Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 22: Problem 11

People who live in rural areas often have less access to capital and, as a result, their productivity is lower on average than the productivity of people who live in cities. An article in the New York Times quoted a financial analyst as arguing that "the core driver" of economic growth in China "is the simple process of urbanization." a. What does the analyst mean by the "process of urbanization"? b. If the analyst is correct that urbanization is the core driver of economic growth in China, would we expect that China will be able to continue to experience high rates of economic growth in the long run? Briefly explain.

Short Answer

Expert verified
The 'process of urbanization' refers to the shift of population from rural areas to urban sectors, often contributing to economic growth by increasing labor availability and productivity. If urbanization is indeed the core driver of economic growth in China, high growth rates might be sustained if China addresses challenges associated with urbanization such as overpopulation, infrastructure strain, and increased inequality effectively.

Step by step solution

01

Understanding Urbanization

In economic terms, the 'process of urbanization' usually refers to the shift of population from rural areas to urban areas. It's characterized by an increase in the proportion of people living in urban areas and is often driven by the prospect of better living conditions, employment opportunities, and access to services and facilities, which are typically more readily available in cities than in rural areas.
02

Implications of urbanization on China's economic growth

If urbanization is indeed the core driver of economic growth in China, then the continuous shift of population from rural to urban areas might be a contributing factor to China's steep economic growth. When more people move to cities, it implies that there will be more labor force potentially available for urban industries. This may lead to increased production, which in turn may contribute to overall economic growth.
03

Predicting China's future economic growth

In predicting whether China will be able to continue experiencing high rates of economic growth due to urbanization, several factors should be considered. While the influx of people into cities can boost productivity, it may also give rise to challenges such as overpopulation, strain on public services and infrastructure, and increased inequality. Therefore, maintaining high growth rates will depend on how efficiently China manages urbanization and overcomes these challenges. For instance, advancements in technology and industrialization, effective public policies, and infrastructural development are critical to maintaining productivity and ensuring sustainable growth.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What are the main reasons many poor countries have experienced slow growth?

What are the consequences for growth of diminishing returns to capital? How are some economies able to maintain high growth rates despite diminishing returns to capital?

Briefly explain whether any of the following policies are likely to increase the rate of economic growth in the United States. a. Congress passes an investment tax credit, which reduces a firm's taxes if it installs new machinery and equipment. b. Congress passes a law that allows taxpayers to reduce their income taxes by the amount of state sales taxes they pay. c. Congress provides more funds for low-interest loans to college students.

(Related to the Apply the Concept on page 742) Economist Charles Kenny of the Center for Global Development has argued: The process technologies-institutions like laws and inventory management systems that appear central to raising incomes per capita flow less like water and more like bricks. But ideas and inventions \(-\) the importance of [education] and vaccines for DPT - really might flow more easily across borders and over distances. If Kenny is correct, what are the implications of these facts for the ability of low-income countries to rapidly increase their rates of growth of real GDP per capita in the decades ahead? What are the implications for the ability of these countries to increase their standards of living? Briefly explain.

(Related to the Apply the Concept on page 742) In his book The White Man's Burden, William Easterly reported: A vaccination campaign in southern Africa virtually eliminated measles as a killer of children. Routine childhood immunization combined with measles vaccination in seven southern African nations starting in 1996 virtually eliminated measles in those countries by \(2000 . \mathrm{A}\) national campaign in Egypt to make parents aware of the use of oral rehydration therapy from 1982 to 1989 cut childhood deaths from diarrhea by 82 percent over that period. a. Is it likely that real GDP per capita increased significantly in southern Africa and Egypt as a result of the near elimination of measles and the large decrease in childhood deaths from diarrhea? If these events did not increase real GDP per capita, is it still possible that they increased the standard of living in southern Africa and Egypt? Briefly explain. b. Which seems more achievable for a developing country: the elimination of measles and childhood deaths from diarrhea or sustained increases in real GDP per capita? Briefly explain.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free