth among the people to reduce economic inequality in the Economy.Growth and Equity is a more rational and desirable objectives of planning for a nation.The differencesGrowth refers to the increase in national income over a long period of time,while equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice. Growth is desirable as you must have the cake to distribute it but growth in itself does not gurantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production. In other words, the major share of Gross Domestic Product (GDP) might be owned by a small proportion of population which may result in exploitation of weaker sections of society. Hence, growth with equity is a rational and desirable objective of planning. This objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth in income.Can growth exist with inequality?From the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement ,keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities.
b. Can growth exist with inequality;According to Kuznet curveNobel laureate economist Simon Kuznets argues that as an economy develops and there’s an increase in economic growth, a natural cycle of economic inequality occurs, represented by an inverted U-shape curve called the Kuznets curve, From the curve, we observe as the economy develops, inequality first increases, then decreases after a certain level of average income is attained. In early development, investment opportunities for those who already have wealth multiply so owners of capital can accumulate wealth. At the same time, there is an influx of cheap rural labour to the developing cities, which drives down wages. Therefore, in early development, inequality increases.
Hence, Inequality is a vicious cycle,the rich get richer, the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals . The reason is simple: People who already hold wealth have the resources to invest or to leverage the accumulation of wealth, which creates new wealth. The process of wealth concentration arguably makes economic inequality a vicious cycle. For example, Growth in technology widens income gapGrowth in technology arguably renders joblessness at all skill levels . For unskilled workers, computers and machinery perform a lot of tasks these workers used to be do. In many jobs, such as packaging and manufacturing, machinery works even more effectively and efficiently. Hence, jobs involving repetitive tasks have largely been eliminated. Skilled workers are not immune to the nightmare of losing jobs. The rapid development in artificial intelligence may ultimately allow computers and robots to perform knowledge-based jobs.The impact of increasing unemployment is stagnant or decreasing wages for most workers, as there is a low demand for but high supply of labour

Name: Kalu Rita Ngozi
Reg number: 2018/242454
Department: Economics
ASSIGNMENT ON ECO 361
1. THE FOUR GROWTH STRATEGIES
Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
MARKET PENETRATION
The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.

MARKET DEVELOPMENT
This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
PRODUCT DEVELOPMENT
The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.

DIVERSIFICATION
This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
Diversification may be divided into further categories:
HORIZONTAL DIVERSIFICATION
This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.
VERTICAL DIVERSIFICATION
The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.
CONCENTRIC DIVERSIFICATION
Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
CONGLOMERATE DIVERSIFICATION
Is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio
Balanced Vs. Unbalanced Growth for Economic Development
Having critically examined the comparative analysis of balanced and unbalanced growth strategies, a logical question arises: which of these two strategies provide greater stimulus of economic growth?
The unbiased and impartial opinion is that there is no need to the debate on the controversy.
It is strictly based on empirical evidence and political motivation. While Paul Streeten contends that it is possible to reformulate the choice between balanced and unbalanced growth.
But Ashok Mathur argues that, “balanced and unbalanced growth need not be mutually conflicting and an optimum strategy of development should combine some elements of balance as well as unbalance.”
Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
Underdeveloped countries have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.
Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.
On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.
The doctrine of balanced growth and unbalanced growth have two common problems on relating to role of state and the role of supply limitations and supply inelasticity’s. The private enterprise is only incapable of taking investment decisions in underdeveloped countries. Therefore, balanced growth presupposes planning. In unbalanced growth strategy, the states play a pioneer role in encouraging SOC investments, there by creating disequilibrium.
If the development starts via Investment in DPA, political pressures force the state to undertake investment in SOC. The theory of balanced growth is mainly concerned with the lack of demand and neglects the role of supply limitations.
This is not true as underdeveloped country lacks in supply of capital, skills, infrastructures and other resources which are- inelastic in supply. Similarly, unbalanced growth doctrine also neglects the role of supply limitations and supply in elasticity’s. Under such situations, a judicious compromise has to be made between the benefits from balanced growth and unbalanced growth.
There is no second opinion that the developing countries are wedded to democracy who should try to control the twin evils of inflation and adverse balance of payments during the course of pursuing any strategy of economic development. The need of the hour is that it should be done to make the doctrine effective as a vehicle of economic development with added strength and vigour.
In this context, Prof. Meier has rightly observed that, “From the discussion we may also now recognize that the phrases balanced growth and unbalanced growth initially caught on too readily, and that each approach has been overdrawn. After much reconsideration, each approach has become so highly qualified that the controversy is essentially barren.
Instead of seeking to generalize either approach we should more appropriately look to the conditions under which each can claim some validity. It may be concluded that while a newly developing country should aim at balance in an investment criterion, this objective will be attained only by initially following, in most case, a policy of unbalanced investment.”
2. For nearly two decades the U.S. economy has been plagued by two disturbing economic trends: the slowdown in the growth rates of productivity and average real wages and the increase in wage and income inequality. The federal budget is in chronic deficit. Imports have far exceeded exports for more than a decade. American competitiveness has been a source of concern for even longer. Many Americans worry that foreigners are buying up U.S. companies, that the economy is losing its manufacturing base, and that the gap between rich and poor is widening.In this book three of the nation’s most noted economists look at the primary reasons for these trends and assess which of the many suggestions for change in policy – whether for increased tax incentives for investment, education reform, or accelerated research and development – are likely to work and which may not work and could even hinder economic development.The author’s discuss a variety of issues connected with deindustrialization and diminished competitiveness, distinguishing between problems that would be of real concern and those that should not. They evaluate explanations for slow growth in aggregate productivity in the United States and its relation to slower growth in other industrialized countries. They discuss the performance of the various sectors of the U.S. economy and systematically examine the evidence for and against the major proposals for correcting the adverse trends in productivity and inequity.Growth With Equity clearly explains how the country can accomplish the challenge of accelerating growth and narrowing the gap that separates the rich from the poor. While recognizing that some of their recommendations may be politically painful, the authors stress the importance of adopting a purposeful, long-range policy to encourage growth, ensure equity, and reduce the government’s equity.

NAME: Eze Nnenna Anthoniatta
REG NO:2018/248095
DEPARTMENT: Economics
COURSE: Eco361 Development Economics

QUESTION 1:
What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

ANSWER:
A….Their are various definitions of growth strategies ranging. Some would say growth strategies is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. And others would say that it is a set of actions and plans that make a company expand its market share than before. On the other hand I would define growth strategy as one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

B…. Unbalanced economic strategy: The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism. unbalanced growth requires less amount of capital, making investment in only leading sectors.

……. Balanced economic strategy: A balanced economy suggests that economic growth is sustainable in the long-term, and the economy is also growing across different sectors – and not focused on one particular industry or area. It aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.

QUESTION 2:
What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWER:
A….in a singular but diverse definition. Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. While The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity. The complementaries between equity and prosperity arise for two main reasons. So far, for some reason these two is a cause for debate in the aspect of economic development but the fact is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity.

B….••Economic growth means a rise in real GDP; effectively this means a rise in national income, national output and total expenditure. Economic growth should enable a rise in living standards and greater consumption of goods and services. As a result, economic growth is often seen as the ‘holy grail’ of macroeconomics
However, this simplistic emphasis on economic growth is often criticised because living standards depend on many more factors than just increasing real GDP. Some economists have suggested that a more useful measure is to look at a wider range of factors, such as the Human Development Index (HDI) which measures GDP but also statistics such as literacy and healthcare standards. They also help other microeconomic models by; Reducing poverty, Improving public services etc.
Although there is a consensus that extreme inequality of income, wealth, or opportunity is unfair and that efforts should be made to raise the incomes of the poorest members of society, there is little agreement on the desirability of greater income equality for its own sake or on what constitutes a fair distribution of income. Equity issues are especially knotty because they are inextricably intertwined with social values. Nonetheless, economic policymakers are devoting greater attention to them for a number of reasons:

Some societies view equity as a worthy goal in and of itself because of its moral implications and its intimate link with fairness and social justice.

Policies that promote equity can help, directly and indirectly, to reduce poverty. When incomes are more evenly distributed, fewer individuals fall below the poverty line. Equity-enhancing policies, particularly such investment in human capital as education, can, in the long run, boost economic growth, which, in turn, has been shown to alleviate poverty.

C…..Does income inequality drive or hinder economic growth?
Yes. Everyone knows the answer. Equality of opportunity is both good in itself, and important for economic growth. Anything that blocks opportunity for some people reduces the energy and innovation the economy requires. Anything that gives some people unfair advantages distorts results and makes things less efficient. Moreover invidious discrimination reduces trust—and trust forms the social capital that makes economic growth possible.
However “income” inequality focuses on outcome, not opportunity. Enforcing equal outcomes hurts economic growth, as there is no incentive to produce. The winners are political—people who figure out how to control or game the outcome distribution—not people who produce high-quality goods and services other people buy voluntarily.

Moreover people are different. Why should a healthy young person need the same income as an older person with a family to support and much higher healthcare costs? Why should someone who trains for a decade and works 80-hour weeks earn the same income as a someone who works part time as a school-crossing guard?
The only real dispute is how much inequality of outcome results from inequality of opportunity. Some people think it’s a lot, so much that we can’t solve it just by equalizing opportunity, we need to redistribute wealth. Other people think it’s only a moderate amount, and can be addressed by concentrating on opportunity.

Name: Onah Amarachi Jane
REG no:2018/246265
Department :Economics

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

Answer
1) A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources etc.

As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.

a. The balanced growth strategy
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse. The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneouslyBalanced growth’ has at least two different meanings in economics. In macroeconomics, balanced growth occurs when output and the capital stock grow at the same rate. This growth path can rationalize the long-run stability of real interest rates, but its existence requires strong assumptions. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. The article reviews the balanced growth debate and the extent to which it has influenced development policies.

b. Unbalanced growth strategy
Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. The strategy of unbalanced growth is most suitable in breaking the vicious circle of poverty in underdeveloped countries. The poor countries are in a state of equilibrium at a low level of income. Production, consumption, saving and investment are so adjusted to each other at an extremely low level that the state of equilibrium itself becomes an obstacle to growth. The only strategy of economic development in such a country is to break this low level equilibrium by deliberately planned unbalanced growth.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Growth can be seen as the increase in some quantity over time. It can be seen as the gradual development in maturity, age, size, weight or height. It is a process that focuses on quantitative improvement.
Equity on the other hand is where income is distributed in a way that is considered to be fair or just. Note that an equitable distribution is not the same as a totally equal distribution and that different people have different views on what is equitable.
The differences between growth and Equity in an economy are as follows;
An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

Name: Eze Ngozi Josephine
Reg No: 2018/241825
Dept: Economics
Email: ezengozijosephine2030@gmail.com
Course code: Eco 361d

Answer 1
A growth strategy is a set of actions and plans that make a company expand
its market share than before. It’s completely opposite to the notion that
growth doesn’t focus on short-term earnings; its focus is on long-term goals.
A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire
organization.

Balanced VS unbalanced growth strategies
Both the theories are based on the theory of Big Push which advocates investment to break the vicious circle of poverty. The balanced growth aims at the development of all sectors simultaneously but unbalanced growth recommends that the investment should be made only in leading sectors of the economy.
* Underdeveloped countries have insufficient resources in men, material and money for simultaneous investment in number of complementary industries. The investment made in selected sectors leads to new investment opportunities. The aim is to keep alive rather than to eliminate the disequilibrium by maintaining tensions and disproportions.
* Balanced growth aims at harmony, consistency and equilibrium whereas unbalanced growth suggests the creation of disharmony, inconsistency and disequilibrium. The implementation of balanced growth requires huge amount of capital.On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sectors. Balanced growth is long term strategy because the development of all the sectors of economy is possible only in long run period. But the unbalanced growth is a short term strategy as the development of few leading sectors is possible in short span of period.

Answer 2
Economic growth is an increase in the production of economic goods and
services, compared from one period of time to another. It can be measured in
nominal or real (adjusted for inflation) terms. Traditionally, aggregate
economic growth is measured in terms of gross national product (GNP) or gross
domestic product (GDP), although alternative metrics are sometimes used.

In simplest terms, economic growth refers to an increase in aggregate
production in an economy. Often, but not necessarily, aggregate gains in
production correlate with increased average marginal productivity. That leads
to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.

In economics, growth is commonly modeled as a function of physical capital,
human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work
with, and the recipes that they have available to combine labor, capital, and
raw materials, will lead to increased economic output.

The differences between growth and Equity in an economy are as follows;
An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer. The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

Name: OSIKE SOLOMON UGOCHUKWU
Reg.No: 2018/242458
Department: Economics

Question 1
What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
Answer
**Growth is something that all businesses and companies want. When we say growth strategy, it isn’t just a plug that gives you immediate results. It’s a process of creating a team and organizing mindset.
A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals.

**Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.
They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.
Strategy of Balanced Growth:

We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.This completes the vicious circle of poverty. In a poor country, the size of the market for goods is small so that sufficient opportunities for profitable investment in industries are lacking. This is the main reason for lack of inducement to invest which we discuss presently.

Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.

Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy. After all, he points out the industrialised countries did not get to where they are now through “balanced growth.” True, if you compared the economy of the United States in 1950 with the situation in 1850, you will find that many things have grown, but not everything grew at the same rate throughout the whole century. Development has proceeded “with growth being communicated from the leading sectors of the economy to the followers, from one industry to another; from one firm to another.”

Question 2
What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Answer
In macroeconomic literature, it is widely held that persuasion of economic growth and more equitable distribution of income (wealth) is not possible at the same time. The basic reason put forward is that to aim for more equitable distribution will reduce total savings in short and medium terms by reducing the weighted average of propensities to save of the different strata of the society. Therefore, the main objective for countries in transitional period is to have a higher economic growth rather than a fairer distribution of income.
**Growth has been and increasingly is causally associated with less equality, greater equality with slower growth.The ineluctable connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies. The enormity of rewards garnered by the innovators and their close associates creates a strong tilt toward increased.Economists refer to an economy’s maximum output level as defining its “production-possibility frontier.” Expanding the frontier depends on one or more “game-changing” innovations. In the recent past, these have mainly been in information technology. In the future they may emerge from other technologies: biogenetic and stem-cell technology, nanotechnology, robotics, or something else. The effect on growth will likely be large, as will the ensuing disproportionate rewards for the innovators and their close associates—leading to greater inequality.

** Growth can exist with inequality because equality slows growth. In a society where there is equitable distribution of resources, individuals tend to put less effort improving themselves because of the comfort they are getting. Even though the effect may not be noticed in the short run but will eventually surface in the long run.

NAME: Kalu Divine Oluchi
REG NO: 2018/249490
COURSE CODE: ECO 361
DEPARTMENT: ECO MAJOR

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

To increase economic growth
We need to see a rise in demand and/or an increase in productive capacity:
1. A rise in aggregate demand

Aggregated demand can increase for various reasons.
• Lower interest rates – reduce the cost of borrowing and increase consumer spending and investment.
• Increased real wages – if nominal wages grow above inflation then consumers have more disposable to spend.
• Higher global growth – leading to increased export spending.
• Devaluation, making exports cheaper and imports more expensive, increasing domestic demand.
• Rising wealth, e.g. rising house prices cause consumers to spend more (they feel more confident and can remortgage their house.
Growth in productivity

This is growth in aggregate supply (productive capacity). This can occur due to:
• Development of new technology, e.g. steam power and telegrams helped productivity in the nineteenth century. Internet, AI and computers are helping to increase productivity in the twenty-first century.
• Introduction of new management techniques, e.g. Better industrial relations helps workers become more productive.
• Improved skills and qualification.
• More flexible working practices – working from home, self-employment.
• Increased net migration – especially encouraging workers with the skills that are in short supply (e.g. builders, fruit pickers)
• Raise retirement age and therefore increasing the supply of labour.
• Public sector investment – e.g. improved infrastructure, increased spending on education

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Growth and Equity Debate in Development Economics is simply an argument going on on whether an economy can be developed in the presence of growth and Equity. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.
The differences between growth and Equity in an economy are as follows;
An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

NAME: OKOYE ARTHUR KANAYO 2018/241820
DEPARTMENT: ECONOMICS

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Answers
1. In contemporary ages, the entrepreneurs whom however ever since the 19th century when they were recognised for their contributions and impact in an economy interms of development have ensured steady thoughts on innovations and means to improve effectiveness and efficiency of the financial system or in terms of Productivity.
The motive and mechanism behind this is known as Growth Strategies.
The term ‘growth strategy’ is an organization’s plan for overcoming current and future obstacles or challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
Therefore we can conclude that Growth strategy is a dynamic process.
In other words, a growth strategy is a collection of business ideas and initiatives that seek the maximization of a company’s value within a period.
      A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.

The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly.

Growth Strategy is pursued to reduce the cost of production per unit. Growth strategies involve a significant increase in performance objectives.

● There are basically various growth strategies, these strategies when implemented on  takes effect on the company or nation..The selection of any of these growth strategies depends on the structure and products of the nation/company. The various growth strategies are as follows:-
1) Internal Growth Strategies:

The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc. 

These strategies are broadly classified as:

A. Intensive Growth Strategies:

The firm pursues intensive growth strategies with an objective to achieve further growth of existing products and/or existing markets.

The basic classification of intensive growth strategies:

(a) Market penetration strategy

(b) Market development strategy

(c) Product development strategy

These strategies are also called ‘organic growth strategies’.

(a) Market Penetration Strategy:

A firm pursuing market penetration strategy directs its resources to the profitable growth of a existing products in current markets. It is the most common form of intensive growth strategy.

(b) Market Development Strategy:

This strategy involves introducing present products or services into new geographic areas. The marketing efforts are made on existing products, to customers in related market areas, by adding different channels of distribution or by changing the current content of the advertising and promotional efforts.

(c) Product Development Strategy:

This strategy involves the growth of market through substantial modification of existing products or creation of new but related products that can be marketed to current customers through established channels.

B. Integrative Growth Strategies:
The integrative growth strategies are designed to achieve increase in sales, assets and profits.

There are basically two variants in integrative growth strategy which involves:

(a) Integration at the same level or stage of business in the same industry i.e. horizontal integration.

(b) Integration of different levels/stages of business in the same industry i.e. vertical integration with backward and forward linkages.

● Horizontal Integration:

When two or more firms dealing in similar lines of activity combine together then horizontal integration takes place. Many companies expand by creating other firms in their same line of business.

● Vertical Integration:

A vertical integration refers to the integration of firms in successive stages in the same industry. The integration of different levels/stages of the industry is known as vertical integration.

C. Diversification Growth Strategies:

Diversification means going into an operation which is either totally or partially unrelated to the present operations. Diversification strategies are used to expand firm’s operations by adding markets, products, services or stages of production to existing operations. The purpose of diversification is to allow the company to enter lines of business that are somewhat different from current operations.

    Diversification makes addition to the portfolio of business the growth strategy is pursued when the firm’s growth objectives are very high and it could not be achieved with in the existing product/market scope. Spreading risks by operating in multiple areas decreases the threat of any one area causing the firm to fail.

However, diversification spreads resources over several areas, similarly decreasing the probability that the firm can be a strong force in any area. Diversification refers to the directions of development which take the organization away from both its present products and its present markets at the same time. Diversification strategies are becoming less popular as organizations are finding it more difficult to manage diverse business activities.

2) External Growth Strategies:

Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

There are various ways of implementing External growth strategies  and these are:
a) Merger:

A merger refers to a combination of two or more companies into a single company. This combination may be either through absorption or consolidation. Merger is said to occur when two or more companies combine into one company. Merger is defined as ‘a transaction involving two or more companies in the exchange of securities and only one company survives.’

When the shareholders of more than one company, usually two, decides to pool the resources of the companies under a common entity it is called ‘merger’. If as a result of a merger, a new company comes into existence it is called as ‘amalgamation’. As a result of a merger, one company survives and others lose their independent entity, it is called ‘absorption’.

b) Takeover:

A takeover generally involves the acquisition of a certain block of equity capital of a company which enables the acquirer to exercise control over the affairs of the company. The main objective of takeover bid is to obtain legal control of the company. The company taken over remains in existence as a separate entity unless a merger takes place.

Thus, a takeover is different from merger in that under a takeover, the company taken over maintains its separate entity, while under a merger both the companies merge to form single corporate entity, and at least one of the companies loses its identity.

The element of willingness on the part of the buyer and seller distinguishes an acquisition from a takeover. If there exists willingness of the company being acquired, it is known as ‘acquisition’. If the willingness is absent, it is known as ‘takeover’.

Takeover may be defined as ‘a transaction or series of transactions whereby an individual or group of individuals or company acquires control over the management of the company by acquiring equity shares carrying majority voting power’. Takeover is an acquisition of shares carrying voting rights in a company with a view to gaining control over the assets and management of the company.

c) Joint Venture:

All joint ventures are typically characterized by two or more ventures being bound by a contractual arrangement which establishes joint control. Activities, which have no contractual arrangements to establish joint control, are not joint ventures. The contractual arrangements establish joint control over the joint venturers.

Such an arrangement ensures that no single venturer is in a position to unilaterally control the activity. Joint venture may give protective or participating rights to the parties to the venture. Protective rights merely allow a co-venturer to protect its interests in the venture in situation where its interests are likely to be adversely affected.

Joint venture is a form of business combination in which two unaffiliated business firms contribute financial and/or physical assets, as well as personnel, to a new company formed to engage in some economic activity, such as the production or marketing of a product. Joint venture can be formed between a domestic company and foreign enterprise in order to flow the skills and knowledge both the ways.

A joint venture by a domestic company with multinational company can allow the transfer of technology and reaching of global market. The partners in joint venture will provide risk capital, technology, patent, trade mark, brand names and allow both the partners to reap benefit to agreed share.

3) Balanced Growth Strategy:
        In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. 

4) Unbalanced Growth Strategy:
A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining.

QUESTION 2 ANSWER
2a)      From my own perspective, growth and equity debate in development economics is an argument to know if an economy can be developed in the presence of growth and Equity.

2b) Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
Growth in an economy is an increase in the production of economic goods and services in an economy

It’s also the increase in capital goods, labourer force,technology, and human capital can all contribute to economic growth.

Economic growth is also an increase in technological Improvement

It’s also increase in human capital. This means laborers become more skilled at their crafts, raising their productivity.

While Equity in Economics is a concept or idea of fairness in economics, particularly in regards to taxation or welfare economics.

Equity in Economics means the fairness of the allocation of resources or goods to a group of people.

Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
        In conclusion, there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between Growth and equity. It is even more unlikely that growth can be attained with equity.

2c)  I support the motion that growth exist with inequality because unequal distribution of income and wealth is possible due to Various factors like education, experience, connections etc.
Furthermore, I believe that growth can exist with inequality ,since 1990, economists have begun to pay attention to the ever-increasing gap between the rich and the poor. And while inequality impacts negatively on the growth process. We can certainly say that significant growth can exist with inequality. In fact, the Kuznet curve depicts such an example where increasing growth stimulates this inequality. However, inequality is reduced in the process of economic development.This is why economic development is the ultimate goal of every nation. As development accounts for different variables such as living standards, security, equitable distribution of income, etc.

NAME: E-PATRICK DALOSAH
REG NUMBER: 2018/242457
DEPARTMENT:ECONOMICS
LEVEL:300
COURSE CODE: ECO 361

1) By “growth strategies” I refer to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.

Unbalanced Growth
A situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining. Unbalanced growth portends an eventual economic slowdown or recession, though economists disagree on how a country should address it.

Balanced Growth
Balanced growth’ has at least two different meanings in economics. In macroeconomics, balanced growth occurs when output and the capital stock grow at the same rate. This growth path can rationalize the long-run stability of real interest rates, but its existence requires strong assumptions. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. The article reviews the balanced growth debate and the extent to which it has influenced development policies.

2)High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries, according to a recent paper by NBER Research Associate Robert Barro. In Inequality, Growth and Investment (NBER Working Paper No.7038), A study of a broad panel of countries between 1960 and1995 and finds that growth tends to fall with greater inequality when income per capita is less than $2,000 (in 1985 dollars) and to rise with inequality when income per capita is more than $2,000.

It therefore concludes that income-equalizing policies might be justified on the grounds of promoting growth in poor countries. For richer countries, however, active income redistribution appears to involve a trade-off between the benefits of greater inequality and a reduction in overall economic growth. Barro further shows that the overall relationship between income inequality and growth and investment is weak.

The study also investigates the effect of economic development on inequality. The traditional relationship here is the “Kuznets curve,” named after the Nobel laureate and former NBER affiliate Simon Kuznets. The curve describes a U-shaped relationship between inequality and growth: inequality first increases and later decreases in the process of economic development. Kuznets explained this in terms of a shift from the rural/agricultural sector of the economy to an urban/industrial sector. Overall, for poor countries, the escape from poverty is made more difficult because rising per capita income induces more inequality, which retards growth in this range. For rich countries, rising per capita income tends to reduce inequality, which lowers growth in this range.

Name: Ezeorah Mariagoretti Ukamaka
Department: Social Science Education
Unit: Education Economics
Reg. No.: 2018/244494
QUESTIONS
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
ANSWERS.
1.What is a Growth Strategy?
A growth strategy is a detailed plan of action designed to help your company grow — that is, increase sales and revenue over a specific period of time. Effective growth strategies are specific, measurable, and focused on continuous improvement.

