SENRIG FREE BECC-114 SOLVED ASSIGNMENT 2022-2023 – IGNOU Assignment 2023-24 Every IGNOU candidates need to write and submit their assignments to the study center before the maturity . If anyone fails to try to to so then he/she cannot attend the Term End Exam conducted by IGNOU within the month of June and December.


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 Long Answer Questions (word limit-500 words)

Q1) Discuss the theory of demographic transition.

In demography, demographic transition is a phenomenon and theory which refers to the historical shift from high birth rates and high death rates in societies with minimal technology, education (especially of women) and economic development, to low birth rates and low death rates in societies with advanced technology, education and economic development, as well as the stages between these two scenarios.

Although this shift has occurred in many industrialized countries, the theory and model are frequently imprecise when applied to individual countries due to specific social, political and economic factors affecting particular populations. However, the existence of some kind of demographic transition is widely accepted in the social sciences because of the well-established historical correlation linking dropping fertility to social and economic development. Scholars debate whether industrialization and higher incomes lead to lower population, or whether lower populations lead to industrialization and higher incomes.

Scholars also debate to what extent various proposed and sometimes inter-related factors such as higher per capita income, lower mortality, old-age security, and rise of demand for human capital are involved History The theory is based on an interpretation of demographic history developed in 1929 by the American demographer Warren Thompson (1887–1973). Adolphe Landry of France made similar observations on demographic patterns and population growth potential around 1934.

In the 1940s and 1950s Frank W. Notestein developed a more formal theory of demographic transition. By 2009, the existence of a negative correlation between fertility and industrial development had become one of the most widely accepted findings in social science. The Jews of Bohemia and Moravia were the among the first populations to experience a demographic transition, in the 18th century, prior to changes in mortality or fertility in other European Jews or in Christians living in the Czech lands.

2) Explain the basic propositions of dependency theory. Discuss the three approaches to dependency theory in the context of Latin America.

Latin American dependency theory is a strand of political-economic thought that developed out of the UN Economic Commission for Latin America and the Caribbean (ECLAC) shortly after World War II.Dependency theorists sought to explain persistent levels of under-development in Latin America by situating national economies within their global economic context. Notable scholars in this intellectual tradition include Raúl Prebisch, Fernando Cardoso, and Andre Gunder Frank, and dependency theory as articulated by Latin Americanists came to later influence the world-systems analysis promoted by Immanuel Wallerstein, Giovanni Arrighi, and Christopher Chase-Dunn.

Dependency theory argues that under-development as experienced in Latin America and elsewhere is the direct result of capital intervention, rather than a condition of “lacking” development or investment. Prebisch, Gunder Frank, and others put forth that the very same processes that generate high-incomes in Western Europe and the United States are those that maintain the rest of the world in a state of dependency vis-à-vis wealth extraction. Rather than looking towards country-level characteristics to explain development, as per earlier theorizations, dependency theory asks that social scientists reorient their analyses to attend to the global economic forces that dictate development disparities both between and within nation-states. In the neoliberal era, dependency theory’s key theoretical insight — that global capital flows structure development and under-development — remains highly relevant.

This essay traces the intellectual lineage of dependency theory as articulated in Latin America, several competing strands of thought from scholars working in this tradition, and some consequences of dependency theory for policy praxis and social science research.

Dependency theory as an intellectual movement emerged as a response to modernization theory, a quasi-evolutionary model of economic development that posited that nations move linearly through successive stages of growth (Gunder Frank 1969; Rostow 1959). Economist William Rostow, one of modernization theory’s chief architects, proposed five distinct stages of economic development, beginning with “traditional,” agrarian societies, moving upward through greater investment in manufacturing, before culminating in an urbanized national economy oriented towards the mass production of consumer goods (Ibid.). In response, ECLAC economist Raúl Prebisch and Andre Gunder Frank argued that Rostow’s model assumes a false dichotomy between “traditional” and “modern” societies, and disputed Rostow’s presumption of a global economic structure that would allow for all nations to pass through these stages successfully (Prebisch 1962).

