Gabriela Valdes 1 Chapter Question Essay example

1057 Words Sep 27th, 2014 5 Pages
Chapter 3
1. What is the relationship among property right, corruption, and economic progress? How important are anticorruption efforts in the efforts to improve a country’s level of economic development? Corruption can reduce growth but also how it can increase growth, for example, by avoiding bureaucratic delays. The results of cross-country empirical literature on the effect of corruption on growth are mixed. Since corruption is an incendiary topic that elicits much anger, it is also important to exercise caution and to pursue rational anti-corruption policies. The issue of data collection and accurate detection of corruption is vital again in this case, since sanctioning an entire group of people for corruption when only a subgroup
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The system even limited the actions of private companies, requiring them to get government approval for routine business activities. Production quotas and high import tariffs also stunted the development of a healthy private sector, as did restrictive labor laws that made it difficult to fire employees. Foreign exchange restrictions, limitations on foreign investment, controls on land use, and managed prices further exacerbated the situation. It would appear that India’s rate of economic growth was negatively affected during this time frame. By 1994, India’s economy was still smaller than Belgium’s despite having a large population. Both GDP and literacy rates were very low, and some 40 percent of the population lived in poverty.
C. How would privatization, deregulation, and the removal of barriers to foreign direct investment affect the efficiency of business formation, and the rate of economic growth in India during the post-1990 time period?
In 1991, India’s government embarked on an ambitious economic reform program. So far, the response to the program has been impressive. The economy expanded at an annual rate of about 6.3 percent from 1994 to 2004. Foreign investment is up from $150 million in 1990 to $6 billion in 2005. Certain sectors of the economy including information technology and pharmaceuticals have done particularly well. Still, problems persist. Actions taken by the government continue to limit efficiency gains for private

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