The Following are the growth strategies that I’m convinced if employed will enhance the growth and development of developing countries like Nigeria. They includes:
MARKET PENETRATION
The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
MARKET DEVELOPMENT
This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
PRODUCT DEVELOPMENT
The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
DIVERSIFICATION
This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
BALANCED GROWTH STRATEGY
The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse. The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. A balanced economy suggests that economic growth is sustainable in the long-term, and the economy is also growing across different sectors and not focused on one particular industry or area.

UNBALANCED GROWTH STRATEGY
Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare.

2.
GROWTH IN DEVELOPMENT ECONOMICS
The term economic growth has been variously defined. Nafziger (2006) explains Economic growth as increases in a country’s production or income per capita, while the Production is usually measured by gross national product (GNP) or gross national income (GNI); they are used interchangeably to measure an economy’s total output of goods and Services.
According to Haller (2012) economic growth, in a narrow sense, is an increase of the National income per capita in quantitative terms with a focus on the functional relations Between the endogenous variables. Then in a wider sense, it involves the increase of the GDP, GNP and NI, including the production capacity, expressed in both absolute and Relative size, per capita. By this definition, it means that economic growth involves the Process of increasing the sizes of national economies, the macro-economic indications, Especially the GDP per capita.
Todaro and Smith (2015) defines economic growth as the steady process by which the Productive capacity of the economy is increased over time to bring about rising levels of National output and income. While Mladen (2015) view economic growth as constantly Increasing the volume of production or the increase in gross domestic product over a Period of time, usually one year. Economic growth is a long-term rise in the capacity to supply increasingly diverse Economic goods to its population. The growing capacity is based on advancing Technology as well as institutional adjustments. Economic growth occurs whenever People take resources and efficiently rearrange them in ways that make them more Productive overtime (Metu et al., 2017). It is the continuous improvement in the capacity To satisfy the demand for goods and services, resulting from increased production scale, And improved productivity i.e. innovations in products and processes. Aggregate economic growth is measured in terms of gross national product (GNP) or Gross domestic product (GDP), although alternative metrics are sometimes used. In a Nutshell, economic growth is an increase in the capacity of an economy to produce goods And services, compared from one period of time to another.

EQUITY IN DEVELOPMENT ECONOMICS
Equity, is the concept or idea of fairness in particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution

DIFFERENCE BETWEEN GROWTH AND EQUITY
I) Equity on the other hand is a more normative concept that concerns the ‘justness’ or ‘fairness’ of resource allocation.
While GROWTH in an economy means the process by which a nation’s wealth increases over time.
ii) Equity, is the concept or idea of fairness in particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution
While GROWTH in an economy is the increase in the value of an economy’s goods and services, which creates more profit for businesses

iii).Can growth exist with inequality? If yes, how? If no, why?
No growth cannot exist in an economy. Inequality is negatively related to economic growth ,greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations. Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth.

ASSIGNMENT :
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWERS :

A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
It is a plan of action that allows you to achieve a higher level of market share than you currently have. Contrary to popular belief, a growth strategy is not necessarily focused on short-term ; growth strategies can be long-term, too.

Different growth strategy are as follows :

1. Internal Growth Strategies:

The internal growth of an organization is possible by expanding operations through diversification, increase of existing capacity, market growth strategies etc.

2. External Growth Strategies:
Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

3 Diversification Growth Strategies:

Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

4. External Growth Strategies:

Sometimes, a firm intends to grow externally when it take over the operations of another firm. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. Such growth is called ‘inorganic growth’. Firms generally prefer the external growth strategies for quick growth of market share, profits and cash flows.

5. Strategy of Balanced Growth:

We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
6. Strategy of Unbalanced Growth:

Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.

Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.

As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.

N0. 2
What I understand by growth and equity debate :
growth is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.Equity debate on the other hand, is equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. What follows in this section should be understood against this background: in order to explain the concept of equity we must present one particular point of view but the topic can be approached from many different points of view. Having said this, we believe that by drawing on a rounded understanding of moral and political philosophy, the discussion below represents a firm foundation for understanding equity. It offers an outline of the basic structure of the concept, almost like the ‘grammar’ of how it is used, based on a balanced and robust reading of the theory. By setting out the structures of the concept, we hope we can give readers at least the tools with which to make their own judgements about levels of equity. By then offering our own interpretation of the value judgements involved, we hope also to provide a broad and inclusive understanding of equity, while retaining enough depth to give something meaningful and inspiring to work with.

Ii. Different between growth and equity in the economy :

Private Equity has come a long way since KKR’s 1988 takeover of RJR Nabisco. Over the past four years, private equity activity in Europe alone totalled an impressive €489 billion. What is less recognised, however, is the role of growth-focused private equity firms, i.e. private equity firms investing in smaller, growth stage companies — particularly as it relates to the technology sector where Venture Capital has become the front-of-mind funding channel.
What is Growth-Stage Private Equity?
Growth-stage Private Equity sits at the intersection of private equity and venture capital. Growth-focused PE firms typically invest in transactions valued between €10–100 million in exchange for either a minority or majority stake in the target company. And it is not uncommon for the invested capital to provide some level of liquidity to current owners.
Working together with the management team, growth equity PE firms help create value through accelerated operational improvements and revenue growth, whether organic or acquisitive. And, unlike in larger leveraged buyouts, debt is not used extensively.
Growth equity can be used to accelerate growth, fund acquisitions or offer liquidity to current shareholders.
Which Companies Typically Receive Growth Equity?
VC’s tend to target early-stage businesses with limited historical financials. On the other end of the spectrum, LBO investors acquire mature companies with a long track-record of cash generation.
Growth equity investors fit somewhere in the middle, backing companies in established markets and with proven unit economics, even if their track record is relatively short. Companies best suited for growth equity exhibit potential for profitable revenue growth through a repeatable and scalable customer acquisition process and customer lifetime value that exceeds the cost of acquisition.
Growth Equity firms invest in well-run, growing businesses with proven business models and solid management teams looking to continue driving the business.
Founders are likely to consider a growth equity deal when they don’t feel it is quite time to sell 100%, but also realize it is prudent to seek some level of liquidity.

Iii.

Yes, growth can exist with inequality.

In the mid-20th century, economists began witnessing inequality’s decline in the developed world. Prior to the two World Wars and Great Depression, rising inequality was characteristic of most of the developed world, but in the aftermath of the upheavals, the trend reversed. At the time, many reasoned that declining inequality was a natural outgrowth of the development process: As countries become more economically mature, inequality would fall. This trend led Nobel Laureate economist Simon Kuznets to write:

“One might thus assume a long swing in the inequality characterizing the secular income structure: widening in the early phases of economic growth when the transition from the pre-industrial to the industrial civilization was most rapid; becoming stabilized for a while; and then narrowing in the later phases.”

Given the narrowing of inequality in the more economically developed nations, Kuznets’ analysis suggested that the inequality in poorer countries was a transitional phase that would reverse itself once these nations became more economically developed. Thus, similar to how the level of inequality was decreasing in wealthy nations, inequality would eventually decline in poorer countries as they became richer. In fact, some economists theorized that inequality in the less developed world was actually good for growth because it meant that the economy was generating select individuals wealthy enough to provide the savings necessary for investment-led growth.
Today, the world looks very different than it did in 1955 when Kuznets made his famous assertion. In the past several decades, economic inequality in the United States and other wealthy nations has risen sharply, spurring renewed interest in the question of whether and how changes in income distributions affect economic wellbeing. Over the same time period, economic inequality has persisted and even grown in many poorer economies.

These trends have sparked economists to conduct empirical studies, analyzing data across states and countries, to see if there is a direct relationship between economic inequality, and economic growth and stability. Early empirical work on this question generally found inequality is harmful for economic growth. Improved data and techniques added to this body of research, but the newer literature was generally inconclusive, with some finding a negative relationship between economic growth and inequality while others finding the opposite.

The latest research, however, provides nuance that can explain many of the conflicting trends within the earlier body of research. There is growing evidence that inequality is bad for growth in the long run. Specifically, a number of studies show that higher inequality is associated with slower income gains among those not at the top of the income and wealth spectrum.

Economists and policymakers today should not be surprised that empirical studies were inconclusive given the broad theoretical (and sometimes contradictory) reasons that hypothesized inequality would both promote growth and inhibit growth. On the one hand, hundreds of years of economic theory has been built on the hypothesis that inequality in outcomes creates incentives for individuals to work hard or be more productive than others in order to receive greater incomes—activity that spurs growth. In addition, many theorized that inequality would help individuals become rich enough to save some of their earnings and fund investments necessary to produce economic growth.

On the other hand, economic theory also suggests the opposite—that inequality may inhibit the ability of some talented but less fortunate individuals to access opportunities or credit, dampen demand, create instabilities, and undermine incentives to work hard, all of which may reduce economic growth. Growing inequality could also generate a relatively larger group of low-income individuals who are less able to invest in their health, education, and training, thereby retarding economic growth.

In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.

In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.

Important as well for the purposes of this paper is this—the latest economic research we reviewed only examines the outcome of whether there are results for regressions that demonstrate positive or negative relationships between inequality and economic growth and stability. This means the paper cannot provide clear guidance for policymakers on exactly how to address inequality or mitigate its effects on growth. In other words, the research examined in this paper generally does not identify the channels or mechanisms by which inequality affects growth.

An additional issue (above and beyond the challenges of how to specify a model) is the paucity of data to evaluate questions about inequality and growth. Ideally, economists would want a variety of measures for inequality, including earnings, income, and wealth, that can be compared across a large number of countries over a long period of time. Sadly, such a perfect data set does not exist. Therefore, econ- omists are left to do the best estimates with the data at hand. Over time, though, the data sets that have been used to perform these analyses have been improving.

Other scholars who have examined this literature have also come to the conclu- sion that to inform policymaking, we need to do more than search for a mechanis- tic relationship between inequality and growth. Dani Rodrik, the former Harvard University professor now at the Institute of Advanced Studies, underscores the limitations of this kind of research, arguing that methods for analyzing data that span across places and time are ill-suited to address the fundamental questions about the relationship of government policy and inequality with growth outcomes.

Eco. 361 —18-10-2021(Online discussion 5—Understanding Growth Strategies and Growth vs Equity debate)
NAME: OKELEKE CHINEMEMMA VICTORY
REG NO: 2018/247843
DEPT: ECONOMICS
LEVEL :300L
EMAIL: okelekevictory@yahoo.com
Questions:
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWER

1) . In my own understanding , a growth strategy is a plan for overcoming current and future problems to achieve its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
There are two major theories of growth strategies which are Balanced and Unbalanced growth strategies.Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.Unbalaced growth is a situation in which economic growth is significantly higher in some sectors than others. The nature of controversy between the protagonist s of balanced and those of Unbalanced growth seems to suggest that the two are mutually exclusive alternative strategies for growth for the underdeveloped countries.The difference between them, as it generally happens with such formulations ,is with regards to their respective assumptions.Balanced growth theories implicitly assume lack of a motivational problem and imperfect knowledge with regard to the constraint’s operating on the growth process .Unbalanced growth protagonist question those assumptions .They argue that because of imperfect knowledge with regard to the constraint’s as well as the possibility of modifying them through the growth process, it is not possible to formulate a priori any unique maximum development path ;it is only by adequately motivating the growth process that the maximum attainable growth can be known as well as realized.A certain unbalance they argue , is necessary for motivating the process. What they fail to realize is that even to attain this unbalance, a certain balance of consistency among various variables is necessary. Further , since the rationale for creating unbalance lies in generating forces which can correct this unbalance , it is also necessary to have some idea about the nature of the balance that is sought to be attained by a process of Unbalanced growth. Thus, there does not seem to be any basic conflict between these two formulations of the growth strategy.
2a Growth and equity debate:

This presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities);, while the fourth is less generally agreed but is strongly supported by the united nations Economics commission for latin America and the Caribbean (ECLAC): the need for the rapid, large-scale spread of technology. Finally, notes the instrumental differences between the ECLAC and neo-liberal approaches in seven specific areas of economic policy. For example, the neo-liberal approach gives priority to the deregulation and liberalization of markets, the neutrality of the instruments used, and some degree of passivity on the part of the State. The ECLAC approach, in contrast, calls for selective action by the State to make up for the most serious flaws and shortcomings in the factor markets, without which it is considered unlikely that the region can attain the high economic growth rates which past history has shown to be within the reach of late-industrializing countries, while it is even more unlikely that such growth can be attained with equity

2b Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution. WHILE Growth or Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time.

2c. According to recent study by international monetary fund (IMF) there is a negative relationship between inequality and Economics growth. An increase inequality is harmful to economic growth in the sense that inequality reduces the opportunity available to the most disadvantage persona in the society.

Moreover, most study shows that the most negative effect of inequality on is caused by the system inefficiency which affect the lowest income individuals ( those at the bottom of income distribution)

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

1. Strategies of Balanced and Unbalanced Economic Growth!
Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a balanced one.

Strategy of Balanced Growth:
We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.
In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.
As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.
Size of Market and Inducement to Invest:
Investment means the expenditure on the making and installation of capital goods, e.g.,. construction of factories and the making of machines and their installation, execution of irrigation and power projects, the construction of roads, railway, etc. Obviously, an entrepreneur will be induced to invest in factories, machinery, etc., if he expects sufficient return on his investment. Businessmen will have incentive to invest only from a motive of earning a profit.
It is the expectation of profit which is a fundamental factor influencing the amount of investment in a country at a given time. In a poor country, the low level of investment is due to low expectations of profit because of less demand for goods or a small size of the market. Let us understand clearly why there is less inducement to invest in a poor country. It is easily understandable that, in under-developed countries, there is a great need for capital for economic development.
People are too poor even to have two square meals a day or a reasonable housing accommodation or clothing to cover their bodies. Hence, there is an urgent need for large-scale production of consumers’ goods, but it cannot be done without the production and use of capital goods in large quantities. Agricultural improvements, the establishment and expansion of industries, the optimum use of the natural resources and harnessing the natural re­sources into the service of the people, all require capital. The need for capital can be great but the inducement to invest can be weak.
The level of investment depends not on the need for capital but on the inducement to invest in the form of attraction to earn profit from the capital invested. Without reasonable expectation of profit, much capital will not flow into investment.
External Economies and Balanced Growth:
It seems to be proper to refer in this con­nection to external economies. When one industry creates demand for another, it will be prof­itable to the other industry. When one industry benefits from the growth of another industry, then we say that external economies are available from one industry to another.
It is to be noted that here we do not use the term ‘external economies’ in the sense in which Marshall used it. By ‘external economies’ Marshall meant those economies which arise from the localisation of a certain industry in a particular place and these economies are enjoyed by each firm in the industry by the establishment of numerous firms there.
Hirschman’s Strategy of Unbalanced Growth:
Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.
Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.
As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.
After all, he points out the industrialised countries did not get to where they are now through “balanced growth.” True, if you compared the economy of the United States in 1950 with the situation in 1850, you will find that many things have grown, but not everything grew at the same rate throughout the whole century. Development has proceeded “with growth being communicated from the leading sectors of the economy to the followers, from one industry to another; from one firm to another.”
An under-developed country may follow the method of unbalanced growth by undertaking initial investment either in social overhead capital or the directly productive activities. Whichever the type of investments it will yield an ‘extra dividend’ of induced decisions resulting in additional investment and output. He contends that social overhead capital, and directly pro­ductive activities cannot be expanded simultaneously because of the limited ability to utilise resources.
Thus, the planning problem is to determine the sequence of expansion that will maxi­mize induced decision-making. Balanced growth (of social overhead capital and directly pro­ductive activities) is not only unattainable in most under-developed countries it may also not be desirable. The rate of growth is likely to be faster with crucial imbalances precisely because of “the incentives and pressures” it sets up.

2. Equity in economics is defined as process to be fair in economy which can range from concept of taxation to welfare in the economy and it also means how the income and opportunity among people is evenly distributed.
While
Economic growth is an increase in the production of goods and services in an economy.Increases in capital goods, labor force, technology, and human capital can all contribute to economic growth. It is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.

Growth strategies refers to economic policies
and institutional arrangements aimed at achieving economic convergence with the living
standards prevailing in advanced countries. Africa and parts of Asia has been rot with underdevelopment and most of this is as a result of the policies they adopts. The Economic policies “and” the institutional arrangements of an Economy are vitally important. As a rule of thumb, whatever growth strategy that is developed and adopted has to be one based on the research of the Countries Macroeconomics space as well as it’s political space, so as to adopt strategies that work and can bring effectiveness as well as efficiency.

So we would look at the different Growth Strategies that exist within Economies, Some have become irrelevant in describing the means for Development while some are still widely practiced

1. Balanced Growth Strategy:

Balanced growth has at least two different meanings in economics. In macroeconomics, balanced growth occurs when output and the capital stock grow at the same rate. This growth path can rationalize the long-run stability of real interest rates, but its existence requires strong assumptions. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. The article reviews the balanced growth debate and the extent to which it has influenced development policies.

One might also view Balanced Growth Strategy as a specific type of economic growth that is sustainable in the long term. It is sustainable in terms of low inflation, the environment and balance between different sectors of the economy such as exports and retail spending. Balanced growth is the opposite of volatile boom and bust economic cycles.

2. Unbalanced Growth Strategy

Unbalanced growth theory encourages investment in a specific industry instead of a string of different industries. This theory is primarily associated with Hirschman. It advocates using scarce resources and investing them in certain strategic industries.

Albert Hirschman’s unbalanced growth hypothesis suggests that a developing economy can promote economic growth by initially investing in industries with high backward and forward linkages. In the case of Chinese economic policy today, one application would be the continued presence of the state in high-linkage sectors and the strategic withdrawal of the state from low-linkage sectors. The evidence shows that while the degree of linkage plays an important role in generating economic growth in China, province-specific withdrawal strategies for the state sector have no effect on economic growth.

While unbalanced growth theory refers to development as a series of disequilibria, balanced growth theory treats development as a dynamic concept.

Export Growth Strategy

Export-led growth occurs when a country seeks economic development by engaging in international trade.
The export-led growth paradigm replaced the import substitution industrialization paradigm. This is what many interpreted as a failing development strategy. While an export-led development strategy met with relative success in Germany, Japan, and East and Southeast Asia, current conditions suggest that a new development paradigm is needed

The Human Development strategy

The human development approach, in contrast, challenges the basic assumptions on
which much of development economics rests. Above all, following the work of Amartya Sen taught in class, the process of development is seen as a process of expanding the
“capabilities” of people.
That is, the objective of development is not to increase output but to enable people to increase their range of choice, to do more things, to live a long life, to escape avoidable illness, to have access to the world’s stock of knowledge, and so forth

This new approach was first recognised by the United Nations system in the 1988 report of the Committee for Development Planning. A year later, under the leadership of
Mahbub ul Haq, the human development approach was endorsed by the United Nations Development Programme (UNDP).

Growth and Equity debate can be understood when we look at Kuznets Curve

Kuznets’ work on economic growth and income distribution led him to hypothesize that industrializing nations experience a rise and subsequent decline in economic inequality, characterized as an inverted “U”—the “Kuznets curve.”
He thought economic inequality would increase as rural labor migrated to the cities, keeping wages down as workers competed for jobs. But according to Kuznets, social mobility increases again once a certain level of income was reached in “modern” industrialized economies, as the welfare state takes hold.However, since Kuznets postulated this theory in the 1970s, income inequality has increased in advanced developed countries—although inequality has declined in fast-growing East Asian countries.

In summary the Growth and Equity debate is of the opinion that Growth and equity are two conflicting objectives as expressed in Kuznets curve.

What’s the difference between Growth and Equity?

Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used. In economics, growth is commonly modeled as a function of physical capital, human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital, and raw materials, will lead to increased economic output

Economic equity is defined as the fairness and distribution of economic wealth, tax liability, resources, and assets in a society. Sustainable development is development that meets the needs of the present, without compromising the ability of future generations to meet their own needs (Brundtland et al. 1987). Together these concepts promote a society where individuals are able to have their needs met intertemporally in a manner consistent with sustainable environmental resource use in each period and across periods.

Can Growth exist with inequality?
Yes

The relationship between income inequality and economic development has popularly been characterized by the Kuznets’ inverted-U curve, which argued that income inequality tends to increase at an initial stage of development and then decrease as the economy develops, implying that income inequality will drop as Development increases.

Obetta Kingsley
2018/249137
Department: Economics
Eco 361

1. What do you understand about growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

ANSWER
Growth strategies refer to economic policies and institutional structures aimed at achieving higher living standards prevailing in advanced countries. They are economic measures and policies implemented by the government to achieve economic growth. Most times, economic growth strategies involve reforms and domestic knowledge. It takes a lot of structural and institutional reforms to achieve economic growth.

THE GROWTH STRATEGIES THAT ENHANCE GROWTH AND DEVELOPMENT IN DEVELOPING COUNTRIES

There are several growth strategies that provide a great stimulus for economic growth and development. They include:

BALANCED GROWTH
Balanced growth advocates the development of all sectors of the economy simultaneously. It aims at harmony, consistency, and equilibrium of sectoral growth. Balanced growth is a long-term strategy as the development of all the sectors of the economy is possible only in the long run.

As expected, the implementation of balanced growth requires a huge amount of capital and developing countries don’t have sufficient human and capital resources for simultaneous investment in different industries. However, most developing countries receive funds and loans from international organizations to champion the activities of development. In addition, foreign direct investment and privatization also contribute significantly to the growth of distinct sectors.

UNBALANCED GROWTH

The strategy of unbalanced growth proposes the creation of disharmony, inconsistency, and disequilibrium in the development process of the sectors of the economy. Unbalanced growth suggests that economic policies and measures should focus investment only on leading sectors of the economy.

Hence, the investment made in selected sectors leads to new investment opportunities. Unbalanced growth requires less amount of capital, and is a short-term strategy.

2. What do you understand by the growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If not, why?

ANSWER

GROWTH VS EQUITY DEBATE

The debate on growth vs equity is an age-old issue. Several economists have made their contributions to this debate and while many support the supremacy of growth, some other economists like Amartya Sen believe that we should not focus on just growth, but other variables that make for an equitable society. He indicated that certain variables such as inflation, governance, and corruption hinder EQUITY.

The underlying question this debate leaves us with is this – Is growth in conflict with equity or poverty reduction? Normally, we expect that as GDP increases and we experience a high level of economic growth, more people should cross over from the poverty line and that infrastructure, as well as level of education, should increase.

However, this is not always the case in developing countries. We continue to observe that even with increased production and GDP, the gap between the rich and the poor continues to increase. Nevertheless, the relationship between equity and growth cannot be ignored. Both variables move hand in hand to promote economic development.

According to recent research conducted by an NBER associate – Robert Barro, growth tends to fall with greater inequality. Robert Barro studied a broad number of countries between 1960 and 1995 and he observed that income-equalizing policies would create more room for growth in developing countries.

The KUZNET curve also studies the relationship between inequality and growth. We observe that inequality increases first and later decreases in the process of economic development. Robert Barro also revealed that advanced technologies significantly raise the level of inequality.

In turn, we also observe that growth-inclined policies have a high impact on the level of inequality. Hence, there is a trade-off between growth and inequality. Such that, GDP growth seems to account for the widening gap between the income of the rich and the income of the poor. On the other hand, growing income inequalities also undermine the activities of growth. Increasing inequality leads to weakening incentives as well as increasing unemployment.

Hence, by implementing broader policies that not only accommodate economic growth but also take into account factors that redistribute income and reduce the gap between the rich and the poor.

DIFFERENCES BETWEEN GROWTH AND EQUITY

Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.

Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

CAN GROWTH EXIST WITH INEQUALITY?
Certainly, significant growth can exist with inequality. If we refer to growth as the persistent increase in the production of goods and services in a country within a period of time. Then, definitely, growth can exist with inequality. We can observe a persistent increase in GDP and still observe an increasing disparity in income.

Since 1990, economists have begun to pay attention to the ever-increasing gap between the rich and the poor. And while inequality impacts negatively on the growth process. We can certainly say that significant growth can exist with inequality. In fact, the Kuznet curve depicts such an example where increasing growth stimulates this inequality. However, inequality is reduced in the process of economic development.

This is why economic development is the ultimate goal of every nation. As development accounts for different variables such as living standards, security, equitable distribution of income, etc.

In the real world, truly economic growth can be observed with inequality. For example, the activities of monopolists can significantly stimulate growth and increase inequality as well. Inflation is an interesting economic variable that affects income by reducing purchasing power. However, inflation most of the time further widens the gap between the rich and the poor.

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria?

What is Growth Strategy?
A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals.
A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire organization.

The growth strategy is not a magic button. If you want to increase the growth, productivity, activation rate, or customer base, then you have to develop a strategy relevant to your product, customer market, any problem that you’re dealing with.

b.Balanced growth
this is a growth strategy where all the sectors of the economy are carried along, there are equal growth, no sector is neglected, but this strategy can slow economic growth since some of the sectors that are lagging behind are being financed by the resources generated by the sectors that are doing well.
Unbalanced growth
This is a type of growth strategy where some of the economic sector are concentrated on, not all the sectors are carried a lot, there are no equal growth. The sectors that are doing well are invested more on and then neglect the ones that has slow growth.
Others include:
Product Expansion
If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
Diversification
The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
Market Penetration
This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
Market Development
Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Growth is an increase in the level of national income over a period of time, while Equity refers to Equitable distribution of the national income .
For every nation, it is very important to have growth alongside with Equity.
If there’s only growth without equity in an Economy, it means that everyone is not enjoying the benefits of growth.
Hence, planners has to ensure that prosperity of economic growth should reach everyone. So the government should ensure appropriate allocation of wealth among the people to reduce economic inequality in the Economy.
Growth and Equity is a more rational and desirable objectives of planning for a nation.
The differences
Growth refers to the increase in national income over a long period of time,while equity refers to an equitable distribution of this income so that the benefits of higher economic growth can be passed on to all sections of population to bring about social justice. Growth is desirable as you must have the cake to distribute it but growth in itself does not gurantee the welfare of society. Growth is assessed by the market value of goods and services produced in the economy (GDP) and it does not guarantee an equitable distribution of the income from this production. In other words, the major share of Gross Domestic Product (GDP) might be owned by a small proportion of population which may result in exploitation of weaker sections of society. Hence, growth with equity is a rational and desirable objective of planning. This objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth in income.