Prior to joining ECLAC, Prebisch served as Argentina’s chief trade diplomat during the 1930s, when a British market crash heavily affected demand for Argentina’s primary exports, beef and grains (Dosman 2008). Attuned to how closely Argentina’s economic fortunes depended on the health of northern markets, Prebisch worked with UN economist Hans Singer to develop the Prebisch-Singer thesis, which formalized one of dependency theory’s primary tenets.

Prebisch and Singer used trade data between wealthier, northern countries and Latin America to analyze the aggregate terms of trade of these interactions, ultimately concluding that an imbalance inherent to this exchange resulted in a constant flow of capital out of Latin America (Prebisch 1959). While Latin American countries exported primary goods like food products, lumber and minerals to the Global North, they tended to re-import manufactured products from these same countries. The value added to these manufactured commodities — typically constructed from the primary inputs imported earlier — generated profit for northern countries while maintaining Latin American countries in a perpetual trade deficit. This wealthy global core exists in a semi-permanent extractive relationship with a low-income periphery.

Medium Answer Questions (word limit-250 words)

4) Explain the key results of the efficiency wage model. Derive efficiency wage equilibrium using the neo-classical framework

What Are Efficiency Wages?

In labor economics, efficiency wages are a level of wages paid to workers above the minimum wage to retain a skilled and efficient workforce. Efficiency wage theory posits that an employer must pay its workers high enough so that workers are incentivized to be productive and that highly skilled workers do not quit. Efficiency wages may also be paid to workers in industries that require a great deal of trust—such as those working in precious metals, jewels, or finance—to help ensure that they remain loyal.

Efficiency wage theory helps explain why firms seem to overpay for labor by arguing that these increased wages boost overall productivity and profitability for a firm over the long run.

Understanding Efficiency Wages

Efficiency wages were theorized as far back as the 18th century when classical political economist Adam Smith identified a form of wage inequality where workers in some industries are paid more than others based on the level of trustworthiness required. For instance, Smith identified that those working for goldsmiths or jewelers, while often just as skilled as those working for blacksmiths or other craftsmen, were paid relatively more per hour. Smith supposed that this must be due to the need to incentivize such workers from stealing these more valuable products.

In more modern contexts, efficiency wages refer to the fact that many employers do not slash wages to the minimum wage, even in the face of competition from other firms or during periods of recession when an eager supply of unemployed labor is abundant. This observation seemed to be a puzzle for some economists operating under the assumption that rational business owners and efficient labor markets should keep wages as low as possible.

The solution to this puzzle is that efficiency wages solve a principal-agent problem so that without such high wages, employers would be hard-pressed to keep their workers productive and loyal.

Why Pay Efficiency Wages?

Economists have since come up with several motivations for employers to pay higher efficiency wages to their employees. The most common include:

Reduce employee turnover: Higher wages discourage workers to quit. This is especially important if hiring and training new workers is a time-consuming and costly pursuit.

Raise morale: Similarly, an efficient wage can keep workers happier and minimize the number of disgruntled employees who can bring down morale among others and slow down production.

Increase productivity: Higher wages lead to more productive workers who produce relatively more goods per hour and show greater effort. These wages also reduce so-called shirking (being lazy on the job) and cut down on absenteeism.

Attract and retain skilled workers: While unskilled workers may be viewed as somewhat interchangeable from the perspective of management, highly skilled workers are often in higher demand and shorter supply.

Trust and loyalty: Higher-paid workers tend to be more loyal to a company and are far less likely to steal or undercut the company’s bottom line.

5) Distinguish among private goods, Community Property Recourse (CPR), and public goods. Explain why a CPR is an “incomplete property right.”

