Gerschenkron Model

ECONOMIC HISTORY Answers Reading I 1. In the issue of England, the agricultural sector played a key role in industrialization. This is mainly because, the amplification in productivity in the sector direct to an increase in the workers income, and this increase made possible for them to save more. The increase in savings led to an increase in investment in the industrial sector. When we are talking about a disinclined country, the mathematical operation cannot be imitated.Backward countries had a traditional agriculture, and at that place was not an increase of productivity, so the agricultural sector could not finance the aftermaths of slap-up needed. Also it was such(prenominal) easier to borrow money from institutions than being dependent of the agriculture. 2. Although Rostow thought that countries followed a stage-like mannequin of development, Gerschenkron firmly disagreed with this assumption Rostow implied that all countries repeat the same action of industrializa tion this could be seen as a inescapable law of scotch development.The process of industrialization of the advance countries was not the same as of the backward countries. For example, England did not stupefy any institution to finance its industrialization, in contrast to the late-comers, who had a whole international financing system built. This advantage of backwardness is what the Gerschenkron sit around is about. Each country had its own process of industrialization and it did not wealthy person to follow certain stages. 3. In order to industrialize, backward countries need to import large amounts of capital.The technology import go away come from the advance countries, and pass on help the relative backward countries to become advanced. The process of industrialization of these countries will take, in fact, much less time compared to the advanced countries, because the technology imported is far more efficient than those used in first arse by the advanced countries when they were in the middle of the process. Since they have access to this overbold technology that the advanced countries did not have, these countries have an advantage for being backward economies. However, hese advantages do not come naturally to the country, but it is the government that require to use the advantage in their favor in order to bring home the bacon a modern economy in less time. 4. a) Big fashion In the text Gerschenkron refers uses the term to constitute the moment when the industrialization in a backward country begins, and there is a rapid economic growth. It is closely related to Rostows take-off but the high-risk spurt focuses on the manufacturing and mining sector b) Missed opportunity This term it is used to describe the failure of applying the proper substitutions in a given economy in order to obtain a big spurt.Like the case of Bulgaria when there was a failure to make the proper substitutions and there was not a big spurt. 5. The prerequisites for i ndustrial growth are a) Abolition of an archaic framework in agricultural organization In order to increase the productivity of trim and of Labor, so there can be an increase of supply to plaque the increase of demand (due to the increase of population).This will increase the workers income, allowing them to save more, and therefore invest in the industry sector. b) Creation of a modern elite that seek economic growth In Europe, the magisterial class had no interest in changing their way of animateness (serfdom), so in order to access industrialization there is a need to create a group of influential entrepreneurs that seek a modern economy that is more productive and efficient. ) Provision of a hearty over-head capital in physical form In the backward countries, there is a need of capital in order to industrialize. The government essential seek this capital by borrowing it from financial institutions. Getting the capital by themselves was not an option, since there was not en ough savings and it would have took much longer than just borrowing the capital.