Can growth exist with inequality?
Answer is No
Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth.But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.

At a theoretical level, the prevailing view in the 1950s and
60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.

However, several voices have subsequently warned of the negative effects of inequality on growth.

One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations.
Greater inequality can also negatively affect growth if, for example, it encourages populist policies.
Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth; in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.

Odo Onochie Godsmark
2017/249540
Economics department
Eco 361 Assignment

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria

answer

Growth Strategies are measures, procedures and processes taken to prioritize and support “good growth” in an area.
The synchronized application of capital to a wide range of different industries is called balanced growth by its advocates. The term BG is used in different senses. Paul Rosenstein Rodan, one of
the original proponents of the doctrine, had in mind the scale of investment necessary to overcome indivisibilities on both the supply and the demand sides of the development process.
Indivisibilities on the supply side refers to the ‘lumpiness’ of capital (especially social overhead capital) and the fact that only investment in a large number of activities simultaneously can exploit the various external economies of scale.
Horizontal vs. Vertical Balance:
BG, therefore, has both horizontal and vertical aspects. On the one hand it recognises
indivisibilities in supply and complementarities of demand. On the other hand it highlights the importance of achieving balance between such sectors as agriculture and industry, between the consumer goods industries and the capital goods industries, and between social overhead capital (SOC) and directly productive activities (DPA). Two Versions of Balanced Growth:
Thus, there are two versions of the doctrine of BG. One refers to the path of development and the pattern of investment necessary to ensure smooth functioning of the economy. The other refers to the scale of investment necessary to overcome indivisibilities in the production process on both sides of the market. Nurkse’s exposition of BG embraces both versions of the doctrine, while Rosen Steiner concentrates on the necessity for a ‘big-push’ to overcome the existence of indivisibilities. On the demand side, the division of labour is limited by the size of the market and if the market is limited, certain activities may not be economically viable. So, several activities are to be set up simultaneously so that each can provide a market for the others’ products. In addition, activities that are not profitable, when considered in isolation, will become so when considered in the context of a large-scale development programme.
For this it is necessary that industrial enterprises are of a certain minimum size so that they can operate profitably. On the supply side, the argument for a ‘big push’ is inseparably linked up with the existence of external economies of scale. In the context of development economics, the external economies refer mainly to the impact of a large investment programme on the cost and profit functions of the participating firms. In the presence of external economies, in either sense, the social return of an activity will exceed the private return Intersectoral Balance:
The second version of the theory of BG stresses the necessity of balance among different sectors of the economy. The objective is to prevent development of bottlenecks in some sectors, which may act as an obstacle to development and excess capacity in others which may be wasteful. For example, a shortage of raw jute or raw cotton will hinder the development of the jute or the cotton textile industries.

Unbalanced Growth:

A. O. Hirschman and his followers showed more faith in market forces but stressed the virtual impossibility of BG in the narrow sense of the simultaneous establishment of many industries all
at a time. He pointed out that most poor countries lack the resources for investing in more than one or very few modern projects at any given time and, therefore, can aim at BG only in the long run, through a sequential process of building first one, then another plant, with each step correcting the worst imbalance in order to approach a more balanced structure gradually. He called that process ‘unbalanced growth’-and argued that market forces are likely to aid it, because imbalances create shortages, whose impact on prices render their relief or elimination more profitable.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

answer

Growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product or gross domestic product (GDP), although alternative metrics are sometimes used.

While Equity means fairness or evenness, and achieving it is considered to be an economic objective. Despite the general recognition of the desirability of fairness, it is often regarded as too normative a concept given that it is difficult to define and measure. However, for most economists, equity relates to how fairly income and opportunity are distributed between different groups in society. The opposite of equity is inequality.

The relationship between economic growth and inequality has been studied by economists for more than a century. Nonetheless, this issue is still far from resolved and, as explained in this article, the answer to the question of how unequal household income affects a country’s growth is still not clear, both from a theoretical and also empirical perspective.

In general terms, a negative relationship can be observed between the level of inequality1 and economic growth (see the first graph). But, as readers are only too well aware, the fact that a correlation exists does not necessarily mean there is a cause/effect relationship.

At a theoretical level, the prevailing view in the 1950s and
60s was that greater inequality could benefit growth, essentially through two mechanisms. The first is based on the fundamental idea that inequality benefits economic growth insofar as it generates an incentive to work and invest more. In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.

However, several voices have subsequently warned of the negative effects of inequality on growth.

One of the main arguments states that greater inequality can reduce the professional opportunities available to the most disadvantaged groups in society and therefore decrease social mobility, limiting the economy’s growth potential. In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants. For this reason, countries with a higher degree of inequality tend to have lower levels of social mobility between generations (see the second graph).

Greater inequality can also negatively affect growth if, for example, it encourages populist policies (see the article «Inequality and populism: myths and truths» in this Dossier). Along the same lines, another source of discussion is whether an increase in inequality can lead to an excessive rise in credit, which ends up acting as a brake on growth (see the article «Can inequality cause a financial crisis?» in this Dossier).

Beyond the theoretical sphere, many authors have attempted to provide empirical evidence of inequality’s effects on economic growth. The findings are not always conclusive, however. This is due to the fact that it is difficult to isolate the impact of inequality on economic growth from the impact of other factors which may also be influential. In fact, this is the main criticism directed at empirical studies based on cross-country growth regressions and such studies are discussed below, so the findings need to be interpreted with due caution.

Broadly speaking, there is no single, universal mechanism behind the relationship between inequality and growth in fact, this relationship may not always be the same. Nevertheless, a relatively generalised pattern can be observed depending on a country’s degree of development. When an economy is at an early stage of its development, the return from physical capital tends to be higher than the return provided by human capital and greater inequality can therefore trigger higher growth. However, as an economy achieves a more advanced stage of development, the return from physical capital tends to decrease while that from human capital tends to rise, so increases in inequality can negatively affect growth.

A recent study by the IMF suggests that an increase in inequality is harmful to economic growth. By way of example, the historical relationship (1980-2012) observed between inequality and growth in the 159 countries analysed shows that, if the income share of the richest 20% of the population increases by 1 pp (a rise in inequality), GDP growth slows down by 0.08 pps during the next five years. On the other hand, if the income share of the poorest 20% of the population increases by 1 pp (a reduction in inequality), GDP growth is 0.38 pps higher during the next five years on average.

Along the same lines, a study by the OECD estimates that an increase in the Gini coefficient of three points (which coincides with the average increase recorded in OECD countries in the last two decades) would have a negative impact on economic growth of 0.35 pps per year over 25 years, representing a cumulative loss of 8.5% of GDP. Moreover, the study shows that the most negative effect on growth is caused by the inequality affecting the lowest income individuals (those at the bottom of income distribution). For example, if the bottom inequality in the UK were changed to be like that in France, or that of the US to become like that of Japan or Australia, the average annual growth in GDP would improve by almost 0.3 pps over the next 25 years, representing a cumulative rise in GDP of more than 7%. Once again, it should be noted that these estimates are for illustrative purposes only and must not be interpreted as the actual effect a change in equality can have on growth in each country.

Lastly, the report concludes that one of the key channels through which inequality acts as a brake on economic performance is by reducing the investment opportunities, primarily in education, of the poorest segments of the population. In fact, social mobility has deteriorated significantly in countries such as the US, where the percentage of children who receive a higher income than their parents has fallen from 90% for the cohort of 1940 to 50% for people born in the 1980s.

In fact, less social mobility can act as an indicator of a rise in inequality. Several empirical studies have revealed a negative relationship between inequality and social mobility (see the second graph) precisely because inequality, particularly when this occurs within the lowest income groups, reduces the chances of the more disadvantaged segment of the population to invest in education, which is the main way to increase social status. Spain is no exception: university graduates from a lower social background record rates of access to professional and managerial jobs that are 14 times higher than those who do not finish secondary education. By way of conclusion, it should be noted that, although inequality is, to some extent, an inevitable phenomenon in modern economies, the latest empirical evidence suggests that, if inequality is reduced, particularly among the lowest income groups, this has a positive effect not only in terms of social justice but also in terms of economic growth.

Michael-Atu ifunanya
2018243767
Economics Education
No1. A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals. A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire organization. The growth strategy is not a magic button. If you want to increase the growth, productivity, activation rate, or customer base, then you have to develop a strategy relevant to your product, customer market, any problem that you’re dealing with.
Different growth strategy
i. Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously. This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest. Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory. No importance should be given to promoting exports.
ii. Unbalanced growth strategy is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan. The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capital growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth.
iii. Market Penetration: This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
iv. Market Development: Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product. Product Expansion: If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
v. Diversification: The goal is to sell novel products to new markets.Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
No.2 Growth and Equity Debate in Development Economics is simply an argument going on on whether an economy can be developed in the presence of growth and Equity. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors.
The differences between growth and Equity in an economy are as follows;
An equity-conscious government will try to lower the value of demand or money supply as it implements policies pursuing economic growth or other growth while a growth conscious government will try to increase it’s demand regardless of the people’s welfare.
Yes, growth can exist with equality though for most countries, economic performance on equality is far more important to the well-being of their citizens than GDP growth. I believe that once a balance is created between growth and equity the people would not suffer and as well the GDP would not suffer.
The conclusion is that there is no inevitable conflict between these two goals provided that economic policy promotes the areas of complementarity between growth and equity.

A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services
BALANCE AND UNBALANCED GROWTH STRATEGY.
Strategies of Balanced and Unbalanced Economic Growth!

Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.

Strategy of Balanced Growth:

We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.

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This completes the vicious circle of poverty. In a poor country, the size of the market for goods is small so that sufficient opportunities for profitable investment in industries are lacking. This is the main reason for lack of inducement to invest which we discuss presently.

Size of Market and Inducement to Invest:

Investment means the expenditure on the making and installation of capital goods, e.g.,. construction of factories and the making of machines and their installation, execution of irrigation and power projects, the construction of roads, railway, etc. Obviously, an entrepreneur will be induced to invest in factories, machinery, etc., if he expects sufficient return on his investment. Businessmen will have incentive to invest only from a motive of earning a profit.

It is the expectation of profit which is a fundamental factor influencing the amount of investment in a country at a given time. In a poor country, the low level of investment is due to low expectations of profit because of less demand for goods or a small size of the market. Let us understand clearly why there is less inducement to invest in a poor country. It is easily understandable that, in under-developed countries, there is a great need for capital for economic development.

People are too poor even to have two square meals a day or a reasonable housing accommodation or clothing to cover their bodies. Hence, there is an urgent need for large-scale production of consumers’ goods, but it cannot be done without the production and use of capital goods in large quantities. Agricultural improvements, the establishment and ex­pansion of industries, the optimum use of the natural resources and harnessing the natural re­sources into the service of the people, all require capital. The need for capital can be great but the inducement to invest can be weak.

The level of investment depends not on the need for capital but on the inducement to invest in the form of attraction to earn profit from the capital invested. Without reasonable expectation of profit, much capital will not flow into investment.

The quantity of profitable investment in a country depends on the size of the market. Adam Smith said, “Division of labour is limited by the size of the market.” We can say in the same manner .that inducement to invest depends on the size of the market, that is, on the level of demand. The small size of the market or the low level of demand for the products concerned discourages the entrepreneurs from investment in industries.

This will be clear from an illustration. In a modern dairy, milking, filling up bottles and their loading all these operations are done with the aid of automatic machinery. Will the instal­lation of such machinery in every Indian town be profitable for individual entrepreneurs?

Obviously, it will not be profitable. Per capita income being low in India, the demand for milk in each town will be too small to make the full use of such automatic machinery. Such costly plant and machinery will remain mostly idle and there will be work for such machinery only for a few hours during a week. This means a great waste of valuable capital asset.

Which entrepreneur dare start such a business?

As an inducement to invest, the entrepreneurs should be sure that the capital equipment will be profitably employed. This will be possible only if the machinery can be kept in continuous use, and this cannot be done unless there is sufficient demand for the product made by this machinery.

Take another example. Suppose a cloth of a special design is very attractive and it can fetch a very high price. But it will not be economical to install a big machine to make a cloth of a special design, because owing to its high price and low incomes of the people, there will not be sufficient demand for this type of cloth, i.e., the market will be too small.

ADVERTISEMENTS:

In America, the cars are cheap but they are very expensive in India. What is the reason? The one reason is that the demand for cars in India as compared with that in America is so small that manu­facturers of cars cannot be induced to make them in large quantities which would have made them cheap on account of the economies of scale. Examples can be multiplied. The conclusion is clear that inducement to invest depends on the size of the market or the purchasing power of the people.

It may be clearly understood that in the underdeveloped countries, demand for consumer goods cannot be increased merely by the expansion of money supply in the country. The real demand will increase only if there is increase in the productivity per worker and as a result thereof there is increase in the real per capita income. But mere expansion of money supply and thus putting more money into people’s pockets demand can increase only in the form of money which will result in inflation or higher prices, but not increase in the real aggregate demand.

Similarly, the demand for goods or the size of the market cannot be large merely because size of a country is big or its population is large. If the purchasing power of the people is low because of their extreme poverty, the demand for goods in that country will be small or the size of the market will be small even though the country is big in size or its population is large.

Further, in poor countries, where the people’s purchasing power is low on account of low per capita income, the demand for goods, and hence the size of the market, cannot be increased by high pressure salesmanship and vigorous advertising campaigns. There should be enough people to buy them. Thus, it is clear that, in the under-developed countries, the demand for goods, or the size of the market, cannot be increased by increasing money supply, or by increase in population or by salesmanship and advertisement or the large size of the country.

The size of the market can be increased only by increasing productivity. As Nurkse puts it, “The crucial determinant of the size of the market is productivity.” Increase in productivity will increase people’s incomes and hence their purchasing power. The level of people’s income in any country can be raised and consequently their purchas­ing power can be increased by increasing productivity and aggregate output or, in other words, by increasing productive employment.

A situation of higher productivity, the greater employment and incomes and high purchasing power of the people will provide a profitable field for invest­ment. It may be said that the size of the market can be enlarged by lowering the price of the products. But this is no solution of the problem. The real solution of the problem is only an increase in productivity of the people by raising productive-employment. Only as a result of increase in productivity, there is increase in income and increase in purchasing power which will increase demand and enlarge the size of the market.

Say’s law propounded by classical economists, tells us that production or supply creates its own demand, But this law cannot be accepted in the sense that the production of cloth creates its own demand because the workers engaged in the making of cloth will not spend their entire earnings on the purchase of cloth. In the same way, production of shoes cannot create its own demand.

The reason lies in the variety of man’s demands. How­ever, Say’s law can be applied to some extent to the developing countries. If, in the developing countries, investment is made simultaneously in a large number of industries, incomes of a large number of workers engaged in these industries will increase.

:

This will create demand for goods produced by one another. In other words, if investment is made simultaneously in a number of industries and production is increased, the supply will create its own demand. The Say’s law will hold good in such a situation.

Thus, we see that investment in a particular industry and the resultant production or supply cannot create its own demand but simultaneous investment in a number of industries can. As Nurkse puts it, “An increase in production over a wide range of consumables, so proportioned as to correspond with the pattern of consumers’ preference, does create its own demand.”

Nurksian Strategy of Balanced Growth:

We have explained above how, in the underdeveloped countries, the small size of the market or the limited demand for goods acts as a hindrance in the way of their economic growth or capital formation. When an entrepreneur wants to set up a factory or install plant and ma­chinery, he makes sure whether there is enough demand for the goods he proposes to manu­facture and whether the investment will be profitable.

We have seen that owing to low demand for industrial goods investment is discouraged because of low profitability. That is why the vicious circle of poverty operates on the demand side of capital formation. The people in the under-developed countries are poor and their per capita income is low.

This keeps the demand limited and size of the market small. Since the market is small, the entrepreneurs are discouraged from investment in plant and machinery in which only large-scale production is possible and economical.

:

The result is that capital formation in the country is discouraged. Owing to lack of capital, productivity is low and since productivity per worker is low, the per capita income is low which means there is poverty. This is how the vicious circle of poverty operates in the under-developed countries. According to Nurkse, it is the vicious circle operating in the underdeveloped countries, which stands in the way of their economic development, and accordingly, if this vicious circle can be broken, economic development will follow.

The operation of the vicious circle can also be described thus:

Inducement to invest depends ultimately upon demand, i.e., the size of the market. And the size of the market in turn depends upon productivity, because the capacity to buy is ultimately based on the capacity to produce. Productivity, in its turn, largely depends on the use of capital. But, for an entrepreneur, the small size of the market will limit the use of capital so that productivity will remain low, thus keeping the size of the market small. The vicious circle will then repeat itself. This vicious circle of poverty, according to Nurkse, can be broken by a simultaneous investment in a large number of industries i.e., by a balanced economic growth.

We have explained above how Say’s law cannot be helpful in underdeveloped countries, if investment is made only in one industry. The output of any single industry newly set up with capital equipment cannot create its own demand.

Human wants being diverse, the people engaged in the new industry will not wish to spend all their income on their own products. Suppose a shoe manufacturing industry is set up. If in the rest of the economy, nothing happens to increase productivity and employment, and hence the buying power of the people, the market for the additional output of shoes is likely to be deficient.

People outside the shoe industry will not give up the consumption of essential food, clothing, etc., to create a sufficient demand for shoes every year. The supply of shoes is likely to outrun demand, and if investment is confined only to one particular industry, it cannot prove fruitful.

Strategies of Balanced and Unbalanced Economic Growth!

Currently, there are, among the development specialists, two major schools of thought regarding the strategy of economic development that should be adopted in developing countries. On the one side, there are economists like Ragnar Nurkse and Rosenstein-Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced devel­opment of the various sectors of the economy.

They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries. Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries. In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a bal­anced one. We may now consider both these views at some length.

Strategy of Balanced Growth:

We also pointed out how difficult it was to break this vicious circle. We explained there how the vicious circle of poverty operates both on supply and demand sides of capital formation. Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation. It will be useful to have again a cursory look at this vicious circle.

In an underdeveloped country, the level of per capita income is low which means that the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low.

As a result of low demand for goods, the inducement for investment is less and capital equipment per capita (i.e., per worker) is small. Since the amount of capital per capita is small, productivity per worker is low. Low per capita productivity means low per capita income, i.e., poverty.

ADVERTISEMENTS:

This completes the vicious circle of poverty. In a poor country, the size of the market for goods is small so that sufficient opportunities for profitable investment in industries are lacking. This is the main reason for lack of inducement to invest which we discuss presently.

Size of Market and Inducement to Invest:

Investment means the expenditure on the making and installation of capital goods, e.g.,. construction of factories and the making of machines and their installation, execution of irrigation and power projects, the construction of roads, railway, etc. Obviously, an entrepreneur will be induced to invest in factories, machinery, etc., if he expects sufficient return on his investment. Businessmen will have incentive to invest only from a motive of earning a profit.

It is the expectation of profit which is a fundamental factor influencing the amount of investment in a country at a given time. In a poor country, the low level of investment is due to low expectations of profit because of less demand for goods or a small size of the market. Let us understand clearly why there is less inducement to invest in a poor country. It is easily understandable that, in under-developed countries, there is a great need for capital for economic development.

People are too poor even to have two square meals a day or a reasonable housing accommodation or clothing to cover their bodies. Hence, there is an urgent need for large-scale production of consumers’ goods, but it cannot be done without the production and use of capital goods in large quantities. Agricultural improvements, the establishment and ex­pansion of industries, the optimum use of the natural resources and harnessing the natural re­sources into the service of the people, all require capital. The need for capital can be great but the inducement to invest can be weak.

The level of investment depends not on the need for capital but on the inducement to invest in the form of attraction to earn profit from the capital invested. Without reasonable expectation of profit, much capital will not flow into investment.

The quantity of profitable investment in a country depends on the size of the market. Adam Smith said, “Division of labour is limited by the size of the market.” We can say in the same manner .that inducement to invest depends on the size of the market, that is, on the level of demand. The small size of the market or the low level of demand for the products concerned discourages the entrepreneurs from investment in industries.

This will be clear from an illustration. In a modern dairy, milking, filling up bottles and their loading all these operations are done with the aid of automatic machinery. Will the instal­lation of such machinery in every Indian town be profitable for individual entrepreneurs?

Obviously, it will not be profitable. Per capita income being low in India, the demand for milk in each town will be too small to make the full use of such automatic machinery. Such costly plant and machinery will remain mostly idle and there will be work for such machinery only for a few hours during a week. This means a great waste of valuable capital asset.

Which entrepreneur dare start such a business?

As an inducement to invest, the entrepreneurs should be sure that the capital equipment will be profitably employed. This will be possible only if the machinery can be kept in continuous use, and this cannot be done unless there is sufficient demand for the product made by this machinery.

Take another example. Suppose a cloth of a special design is very attractive and it can fetch a very high price. But it will not be economical to install a big machine to make a cloth of a special design, because owing to its high price and low incomes of the people, there will not be sufficient demand for this type of cloth, i.e., the market will be too small.

In America, the cars are cheap but they are very expensive in India. What is the reason? The one reason is that the demand for cars in India as compared with that in America is so small that manu­facturers of cars cannot be induced to make them in large quantities which would have made them cheap on account of the economies of scale. Examples can be multiplied. The conclusion is clear that inducement to invest depends on the size of the market or the purchasing power of the people.

It may be clearly understood that in the underdeveloped countries, demand for consumer goods cannot be increased merely by the expansion of money supply in the country. The real demand will increase only if there is increase in the productivity per worker and as a result thereof there is increase in the real per capita income. But mere expansion of money supply and thus putting more money into people’s pockets demand can increase only in the form of money which will result in inflation or higher prices, but not increase in the real aggregate demand.

Similarly, the demand for goods or the size of the market cannot be large merely because size of a country is big or its population is large. If the purchasing power of the people is low because of their extreme poverty, the demand for goods in that country will be small or the size of the market will be small even though the country is big in size or its population is large.

Further, in poor countries, where the people’s purchasing power is low on account of low per capita income, the demand for goods, and hence the size of the market, cannot be increased by high pressure salesmanship and vigorous advertising campaigns. There should be enough people to buy them. Thus, it is clear that, in the under-developed countries, the demand for goods, or the size of the market, cannot be increased by increasing money supply, or by increase in population or by salesmanship and advertisement or the large size of the country.

The size of the market can be increased only by increasing productivity. As Nurkse puts it, “The crucial determinant of the size of the market is productivity.” Increase in productivity will increase people’s incomes and hence their purchasing power. The level of people’s income in any country can be raised and consequently their purchas­ing power can be increased by increasing productivity and aggregate output or, in other words, by increasing productive employment.

A situation of higher productivity, the greater employment and incomes and high purchasing power of the people will provide a profitable field for invest­ment. It may be said that the size of the market can be enlarged by lowering the price of the products. But this is no solution of the problem. The real solution of the problem is only an increase in productivity of the people by raising productive-employment. Only as a result of increase in productivity, there is increase in income and increase in purchasing power which will increase demand and enlarge the size of the market.

Say’s law propounded by classical economists, tells us that production or supply creates its own demand, But this law cannot be accepted in the sense that the production of cloth creates its own demand because the workers engaged in the making of cloth will not spend their entire earnings on the purchase of cloth. In the same way, production of shoes cannot create its own demand.

The reason lies in the variety of man’s demands. How­ever, Say’s law can be applied to some extent to the developing countries. If, in the developing countries, investment is made simultaneously in a large number of industries, incomes of a large number of workers engaged in these industries will increase.

This will create demand for goods produced by one another. In other words, if investment is made simultaneously in a number of industries and production is increased, the supply will create its own demand. The Say’s law will hold good in such a situation.

Thus, we see that investment in a particular industry and the resultant production or supply cannot create its own demand but simultaneous investment in a number of industries can. As Nurkse puts it, “An increase in production over a wide range of consumables, so proportioned as to correspond with the pattern of consumers’ preference, does create its own demand.”

Nurksian Strategy of Balanced Growth:

We have explained above how, in the underdeveloped countries, the small size of the market or the limited demand for goods acts as a hindrance in the way of their economic growth or capital formation. When an entrepreneur wants to set up a factory or install plant and ma­chinery, he makes sure whether there is enough demand for the goods he proposes to manu­facture and whether the investment will be profitable.

We have seen that owing to low demand for industrial goods investment is discouraged because of low profitability. That is why the vicious circle of poverty operates on the demand side of capital formation. The people in the under-developed countries are poor and their per capita income is low.

This keeps the demand limited and size of the market small. Since the market is small, the entrepreneurs are discouraged from investment in plant and machinery in which only large-scale production is possible and economical.