Public Goods Most of the economic theory that you have studied up till now is concerned solely with private gooh. These goods have the property that if one person consumes a particular good, it is not available to others for consumption. For example, the eating of an apple by ohe individual. Certain goods do not have this property. Consider, for example, street lights. The amount of street light in a given area is fixed – all the people in the street have the same potential consumption. Furthermore, consumption of streetlight by one person does not reduce the supply available for other individuals. Goods of these types are called public goods; other examples are knowledge, national defense, clean air and so on. / Definition: A public good is a commodity$~r which use of a unit of the good by one ugent does no[ preclude its use by ofher agents. Unlike private goods, public goods are not consumed by economic agents individually but used collectively by society.

Everyone can simultaneously obtain benefits from them4 .The characteristic that enjoyment of a public good by one individual does not reduce its availability to others is known as non-rivalry. Many natural resources or ecosystem services are to some extent “public” in this sense. The global climate is the purest example of a public good. The private provision of public goods generates a special type of externality: if one individual provides a unit of a public good, all individuals benefit. As a result, private provision of public goods is typically Pareto inefficient.

Optimal Provision of Public Goods The problem now is to determine how much of apublic good or bad should be provided. The standard approach in the case of private goods is to use price mechanism to allocate resources eficiently between different goods. For public goods, however, we have seen that non-excludability invalidates the use of price mechanism for resource allocation. Samuelson Rule for the Provision of Public Good Consider an economy with two persons and two goods; one public good and the other private good.

The amount of the public good is denoted by x, and the amount of the private good consumed by individual i be denoted by yl, i = 1,2. Note that because the level of consumption of the public good must be the same for each consumer, the argument x does not have i subscript. The technological possibilities of the economy are described by a transformation function T(x,y,+y2). The hnction T(.,.) tells us how much of the private good is required to produce one unit of the public good

6) Differentiate between:

(a) Linear theories of underdevelopment and structural theories of underdevelopment.

Overview of the Linear-Stages-of-Growth Models

Development theory is a conglomeration of theories about how desirable change in society is best achieved (Todaro & Smith, 2012). One of the key development models is the linear stages of growth model. The Linear Stages of Growth model is an economic model which is heavily inspired by the Marshall Plan of the US which was used to rehabilitate Europe’s economy after the Post-World War II Crisis. The linear stages of growth models are the oldest and most traditional of all development plans. It was an attempt by economists to come up with a suitable concept as to how underdeveloped countries of Asia, Africa and Latin America can transform their agrarian economy into an industrialized one.

Overview of the Structural Change Model

In economics, structural change is a shift in the basic way a market or economy functions or operates (FREE BECC-114 SOLVED ASSIGNMENT 2022-2023 ). The structural change model demonstrates how a country’s economy transforms from the subsistence level which is concerned with agricultural produce for personal consumption to a modern industrial economy with greater output for worldwide consumption.

In order to illustrate the structural change model, we’ll consider two approaches, they are:

  • Two-sector surplus labor theoretical model which was developed by Nobel Laureate W. Arthur Lewis.
  • Patterns of demand analysis formulated by Hollis B. Chenery

(b) Positive externalities and negative externalities.

What is an externality?

An externality is a cost or benefit associated with the production or consumption of a product or service. Externalities affect third parties who don’t take part in the production of a product and don’t consume the product or service. Economists input all costs and benefits to assign value to an externality and qualify this as a cost or benefit. If a product helps society, it’s a positive externality, but if the effect of production or consumption does more harm than good for society, it’s a negative externality.

What are positive and negative externalities?

A positive externality is a benefit of producing or consuming a product. For example, education is a positive externality of school because people learn and develop skills for careers and their lives.

In comparison, negative externalities are a cost of production or consumption. For example, pollution is a negative externality that results from both producing and consuming certain products. Externalities are often environmental, so it’s important for businesses and consumers to create and enjoy products responsibly.

Positive externalities of production

Positive externalities of production are benefits for society that result from the production of a product or services. Businesses that manufacture the goods are responsible for these. An important characteristic of positive externalities of production is that even though a company does something that benefits society, they do not receive additional payment or compensation for this service.

Negative externalities of production

Negative externalities of production are a cost at the expense of a third party. These are harmful effects on society that result from a business producing its product or services. For example, pollution is a negative externality of production because it harms the environment, which is a third party uninvolved with the manufacturing or consumption of products that create pollution.


