Critically comment on the following statements as they refer to middle-income developing countries (1 page )...

Critically comment on the following statements as they refer to middle-income developing countries (1 page )

"For developmental macroeconomics, technological progress and the production of capital goods depend on demand conditions rather than on supply conditions"

Expert Solution

Demand condition:

Middle income group countries relatively exhibit the features of developed countries. These countries have satisfactory level of infrastructure.
Hence, Aggregate Demand (AD) plays crucial role in deciding the level of economic activities.
Rise in the demand for output automatically leads to the more investment in capital goods and technological development.
Fall in demand holds back investment on these capital goods and technological development.

Supply condition:

But here supply side can not be neglected while studying overall capital investment and technological development. These countries do not have sufficient capital base either. These countries are dependent on developed countries. Thus, supply side also influence level of technological progress and production of capital goods.

To conclude, we can not squarely be dependent on demand side for technological progress and production of capital goods. Hence, Supply side should also be considered.

Rahul Sunny answered 1 year ago

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Critically comment on the following statements as they refer to middle-income developing countries (1 page )...

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