The result is that capital formation in the country is discouraged. Owing to lack of capital, productivity is low and since productivity per worker is low, the per capita income is low which means there is poverty. This is how the vicious circle of poverty operates in the under-developed countries. According to Nurkse, it is the vicious circle operating in the underdeveloped countries, which stands in the way of their economic development, and accordingly, if this vicious circle can be broken, economic development will follow.

The operation of the vicious circle can also be described thus:

Inducement to invest depends ultimately upon demand, i.e., the size of the market. And the size of the market in turn depends upon productivity, because the capacity to buy is ultimately based on the capacity to produce. Productivity, in its turn, largely depends on the use of capital. But, for an entrepreneur, the small size of the market will limit the use of capital so that productivity will remain low, thus keeping the size of the market small. The vicious circle will then repeat itself. This vicious circle of poverty, according to Nurkse, can be broken by a simultaneous investment in a large number of industries i.e., by a balanced economic growth.

We have explained above how Say’s law cannot be helpful in underdeveloped countries, if investment is made only in one industry. The output of any single industry newly set up with capital equipment cannot create its own demand.

Human wants being diverse, the people engaged in the new industry will not wish to spend all their income on their own products. Suppose a shoe manufacturing industry is set up. If in the rest of the economy, nothing happens to increase productivity and employment, and hence the buying power of the people, the market for the additional output of shoes is likely to be deficient.

People outside the shoe industry will not give up the consumption of essential food, clothing, etc., to create a sufficient demand for shoes every year. The supply of shoes is likely to outrun demand, and if investment is confined only to one particular industry, it cannot prove fruitful.

But if investment is made simultaneously in a large number of industries, it will provide work for a large number of people producing diverse commodities. It will increase their income and they will be in a position to buy the consumer goods made by one another.

This is how supply can create its own demand (as Say’s Law asserts) through the strategy of balanced growth. The workers employed in different industries become customers of one another’s goods and demand is increased or the size of the market is enlarged.

The expansion of one industry helps in the expansion of others and there is all round growth. This is how the difficulty arising from small size of the market is overcome and the obstacle in the way of economic growth cleared. In Nurkse’s words; “The difficulty caused by the small size of the market relates to individual investment incentives in any single line of production taken by itself.

At least in principle, the difficulty vanishes in the case of different industries. Here is an escape from the deadlock; here the result is an overall enlargement of the market. People, working with more and better tools in a number of complementary projects become each other’s customers. Most industries catering for mass consumption are complementary in the sense that they provide a market for, and thus support, each other. This basic complementarity stems in the last analysis from the diversity of human wants. The case for balanced growth rests on the need for a balanced diet.”

Taken separately, a number of industries may be unprofitable so that the private profit motive would not suffice to induce investment in these industries. However, undertaken together in a synchronized manner, a balanced increase in production would enlarge the size of the market for each firm or industry so that “synchronized undertaking” would become profitable. This wave of capital investment in a number of different industries is called by Nurkse as “balanced growth.”

In this way, as we have already said, the hindrance to economic growth owing to the small size of the market is removed. The aggregate demand is increased owing to simultaneous in­vestment in a large number of industries, because the incomes go up and productivity levels of persons employed in different industries go up.

Hence, the under-development equilibrium trap and the vicious circle of poverty can be broken by balanced growth. If once this circle is broken then, since there is circular connection, this circle will turn from poverty to balanced growth and to all-round development of the economy. In this way, the circle can be given beneficial form.

Now the question arises: Which industries should be selected for investment? The answer is to be found in the above solution offered by Nurkse. Investment should be made simulta­neously in such industries the manufactured products of which are in accordance with the demand or the preferences of the consumers or on which the persons engaged in different industries would spend their incomes.

There should be investment in a large number of com­plementary industries in the sense that persons employed in them become each other’s customers. Only by a simultaneous investment in such industries, production or supply will create its own demand.

Then the question is: How is it to be made sure that simultaneous investment in a large number of industries is actually made? Nurkse answers that, if in the country there are dynamic and constructive entrepreneurs and industrialists, they can be induced to make investment si­multaneously in different industries.

If there is lack of such entrepreneurs, then the government can take the work of balanced growth in its own hands. That is, the government can itself make simultaneous investment in several industries and can thus increase people’s incomes and pro­ductivity.

As a result of investment in several industries, it will be possible to increase the use of capital goods in large quantities which will raise the level of productivity and there will be a large increase in the aggregate output of consumer’s goods and services.

As a result of this, the level of national income will rise which will help to raise the standards of living of the people? In this way, the poverty of the people will be eliminated. What is needed to remove the poverty of the people is to launch an attack on the various sectors of the economy simul­taneously. This will remove the obstacle arising from limited demand or narrowness of the market and the inducement to investment will increase.

External Economies and Balanced Growth:

It seems to be proper to refer in this con­nection to external economies. When one industry creates demand for another, it will be prof­itable to the other industry. When one industry benefits from the growth of another industry, then we say that external economies are available from one industry to another.

We have seen above that it proves profitable to make investment in complementary industries, because people engaged in such industries become one another’s customers or create demand for one another. It is clear, therefore that the doctrine of balanced growth is based on the concept of external economies.

It is to be noted that here we do not use the term ‘external economies’ in the sense in which Marshall used it. By ‘external economies’ Marshall meant those economies which arise from the localisation of a certain industry in a particular place and these economies are enjoyed by each firm in the industry by the establishment of numerous firms there.

But in development economics, by external economies we mean those benefits which accrue to other industries by the establishment of new industries or the expansion of the existing industries. We have seen above how, according to Nurkse’s doctrine of balanced growth, these benefits accrue to the other industries by the establishment of new industries or the expansion of old industries through simultaneous investment in such industries in the form of increased demand or extension of the market.

In fact, the increasing returns which arise from the process of economic growth, are mainly due to the creation of external economies in the form of extension of the market or increase in demand and not due to the external economies mentioned by Marshall such as technical information from the journals, improvement in the technical skill of labour, development in the means of communi­cation and transport, etc. which arise from the location of an industry in a particular place.

It is worthwhile knowing whether, in the balanced growth, investment will be made in agriculture or not. Nurkse has not discussed this point in his book ‘Problems of Capital Formation in Under-developed Countries.’ But later on he made it clear that in his balanced growth strategy, appropriate investment will be made in agriculture.

Thus, he has not ignored agricultural devel­opment in his doctrine of balanced growth. In fact, investment in agriculture is implied in his book referred to above, because he has said that investment would be made in such industries simultaneously as produce goods conforming to consumer’s demand or preferences.

Since when, in the under-developed countries, people will get employment in the various industries, they mostly spend their incomes on the food-grains, investment in agriculture will be necessary to meet their demand and to promote balanced growth.

Nurkse has also not made in his doctrine of balanced growth whether investment should be made in capital goods industries and social overhead capital like transport and communica­tions to promote balanced growth.

Actually, Nurkse has suggested investment in consumer goods industries. But how will the machinery and capital equipment required in these industries are obtained? If they are not to be imported from abroad, they will have to be produced in the country and for that purpose investment will have to be made in their production.

Thus, we see if the doctrine of balanced growth to be fully implemented, then investment will have to be made in consumer goods industries, agriculture, capital goods industries and social overhead capital. But when investment is to be made in all such sectors and industries, then, in order to bring about balanced economic growth, large quantities of resources will be required. It is doubtful if the under-developed countries have the means to mobilise resources in such large quantities.

A Critique of Balanced Growth Doctrine:

Prof. Hans Singer and Albert Hirschman, eminent American economists, have criticized Nurkse’s doctrine of balanced growth. They contend that what is needed is not balanced growth, but a strategy of judiciously-planned unbalanced growth.

According to Singer, balanced growth cannot solve the problem of the under-developed countries, nor do they have sufficient resources to achieve balanced growth. Singer maintains that balanced growth doctrine might be better expressed as follows: “As hundred flowers may grow whereas a single flower would wither away for lack of nourishment.” But where are the resources to grow hundred flowers? Singer argues that the slogan “stop thinking piecemeal and start thinking big” is a sound advice for under-developed countries but he also feels that there are “several areas of doubt” about the balanced growth theory in its Nurksian form.

First, if the balanced growth doctrine is interpreted to advise the under-developed countries to embark on a large and varied package of industrial investment with no attention to agricultural productivity, it can lead to trouble.

At the initial stages of development, as the income grows with new industrial investment and employment, the relatively greater demand would be created for food and other agricultural goods. In order to sustain industrial investment, the agricultural productivity would have to be greatly raised.

Thus, the big push in industry must be accompanied by a big push in agriculture as well, if the country is not to run short of foodstuffs and agri­cultural raw materials during the transition to an industrialised society.

But when we start talking about varied investment package for industry and “major additional blocks of investment in agriculture” at the same time, we run into serious doubts about the capacity of under-developed countries to follow the balanced growth path.

According to Marcus Fleming, “Whereas the balanced growth doctrine assumes that the relationship between industries is for the most part complementary, the limitation of factor supply assures that the relationship is for the most part competitive.” Singer adds: “The resources required for carrying out the policy of balanced growth…are of such an order of magnitude that a country disposing of such resources would in fact not be under-developed.”

Investment may be of whatever type, it necessarily induces some additional investment and some other productive activities. According to Singer, the expansion of social overhead capital and the growth of consumer goods industries and improvement of production techniques in them to raise productivity cannot take place simultaneously, because the under-developed countries have only limited capabilities of making use of their resources.

In the under-developed countries, not only are the resources and the capabilities to bring about balanced growth lacking but, according to Hirschman, balanced growth is not even desirable. His view is that if economic growth is to be accelerated, it will have to be brought about by unbalanced growth.

If we promote growth by creating imbalances in the economy, the growth will be accelerated, because it will produce such incentives and pressures which will encourage development in the private sector. “The balanced growth doctrine is premature rather than wrong.” Singer concludes. It is applicable to a subsequent stage of self-sustained growth rather than to the breaking of a deadlock.

For launching growth “it may well be a better development strategy to concentrate available resources on those types of investment which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded markets and expanding demand”. He mentions investments in social overhead capital and removal of special bottlenecks as examples of such “strategic” in­vestment.

The fundamental trouble with the balanced growth doctrine, according to Singer, is its failure to come to grip with the true problem of under-developed countries, the shortage of resources. “Think Big” is a sound advice to under-developed countries, but “Act Big” is unwise counsel if it spurs them to bite more than they can possibly chew.

Moreover, the balanced growth doctrine assumes that an under-developed country starts from a scratch. In reality, every under-developed country starts from a position that reflects previous investment and previous development. Thus, at any point of time, there are some highly desirable investment programmes which are not in themselves balanced investment packages but which represent unbalanced in­vestment to complement existing imbalances.

Hirschman’s Strategy of Unbalanced Growth:

Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving economic growth.

Like Singer, he argues that balanced growth theory requires huge amounts of precisely those abilities which have been identified as likely to be very limited in supply in the under-developed countries. He characterises the balanced growth doctrine as “the application to underdevelopment of a therapy originally devised for an underemployment situation” by J.M. Keynes. In an advanced country, during depression, “industries, machines, managers, and workers as well as the con­sumption habits” are all present, while in under-developed countries this is obviously not so.

As an under-developed country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an under-developed economy from a position of stagnation, Hirschman prescribes big push in strategic selected industries or sectors of the economy.

After all, he points out the industrialised countries did not get to where they are now through “balanced growth.” True, if you compared the economy of the United States in 1950 with the situation in 1850, you will find that many things have grown, but not everything grew at the same rate throughout the whole century. Development has proceeded “with growth being communicated from the leading sectors of the economy to the followers, from one industry to another; from one firm to another.”

According to Professor Hirschman, the real scarcity in under-developed countries is not the resources themselves “but the ability to bring them into play.” He divides the initial invest­ment into two related activities: (a) directly productive activities (DPA) and (b) social overhead capital (SOC).

An under-developed country may follow the method of unbalanced growth by undertaking initial investment either in social overhead capital or the directly productive activities. Whichever the type of investments it will yield an ‘extra dividend’ of induced decisions resulting in additional investment and output. He contends that social overhead capital, and directly pro­ductive activities cannot be expanded simultaneously because of the limited ability to utilise resources.

Thus, the planning problem is to determine the sequence of expansion that will maxi­mize induced decision-making. Balanced growth (of social overhead capital and directly pro­ductive activities) is not only unattainable in most under-developed countries it may also not be desirable. The rate of growth is likely to be faster with crucial imbalances precisely because of “the incentives and pressures” it sets up.

Hirschman’s Illustration of Balanced and Unbalanced Growth Paths:

Now, should we choose ‘development via excess capacity of SOC or ‘development via shortage of SOC? According to Hirschman, the se­quence/of development which is vigorously self-pro­pelling’ should be adopted. We may explain the ra­tionale behind this contention with the help of Hirschman’s diagram as shown in Fig. 49.1.

In this diagram, the units of investment in SOC are meas­ured along the vertical axis, while the units of in­vestment in DPA are measured along the horizontal axis. The curves, I, II, III are the isoquants, re­flecting the different combinations of SOC and DPA that result in the same gross national products at a given time.

As we move successively from curve I to II to III, we reach a higher level of gross national product. For the sake of analytical simplicity, the curves have been drawn in such a way that their op­timal points lie on the 45° line. In fact, this line gives the locus of balanced growth of DPA and SOC.

As­suming that balanced growth of SOC and DPA is not possible because of the inherent limited ability of the under-developed countries to utilise resources, we have to determine that sequence of development which maximises induced decision-making. Balanced and Unbalanced Growth Pants

Let us first consider the sequence of development via excess capacity of SOC. The path of development assumed by the economy would then be given by the heavy line A—>A1—>B —> B2—>C. Starting from A, the increase in SOC to A1 invites increase in DPA till the balance is achieved at B. With the increased gross national product, the government may undertake further investment in SOC to B2. This in turn will induce the DPA to increase to the point C.

If, on other hand, the economy adopts the sequence of development via shortage of SOC, the course followed by the economy would be the one shown by the dotted line AB1BC1C. In this case to start with, we increase DPA from A to B1. To restore balance, this will be followed by the increase in SOC from B1 to B. If there is a further increase in DPA to C1, SOC will have to follow suit until balance is restored at C.

It needs to be noted that unbalanced growth via both the paths yields an “extra dividend” of “induced easy-to-take or compelled decisions resulting in additional investment and output”. However, the sequence of development via excess capacity of SOC is what Hirschman calls “self-propelling” in the sense that it is more continuous and smooth.

The second path i.e., ‘development via shortage of SOC lacks this attribute since it may take some time for the political pressure to be generated so that the adjustment in SOC is delayed. And thus the DPA cost of producing an amount of output is pushed up. In Hirschman’s terminology, the ‘development via excess SOC is basically a permissive sequence, while the development via shortage of SOC is essentially a compulsive sequence.

Having demonstrated the virtues of strategic imbalances, we are left with the problem of discovering what kind of imbalance is likely to be most effective. Any particular investment project may have both “forward linkage” (that is, it may encourage investment in subsequent stages of production) and “backward linkage” (that is, it may encourage investment in earlier stages of production).

The task is to find the projects with greatest “total linkage.” The projects, with the greatest total linkage, will vary from country to country and from time to time and can be discovered only by empirical studies of the “input-output tables”.

In determining the sequence of projects, planning authorities should also give attention to the alteration of “pressure-creating” and pressure-relieving” investments. In countries with vig­orously expanding private enterprise sectors, the government’s function can be largely limited to “pressure-relieving.”

As private investment takes place, shortages and bottlenecks will appear in transport, public utilities, education, and other activities traditionally assigned (in whole or in part to public enterprises in such societies). Government ought not to feel “restless and slighted” when confined” to this “induced role”.

Where expansion through private investment is not assured, the government’s role must be more active. For example, it might build an iron and steel plant. “It is interesting to note,” says Hirschman, “that the industry with the highest combined linkage score is iron and steel.

Perhaps the under-developed countries are not foolish and exclusively prestige-motivated in attributing prime importance to this industry, because of the high total linkage effects of iron and steel industry.” The building of it by the government will lead to a spurt of investment and production in a variety of fields both in the stages before and after this industry.

In this way, it accelerates economic growth. The investment in iron and steel industry will reveal deficiencies in the preceding and succeeding sectors of industry that the government must fill up. To remove these deficiencies and obstacles, further investment will be stimulated. When these deficiencies are filled up, further private investment will take place, and so the process of growth goes on.

The foregoing discussion leads us to the conclusion that the balanced growth doctrine is neither attainable nor desirable. On the other hand, for rapid economic development the under­developed countries should rely largely on judiciously-planned unbalanced growth. In fact, under Mahalanobis strategy of development, India has been following this course.

A Critique of Unbalanced Growth Strategy:

The strategy of unbalanced growth has come in for severe criticism. First, it has been pointed out that unbalanced growth strategy is based on wrong assumption that only factor constraining economic growth is the scarcity of decision-making ability in respect of investment.

According to it all that is needed for accelerating growth in less developed countries is to provide inducements and incentives to private enterprise to undertake investment projects. Once this is done, supply of financial resources will adequately flow into investment projects.

This is not a realistic assumption to make in the context of the developing economies. In the developing countries supply of financial resources is scare due to low rate of saving and this hampers economic growth. Hischman paid little attention to overcome thus bottleneck to accelerate growth. Thus, not only the supplies of physical resources are limited but also the availability of financial resources for funding the developmental projects is scarce.

Hirschman’s unbalanced growth strategy has also been criticised on the ground that it will generate inflationary pressures in the economy. Whether more investment is undertaken in social overhead capital (SOC) or directly productive activities (DPO) incomes of the people will rise which will lead to the increased demand for consumer goods, especially food-grains. If sufficient investment in agriculture and other consumer goods is not made, it will cause rise in prices as was actually witnessed in India during the second and third five year plans.

Thirdly, it has been pointed out that in case response from private enterprises to the in­ducements and pressures created by unbalanced growth strategy is not adequate imbalances will be created in the economy without causing expansion in the other linked sectors resulting in excess capacity in some industries or sectors. This excess capacity represents waste of resources.

Lastly, it has been pointed out by Paul Streeten that unbalanced growth strategy neglects the possibility of resistances for adjustment to imbalances created by the unbalanced growth strategy. These resistances to growth may occur in a variety of forms.

There may come into existence monopolies which have vested interests in restricting expansion in output. In the back­ground of imbalances and shortages private enterprises which are interested in making quick profits will be more willing to raise prices of products rather than expanding their quantities. As Paul Streetion emphasise “the theory of unbalanced growth concentrates on stimuli to ex­pansion and tends to neglect or minimise resistances caused by unbalanced growth.”

We however conclude that despite some shortcomings in the unbalanced growth strategy, laying stress on the decision-making ability for accelerating economic growth and on the need for building up social overhead capital, Hirschman has made a valuable contribution to devel­opment economics.

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But if investment is made simultaneously in a large number of industries, it will provide work for a large number of people producing diverse commodities. It will increase their income and they will be in a position to buy the consumer goods made by one another.

This is how supply can create its own demand (as Say’s Law asserts) through the strategy of balanced growth. The workers employed in different industries become customers of one another’s goods and demand is increased or the size of the market is enlarged.

The expansion of one industry helps in the expansion of others and there is all round growth. This is how the difficulty arising from small size of the market is overcome and the obstacle in the way of economic growth cleared. In Nurkse’s words; “The difficulty caused by the small size of the market relates to individual investment incentives in any single line of production taken by itself.

At least in principle, the difficulty vanishes in the case of different industries. Here is an escape from the deadlock; here the result is an overall enlargement of the market. People, working with more and better tools in a number of complementary projects become each other’s customers. Most industries catering for mass consumption are complementary in the sense that they provide a market for, and thus support, each other. This basic complementarity stems in the last analysis from the diversity of human wants. The case for balanced growth rests on the need for a balanced diet.”

Taken separately, a number of industries may be unprofitable so that the private profit motive would not suffice to induce investment in these industries. However, undertaken together in a synchronized manner, a balanced increase in production would enlarge the size of the market for each firm or industry so that “synchronized undertaking” would become profitable. This wave of capital investment in a number of different industries is called by Nurkse as “balanced growth.”

In this way, as we have already said, the hindrance to economic growth owing to the small size of the market is removed. The aggregate demand is increased owing to simultaneous in­vestment in a large number of industries, because the incomes go up and productivity levels of persons employed in different industries go up.

Hence, the under-development equilibrium trap and the vicious circle of poverty can be broken by balanced growth. If once this circle is broken then, since there is circular connection, this circle will turn from poverty to balanced growth and to all-round development of the economy. In this way, the circle can be given beneficial form.

Now the question arises: Which industries should be selected for investment? The answer is to be found in the above solution offered by Nurkse. Investment should be made simulta­neously in such industries the manufactured products of which are in accordance with the demand or the preferences of the consumers or on which the persons engaged in different industries would spend their incomes.

There should be investment in a large number of com­plementary industries in the sense that persons employed in them become each other’s customers. Only by a simultaneous investment in such industries, production or supply will create its own demand.

Then the question is: How is it to be made sure that simultaneous investment in a large number of industries is actually made? Nurkse answers that, if in the country there are dynamic and constructive entrepreneurs and industrialists, they can be induced to make investment si­multaneously in different industries.

If there is lack of such entrepreneurs, then the government can take the work of balanced growth in its own hands. That is, the government can itself make simultaneous investment in several industries and can thus increase people’s incomes and pro­ductivity.

As a result of investment in several industries, it will be possible to increase the use of capital goods in large quantities which will raise the level of productivity and there will be a large increase in the aggregate output of consumer’s goods and services.

As a result of this, the level of national income will rise which will help to raise the standards of living of the people? In this way, the poverty of the people will be eliminated. What is needed to remove the poverty of the people is to launch an attack on the various sectors of the economy simul­taneously. This will remove the obstacle arising from limited demand or narrowness of the market and the inducement to investment will increase.

External Economies and Balanced Growth:

It seems to be proper to refer in this con­nection to external economies. When one industry creates demand for another, it will be prof­itable to the other industry. When one industry benefits from the growth of another industry, then we say that external economies are available from one industry to another.

We have seen above that it proves profitable to make investment in complementary industries, because people engaged in such industries become one another’s customers or create demand for one another. It is clear, therefore that the doctrine of balanced growth is based on the concept of external economies.

It is to be noted that here we do not use the term ‘external economies’ in the sense in which Marshall used it. By ‘external economies’ Marshall meant those economies which arise from the localisation of a certain industry in a particular place and these economies are enjoyed by each firm in the industry by the establishment of numerous firms there.

But in development economics, by external economies we mean those benefits which accrue to other industries by the establishment of new industries or the expansion of the existing industries. We have seen above how, according to Nurkse’s doctrine of balanced growth, these benefits accrue to the other industries by the establishment of new industries or the expansion of old industries through simultaneous investment in such industries in the form of increased demand or extension of the market.

In fact, the increasing returns which arise from the process of economic growth, are mainly due to the creation of external economies in the form of extension of the market or increase in demand and not due to the external economies mentioned by Marshall such as technical information from the journals, improvement in the technical skill of labour, development in the means of communi­cation and transport, etc. which arise from the location of an industry in a particular place.

It is worthwhile knowing whether, in the balanced growth, investment will be made in agriculture or not. Nurkse has not discussed this point in his book ‘Problems of Capital Formation in Under-developed Countries.’ But later on he made it clear that in his balanced growth strategy, appropriate investment will be made in agriculture.

Thus, he has not ignored agricultural devel­opment in his doctrine of balanced growth. In fact, investment in agriculture is implied in his book referred to above, because he has said that investment would be made in such industries simultaneously as produce goods conforming to consumer’s demand or preferences.

Since when, in the under-developed countries, people will get employment in the various industries, they mostly spend their incomes on the food-grains, investment in agriculture will be necessary to meet their demand and to promote balanced growth.

Nurkse has also not made in his doctrine of balanced growth whether investment should be made in capital goods industries and social overhead capital like transport and communica­tions to promote balanced growth.

Actually, Nurkse has suggested investment in consumer goods industries. But how will the machinery and capital equipment required in these industries are obtained? If they are not to be imported from abroad, they will have to be produced in the country and for that purpose investment will have to be made in their production.

Thus, we see if the doctrine of balanced growth to be fully implemented, then investment will have to be made in consumer goods industries, agriculture, capital goods industries and social overhead capital. But when investment is to be made in all such sectors and industries, then, in order to bring about balanced economic growth, large quantities of resources will be required. It is doubtful if the under-developed countries have the means to mobilise resources in such large quantities.

NAME: IBEZIM CHISOM PRECIOUS
REG. NUMBER: 2018/242340
DEPARTMENT: DEPARTMENT OF ECONOMICS
LEVEL: 300 LEVEL
COURSE: DEVELOPMENT ECONOMICS I (ECO 361)

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

Conceptual clarification
i. Growth (or Economic growth) is a steady increase in the productive capacity of the economy. According to Wikipedia, economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time.
ii. Strategy simply means an elaborate and systematic plan of action. The Oxford Dictionary defines strategy as: “A plan of action designed to achieve a long-term or overall aim”.
iii. Growth Strategy: From the above, one can simply define growth strategy as an elaborate and systematic plan of action to achieve a steady increase in the productive capacity of the economy both in the short run and long run.

