Question

Briefly explain the vicious circles. Can you give two more examples of vicious circles that might affect a less - developed economy? Summarise the various aspects of Rosenstein Rodan's theory of "Big Push" by incorporating the "vicious circles approach".

Answer 1

A Vicious Circle is an iterative procedure that produces negative outcomes that bolster into the following emphasis bringing about regularly exacerbating outcomes. It is related with foolish practices and weaknesses that are hard to overcome. For instance:

Client Service:- Poor client administration may bring about antagonistic and unpleasant associations with clients bringing about low worker fulfillment and business related pressure. This may prompt declining client benefit and the cycle rehashes.

Advancement:- Associations that neglect to advance may lose imaginative and sure workers who are well on the way to create development. It might likewise turn out to be progressively hard to enlist ability as their notoriety goes into decay. This prompts decreased ability to advance.

Manageabilit:- At the point when a stream is perfect and lovely individuals may not set out to dirty it. At the point when a waterway is dangerous and fixed with liter individuals may not feel as awful to utilize it as a dumping ground.

Neediness:- Neediness can bring about wellbeing, social and instructive snags that prompt more destitution.

Rosenstein Rodan's theory: - The theory of big push is a modern version of an old idea of external economies’. He argued that at an early stage of development, the investments of industrializing firms in one sector may increase the profitability of other sectors throughout the economy. Simultaneous industrialization of many sectors of the economy could be profitable for them all, even though no sector would be profitable industrializing alone. As a result, an underdevelopment trap was possible. Even the market mechanism need not succeed in coordinating the activities needed to ensure development. He particularly concerned with income effects associated with increasing returns industries. The theory of big push envisages massive investment at the very outset of the process of growth. In its absence, the process of growth may not be self-sustaining. The theory envisages the need for investment across different channels of growth so that each channel sustains the growth of other by providing the necessary demand-base. Thus, it leads towards the Balanced Growth of the system.