(c) The internationalistic approach to globalization and globalistic approach to globalisation.

Globalization, or globalisation (Commonwealth Englishsee spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term globalization first appeared in the early 20th century (supplanting an earlier French term mondialization), developed its current meaning some time in the second half of the 20th century, and came into popular use in the 1990s to describe the unprecedented international connectivity of the post-Cold War world. Its origins can be traced back to 18th and 19th centuries due to advances in transportation and communications technology. This increase in global interactions has caused a growth in international trade and the exchange of ideas, beliefs, and culture. Globalization is primarily an economic process of interaction and integration that is associated with social and cultural aspects. However, disputes and international diplomacy are also large parts of the history of globalization, and of modern globalization.

Economically, globalization involves goods, services, data, technology, and the economic resources of capital. The expansion of global markets liberalizes the economic activities of the exchange of goods and funds. Removal of cross-border trade barriers has made the formation of global markets more feasible. Advances in transportation, like the steam locomotivesteamshipjet engine, and container ships, and developments in telecommunication infrastructure, like the telegraphInternetmobile phones, and smartphones, have been major factors in globalization and have generated further interdependence of economic and cultural activities around the globe

 7) Write short notes on the following.

(a) The Harris-Todaro model.

The Harris–Todaro model, named after John R. Harris and Michael Todaro, is an economic model developed in 1970 and used in development economics and welfare economics to explain some of the issues concerning rural-urban migration. The main assumption of the model is that the migration decision is based on expected income differentials between rural and urban areas rather than just wage differentials. This implies that rural-urban migration in a context of high urban unemployment can be economically rational if expected urban income exceeds expected rural income.


Therefore, migration from rural areas to urban areas will increase if:

Wages increase in the urban sector, increasing the expected urban income.

Agricultural productivity decreases, lowering marginal productivity and wages in the agricultural sector (wA), decreasing the expected rural income.

However, even though this migration creates unemployment and induces informal sector growth, this behavior is economically rational and utility-maximizing in the context of the Harris–Todaro model. As long as the migrating economic agents have complete and accurate information concerning rural and urban wage rates and probabilities of obtaining employment, they will make an expected income-maximizing decision.


(b) Social Capital.

What Is Social Capital?

The term social capital refers to a positive product of human interaction. The positive outcome may be tangible or intangible and may include favors, useful information, innovative ideas, and future opportunities. Social capital is not held by an individual, but instead appears in the potential between social network connections between individuals.

It can be used to describe the contribution to an organization’s success that can be attributed to personal relationships and networks, both within and outside an organization. It can also be used to describe the personal relationships within a company that help build trust and respect among employees, leading to enhanced company performance.

Understanding Social Capital

Social capital allows a group of people to work together effectively to achieve a common purpose or goal. It allows a society or organization, such as a corporation or a nonprofit, to function together as a whole through trust and shared identity, norms, values, and mutual relationships. Put simply, social capital benefits society as a whole through social relationships. As such, the study of how social capital works or fails to work pervades the social sciences.

(c) Sustainable Development.

  • Sustainable development can be defined as an approach to the economic development of a country without compromising with the quality of the environment for future generations. In the name of economic development, the price of environmental damage is paid in the form of land degradation, soil erosion, air and water pollution, deforestation, etc. This damage may surpass the advantages of having more quality output of goods and services.

Sustainable Development Goals

  • To promote the kind of development that minimises environmental problems.
  • To meet the needs of the existing generation without compromising with the quality of the environment for future generations.

Achieving Sustainable Development

  • Sustainable development can be achieved if we follow the following points:
  • It can be achieved by restricting human activities.
  • Technological development should be input effective and not input utilising.
  • The rate of consumption should not surpass the rate of salvation.
  • For renewable resources, the rate of consumption should not surpass the rate of production of renewable substitutes.
  • All types of pollution should be minimised.
  • It can be achieved by sensible use of natural resources


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