Types of Growth strategies
There are two major growth strategies, namely: balanced and unbalanced growth strategies.
i. Balanced Growth Strategy: The doctrine of balanced growth has several authors who interpret it in their own way. To some it means investing in a laggard sector or industry so as to bring it abreast of others. To others, it implies that investment takes place simultaneously in all sectors or industries at once. Still to others, it means balanced development of manufacturing industries and agriculture. Balanced growth, therefore, requires balance between different consumer goods industries, and between consumer goods and capital goods industries. It also implies balance between industry and agriculture, and between the domestic and export sector. Further, it entails balance between social and economic overheads and directly productive investments, and between vertical and horizontal external economies. In fine, the theory of balanced growth states that there should be simultaneous and harmonious development of
different sectors of the economy so that all sectors grow in unison.

ii. Unbalanced Growth Strategy: The theory of unbalanced growth is the opposite of the doctrine of balanced growth. According to this concept, investment should be made in selected sectors rather than simultaneously in all sectors of the economy. No underdeveloped country possesses capital and other resources in such quantities as to invest simultaneously in all sectors. Therefore, investment should be made in a few selected sectors or industries for their rapid development, and the economies accruing from them can be utilized for the development of other sectors. Thus the economy gradually moves from the path of unbalanced growth to that of balanced growth.

Alternative Growth strategies include
iii. Pro-poor growth strategy: this refers to a development strategy that combines more rapid economic growth with increased opportunities for the poor to participate in the economy. Many economists believe that market-friendly policies, including maintaining fiscal discipline, reducing price inflation, and increasing economic openness, serve the interests of the poor. But these interventions alone are not enough; some of the poor will benefit and others will be hurt.

iv. Import-substitution strategy: A strategy that emphasizes the replacement of imports with domestically produced goods, rather than the production of goods for export, to encourage the development of domestic industry. ‘Import Substitution’ (IS) generally refers to policy that eliminates the importation of the commodity and allows for the production in the domestic market. The objective of this policy is to bring about structural changes in the economy. The structural change is brought about by creating gaps in the process of eliminating imports and thus making investment possible in the non-traditional sectors (Bruton, 1970).

v. Export-promotion strategy: The last 40 or so years have been dominated by what has come to be known as export-led growth or export promotion strategies for industrialization, at least when it comes to matters of economic development. Export-led growth occurs when a country seeks economic development by engaging in international trade.
The export-led growth paradigm replaced the import substitution industrialization paradigm. This is what many interpreted as a failing development strategy. While an export-led development strategy met with relative success in Germany, Japan, and East and Southeast Asia, current conditions suggest that a new development paradigm is needed.
Export-led growth has a lot to do with self-sufficiency. Import substitution, on the other hand, is the opposite. It is an effort by countries to become self-sufficient and lower their dependence on developed nations. They do this by developing their own industries so they can compete with other countries that rely on exports. Keep reading to learn more about export-led growth and its history.

vi. New structural economics: this, as proposed by Justin Lin (2011), is an open-economy growth strategy based on the continuous industrial and technological upgrading of an economy, consistent with its changing comparative advantages. Upgrading means that the country continuously needs to reconsider and anticipate which industries should form its leading sector, and which technologies these sectors should be using. The leading sector could be agro-industry, textiles, home appliances, electronics, the car and aircraft industries, etc.
Critics of the new structural economics have noted that it is heavily reliant on the capacity of the state, while lacking a theory of the state as to how to achieve this capacity. In addition, the sectors that may lose from state-led upgrading need to be compensated, as sunken capital does not have the flexibility to be reallocated to the emerging competitive sectors. Finally, social assistance is needed to help shelter those who are vulnerable to the restructuring, both to provide incentives for change and to avoid rising poverty. The new structural economics is appealing and matches the growth strategy followed by China, but it is incomplete in how it can be applied to countries with weak state capacity and weak social-safety nets.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

i. In the early days of the “growth with equity” debate, the term “equity” mainly referred to
a reduction in relative inequality through redistributive policies. In later years, particularly since the 1970s, the equity aspect has been viewed mainly in terms of a reduction in absolute poverty rather than income inequality. The term “growth with equity” has come to refer to a broad-based strategy of development that does not leave the poor behind.

ii. Economic growth, which refers to the annual growth rate of a country’s gross domestic product (GDP), that is, the total market value of all final goods and services produced by a nation during a given year or, in some cases, to the growth rate of per capita GDP.
While economic equity is concerned with the fairness and distribution of economic wealth, tax liability, resources, and assets in a society. The concept of equity demands that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Equity is complementary to the pursuit of long-term prosperity.

iii. Yes, it is quite obvious that growth exists with inequality. The degree of income inequality varies substantially from one location to the next. Latin America and Sub-Saharan Africa have the highest levels, while Eastern Europe has the lowest; the rest of the world is in the middle. The average “Gini coefficient” in Latin America is roughly 0.5, which is the most generally used measure of inequality, with 0 representing perfect equality and 1 representing total inequality. In Sub-Saharan Africa, the average Gini coefficient is slightly lower, but there is significant variation among nations. In both Africa and Latin America, economic disparity has a regional dimension, with average incomes in urban regions much greater than in rural ones.
In a huge number of countries, income inequality has risen in recent years. This trend has been especially noticeable in nations transitioning to market-oriented systems, where the average Gini coefficient was about 0.25 until the late 1980s and had grown to more than 0.30 by the mid-1990s. Although this may not appear to be a big increase, it is important for such a short period of time, because Gini coefficients in countries tend to stay rather steady over time. Income inequality has risen in some Group of Seven countries (for example, Germany, Japan, the United Kingdom, and the United States) over the last decade, and it is beginning to rise in certain East Asian countries (China and Thailand).
Wage earnings have dominated most of the discussion concerning income distribution. Wages, however, only reveal part of the tale. Wealth (and, by extension, capital income) has a more concentrated distribution than labor income. Uneven land ownership has been identified as a significant determinant in the overall distribution of income in Africa and Latin America. Furthermore, in many nations, there has been a transition in recent years from labor to capital income (including from self-employment). In transition economies, this shift has been due primarily to the privatization of state-owned assets. The analysis of trends in nonlabor income in countries with well-developed capital markets and pension funds is more complicated. Pension funds and other financial institutions receive a sizable portion of capital income, and the share of capital income in total household income typically changes over the life cycle of the individuals in the household.

Name: okechukwu Chioma Sandra
Reg no: 2018/243748
Department: Economics
Course code: Eco 361
Email. Okechukwukalia002@gmail.com

Questions
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Answers
1a. A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

In a global economy where market information is available rapidly and inexpensively, how should executives think about decision processes, positioning, market entry, resource allocation, new strategic initiatives, innovation and strategy execution?

The strategy an organization uses to expand its business depends on its financial position, existing competition and any government regulation applicable to that industry. Five main growth strategies commonly utilized by most businesses are market penetration, market development, product expansion, acquisition and diversification.

Market Penetration

This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.

Market Development

Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.

Product Expansion

If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.

Acquisition

A business can purchase another company in the same industry in order to expand its sales in that market. The purchaser must be very clear on the benefits of buying a business because of the additional investment required to buy and implement the required changes. For this reason, an acquisition strategy can be very risky. However, it is not as risky as a diversification strategy because the products and market have already been established by the company it is purchasing.

Diversification

The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.

2. There are two sides to the issue of the relationship between inequality and development. One side focuses on the distribution of the benefits of development and the capacity of development to effectively reduce poverty. The other side focuses on how the distribution of economic resources may affect the pace and structure of development.

The first side of the issue, namely who benefits from development, centers around Simon Kuznets’ famous hypothesis, according to which income inequality tends to increase in the first stage of development, and then decreases beyond some threshold. This hypothesis motivated many studies in the 1970s and the 1980s. On the one hand, it provided an explanation for the mechanisms that determine the distributional consequences of economic growth. On the other hand, it allowed us to test whether the hypothesis of an inverted-U, or Kuznets curve between inequality and average income per capita could be justified empirically. As it turns out, there seems to be no empirical evidence of a systematic relationship between the level of development (e.g., as measured by GDP per capita) and income inequality (e.g., as measured by the Gini coefficient). The recent increase in inequality in developed countries may support this conclusion, as well as demonstrate the complexity of the multiple mechanisms and policies that determine the evolution of inequality.

The other side of the issue of the inequality-development relationship has attracted much attention over the last 20 years or so, even though the modern discussion on the topic dates back to Kaldor [1955]. He observed that if capitalists saved more than the workers, a faster rate of growth was associated with a higher share of profit. In the 1990s, renewed interest in the theory and empirics of economic growth led to various alternative views on whether and how inequality could affect the rate of economic growth. These views departed somewhat from the pure macroeconomic functional distribution framework in classical, neo-classical, and Keynesian (i.e., Kaldor’s contribution) economics. From a theoretical perspective, the prevailing belief included the existence of a tradeoff between the equality of the distribution of economic resources and economic efficiency. However, many authors showed that inequality could actually cause inefficiency and slower growth through various channels, including market imperfections, endogenous redistribution, and political economy mechanisms. From an empirical perspective, the growth regression wave of the 1990s generated a flurry of econometric tests of the effect of the initial Gini coefficient of income distribution [2] on economic growth during some period. Heterogeneous results were obtained, although a slight majority favored a negative relationship.

Despite the considerable work and energy expended by the economic profession on this matter, there are few conclusions on whether inequality has a positive or negative effect on economic growth and development, or what the policy implications of the effect might be. Of course, equality may be seen as an objective worth pursuing per se, for ethical reasons. Even so, however, it seems important to know something about the economic cost of reducing inequality. Is the cost substantial, or perhaps even prohibitive, as some claim? Alternatively, are there situations in which the objectives of equality and economic growth are complementary?

Growth has been and increasingly is causally associated with less equality, greater equality with slower growth.

The ineluctable connection between growth and inequality lies in the crucial role of innovation in driving growth in technologically advanced economies. The enormity of rewards garnered by the innovators and their close associates creates a strong tilt toward increased inequality of income and wealth.

Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.
In looking at studies that directly estimate the effect of inequality on growth, there are concerns about data quality and statistical methodology. The purpose of these studies is to establish whether economic inequality has some effect on economic growth or stability. For researchers, there are important two questions: is there a causal relationship between inequality and growth? If so, can researchers actually identify this factor, or are they actually measuring the effect of some other factor. Establishing causality is exceptionally difficult in the social sciences and the standard approach employed for studying relationships between inequality and growth has been to look at the level of inequality preceding the growth period being measured. This does not firmly establish causality but can be indicative of it. On the other hand, the approaches for detecting the relationship vary widely by the statistical design, the data, controls included. Given enough time and flexibility in their specifications, economists have demonstrated an ability to draw a variety of conclusions. The best practices in this area are evolving and so it is important to look at the breadth of the literature, rather than focus on a single paper or approach.

Odoh, Victor Chukwuemeka
2018/248582
Economics major
Eco 361 assignment

Assignment Questions:
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

Answers:
No 1.
A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals. A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire organization.
The growth strategy is not a magic button. If you want to increase the growth, productivity, activation rate, or customer base, then you have to develop a strategy relevant to your product, customer market, any problem that you’re dealing with.
i. Balanced growth strategy: The balanced growth theory is an economic theory pioneered by the economist Ragnar Nurkse (1907–1959). The theory hypothesises that the government of any underdeveloped country needs to make large investments in a number of industries simultaneously.[1][2] This will enlarge the market size, increase productivity, and provide an incentive for the private sector to invest.
Nurkse was in favour of attaining balanced growth in both the industrial and agricultural sectors of the economy.[3] He recognised that the expansion and inter-sectoral balance between agriculture and manufacturing is necessary so that each of these sectors provides a market for the products of the other and in turn, supplies the necessary raw materials for the development and growth of the other.
Nurkse and Paul Rosenstein-Rodan were the pioneers of balanced growth theory and much of how it is understood today dates back to their work.[4]
Nurkse’s theory discusses how the poor size of the market in underdeveloped countries perpetuates its underdeveloped state. Nurkse has also clarified the various determinants of the market size and puts primary focus on productivity. According to him, if the productivity levels rise in a less developed country, its market size will expand and thus it can eventually become a developed economy. Apart from this, Nurkse has been nicknamed an export pessimist, as he feels that the finances to make investments in underdeveloped countries must arise from their own domestic territory. No importance should be given to promoting exports.
ii. Unbalanced growth strategy is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs that are not balanced investment packages may still advance welfare. Unbalanced investment can complement or correct existing imbalances. Once such an investment is made, a new imbalance is likely to appear, requiring further compensating investments. Therefore, growth need not take place in a balanced way. Supporters of the unbalanced growth doctrine include Albert O. Hirschman, Hans Singer, Paul Streeten, Marcus Fleming, Prof. Rostov and J. Sheehan. The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion of consumption and low savings, high rates of population growth and dependency burdens, high unemployment and underemployment, technological backwardness and dualism{existence of both traditional and modern sectors}. In a less-developed country, these characteristics lead to scarce resources or inadequate infrastructure to exploit these resources. With a lack of investors and entrepreneurs, cash flows cannot be directed into various sectors that influence balanced economic growth.
Hirschman contends that deliberate unbalancing of the economy according to the strategy is the best method of development and if the economy is to be kept moving ahead, the task of development policy is to maintain tension, disproportions and disequilibrium. Balanced growth should not be the goal but rather the maintenance of existing imbalances, which can be seen from profit and losses. Therefore, the sequence that leads away from equilibrium is precisely an ideal pattern for development. Unequal development of various sectors often generates conditions for rapid development. More-developed industries provide undeveloped industries an incentive to grow. Hence, development of underdeveloped countries should be based on this strategy.
The path of unbalanced growth is described by three phases:
a. Complementary
b. Induced investment
c. External economies
Singer believed that desirable investment programs always exist within a country that represent unbalanced investment to complement the existing imbalance. These investments create a new imbalance, requiring another balancing investment. One sector will always grow faster than another, so the need for unbalanced growth will continue as investments must complement existing imbalance. Hirschman states “If the economy is to be kept moving ahead, the task of development policy is to maintain tensions, disproportions and disequilibrium”. This situation exists for all societies, developed or underdeveloped.
a. Complementary: Complementarity is a situation where increased production of one good or service builds up demand for the second good or service. When the second product is privately produced, this demand will lead to imports or higher domestic production of the second product, as it will be in the interests of the producers to do so. Otherwise, the increased demand takes the form of political pressure. This is the case for such public services such as law and order, education, water and electricity that cannot reasonably be imported.
b. Induced investment: Complementarity allows investment in one industry or sector to encourage investment in others. This concept of induced investment is like a multiplier, because each investment triggers a series of subsequent events. Convergence occurs as the output of external economies diminishes at each step. Growth sequences tend to move towards convergence or divergence and the policy is usually concerned with preventing rapid convergence and promoting the possibility of divergence.
c. External economies: New projects often appropriate external economies created by preceding ventures and create external economies that may be utilized by subsequent ones. Sometimes the project undertaken creates external economies, causing private profit to fall short of what is socially desirable. The reverse is also possible. Some ventures have a larger input of external economies than the output. Therefore, Hirschman says, “the projects that fall into this category must be net beneficiaries of external economies”.
iii. Market Penetration: This is an excellent strategy to use when a business wants to market its existing products in the same market where it already has a presence. The goal is to increase its market share in a predefined vertical channel. Market share for this purpose is defined as a percentage of the gross sales in the market in comparison to other businesses in the same market. Market penetration involves going deeper in an existing vertical rather than introducing new market channels.
iv. Market Development: Development refers to expanding the sales of existing products in new markets. Competition in the current market may be so tight there is no room for growth without spending exorbitant amounts on advertising. It may be much more efficient to develop new markets to increase profitability. The company may also develop new uses for its products. For example, an organization that sells medical equipment to hospitals may find that medical clinics also desire the same product.
v. Product Expansion: If technology changes and advancements begin to reduce existing sales, the company may expand its product line by creating new products or adding additional features to their existing products. The business continues to sell its products in the same market, and it utilizes the relationships the organization has already established by selling original products or enhanced products to its current customers.
vi. Diversification: The goal is to sell novel products to new markets. Market research is essential to the success of this strategy because the company must determine the potential demand for its new products. Just because an organization is successful selling one type of product to a specific market, does not mean it will be profitable selling alternative products to markets that do not currently exist. Diversification is even more risky than acquisition because of the significant cost involved in creating contemporary products for untried markets.
The case study “Creating a Strategy that Smoothes the Path for Growth” by Pacific Crest Group (PCG) illustrates the power of accountability in a strategic plan. PCG developed a business growth plan with well-defined steps, metrics to measure the client’s success and accountability to make sure the plan was executed efficiently. The process included tools for the company to manage their growth, automate administrative functions and assisted them in training existing staff as well as hiring new staff as necessary to optimize effectiveness. The implementation of this system resulted in the accomplishment of an overwhelmingly profitable growth initiative.
Pacific Crest Group provides professional services that keep your business focused on your critical objectives. We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

No 2.
Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
In simplest terms, economic growth refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.
In economics, growth is commonly modeled as a function of physical capital, human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital, and raw materials, will lead to increased economic output.
There are a few ways to generate economic growth. The first is an increase in the amount of physical capital goods in the economy. Adding capital to the economy tends to increase productivity of labor. Newer, better, and more tools mean that workers can produce more output per time period. For a simple example, a fisherman with a net will catch more fish per hour than a fisherman with a pointy stick. However two things are critical to this process. Someone in the economy must first engage in some form of saving (sacrificing their current consumption) in order to free up the resources to create the new capital, and the new capital must be the right type, in the right place, at the right time for workers to actually use it productively.
A second method of producing economic growth is technological improvement. An example of this is the invention of gasoline fuel; prior to the discovery of the energy-generating power of gasoline, the economic value of petroleum was relatively low. The use of gasoline became a better and more productive method of transporting goods in process and distributing final goods more efficiently. Improved technology allows workers to produce more output with the same stock of capital goods, by combining them in novel ways that are more productive. Like capital growth, the rate of technical growth is highly dependent on the rate of savings and investment, since savings and investment are necessary to engage in research and development.
Another way to generate economic growth is to grow the labor force. All else equal, more workers generate more economic goods and services. During the 19th century, a portion of the robust U.S. economic growth was due to a high influx of cheap, productive immigrant labor. Like capital driven growth however, there are some key conditions to this process. Increasing the labor force also necessarily increases the amount of output that must be consumed in order to provide for the basic subsistence of the new workers, so the new workers need to be at least productive enough to offset this and not be net consumers. Also just like additions to capital, it is important for the right type of workers to flow to the right jobs in the right places in combination with the right types of complementary capital goods in order to realize their productive potential.
The last method is increases in human capital. This means laborers become more skilled at their crafts, raising their productivity through skills training, trial and error, or simply more practice. Savings, investment, and specialization are the most consistent and easily controlled methods. Human capital in this context can also refer to social and institutional capital; behavioral tendencies toward higher social trust and reciprocity and political or economic innovations like improved protections for property rights are in effect types of human capital that can increase the productivity of the economy.
An equity-efficiency tradeoff is when there is some kind of conflict between maximizing economic efficiency and maximizing the equity (or fairness) of society in some way. When and if such a trade-off exists, economists or public policymakers may decide to sacrifice some amount of economic efficiency for the sake of achieving a more just or equitable society.
An equity-efficiency tradeoff results when maximizing the efficiency of an economy leads to a reduction in its equity—as in how equitably its wealth or income is distributed.
Economic efficiency, producing those goods and services that provide the most benefit at the lowest cost, is a primary normative goal for most economic theories. This can apply to an individual consumer or a business firm, but mostly it refers to the efficiency of an economy as a whole at satisfying the wants and needs of the people in the economy.
Economists define and attempt to measure economic efficiency in several different ways, but the standard approaches all involve a basically utilitarian approach. An economy is efficient in this sense when it maximizes the total utility of the participants. The concept of utility as a quantity that can be maximized and summed up across all people in a society is a way of making normative goals solvable, or at least approachable, with the positive, mathematical models that economists have developed. Welfare economics is the branch of economics most concerned with calculating and maximizing social utility.
In macroeconomic literature, it is widely held that persuasion of economic growth and more equitable distribution of income (wealth) is not possible at the same time. The basic reason put forward is that to aim for more equitable distribution will reduce total savings in short and medium terms by reducing the weighted average of propensities to save of the different strata of the society. Therefore, the main objective for countries in transitional period is to have a higher economic growth rather than a fairer distribution of income. Recent developments on economic growth studies from a longer perspective and with sustainability criterion has put above idea in real jeopardy. It is shown that by paying more attention to justifiable distribution especially among different generations will promote a higher genuine savings which results in a higher rate of steady economic growth. In this research we use dynamic optimization approach (optimal control) for studying the mechanics of this regularity and test the proposition for selected MENA zone countries and then compare with some developed countries. Our ultimate goal is suggesting a fair fiscal policy to have a high economic growth compatible with a fairer distribution of wealth and income. It seems that any attempt to provide a more equitable condition, will be eventually reached to a higher capital formation, higher saving and higher output per capita in MENA region compared with selected developed countries. Yes, growth can exist with inequality.
The reason is because income inequality is a condition that prevails along with economic growth. According to the utilitarian view, income inequality must exist along with economic growth in order to maximize social welfare.

Udumukwu Emmanuel Chibueze

2018/242302
Manuelbueze07@gmail.com
Economics major
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.

Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
* MARKET PENETRATION
The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share.  To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
* MARKET DEVELOPMENT
This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ;  industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
* PRODUCT DEVELOPMENT
The objective is to launch new products or services on existing markets. Product development may be used to extend the offer proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it;  Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
* DIVERSIFICATION 
This means launching new products or services on previously unexplored markets. Diversification is the riskiest strategy. It involves the marketing, by the company, of completely new products and services on a completely unknown market.
Diversification may be divided into further categories:
* HORIZONTAL DIVERSIFICATION
This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups.  These new products are often technologically or commercially unrelated to current products but that may appeal to current customers. For example, a company that was making notebooks earlier may also enter the pen market with its new product.
* VERTICAL DIVERSIFICATION
The company enters the sector of its suppliers or of its customers.For example, if you have a company that does reconstruction of houses and offices and you start selling paints and other construction materials for use in this business.
* CONCENTRIC DIVERSIFICATION
Concentric diversification involves the development of a new line of products or services with technical and/or commercial similarities to an existing range of products. This type of diversification is often used by small producers of consumer goods, e.g. a bakery starts producing pastries or dough products.
* CONGLOMERATE DIVERSIFICATION
Is moving to new products or services that have no technological or commercial relation with current products, equipment, distribution channels, but which may appeal to new groups of customers. The major motive behind this kind of diversification is the high return on investments in the new industry. It is often used by large companies looking for ways to balance their cyclical portfolio with their non-cyclical portfolio.

Understanding Economic Growth
In simplest terms, economic growth refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.

In economics, growth is commonly modeled as a function of physical capital, human capital, labor force, and technology. Simply put, increasing the quantity or quality of the working age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital, and raw materials, will lead to increased economic output.
There are a few ways to generate economic growth. The first is an increase in the amount of physical capital goods in the economy. Adding capital to the economy tends to increase productivity of labor. Newer, better, and more tools mean that workers can produce more output per time period. For a simple example, a fisherman with a net will catch more fish per hour than a fisherman with a pointy stick. However two things are critical to this process. Someone in the economy must first engage in some form of saving (sacrificing their current consumption) in order to free up the resources to create the new capital, and the new capital must be the right type, in the right place, at the right time for workers to actually use it productively.

A second method of producing economic growth is technological improvement. An example of this is the invention of gasoline fuel; prior to the discovery of the energy-generating power of gasoline, the economic value of petroleum was relatively low. The use of gasoline became a better and more productive method of transporting goods in process and distributing final goods more efficiently. Improved technology allows workers to produce more output with the same stock of capital goods, by combining them in novel ways that are more productive. Like capital growth, the rate of technical growth is highly dependent on the rate of savings and investment, since savings and investment are necessary to engage in research and development.

Another way to generate economic growth is to grow the labor force. All else equal, more workers generate more economic goods and services. During the 19th century, a portion of the robust U.S. economic growth was due to a high influx of cheap, productive immigrant labor. Like capital driven growth however, there are some key conditions to this process. Increasing the labor force also necessarily increases the amount of output that must be consumed in order to provide for the basic subsistence of the new workers, so the new workers need to be at least productive enough to offset this and not be net consumers. Also just like additions to capital, it is important for the right type of workers to flow to the right jobs in the right places in combination with the right types of complementary capital goods in order to realize their productive potential.

The last method is increases in human capital. This means laborers become more skilled at their crafts, raising their productivity through skills training, trial and error, or simply more practice. Savings, investment, and specialization are the most consistent and easily controlled methods. Human capital in this context can also refer to social and institutional capital; behavioral tendencies toward higher social trust and reciprocity and political or economic innovations like improved protections for property rights are in effect types of human capital that can increase the productivity of the economy.

Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.
There are three distinct categories of substantive fairness (equality, equity, and reciprocity) that must be combined and balanced in order to achieve a truly fair society. Inequality and inequities have significantly increased in recent decades, possibly driven by the worldwide economic processes of globalisation, economic liberalisation and integration. This has led to states ‘lagging behind’ on headline goals such as the Millennium Development Goals (MDGs) and different levels of inequity between states have been argued to have played a role in the impact of the global economic crisis of 2008–2009.
Equity is based on the idea of moral equality. Equity looks at the distribution of capital, goods, and access to services throughout an economy and is often measured using tools such as the Gini index. Equity may be distinguished from economic efficiency in overall evaluation of social welfare. Although ‘equity’ has broader uses, it may be posed as a counterpart to economic inequality in yielding a “good” distribution of wealth. It has been studied in experimental economics as inequity aversion.

