Questions:
1.Briefly contrast the neo-classical theory of growth with cumulative causation theory by describing what each would predict in the following scenario. A 50,000 person metro area suffers a major loss of jobs (1500) as a result of a large business closing shop. What would each theory predict would happen in the years following the closure?
2.The City of Cary is about 25 miles east of Raleigh, though both are part of the larger Upstate region. In general, land values in Cary are lower than those in Raleigh, but it has access to a similar set of workers and transportation networks as the rest of the region.
What would the various theories that we have discussed tell you about what avenues the City of Cary might pursue in trying to grow its economy?
What are the potential difficulties that Cary might face in pursuing development?
Be specific in your ideas. Answer the questions with respect to the ideas that we have discussed in class.
Hint: think about trade theory, cumulative causation and unbalanced growth, and neoclassical theories in particular
3.The authors in Malizia and Feser argue that economic development professionals need to understand economic growth theories in order to do their jobs well.
Regardless of your own feelings about the statement, present a short counter-argument to that statement. You may draw upon issues from class or from your own opinion, but you should try to construct coherent arguments.