1) Growth strategies include the following:

I. Investment strategy: This strategy is usually used to kick start growth.This theory has two views, One view emphasizes the role of government-imposed barriers and high levels of policy uncertainty to entrepreneurship. The removal of forms of impediments is then expected to encourage investments. According to the second view, the government needs to create inducement for entrepreneurship and investment.
II. An Institution building strategy: This strategy postulates that growth is sustained through high quality institutions that provides appropriate regulation, social insurance, macroeconomic stability necessary for economic growth.
III. Theory of balanced growth: This theory postulates that all sectors of the economy should grow simultaneously. The expansion and inter-sectoral balance between agriculture and manufacturing is necessary as agricultural development provides food and labour required to engage in industry. Industrial wealth stimulates markets for agricultural growth.
IV. Theory of Unbalanced growth: The theory argues that growth in some sectors will induce other sectors growth at a later stage and this will stimulate economic growth.

2) Equity versus growth debate
This debate centers around Simon Kuznets’ famous hypothesis, according to which income inequality tends to increase in the first stage of development, and then decreases beyond some threshold.
This view is supported by the Trickle down theory, three main conclusions are obtained from this model.
First, when the rate of capital accumulation is sufficiently high, the economy converges to a unique invariant wealth distribution. Second, even though the trickle-down mechanism can lead to a unique steady-state distribution under laissez-faire, there is room for government intervention: in particular, redistribution of wealth from rich lenders to poor and middle-class borrowers improves the production efficiency of the economy both because it brings about greater equality of opportunity Third, the process of capital accumulation initially has the effect of widening inequalities but in later stages it reduces them.

Name: Ubochioma Favour Ugomma
Dept: social science education (economics edu)
Email : princessfavluv@gmail.com
Reg no: 2018/245392

QUESTION 1.

What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

ANSWER

A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Growth strategies are used to get rid of poverty, underdeveloped countries in a large scale.
Examples of growth strategy goals include market share and revenue, acquiring assets, and improving the organization’s products or services.

✓Different growth strategies..
(Balanced and un balanced growth)

BALANCED GROWTH..

According to Lewis, balanced growth means that all sectors of the economy should grow simultauously to a proper balance between industry and agriculture. This will enlarge the market size, increase productivity and provide an incentive for the private sector to invest.

UNBALANCED GROWTH

This growth that stresses on the need to invest in strategic sectors of the economy rather than in all the sectors simultaneously.. It states that the sectors in the economy should not grow at the same rate similar to one another..

QUESTION 2

What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWER

Economic Growth can be said to be the sustained increase in a country output as desired by GDP and GNP. The components of the Gross Domestic Product are consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy.
Then Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
Equity is giving individuals what they need.
According to Lewis, balanced growth means that so sectors of the economy should grow simultauous.

✓Differences between growth and equity

Equity states that all sectors of the economy should be treated equally, no sector should be seen as more inputs than the other.
In equity different economies are treated as their need arises, they are not treated equally, the distribution of income and resources in one economy is dependent on the need of that economy but at the end the day the same result is achieved in all economies,no one is lagging…
While,
In growth, all sectors are treated equally, it is a gradual increase in one of the components of GDP.
Some ways of improving the growth of an economy is by:
1.Increasing technology .
2.Increasing the labour Force. e.t.c
Growth refers to an increase in aggregate
production in an economy.

Yes, growth can exist with inequality.
REASON
Income inequality is a condition that prevails along
with economic growth. According to the utility view, income
inequality must exist along with economic growth in order to maximize
social welfare.

Reg no:2018/242418
Assignment
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Answer
1. Growth strategy is an organization’s plan for our coming current and future challenges to realize it’s goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets and improving the organization product and services . Growth strategy is a set of actions and plans that make a company expand
its market share than before. It’s completely opposite to the notion that
growth doesn’t focus on short-term earnings; its focus is on long-term goals.
A successful growth strategy is an integration of product management, design,
leadership, marketing, and engineering. It’s important to remember that your
growth strategy would only work if you implement it into your entire
organization.
The types of growth strategies are as follows:
1. Balance growth
2. Unbalance growth
1. Balance growth aims at the development of all sectors simultaneously.In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size.
2. Unbalance growth strategies is a situation in which economic growth is significantly higher in some sectors than others. For example, banking may be growing rapidly while manufacturing may be growing more slowly or even declining. unbalanced growth recommends that the investment should be made only in leading sectors of the economy. … On the other hand, unbalanced growth requires less amount of capital, making investment in only leading sector.
Other types of growth strategy are mentioned below:
MARKET PENETRATION
The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. To do this, you can attract customers away from your competitors and/or make sure that your own customers buy your existing products or services more often. This can be accomplished by a price decrease, an increase in promotion and distribution support; the acquisition of a rival in the same market or modest product refinements.
MARKET DEVELOPMENT
This means increasing sales of existing products or services on previously unexplored markets. Market expansion involves an analysis of the way in which a company’s existing offer can be sold on new markets, or how to grow the existing market. This can be accomplished by different customer segments ; industrial buyers for a good that was previously sold only to the households; New areas or regions about of the country ; Foreign markets
PRODUCT DEVELOPMENT
The objective is to launch new products or services on existing markets. Product development increasing their turnover. These products may be obtained by: Investment in research and development of additional products; Acquisition of rights to produce someone else’s product; Buying in the product and “branding” it; Joint development with ownership of another company who need access to the firm’s distribution channels or brands.
All these are developing or development strategies used in the growth, formation and development of underdeveloped countries around the world.

THE DEBATE BETWEEN GROWTH VS EQUITY.
2.The debate on growth vs equity is an age-old issue. Several economists have made their contributions to this debate and while many support the supremacy of growth, some other economists like Amartya Sen believe that we should not focus on just growth, but other variables that make for an equitable society. He indicated that certain variables such as inflation, governance, and corruption hinder EQUITY.

DIFFERENCE BETWEEN GROWTH AND EQUITY
Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.This is why economic development is the ultimate goal of every nation. As development accounts for different variables such as living standards, security, equitable distribution of income, etc.

In the real world, truly economic growth can be observed with inequality. For example, the activities of monopolists can significantly stimulate growth and increase inequality as well. Inflation is an interesting economic variable that affects income by reducing purchasing power. However, inflation most of the time further widens the gap between the rich and the poor.

CAN GROWTH EXIST WITH INEQUALITY?
Certainly, significant growth can exist with inequality. If we refer to growth as the persistent increase in the production of goods and services in a country within a period of time. Then, definitely, growth can exist with inequality. We can observe a persistent increase in GDP and still observe an increasing disparity in income.

Nnodim ugonna victor
2018/241867
Economics
Eco 361
1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
Answer
Definition
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
Strategies for growth in an economy

Unbalanced growth
Unbalanced growth is a better development strategy to concentrate available resources on types of investment, which help to make the economic system more elastic, more capable of expansion under the stimulus of expanded market and expanding demand

Balance growth strategy
In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size
OTHERS

Product development strategy—growing your market share by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.

Market development strategy—growing your market share by developing new customer segments, expanding your user base, or expanding your current users’ usage of your product. This strategy is sales-focused.

Market penetration strategy—growing your market share by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.

Diversification strategy—growing your market share by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market. This strategy is often the riskiest but can have huge rewards if successful.

How Groove turned high churn around with targeted emails
In 2013, the help desk tool Groove was experiencing a worryingly high churn rate of 4.5%. They had no problem acquiring new users, but people were leaving as fast as they came.

So they set out to get to know their users better. “Your customers probably won’t tell you when they hit a snag,” says Alex Turnbull, founder and CEO of Groove. “Dig into your data and look for creative ways to find those customers having trouble, and help them.”

Groove used Kissmetrics to identify who was leaving and who was staying in the app. They compared the user behavior of both cohorts and found that staying in the app was strongly correlated with performing certain key actions—like being able to create a support widget in 2 to 3 minutes. Users who churned were taking far longer, meaning that for some reason, they weren’t able to get a grasp of the tool.

Groove was then able to send highly targeted emails to this second cohort, bringing them back into the app. This strategy of proactively reaching out to customers reduced churn to 1.6%

Taking a leave out of this example this same process could easily be replicated in Nigeria today in other to boost Nigeria’s growth. All it would take is a little planning

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Answer
GROWTH VS EQUITY DEBACLE

over time it’s the issue of growth Vs equity has risen with many economic coming to order Thier opinions on what each entails and which is more relevant in the economy.
Growth and equity can be seen as a double sided sword as more offen that not one always suffer as the other progress. Looking at most African nations as a case study you see high growth and low equity. The growth that occurs are usually one-sided in nature and the equity only favour the socialist while the masses work more for less.

The main question this debate leaves us with is this????– Is growth in conflict with equity or poverty reduction? Normally, we expect that as GDP increases and we experience a high level of economic growth, more people should cross over from the poverty line and that infrastructure, as well as level of education, should increase.

However, this is not always the case in developing countries. They are various factors which We continue to observe that even with increased production and GDP, the gap between the rich and the poor continues to increase. Nevertheless, the relationship between equity and growth cannot be ignored. Both variables move hand in hand to promote economic development.

The KUZNET curve studies the relationship between inequality and growth. We observe that inequality increases first and later decreases in the process of economic development. Robert Barro also revealed that advanced technologies significantly raise the level of inequality.

In turn, we also observe that growth-inclined policies have a high impact on the level of inequality. Hence, there is a trade-off between growth and inequality. Such that, GDP growth seems to account for the widening gap between the income of the rich and the income of the poor. On the other hand, growing income inequalities also undermine the activities of growth. Increasing inequality leads to weakening incentives as well as increasing unemployment.

Hence, by implementing broader policies that not only accommodate economic growth but also take into account factors that redistribute income and reduce the gap between the rich and the poor.

DIFFERENCES BETWEEN GROWTH AND EQUITY
YES!
Economic growth refers to an increase in the production of goods and services, within a period of time. It can be measured in nominal or real terms. Aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

However, equity in economics simply refers to the process of redistributing income in the economy. Different concepts such as taxation are employed to ensure that income and opportunity among people are evenly distributed.

Every nation must have equity as an economic objective. The absence of equity creates a scope of inequality in the market.

CAN GROWTH EXIST WITH INEQUALITY?
YESS!
Certainly, significant growth can exist with inequality. If we refer to growth as the persistent increase in the production of goods and services in a country within a period of time. Then, definitely, growth can exist with inequality. We can observe a persistent increase in GDP and still observe an increasing disparity in income.

Since 1990, economists have begun to pay attention to the ever-increasing gap between the rich and the poor. And while inequality impacts negatively on the growth process. We can certainly say that significant growth can exist with inequality. In fact, the Kuznet curve depicts such an example where increasing growth stimulates this inequality. However, inequality is reduced in the process of economic development.

This is why economic development is the ultimate goal of every nation. As development accounts for different variables such as living standards, security, equitable distribution of income, etc.

In the real world, truly economic growth can be observed with inequality. For example, the activities of monopolists can significantly stimulate growth and increase inequality as well. Inflation is an interesting economic variable that affects income by reducing purchasing power. However, inflation most of the time further widens the gap between the rich and the poor.

NAME: UDEZE OBIANUJU CHARITY
DEPARTMENT: EDUCATION ECONOMICS
REG NO: 2018/244283
COURSE: DEVELOPMENT ECONOMICS ( Eco 361)
Question1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
Answer:
Growth strategies are management plans to advance further or progress in order to achieve growth of the enterprise or organization.
In recent times especially for developing countries, the need for the adoption of growth stategies cannot be overemphasized. Growth strategies is a must for the survival of any economy in the long-run.
The different growth strategies that we support the growth of our country Nigeria are
1.Market Penetration: this is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through the use of instruments like:
a. Aggressive advertising and other sales promotion techniques.
b. Encouraging new uses of the old product.
c. Coming out with exchange offers.
2. Market Development:This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products by changing size, packaging, and brand name etc.
3. Product Development: this as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
4. Diversification: this is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.
Diversification can be: Internal horizontal diversification, Vertical diversification, Concentric diversification, Conglomerate diversification.
Benefits of Diversification Growth Strategy
The benefits of diversification, as a growth strategy include:
a. Diversification enables an economy to make better use of its resources.
b. It helps to minimize risk associated with growth. For example, loss in one line may be made good through profits in some other lines.
c. It adds to the competitive strength of a company because of more products, greater resources, wider distribution network etc.
d. Diversification acts as shock-absorber for a company, in phases of business cycle. For instance, if there is depression in one product line; the firm may survive if there is good business in other lines of production.
e. It adds to the goodwill of a firm; because of its brand name associated with a variety of product items.
Limitations of Diversification Growth Strategy
1. It requires huge funds to finance it.
2. It has a problem of co-ordination of the diversified area.
3. The need to handle the new products.
5. Modernisation: It involves replacing worn-out and obsolete machines etc. by modern machines and equipment’s operated according to latest technology; to achieve objectives like better quality, cost reduction etc. Modernisation is a growth strategy in the sense that it helps to achieve more and qualitative production at lower costs; thus helping to increase
sales and profits for the enterprise.
Advantages of Modernisation
The benefits of Modernisation are :
1. Modernisation results in lesser cost of production and consequently higher profits for the company.
2. Modernisation leads to qualitative production; attracting quality-conscious consumers. It helps to increase sales of the company.
3. It helps to improve long-run competitive position of the enterprise. It may help the enterprise in developing strategies of product differentiation and beating powerful forces of competition.
4. It gives a new looks to the enterprise and its functioning; thus adding to its goodwill in the market.
Limitations of Modernisation:
Some limitations of modernisation, as a growth strategy:
1. Modernisation requires huge capital investment; which is a serious problem for enterprises facing financial crunch.
2. Existing management and staff may not be competent to understand, introduce and implement new technology.
3. Organisational restructuring might be a major problem to introduce and successfully implement new technology.

Balanced growth strategy is a growth strategy which aims at the development of all the sectors in an economy simultaneously whereas
Unbalanced growth strategy is a growth strategy that aims at the development of leading sectors of an economy. Example if Nigeria decides to focus on the development of the oil sector and agricultural sector while ignoring other sectors, we regard it as unbalanced growth strategy.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?
Answer
Growth simply refers to an increase in the level of national income over a period of time while equity deals with equitable distribution of national income.
The growth and equity debate deals with a relationship of economic growth with income distribution and the impact on poverty reduction. It explores the role played by the balance of class power, the nature of the governance regime, and the policy framework to relook at this old debate and asks how the initial conditions and nature of growth affect wealth and distribution.
The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity.
The differences between growth and equity in an economy are:
1. Growth deals with an increase in the GDP whereas equity deals more with equal distribution of the resources available in an economy.
2. Growth may occur without economic development whereas equity can not occur without development.
3. In economic growth few lives may be affected positively whereas in economic development most of the lives of not all the lives in an economy will be affected positively.
4. In economic growth income can be in the hands of few whereas in equity every individual in the economy is sure of income.
.
Can growth exist with inequality?
Yes growth can exist with inequality
Growth simply means an increase in the level of national income. The growth in question can be an increase in certain sectors of the economy or even mean that certain individual in an economy now earn more. The fact that the growth is in the hands of certain individuals obviously tells us that there are individuals in the same economy whose income has not increase and this means that growth can exist with inequality.

NAME: OGBUEWU COSMOS NNACHETAM
REG NO: 2018/243754
DEPARTMENT: ECONOMICS

1. What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria.

According to Wikipedia, Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP. while strategy is a relatively new and rapidly developing area of economic consulting, involving the application of economic principles and methods to provide clients with unique insights aimed at addressing specific issues/problems and/or enhancing their long-term performance.
Meanwhile, A growth strategy is one under which management plans to advance further and achieve growth of the enterprise, in fields of manufacturing, marketing, financial resources and so on.
Furthermore, a growth strategy can be said to be an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.
As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences.
The different growth strategies in the economy can be
(a) Internal growth strategies
and
(b) External growth strategies.

Internal growth strategies are those in which a nation plans to grow on its own, without the support of others. On the other hand, external growth strategies are those in which a nation plans to grow by combining with others.

Types of Growth Strategies based on Internal growth strategy

(1) Market Penetration:
Market penetration is a growth strategy, in which a firm tries to seek a higher volume of sales of present products by penetrating (or getting deeper), into existing markets through devices like the following:
a. Aggressive advertising and other sales promotion techniques.

b. Encouraging new uses of the old product e.g. use of coffee during summer season by way of cold coffee or coffee-shake.

c. Coming out with exchange offers e.g. exchange of old scooters or TV for new ones at a discount etc.

(2) Market Development:
This growth strategy, as the name implies, aims at increasing sales of existing products through l market development, i.e. exploring new markets for company’s products. For example, many companies have achieved remarkable growth by entering into foreign markets; pushing their products I by changing size, packaging, and brand name etc.
Market development may be tried by a company I within the same country also e.g. sale of electronic goods like transistors etc. in rural areas.

(3) Product Development:

Product development as a growth strategy implies developing new and improved products for sale in existing markets; so that people who have otherwise become indifferent to the old product with passage of time get attracted to the new product because of the charisma associated with the phenomenon of newness.
Examples: introduction of Babool and Promise toothpastes by Balsara Hygiene Products Ltd.; introduction of Colgate Super Shakti by Colgate-Palmolive (India) Ltd. etc.

(4) Diversification:
Diversification is quite an important growth strategy. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. The fundamental philosophy of diversification is presumably contained in an old English proverb which suggests that one should not keep all one’s eggs in one basket.
Major dimensions of diversification growth strategy are as follows:
(a) Internal horizontal diversification:
Under this type of diversification, new products – whether related or unrelated to the present business line are developed by the business enterprise on its own. For example, Raymon Woolen Mills have added new product, cement to their existing line of woolen textiles. Similarly, Godrej added refrigerators and later on detergents to their original product lines of steel safes and locks.

(b) Vertical diversification:
Vertical diversification maybe backward or forward. In backward vertical diversification, the aim of a firm is to move backwards in the production process so that it is able to produce its own raw-materials/basic components. For example, a TV manufacturer may start producing picture tubes, built-in-voltage stabilizers and other similar components.

In forward vertical diversification, the aim of a firm is to move forward towards distribution process so as to reach the final consumer. For example, many textile mills like Mafatlal, Reliance, Raymond etc. have set up their own retail distribution systems.

(c) Concentric diversification:
in case of market related concentric diversification, new product/service is sold through existing distribution system. For example, addition of lease-financing for buying cars to the existing hire-purchase business is market related concentric diversification.
In technology related concentric diversification, new products are provided by using technologies similar to the present product line. For example, Food Specialties Ltdh as added ‘Tomato Ketchup’ to the existing ‘Maggi’ produced by them.

(d) Conglomerate diversification:
This growths strategy involves addition of dissimilar new products to the existing line of business. DCM Ltd. is a good example of conglomerate diversification. There has been an addition of a wide range of products such as fertilizers, sugar, chemicals, rayon, trucks etc. to their basic line of textiles. ITC, Godrej, Kirloskars etc. are other examples of conglomerate diversification.

(5) Modernisation:
Modernisation involves replacing worn-out and obsolete machines etc. by modern machines and equipment’s operated according to latest technology; to achieve objectives like better quality, cost reduction etc. Modernisation is a growth strategy in the sense that it helps to achieve more and qualitative production at lower costs; thus helping to increase sales and profits for the enterprise.

Modernisation may be a pre-requisite to the adoption of other growth strategies like product development, diversification (of many dimensions) etc. In fact, it is a background growth strategy.

(II) External Growth Strategies:
Some popular external growth strategies are:

(1) Joint Ventures:
Joint venture is a growth strategy in which two or more companies, establish a new enterprise (or organisation) by participating in the equity capital of the new organisation and by agreeing to participate in its management in an agreed manner.
A firm or a company may have a joint venture with another company of the same country or a foreign country. Some examples of joint ventures: Tata Iron and Steel Co. joined hands with IPICOL of Orissa to form IPITATA Sponge Iron Ltd; Hindustan Computers Ltd. and Hewlett Packard of USA formed a joint venture named HCL-HP Ltd; Tungabhadra Industries Ltd. of India and Yamaha Motor Company Ltd. of Japan formed a joint-venture Birla Yamaha Ltd. etc.

For ensuring success of a joint venture, the co-venturers must agree in advance on:

1. Objectives of joint venture

2. Equity participation of co-venturers

3. Management pattern etc.

(2) Mergers:
Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. Merger may take place with a co-operative approach or it may take place with a hostile approach. In the latter case, a merger is known as a takeover
Mergers are of the following four types:

(a) Horizontal Mergers:

In this type of merger, different business units which have been competing with one another in the same business line join together and form a combination. The Indian Jute Mills Association, the Indian Paper Mill Makers’ Association and Associated Cement Companies (ACC) are some popular examples of horizontal merger.

(b) Vertical Mergers:

Vertical merger arises as a result of integration of those units which are engaged in different stages of production of product. It is also known as sequence or process merger. Vertical merger may be backward or forward. When manufacturers at successive stages of production integrate backwards up to the source of raw materials; it is known as backward merger.

On the other hand, when manufacturing units combine with business units which distribute their product; it is known as forward integration or merger.
Backward merger is adopted to have a control over sources of raw-materials; while forward merger aims at attaining control over channels of distribution eliminating middlemen’s profits.

Examples:
A textile unit takes over cotton ginning and yarn spinning units to get smooth supply of raw materials. It is a case of backward merger. A textile company manufacturing various kinds of cloth takes over wholesalers and retailers engaged in marketing its product. It is a case of forward merger.

(c) Concentric Merger:

(Concentric means having the same centre) Concentric merger takes place when companies which are similar either in terms of technology or marketing system, combine with each other i.e. combining units do production with the same technology or use the same distribution channels.

(d) Conglomerate Merger:

(Conglomerate means a larger company that is formed by joining together different firms). When two or more unrelated or dissimilar firms combine together; it is known as a conglomerate merger. It implies dissimilar products or services under common control. When e.g. a footwear company combines with a cement company or a ready-made garment manufacturer etc.; a conglomerate merger comes into existence.

2. What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

While growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP, Equity simply means the quality of being fair and impartial. Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome.

Growth with equity is actually rational and can be a desirable objective of planning. The objective ensures that the benefits of high growth are shared by all people equally and hence, inequality of income is reduced along with growth in income.
This simply means that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between Growth and equity. It is even more unlikely that growth can be attained with equity.

Name: Ubochioma Favour Ugomma
Dept: social science education (economics edu)
Email : princessfavluv@gmail.com

QUESTION 1.
What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..
ANSWER
A growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. Growth strategies are used to get rid of poverty, underdeveloped countries in a large scale.
Examples of growth strategy goals include :
1.Market share and revenue.
2.Acquiring assets
3.Improving the organization’s products or services.

✓Different growth strategies..
(Balanced and un balanced growth)
BALANCED GROWTH..
According to Lewis, balanced growth means that all sectors of the economy should grow simultauously to a proper balance between industry and agriculture. This will enlarge the market size, increase productivity and provide an incentive for the private sector to invest.
UNBALANCED GROWTH
This growth that stresses on the need to invest in strategic sectors of the economy rather than in all the sectors simultaneously.. It states that the sectors in the economy should not grow at the same rate similar to one another..

QUESTION 2
What do you understand by growth and equity debate in development economics? What are differences between Growth and Equity in the economy? Can growth exist with inequality? If yes, how? If no, why?

ANSWER
Economic Growth can be said to be the sustained increase in a country output as desired by GDP and GNP. The components of the Gross Domestic Product are consumption, government spending, investment, net exports. Economic growth brings quantitative changes in the economy.
Then Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics.
Equity is giving individuals what they need.
According to Lewis, balanced growth means that so sectors of the economy should grow simultauous.

✓Differences between growth and equity ..
Equity states that all sectors of the economy should be treated equally, no sector should be seen as more inputs than the other.
In Equity there is fairness of the allocation of resources or goods to a group of people.
In equity different economies are treated as their need arises, they are not treated equally, the distribution of income and resources in one economy is dependent on the need of that economy but at the end the day the same result is achieved in all economies,no one is lagging…
While,
In growth, all sectors are treated equally, it is a gradual increase in one of the components of GDP.
Some ways of improving the growth of an economy is by increasing technology and also increasing the labour Force.
Growth refers to an increase in aggregate
production in an economy.

Yes, growth can exist with inequality.
REASON
The reason why growth can exist with equality is that Income inequality is a condition that prevails along
with economic growth. According to the utilitarian view, income
inequality exists along with economic growth in order to maximize
social welfare.

Ihekwoaba Alex Ezihe
2018/243746

Growth vs equity debate

What Is Economic Growth?

Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
In simplest terms, economic growth refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.
There are a few ways to generate economic growth. The first is an increase in the amount of physical capital goods in the economy. Adding capital to the economy tends to increase productivity of labor. Newer, better, and more tools mean that workers can produce more output per time period. For a simple example, a fisherman with a net will catch more fish per hour than a fisherman with a pointy stick. However two things are critical to this process. Someone in the economy must first engage in some form of saving (sacrificing their current consumption) in order to free up the resources to create the new capital, and the new capital must be the right type, in the right place, at the right time for workers to actually use it productively.

A second method of producing economic growth is technological improvement. An example of this is the invention of gasoline fuel; prior to the discovery of the energy-generating power of gasoline, the economic value of petroleum was relatively low. The use of gasoline became a better and more productive method of transporting goods in process and distributing final goods more efficiently. Improved technology allows workers to produce more output with the same stock of capital goods, by combining them in novel ways that are more productive. Like capital growth, the rate of technical growth is highly dependent on the rate of savings and investment, since savings and investment are necessary to engage in research and development.

Another way to generate economic growth is to grow the labor force. All else equal, more workers generate more economic goods and services. During the 19th century, a portion of the robust U.S. economic growth was due to a high influx of cheap, productive immigrant labor. Like capital driven growth however, there are some key conditions to this process. Increasing the labor force also necessarily increases the amount of output that must be consumed in order to provide for the basic subsistence of the new workers, so the new workers need to be at least productive enough to offset this and not be net consumers. Also just like additions to capital, it is important for the right type of workers to flow to the right jobs in the right places in combination with the right types of complementary capital goods in order to realize their productive potential.

The last method is increases in human capital. This means laborers become more skilled at their crafts, raising their productivity through skills training, trial and error, or simply more practice. Savings, investment, and specialization are the most consistent and easily controlled methods. Human capital in this context can also refer to social and institutional capital; behavioral tendencies toward higher social trust and reciprocity and political or economic innovations like improved protections for property rights are in effect types of human capital that can increase the productivity of the economy
There is a growing recognition of the importance of equity to development, and many development agencies recognise equity as a central goal for their programming. However, while equity is used intuitively in development debates and programming, it seems that its meaning is not clearly understood. This is reflected in often shallow analysis about what equity is and what should be done to achieve it. Its importance is recognised, but the policy priorities for achieving it are not consistently or coherently explored.

Recent decades have seen rising inequality and inequities, which are in turn partly responsible for the world ‘lagging behind’ on headline goals such as the Millennium Development Goals (MDGs). While this rise may be driven largely by worldwide processes such as globalisation and economic integration, more than by government or donor policies, rising inequity is a problem that can and should be tackled by the development community, and should be more firmly on the agenda. This paper draws together the current understanding on why it is important, and how to tackle it.

The problem
Equity comes from the idea of moral equality, that people should be treated as equals. Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens. Applying these ideas in a specific country context involves hard choices, and embedding discussions of distributive justice into domestic political and policy debates is central to national development, but three areas of considerable consensus can be identified. In order of priority, these are:

1. Equal life chances: There should be no differences in outcomes based on factors for which people cannot be held responsible.
2. Equal concern for people’s needs: Some goods and services are necessities, and should be distributed according solely to the level of need.
3. Meritocracy: Positions in society and rewards should reflect differences in effort and ability, based on fair competition.

Unfortunately, there is considerable inequity in developing countries. People’s access to and interaction with key institutions are shaped by power balances in the political, economic and social spheres, often leading to adverse incorporation and social exclusion. Also, patterns of inequality reinforce each other through intergenerational transmission and various formal and informal institutions, resulting in inequality between groups and geographical regions and chronic poverty passed between generations. The available evidence on the scale of the challenge confirms a worrying picture of life chances dependent on inherited circumstances and inequitable access to services, as well as rising income inequality which may further entrench disadvantage. As well as being a bad thing in itself, this inequity has a negative effect on growth, poverty reduction, social cohesion and voice.

The solutions
Taking equity as a guiding principle brings into focus particular areas of policy. These are existing and emerging areas of policy, but they gain a new importance from an equity perspective. The five core priorities for addressing equity at the national level are:

1. Providing universal public services for fair treatment. This means prioritising universal access to public services, such as health and education, and improving their quality by improving their delivery and strengthening underlying institutions. Infrastructure and law and order are also crucial. Services should be free at the point of delivery wherever possible, and where this is not possible, arrangements should be made to ensure that poor people are not excluded.
2. Targeted action for disadvantaged groups. Government expenditure should favour disadvantaged regions or groups. Quotas can support access to employment for specific excluded groups. Services targeted towards these groups are crucial (e.g. girls’ education), as is providing assistance at key stages of development, such as early childhood. Empowering these groups is also vital, as well as strengthening organisations such as producer organisations, social movements and trade unions.
3. Social protection. Social protection should be provided to ensure that nobody drops below a minimum level of wellbeing, beyond which unmet need will create cycles of disadvantage. Options include: payments such as social insurance or basic income grants; conditional transfers to promote human development; minimum wage policies; guaranteed government employment programmes; and labour market regulations to those in employment.
4. Redistribution. ‘Downstream’ action is required to improve equity by reducing inequality. Progressive taxation can help, if the additional fiscal space created is used to fund interventions that will support equity. Other priorities include lowering taxes on staple goods and applying taxes on property – inheritance taxes are key. Land reform is also crucial and redistribution may be required to provide the poor with productive assets.
5. Challenging embedded power imbalances. Power relations can cause and sustain inequity. Tackling harmful power relations takes time, and the empowerment of disadvantaged people must be combined with improving accountability mechanisms and reforming democratic institutions. It is important to build a vibrant civil society and an independent media. Addressing unhelpful attitudes and beliefs can also help foster social cohesion and build a pro-equity social contract.

There are a number of challenges and obstacles to implementing pro-equity policies, many of which themselves stem from inequities. In light of this, development agencies have a special role: by virtue of being external actors they may have more room for manoeuvre to help equalise life chances. To deliver on equity, agencies should incorporate a more systematic understanding of equity and inequity into their policy decisions, implement pro-equity policies and influence developing country governments to address inequity. More than this, equity should be embedded in decision-making tools and procedures.

Onyemaechi Favour Ozioma
2018/244292
Edu/Economics
Eco361

An Assignment:
1a.What do you understand by growth strategies? Clearly discuss different growth strategies in the economy (including balanced and unbalanced and others) that will support and enhance the growth and development of a developing country like Nigeria.
Strategic management deals with the issues, concepts, theories approaches and action choices related to an organization’s interaction with the external environment. Strategy, in general, refers to how a given objective will be achieved. Strategy,therefore, is mainly concerned with the relationships between ends and means, that is,between the results we seek and the resources at our disposal. For the most part, strategy is concerned with deploying the resources at your disposal whereas tactics is concerned with employing them. Together, strategy and tactics bridge the gap between ends and means.
What is Growth Strategy?
A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals. A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire organization.
The growth strategy is not a magic button. If you want to increase the growth, productivity, activation rate, or customer base, then you have to develop a strategy relevant to your product, customer market, any problem that you’re dealing with. Some organizations are groups of different business and functional units, each of them must be having its own set of goals, which may not necessarily be same as the goals of the corporate headquarters looking after the interests of the entire organization. Since the goals are different and the means to achieve them are different, strategies are likely to be different. This understanding has led to the hierarchical division of strategy at two levels: a business-level (competitive) strategy and a company-wide strategy (corporate strategy) (Porter, 1987). In addition to these strategies, many authors also mention functional strategies, practiced by the functional units of a business unit, as another level of strategy.
1.Corporate Strategies: These are concerned with the broad, long-term questions of “what businesses are we in, and what do we want to do with these businesses?” The corporate strategy sets the overall direction the organization will follow. It matter whether a firm is engaged in one or several businesses. This will influence the overall strategic direction, what corporate strategy is followed, and how that strategy is implemented and managed. Corporate strategies vary from drastic retrenchment through aggressive growth. Top management need to carefully assess the environment before choosing the fundamental strategies the organization will use to achieve the corporate objectives.
2.Competitive Strategies: Those decisions that determine how the firm will compete in a specific business or industry. This involves deciding how the company will compete within each line of business or strategic business unit (SBU). Competitive strategies include being a low-cost leader, differentiator, or focuser. Formulating a specific competitive strategy requires understanding the competitive forces that determine how intense the competitive forces are and how best to compete.
3.Functional Strategies: Also called operational strategies, are the short-term (less than one year), goal-directed decisions and actions of the organization’s various functional departments. These are more localized and shorter-horizon strategies and deal with how each functional area and unit will carry out its functional activities to be effective and maximize resource productivity. Functional strategies identify the basic courses of action that each functional department in a strategic business unit will pursue to contribute to the attainment of its goals. In a nutshell, corporate-level strategy identifies the portfolio of businesses that in total will comprise the corporation and the ways in which these businesses will relate. The competitive strategy identifies how to build and strengthen the business’s long-term competitive position in the marketplace while the functional strategies identify the basic courses of action that each department will pursue to contribute to the attainment of its goals.
4.Theory of Balanced Growth
• Fredrick List was first to put forward the theory of balance growth. According to him, a balance could be established among agriculture, industries and trade. In the year 1928, Arthur Young gave the concept of different industries were mutually interdependent, then all of them should be develop simultaneously. A strategy of growth with an equal emphasis on agriculture and industry. Agricultural development provides the food required and releases labour from the land to engage in industry. Industrial wealth stimulates markets for agricultural growth.
According to Lewis “Balance growth means that all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports. The truth is that all sectors should be expanded simultaneously.
Different Views Regarding Balanced Growth
1. Explanation of Rodan’s Theory of Balanced Growth.
According to an article ‘Notes on Big Push’(1957) by Rodan, indivisibilities of supply side are concerned with social overhead capital. Indivisibilities of demand side means restricting the desirability and profitability of economic activities due to the narrow extent of the market. Rodan has referred to three kinds of indivisibilities:
(i) Indivisibility in the production function or in the supply of social overhead costs
(ii) Indivisibility of Demand
(iii) Indivisibility of Supply of savings
2. Explanation of Nurkse’s Theory of Balance Growth
According to Prof. Nurkse in the development of underdeveloped countries the greatest obstacle is Vicious Circle of Poverty. The Vicious Circle shows that income is low in underdeveloped countries. Because of low income, saving is low. There for investment and output is low. Low output means low income.
(i) Complementarity of Demand
(ii) Intervention by the Government
(iii) External Economies
(iv) Accelerated Rate of Growth
Advantage of Theory of Balanced Growth
i. Large size of Market
ii External Economies
iii. Horizontal Economies
iv. Vertical Economies
v. Better Division of Labour
vi. Better Use of Capital
vii. Rapid Rate of Development
viii. Encouragement of Private Enterprises
ix. Breaking of Vicious Circle of Poverty
x. Encouragement of International Specialization
xi. Development of Social Overhead Costs
Criticism of Theory of Balanced Growth
This theory Criticized by Fleming, Singer, Hirschman and Kurihara.
• Unrealistic or Ignores Scarcity of Resources
• Ignores the Need of Planning
• External Diseconomies
• Development from Scratch
• Not a Theory of Development
• Same Policy for Developed and Underdeveloped countries
• Not supported by History
• Scarcity of Factors of Production
• Inflation
• Contrary to the Theory of Comparative Costs
5.Theory of unbalance growth:
Hirschman, Rostow, Fleming Singer have propounded the concept of unbalanced growth as a strategy of development for the underdeveloped nations. The theory stresses the need for investment in strategic sectors of the economy, rather than in the all sectors simultaneously. Unbalanced growth is a situation in which the various sectors of a given economy are not growing at a rate similar to one another Specific sectors of the economy will be growing at a rapid rate, while other sectors are either stagnant or experiencing a significantly reduced rate of growth. When economic growth patterns such as unbalanced growth appear, the phenomenon usually indicates that major shifts in the overall economy are about to take place.
Prof. Hirschman states in his book,”Strategies of Economic Development”, that creating imbalances in the system is the best strategy of growth. Accordingly , strategic sectors of the economy should get priority in matters of investment:
• External Economies
• Compementries
• Social Overhead Capital or (SOC)
• Direct productive Activities or (DPA)
• Unbalancing the Economy through (SOC)
• Unbalancing the Economy with direct productive activities (DPA).
Features of the Theory of Unbalanced Growth
i. Investment should first be made in the key sectors of the economy.
ii. Based on the principle of inducement & pressures.
iii. Big Push
iv. Real life observations
v. Significance of the Public sector with regard to SOC activities.
Criticism of the Theory of Unbalanced Growth
According to Paul Streeten:
• Inflation
• Wastage of Resources
• No Mention of Obstacles
• Increase in Uncertainty
• Unbalance is not Necessary
• Neglect of Degree of Unbalance
• Lack of basic Facilities
• Disadvantages of Localisation.
2.What do understand by growth and equity debate in development economics?. What are the differences between them in the economy? Can growth exist with inequality? If yes how, if no why?
Equity debate
There is a growing recognition of the importance of equity to development, and many development agencies recognise equity as a central goal for their programming. However, while equity is used intuitively in development debates and programming, it seems that its meaning is not clearly understood. This is reflected in often shallow analysis about what equity is and what should be done to achieve it. Its importance is recognised, but the policy priorities for achieving it are not consistently or coherently explored.

Recent decades have seen rising inequality and inequities, which are in turn partly responsible for the world ‘lagging behind’ on headline goals such as the Millennium Development Goals (MDGs). While this rise may be driven largely by worldwide processes such as globalisation and economic integration, more than by government or donor policies, rising inequity is a problem that can and should be tackled by the development community, and should be more firmly on the agenda. This paper draws together the current understanding on why it is important, and how to tackle it.
The problem:
Equity comes from the idea of moral equality, that people should be treated as equals. Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens. Applying these ideas in a specific country context involves hard choices, and embedding discussions of distributive justice into domestic political and policy debates is central to national development, but three areas of considerable consensus can be identified. In order of priority, these are:
1. Equal life chances: There should be no differences in outcomes based on factors for which people cannot be held responsible.
2. Equal concern for people’s needs: Some goods and services are necessities, and should be distributed according solely to the level of need.
3. Meritocracy: Positions in society and rewards should reflect differences in effort and ability, based on fair competition.
Unfortunately, there is considerable inequity in developing countries. People’s access to and interaction with key institutions are shaped by power balances in the political, economic and social spheres, often leading to adverse incorporation and social exclusion. Also, patterns of inequality reinforce each other through intergenerational transmission and various formal and informal institutions, resulting in inequality between groups and geographical regions and chronic poverty passed between generations. The available evidence on the scale of the challenge confirms a worrying picture of life chances dependent on inherited circumstances and inequitable access to services, as well as rising income inequality which may further entrench disadvantage. As well as being a bad thing in itself, this inequity has a negative effect on growth, poverty reduction, social cohesion and voice.
The solutions:
Taking payoff as a guiding principle brings into focus particular areas of policy. These are existing and emerging areas of policy, but they gain a new importance from an equity perspective. The five core priorities for addressing equity at the national level are:
1. Providing universal public services for fair treatment. This means prioritising universal access to public services, such as health and education, and improving their quality by improving their delivery and strengthening underlying institutions. Infrastructure and law and order are also crucial. Services should be free at the point of delivery wherever possible, and where this is not possible, arrangements should be made to ensure that poor people are not excluded.
2. Targeted action for disadvantaged groups. Government expenditure should favour disadvantaged regions or groups. Quotas can support access to employment for specific excluded groups. Services targeted towards these groups are crucial (e.g. girls’ education), as is providing assistance at key stages of development, such as early childhood. Empowering these groups is also vital, as well as strengthening organisations such as producer organisations social movements and trade unions.
3. Social protection. Social protection should be provided to ensure that nobody drops below a minimum level of wellbeing, beyond which unmet need will create cycles of disadvantage. Options include: payments such as social insurance or basic income grants; conditional transfers to promote human development; minimum wage policies; guaranteed government employment programmes; and labour market regulations to those in employment.
4. Redistribution. ‘Downstream’ action is required to improve equity by reducing inequality. Progressive taxation can help, if the additional fiscal space created is used to fund interventions that will support equity. Other priorities include lowering taxes on staple goods and applying taxes on property – inheritance taxes are key. Land reform is also crucial and redistribution may be required to provide the poor with productive assets.
5. Challenging embedded power imbalances. Power relations can cause and sustain inequity. Tackling harmful power relations takes time, and the empowerment of disadvantaged people must be combined with improving accountability mechanisms and reforming democratic institutions. It is important to build a vibrant civil society and an independent media. Addressing unhelpful attitudes and beliefs can also help foster social cohesion and build a pro-equity social contract.
There are a number of challenges and obstacles to implementing pro-equity policies, many of which themselves stem from inequities. In light of this, development agencies have a special role: by virtue of being external actors they may have more room for manoeuvre to help equalise life chances. To deliver on equity, agencies should incorporate a more systematic understanding of equity and inequity into their policy decisions, implement pro-equity policies and influence developing country governments to address inequity. More than this, equity should be embedded in decision-making tools and procedures.
The payoff:
The interventions listed above have had a proven impact on poverty, inequity and human development indicators. More than this, some developing countries (e.g. Vietnam) have employed wide-ranging and coherent strategies to tackle inequity, which have promoted long-term and sustainable change in terms of growth as well as reducing poverty and inequality. Tackling inequity is crucial for developing country governments and development agencies: as well as being a valuable goal in itself, improving equity constitutes a central place in our understanding of beneficial change and development, driving poverty reduction in combination with growth. Moreover, the empirical evidence indicates that equity is instrumentally central to long-term change, through its causal ties to efficiency, growth, poverty reduction and social cohesion.
Putting equity at the heart of development programming could potentially have further benefits. As well as adding practical value, the symbolic, normative and political dimensions of the concept promote the recognition of key challenges, resonate with stakeholders North and South, foster empowerment and engagement and promote deeper, more sustainable change.
The political will?
Equity is central to development. There is a broad and deep understanding of inequity and its causes, and on what works and what does not. Yet, equity remains low on the policy agenda in many countries. This must be down to a lack of political will. We can only conclude that the limited focus on equity is a matter of domestic and international power imbalances. Tackling inequities often requires working against the interests of national elites, challenging vested interests or dominant ideologies, or speaking for people who are excluded and ignored systematically by those making policy.
As a result, the biggest challenge for promoting equity in developing countries is to address the political economy of change. It is crucial to strengthen political movements and coalitions, to challenge prevailing beliefs and misconceptions around equity, and to encourage a representative public debate on practical issues of distributive justice.
While many developing countries do not need to wait for the development community to get its act together on equity issues, donors can play a crucial role in influencing development debates and in promoting equity through programme design and policy influence. Because donors are separate from national power structures that may reinforce social, political and economic inequalities they can also have a disproportionate influence. While some agencies (mostly INGOs such as ActionAid and Oxfam, but also SIDA) do give equity considerable attention in their analysis, policy and practice, others portray equity related issues as overly ‘political’. Where policy discourses draw on neo-liberal visions of development, principles such as equality of opportunity may be seen as important, but there may be ideological barriers to putting this agenda into operational. Donor agencies need to focus more strongly on transforming an equity-focused agenda into tangible action for the poor, backed by political will at the top levels.

Economic growth
From the answer to the previous question you will have noticed that the listed characteristics once again say more about goals than the processes or mechanisms for achieving them. So what drives a country towards achieving these goals? The orthodox view, espoused by most governments, most major international organisations, and the economists that advise them, is that a big part of the answer lies in economic growth.
However, economic growth can follow many different paths, and not all of them are sustainable. Indeed, there are many who argue that given the finite nature of the planet and its resources any form of economic growth is ultimately unsustainable. We shall leave these debates for later. For now let us look at what exactly economic growth is and how it is measured.
Economists usually measure economic growth in terms of gross domestic product (GDP) or related indicators, such as gross national product (GNP) or gross national income (GNI) which are derived from the GDP calculation. GDP is calculated from a country’s national accounts which report annual data on incomes, expenditure and investment for each sector of the economy. Using these data it is possible to estimate the total income earned in the country in any given year (GDP) or the total income earned by a country’s citizens (GNP or GNI).
GNP is derived by adjusting GDP to include repatriated income that was earned abroad, and exclude expatriated income that was earned domestically by foreigners. In countries where inflows and outflows of this sort are significant, GNP may be a more appropriate indicator of a nation’s income than GDP.There are three different ways of measuring GDP
i.the income approach
ii.the output approach
iii.the expenditure approach
The income approach, as the name suggests measures people’s incomes, the output approach measures the value of the goods and services used to generate these incomes, and the expenditure approach measures the expenditure on goods and services. In theory, each of these approaches should lead to the same result, so if the output of the economy increases, incomes and expenditures should increase by the same amount.
Figures for economic growth are usually presented as the annual percentage increase in real GDP. Real GDP is calculated by adjusting nominal GDP to take account of inflation which would otherwise make growth rates appear much higher than they really are, especially during periods of high inflation.
Short-term versus long-term growth
A distinction needs to be made between short-term growth rates and longer term ones. It iquite normal for short-term growth rates to fluctuate in line with the business cycle.
According to the measures of GDP and growth shown here, growth in recent decades has fluctuated between zero and 5% per annum. Clearly, based on long-term trends, growth rates exceeding 5% (as measured here) would seem to be unsustainable. When politicians are talking about sustainable growth they are often referring to macroeconomic concerns relating to the cycle of boom and bust.Source: unit author, based on statistics from US Department of Commerce, Bureau of Economic Analysis
An economic boom involves high growth rates and is often accompanied by rising inflation. It is often followed by a period of lower growth rates and recession (‘bust’). Sustainable growth in this context relates to stable growth rates that even out the fluctuations in the business cycle, thus avoiding high peaks and the large troughs associated with recessions. Note that this is different from the issues that environmentalists typically focus upon when they discuss the sustainability of economic growth. We shall say more on this later.
The difference between growth and equity:
1. Growth is about the total income of a country is to say the GDP per capita while equity is about equal distribution of income, justice and political position.
2. Growth relates to output while equity relate how those ouput are distributed.
Can growth exist with inequality if yes how, if no why.
I will say yes that growth can actually exist with inequality, the how there was is that growth can cohabit with inequality in the sense that growth which is total ouput or total income might just be the few rich people in the country which was because income was not distributed equally, few are rich while many are poor. There poverty in different level but on d general note the country will be noted as a growing country. That a country is growing don’t mean that the country is develop that is say that development cannot exist with inequality.

NAME: OYIBE EBERE IZUINYA

REG NUMBER: 2018/245131

DEPARTMENT :ECONOMICS

COURSE: ECO 361

1a. What do you understand by growth strategies?

Growth strategy has to do with economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
It is a plan of action that allows one to achieve a higher level of the market share that you currently have.

1b. Clearly discuss different growth strategies in the economy (including balanced and unbalanced, and others) that will support and enhance the growth and development of a developing country like Nigeria..

BALANCED GROWTH THEORY.
The balanced growth theory was first advocated by Fredrick List. He argued that a balance could be established among agriculture, industries, and trade, but with an equal emphasis on agriculture and industry.

ARGUMENTS FOR BALANCED GROWTH STRATEGY.
According to Lewis, balanced growth means that all sectors of the economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production for exports.
He (Lewis 1955) stated that the pattern of resource allocation should be chosen such that at every stage of development, the available production capacity is fully utilized in all the economic sectors; therefore, no surplus nor shortage should exist. To him in order to increase production simultaneously in agriculture and industrial sectors, the strategy of balance between domestic and foreign trade should be adopted. That is if industrial sector is not developing,then agricultural products should exported and industrial products imported and vice versa.

According to Regnar Nurske, the major obstacles to the development of the underdeveloped countries is the vicious circle of poverty which shows that the income in developing countries are low. This low income therefore leads to low savings, then low savings leads to low investment which will result to low productivity. Again, low productivity will generate low income, low income will create low aggregate demand for goods thereby resulting to Small market. Thus, there will be no inducement to invest.
To Nurske, the inducement to invest may be due to small buying power of the people, which is due to their small real income, which again is due to low productivity. The low productivity however is due to small amount of capital used in production which in turn may be caused, at least partly by inducement to invest. Therefore, in order to break the vicious circle of poverty in the underdeveloped countries, it is necessary to have a balance between demand and supply.

CRITICISMS OF BALANCED GROWTH STRATEGY.

i. It is a wrong assumption;
ii. There is a danger of inflation;
iii. Administrative difficulties;
iv. Lack of competition;
v. Rise in costs.

UNBALANCED GROWTH THEORY.

Hirschman (1958),popularized the concept of unbalanced growth. Kindleberger (1958), Rostow (1959), Singer (1958), Streeton (1963) also subscribed to the theory. The theory stresses the need for investment in strategic sectors of the economy rather than all sectors simultaneously. Unbalanced growth is a situation whereby the various sectors of a given economy are not growing at a rate similar to one another.
According to Hirschman, a deliberate unbalancing of the economy along a predetermined strategy is the best way to achieve development in the less developed countries (LCDs). To him, development is characterized by a chain of disequilibrium which must be maintained rather than eliminated. He believes that profits and losses are healthy symptoms in a competitive economy and thus the task of development policy is the ability to manage the tensions, disproportion and disequilibrium in the economy, so as to move the economy ahead. Therefore, development can only be achieved by unbalancing the economy.

ARGUMENTS FOR UNBALANCED GROWTH THEORY.

i. It generate greater economic surplus;
ii. It generate economics of large scale production;
iii. The theory of unbalanced growth is more realistic;
iv. It encourages new inventions;
v. It creates room for self reliance;
vi. it is more important to basic industries.

The Harrod-Domar Growth Model
Every economy must save a certain proportion of its national income, if only to replace worn-out or impaired capital goods (buildings, equipment, and materials). However, in order to grow, new investments representing net additions to the capital stock are necessary. If we assume that there is some direct economic relationship between the size of the total capital stock, K, and total GDP, Y—for example, if $3 of capital is always necessary to produce an annual $1 stream of GDP—it follows that any net additions to the capital stock in the form of new investment will bring about corresponding increases in the flow of national output, GDP. Capital-output ratio Aratio that shows the units of capital required to produce a unit of output over a given period of time. Net savings ratio Savings expressed as a proportion of disposable income over some period of time. Suppose that this relationship, known in economics as the capital-output ratio, is roughly 3 to 1.
If we define the capital-output ratio as k and assume further that the national net savings ratio, s, is a fixed proportion of national output (e.g., 6%) and that total new investment is determined by the level of total savings, we can construct the following simple model of economic growth:
1. Net saving (S) is some proportion, s, of national income (Y) such that we have the simple equation S = sY (3.1)
2. Net investment (I) is defined as the change in the capital stock, K, and can be represented by K such that ¢ I =¢K (3.2)
But because the total capital stock, K, bears a direct relationship to total national income or output, Y, as expressed by the capital-output ratio, c,3 it follows that K Y = c or or,
finally, ¢K ¢Y = c ¢K = c¢Y (3.3)
3. Finally, because net national savings, S, must equal net investment, I, we can write this equality as S = I (3.4)
But from Equation 3.1 we know that S = sY, and from Equations 3.2 and 3.3 we know that I =¢K = c¢Y It therefore follows that we can write the “identity” of saving equaling investment shown by Equation 3.4 as (3.5) S = sY = c¢Y =¢K = I

Structural-Change Models

Structural-change theory focuses on the mechanism by which underdeveloped economies transform their domestic economic structures from a heavy emphasis on traditional subsistence agriculture to a more modern, more urbanized, and more industrially diverse manufacturing and service economy. It employs the tools of neoclassical price and resource allocation theory and modern econometrics to describe how this transformation process takes place. Two well-known representative examples of the structural-change approach are the “two-sector surplus labor” theoretical model of W. Arthur Lewis and the “patterns of development” empirical analysis of Hollis B. Chenery and his coauthors.
The Lewis Theory of Development

One of the best-known early theoretical models of development that focused on the structural transformation of a primarily subsistence economy was that formulated by Nobel laureate W. Arthur Lewis in the mid1950s and later modified, formalized, and extended by John Fei and Gustav Ranis.5 The Lewis two-sector model became the general theory of the development process in surplus-labor developing nations during most of the 1960s and early 1970s, and it is sometimes still applied, particularly to study the recent growth experience in China and labor markets in other developing countries.6 In the Lewis model, the underdeveloped economy consists of two sectors: a traditional, overpopulated rural subsistence sector characterized by zero marginal labor productivity—a situation that permits Lewis to classify this as surplus labor in the sense that it can be withdrawn from the traditional agricultural sector without any loss of output—and a high-productivity modern urban industrial sector into which labor from the subsistence sector is gradually transferred. The primary focus of the model is on both the process of labor transfer and the growth of output and employment in the modern sector. (The modern sector could include modern agriculture, but we will call the sector “industrial” as a shorthand). Both labor transfer and modern-sector employment growth are brought about by output expansion in that sector. The speed with which this expansion occurs is determined by the rate of industrial investment and capital accumulation in the modern sector.

CRITICISMS OF LEWIS MODEL

i. The notion that surplus labour exist in rural areas while there is full employment in the urban areas is wrong.
ii. The notion of a competitive modern- sector labour market that guarantees the continued existence of constant real urban wages up to the point where the supply of rural labour is exhausted is wrong.
iii. The assumption of deminishing return in the modern industrial sector is also a wrong assumption.
2a. What do you understand by growth and equity debate in development economics?
Equity is a normative concept, one which has a long history in religious, cultural and philosophical traditions (World Bank, 2005) and is concerned with equality, fairness and social justice, topics which are also the subject of fierce debate among political philosophers. As such, there will always be debates about the precise meaning of equity, and it is likely that a number of conceptions will compete to be the ‘correct’ definition. Equity is based on the idea of moral equality, the principle that people should be treated as equals. This is the idea that, despite many differences, all people share a common humanity or human dignity and, as a result of this, we must consider how each of them should be treated. This is not the same as treating people equally, as we shall see; rather, it is the idea that all count in the moral calculus.
Three principles of equity
There is no single interpretation of equity, and precisely what qualifies as the most ‘relevant’ principles for distributing goods and services, and the most useful broad groupings of goods, is a value judgement. Therefore, clearly (following recent arguments by two leading theorists – Sen, 2009 and Sandel, 2009), dialogues on distributive justice need to be a top priority for national political and policy debates. Ensuring that justice is a central concern for public policy is a central task in making legitimate policies on equity, and in national development more generally. However, there are three strong areas of convergence and consensus running through the literature (as well as speaking strongly to common sense), which should serve as at least a starting point for these debates. We take these as the basis for the structure of equity: three principles placed in order of priority. They are as follows:
1. Equal life chances: There should be no differences in outcome based on factors for which people cannot be held responsible. Certain differences among people strike most as inherently unfair. The World Development Report 2006 (World Bank, 2005) uses the example of two children born on the same day in South Africa: Nthabiseng is black, born to a poor family in a rural area in the Eastern Cape to a mother with no formal schooling; Pieter is white, born to a wealthy family in Cape Town, to a mother who completed a college education at a nearby prestigious university. The circumstances into which the two children were born play a major role in shaping their lives: Nthabiseng has a 7.2% chance of dying in her first year and can expect to live to 50, compared with Pieter’s 3% and of 68; she is likely to complete less than one year of formal schooling to Pieter’s 12; and she is likely to be considerably poorer throughout her life. From the outset, these children face vastly different opportunities and have very different chances of achieving wellbeing and reaching their potential, through no fault of their own. This principle of equity relates to people’s life chances, which is a probabilistic concept describing how an individual’s life is likely to turn out. It involves surveying a broad range of outcomes, such as health, wealth, educational achievement and any other factors relevant to people’s welfare and wellbeing, such as career sector and immunisations. Correlations, links and causal relationships are drawn between these outcomes and various features of people and their lives, to see how various factors influence a person’s likely outcomes. The central principle here is that there should be no differences in life chances based on factors that are beyond a person’s control, for which we can not hold them responsible. In other words, there can be no relevant reason for differences in outcomes between two people where they have done nothing different to each other. Discussions of life chances focus on probabilities linked to factors with which or into which people are born, and which therefore a person quite unambiguously has no control over or responsibility for5 (most prominently, Roemer’s 1998 formulation). So, where factors such as family circumstances (e.g. income, dependency ratio, father’s occupation or mother’s years of education), place of birth and group characteristics (e.g. gender, caste, religion or ethnicity) play a role in determining a person’s likely welfare outcomes, the principle has been violated. Giving one child a wealth of opportunities while another is likely to face relative deprivation means either that justifications are not relevant (e.g. suggesting that a person of a certain ethnicity just inherently deserves more money in life) or that they are not being consistently applied (e.g. ensuring one child is given education but not another).
2. Equal concern for people’ s needs : be distributed proportional to people’ S ome goods/services are matters of necessity and should s level of need and nothing else . A broad range of goods and services, often crucial to people and of universal value, need to be distributed based on very stark and firm criteria in order to respect people’s common humanity. As an illustration, imagine two sick children at a doctor’s surgery, both with the same condition, equally in need of treatment. The first child is given a full examination and treated and makes a quick recovery whereas the second is made to wait weeks, then seen only briefly by the doctor and not given sufficient medicine to fully treat his illness. Two equal problems, but vastly different treatment. This seems unfair: the doctor clearly has not shown equal concern for the children’s problems, and perhaps our instinct would be to say that a doctor would not do such a thing. However, something similar to this occurs at a wider level with uneven state-run health care coverage: imagine that the children actually went to different doctors, one in the centre of a capital city, the other in a rural area neglected by the government. The first child finds a wellstaffed, well-resourced hospital, whereas the rural child finds only a run-down, poorly equipped clinic where resources and capacity are overstretched. The government funds and is responsible for the running of both services but has not delivered adequate care to one child. This second principle of equity relates to the sorts of goods and services that people are said to need: shelter, physical security and environment, health care, water and sanitation, food and nutrition, a basic education and so on. These are things a person must have within a certain time period if they are to avoid suffering adverse effects on their wellbeing. These are goods which are required despite what one chooses, and which perhaps no person would rationally decide to go without. There are different levels of need of course, ranging from ‘basic’ needs, which are ‘pressed from a simple passion to subsist’ (Wiggins, 1998) and required as a result of simple laws of nature or human constitution, to the broader set of goods and services that are a prerequisite to people being able to take full part in society.6 The latter are likely to be more variable and culturally specific than the former, but both are relative to an understanding of wellbeing
.
3. Meritocracy : Positions in society and rewards should be distributed to reflect differences in effort and ability, based on fair competition . A strong instinct many have is that, where differences in people’s success in life truly reflect factors over which they had control, this is just. Imagine twins Adam and Betty, with identical upbringings, having attended the same school, with similar interests in making a living as a concert pianist. On leaving music school, Betty devotes every waking hour to practising, learning and applying for positions, whereas Adam does not try to improve, spends little time looking for opportunities to play the piano and never seems to find the will to really do something about it. If Betty was to find a highly rewarding, high-profile and well-paid job as a concert pianist, and Adam was to make a modest living accompanying performers in a talent contest, the intuition that most would have is that this difference in achievement is deserved. If Adam was able to get the concert pianist job ahead of Betty thanks to having a friend on the judging panel, or because the judges were happier giving the job to a man, then this would be an unfair reflection on their abilities or would fail to pay respect to the great sacrifices made by Betty in relation to those of her brother.

2b. What are differences between Growth and Equity in the economy?

i. Growth refers to an increase in the level of national income over a period of time. While equity refers to equitable distribution of the national income.
ii. Economic Growth refers to the increment in amount of goods and services produced by an economy. While equity reduces the extreme gaps between the rich and the poor.
iii. Economic growth is single dimensional in nature as it only focuses on income of the people. While equity has to do with elimination of social injustice and improving the welfare of citizens.

2c. Can growth exist with inequality? If yes, how? If no, why?

No.
This is because there are lots of vices which inequality breeds which impedes growth. They are as follows:
i. High inequalities in income and assets (including human capital assets), combined with imperfect land and capital markets, reduce some people’s opportunities to contribute to growth through investment. Conversely, increasing equity contributes to more inclusive national markets, by (more positively) incorporating disadvantaged groups (CPRC, 2008). This can deepen labour markets and make for more robust domestic demand, which are key elements for sustaining growth in the long term and reducing a country’s vulnerability to external shocks.
ii. Political inequalities and power disparities give rise to exclusive institutions that allow the powerful and advantaged to establish the ‘rules of the game’, which leads to the development of inefficient institutions and to cycles of advantage and disadvantage.
iii. Inequalities generate forms of collective behaviour that impede growth. This is because they lead to social protest along with institutional forms that make it difficult for these protests to be negotiated (Bebbington et al., 2008). Related to this, it has been found that inequalities lead to policies that reduce incentives for individuals to engage in growth-promoting activities (Persson and Tabellini, 1994). On the other hand, a good deal of work shows that high levels of trust (which is eroded by high inequality) are strongly linked to economic success (Harrison and Huntingdon, 2000), by encouraging the idea that there are benefits to cooperation.

NAME: ANYANWU COLETTE CHINAZAEKPERE
REG. NO: 2018/242442
DEPARTMENT: ECONOMICS (MAJOR)
COURSE: ECO 361
LEVEL: 300L
EMAIL: colettechinazaekpere@gmail.com

MEANING OF GROWTH STRATEGIES
By “growth strategies” I refer to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries.
Growth strategies can be described as a program, set of policies, or activities that seek to build capacity for self-sustaining, long-term economic growth.
A growth strategy is one that an economy pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level.

DIFFERENT GROWTH STRATEGIES IN AN ECONOMY THAT WILL SUPPORT AND ENHANCE THE GROWTH AND DEVELOPMENT OF A DEVELOPING COUNTRY LIKE NIGERIA.

In the nineteen fifties and sixties there were among the development specialists the two major schools of thought regarding the strategy of economic development that should be adopted in developing countries.

BALANCED GROWTH STRATEGIES

Economists like Ragnar Nurkse and Rosenstein Rodan who are of the view that the strategy of investment should be so designed as to ensure a balanced development of the various sectors of the economy(agricultural, industrial, health, finance, educational, etc).
They, therefore, advocate simultaneous investment in a number of industries so that there is a balanced growth of different industries.

According to Say’s Law production, supply creates its own demand. If, in the under-developed countries, investment is made simultaneously in a large number of industries, incomes of a large number of workers engaged in these industries will increase. This will create demand for goods produced by one another and production will increase.

Also, it will provide work for a large number of people producing diverse commodities. It will increase their income and they will be in a position to buy for consumption the goods made by one another. Thus, the expansion of one industry helps in the expansion of others and there is all round growth. This wave of capital investment in a number of different industries is called by Nurkse ‘balanced growth’.

But when investment is to be made in all such sectors and industries, then, in order to bring about balanced economic growth, large quantities of resources will be required. It is doubtful if the under developed countries have the means to mobilise resources in such large quantities.
Nurkse put forward the doctrine of balanced growth in order to break the vicious circle of poverty on the demand side of capital formation.
Nurkse points out that owing to lack of capital, productivity is low and since productivity per worker is low, the per capita income is low which means there is poverty. This is how the vicious circle of poverty operates in the developing countries. According to Nurkse, it is the vicious circle operating in the developing countries which stands in the way of their capital formation and economic development and, accordingly, if this vicious circle can be broken, capital accumulation will take place and economic development will follow.

CRITIQUE OF THE BALANCED GROWTH DOCTRINE:

First, if the balanced growth doctrine is interpreted to advise the developing countries to embark on a large and varied package of industrial investment with no attention to agricultural productivity, it can lead to trouble. Balanced growth strategy of Nurkse, as of earlier ‘Big-Push Strategy’ of Rosenstein-Rodan underestimates the role of agriculture in economic development of developing countries.
According to Marcus Fleming, “Whereas the balanced growth doctrine assumes that the relationship between industries is for the most part complementary, the limitation of factor supply assures that the relationship is for the most part competitive.” Singer adds – “The resources required for carrying out the policy of balanced growth are of such an order of magnitude that a country disposing of such resources would in fact not be underdeveloped.”

Further, Furtado (1954) has made an important point that investment in large-scale industrial sector as envisaged in Nurksian balanced growth strategy is associated with capital-intensive production technologies used in the advanced industrialised countries. According to him, there are more labour-intensive technologies which are viable for production in small-scale industries and are not constrained by small size of the market or lack of demand for their products.

Unbalanced Growth STRATEGIES

Economists, like H.W. Singer and A.O. Hirschman, on the other side, believe that for rapid economic growth there should be concentration of investment in certain strategic industries rather than an even distribution of investment among the various industries.

In other words, in the view of these latter economists, unbalanced growth is more conducive to economic development than a balanced one.
Professor Albert Hirschman in his book, “Strategy of Economic Development,” carried Singer’s idea further and contended that deliberate unbalancing of an economy, in accordance with a predetermined strategy, was the best way of achieving rapid economic growth.
As a developing country is incapable of financing and managing simultaneously a balanced “investment package” in industry and the needed investment in agriculture, in order to give a big push to lift an underdeveloped economy from a position of stagnation, Hrishman prescribes big push in strategic selected industries or sectors of the economy.
After all, he points out, the industrialised countries did not get to where they are now through “balanced growth”. True, if you compare the economy of the United States in 1950 with the situation in 1850, you will find that many things have grown, but not everything grew at the same rate through the whole century.

Development has proceeded “with growth being communicated from the leading sectors of the economy to the followers, one from industry to another; from one firm to another.”

According to Hirschman, the sequence of development which is vigorously self-propelling should be adopted.

A Critique of Unbalanced Growth Strategy:

The strategy of unbalanced growth has come in for severe criticism. First, it has been pointed out that unbalanced growth strategy is based on wrong assumption that only factor constraining economic growth is the scarcity of decision-making ability in respect of investment. According to it, all that is needed for accelerating growth in less developed countries is to provide inducements and incentives to private enterprise to undertake investment projects.
This is not a realistic assumption to make in the context of the developing economies. In the developing countries supply of financial resources is scarce due to low rate of saving and this hampers economic growth.
Hirschman’s unbalanced growth strategy has also been criticised on the ground that it will generate inflationary pressures in the economy. Whether more investment is undertaken in social overhead capital (SOC) or directly productive activities (DPO) incomes of the people will rise which will lead to the increased demand for consumer goods, especially food-grains. If sufficient investment in agriculture and other consumer goods industries is not made, it will cause rise in prices as was actually witnessed in India during the Second and Third Five Year Plans.

Thirdly, it has been pointed out that in case response from private enterprises to the inducements and pressure created by unbalanced growth strategy is not adequate, imbalances will be created in the economy without causing expansion in the other linked sectors resulting in excess capacity in some industries or sectors. This excess capacity represents waste of resources.

Lastly, it has been pointed out by Paul Streeten that unbalanced growth strategy neglects the possibility of resistances for adjustment to imbalances created by the unbalanced growth strategy. These resistances to growth may occur in a variety of forms. There may come into existence monopolies which have vested interests in restricting expansion in output.

SUSTAINABLE GROWTH STRATEGY

Sustainable Economic Growth Strategy seeks to create sustainable long-term economic growth that will increase revenue generation, create employment, and lead to poverty reduction in developing countries. economic growth of the industrial and business sectors in developing countries.
Sustainable growth strategy generate substantial economic and employment growth and sustainable business and community development by demonstrating that innovation, efficiency, and conservation in the use and reuse of all natural and human resources are the best ways to increase jobs, incomes, productivity, and competitiveness.
Sustainable strategy are a highly cost-effective method of promoting renewable energy and clean technologies that protect the environment and help in preventing harmful impacts of climate change.
By launching sustainable growth strategy based on technological innovation and resource efficiency, places can grow their economies, improve their standards of living, and expand businesses, jobs, and incomes.
Building a long-term sustainable growtht strategy is a complex undertaking. It requires strong and consistent leadership, bold vision and the appropriate level of resources. But if done well, it can lay the foundation for a new and higher level of prosperity – prosperity based on growing natural, social/human, and economic capital.

Intensive Growth Strategies
Intensive growth strategies aim at achieving further growth for existing products and/ or in existing markets.

There are three important intensive growth strategies, viz.:

i. Market penetration,

ii. Market development and

iii. Product development.

i. Market Penetration Strategy:

Market penetration strategy strives to increase the sale of the current products in the current markets.

ii. Market Development Strategy:

The market development strategy involves broadening the market for a product.

iii. Product Development Strategy:

A company may be able to increase its current business by product improvement or introducing products with new features. Example – Colgate-Palmolive has been trying to maintain its share of the toothpaste market by introducing new brands. (Maintaining the market share in a growing market means, obviously, increasing sales).

Many companies endeavour to maintain/increase sales through continuous feature improvements/introduction of new products. This is very obvious in certain industries like electronics, white goods, passenger vehicles (including two-wheelers), etc.

Often, market development and product development strategies facilitate better market penetration.

Integrative Growth Strategies
One of the common growth strategies is the integrative growth strategy. A major contributor to the growth of Reliance Industries in the early stages was backward and forward integration. It is today the most fully integrated company in the world (from petroleum exploration to textiles retailing).

There are broadly two types of integrative growth:

i. Integration at the same level or stage of business in the same industry (horizontal integration), or

ii. Integration of different levels/stages of business in the same industry (vertical integration).

i. Horizontal Integration:

Integration at the same level of business, popularly known as horizontal integration, involves the acquisition of one or more competitors.

For example- a tyre company may grow by acquiring another tyre company. Examples of horizontal integration includes acquisition of Universal Luggage’s (Aristocrat) by Bioplast (V.I.P.) and Tata Oil Mills Company (TOMCO) by Hindustan Lever. The Indian cement industry has witnessed considerable horizontal integration. The FMCG sector has recently undergone several acquisitions resulting in horizontal integration.

Perhaps, the most important advantage of horizontal integration is that it eliminates or reduces competition.

ii. Vertical Integration:

Integration of the different levels/stages of the same industry is known as vertical integration.

Diversification Growth Strategies
Diversification means adding new lines of business. The new lines of business may be related to the current business or may be quite unrelated. If the new lines added make use of the firm’s existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. (Example – the diversification of Videocon).

Some companies expand the business into unrelated industries (Example – Wipro which is in the business of several FMCG, electrical and lighting, furniture and IT). Other examples- include the V-Guard, Reliance, LG, Samsung, Hyundai, General Electric, etc. Expanding the market to geographical areas where the company has not had business is also regarded as diversification.

Diversification is also described as portfolio change.

Large conglomerate (diversified) business houses dominate the industrial sector of many countries. While most of the top industrial houses of the US are focused, of the West European and Asian countries like Japan, South Korea and India are diversified.

INCLUSIVE GROWTH STRATEGY

This means growth that combines increased prosperity with greater equality, creates opportunities for all, and distributes the benefits of increased prosperity fairly.
Inclusive growth Strategy has become central to economic development due to rising economic inequality and its effects on human well-being and prosperity.
This inequality has disproportionately affected communities of color, women, those less physically abled, and certain geographies.
unlocking women’s economic potential in the workforce over the coming years could add $2.1 trillion in GDP by 2025.

Key actions for achieving inclusive growth are:
Promoting fair work and good-quality jobs
We aim to create the right environment for more inclusive employment opportunities to flourish. Through supporting investment, innovation, internationalisation and fairer work, we are encouraging competitiveness and more responsible business behaviour.

Promoting equality in the workplace and tackling inequality in the labour market so that everyone has the opportunity to fulfil their potential.

Maximising opportunities for women and families through actions such as increasing the availability of free childcare and encouraging employers to give equal pay and offer flexible working.

Supporting carers to balance their caring responsibilities with employment opportunities.

Reducing inequalities in wealth and health so that no-one is held back from finding fulfilling employment.

Closing the attainment gap
An individual’s socioeconomic background can have a significant impact on their ability to attain higher levels of education.

Closing the attainment gap by ensuring that all children get the best possible start in life.

GROWTH AND EQUITY DEBATE IN DEVELOPMENT ECONOMICS.

It is difficult to argue that high growth of GDP (except in an exploitative non-democratic feudal society) has no impact on bringing at least some people above the poverty line. It is even more difficult to argue that, say, a 15% growth rate of GDP, ceteris paribus, will not automatically reduce poverty more than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute income (say, via higher tax incomes) will meet with less political resistance.

With factor-biased technical progress described as labor-saving and skill-biased technical changes, there are concerns that technological innovation can lead to unemployment and widen inequality in the economy. This study explores impacts of factor-biased technical changes on the economic system in terms of economic growth, employment, and distribution, using a computable general equilibrium (CGE) model. The results show that technological innovation contributes to higher level of economic growth with productivity improvements. However, our analysis suggests that economic growth accompanied by skill- and capital-biased technical progress disproportionately increases demand for capital and high-skilled labor over skilled and unskilled labor. This shift in the value-added composition is found to deepen income inequality, as more people in higher income groups benefit from skill premium and capital earnings.

The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve); and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy);. Instead, it advocates an “integrated” approach in which economic policy incorporates considerations of income distribution and social policy pays due attention to efficiency, while both attach great importance to the areas of complementarity between growth and equity. In this respect, it mentions four major areas of complementarity between these two goals, three of which are the subject of fairly general agreement (keeping the macroeconomic balances within acceptable margins; investment in human resources, and a policy of full employment in productive activities); the fourth is less generally agreed but is strongly supported by ECLAC: the need for the rapid, large-scale spread of technology.

DIFFERENCES BETWEEN GROWTH AND EQUITY IN AN ECONOMY.

Growth, is the process by which a nation’s wealth increases over time. Although the term is often used in discussions of short-term economic performance, in the context of economic theory it generally refers to an increase in wealth over an extended period.
Equity is the concept or idea of fairness, particularly in regard to taxation, welfare or income redistribution. More specifically, it may refer to equal life chances regardless of identity, to provide all citizens with a basic and equal minimum of income, goods, and services or to increase funds and commitment for redistribution.

GDP growth can paint a very misleading picture of the health of the economy, suggesting that we are in a robust recovery when, in fact, only a small number of households are benefitting.
GDP growth is based on mean income—a simple average calculated by dividing total income (measured by GDP) by the number of people in the economy. A country with high and increasing GDP could nevertheless be quite an unpleasant one to live in.

GDP growth places the same value on $1 of new income earned by the richest member of society as it does on $1 earned by the poorest member of society. But surely society would prefer to value more highly the $1 for the poor person because society values equity to some degree and because the rich person presumably values an additional dollar much less than the poor person does. And it might be better for growth too: The poor person is more likely to spend that $1, contributing to overall demand in the economy, while the rich person is likely to save it in ways that protect wealth but may not necessarily improve growth down the line.

CAN GROWTH EXIST WITH INEQUALITY? YES

It is almost certain that a 15% growth rate will probably be accompanied by greater inequality of incomes than a 5% rate. This is simply because capabilities (except by in a rare utopian world) are unequally distributed and this is not only because of unequal educational opportunities. Any growing economy will find some sectors grow faster than others and hence, the incomes of those best suited to production in the faster growing sectors will grow proportionately more than in the other sectors. This is also independent of the political system so that even communist China has seen income inequalities (measured by the Gini coefficient or whatever) increase over the last decade or so.

There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s. Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality. Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes.