Question
What is Leibenstein's Critical Minimum Effort Thesis? Explain its significance for the
economic advancement of developing countries.
Answer :
Word Count : 1357
Harvey Leibenstein’s Critical Minimum Effort Thesis is an important theory of economic development that explains why many developing countries remain trapped in a condition of low income, low productivity, and slow economic growth. The theory was developed by the economist Harvey Leibenstein, particularly in his work on economic backwardness and development. It focuses on the interaction between population growth, income growth, investment, productivity, and the forces that either promote or obstruct development. According to Leibenstein, a developing economy must make a sufficiently large and sustained development effort to cross a certain minimum threshold. If the effort remains below this critical level, the economy tends to return to a low-level equilibrium, while an effort above the critical minimum can set the economy on a path of sustained growth. The basic idea behind the thesis is that development does not necessarily occur automatically through small and gradual increases in income. In poor economies, an increase in income may generate forces that counteract the benefits of economic growth. One of the most important of these forces is population growth. When per capita income rises slightly above the subsistence level, mortality tends to decline because people have better access to food, sanitation, and basic health services. However, fertility may remain high for some time. As a result, population increases rapidly. The additional population absorbs much of the increase in national ____ ____ ______ ___ ______.
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Harvey Leibenstein’s Critical Minimum Effort Thesis is an important theory of economic development that explains why many developing countries remain trapped in a condition of low income, low productivity, and slow economic growth. The theory was developed by the economist Harvey Leibenstein, particularly in his work on economic backwardness and development. It focuses on the interaction between population growth, income growth, investment, productivity, and the forces that either promote or obstruct development. According to Leibenstein, a developing economy must make a sufficiently large and sustained development effort to cross a certain minimum threshold. If the effort remains below this critical level, the economy tends to return to a low-level equilibrium, while an effort above the critical minimum can set the economy on a path of sustained growth. The basic idea behind the thesis is that development does not necessarily occur automatically through small and gradual increases in income. In poor economies, an increase in income may generate forces that counteract the benefits of economic growth. One of the most important of these forces is population growth. When per capita income rises slightly above the subsistence level, mortality tends to decline because people have better access to food, sanitation, and basic health services. However, fertility may remain high for some time. As a result, population increases rapidly. The additional population absorbs much of the increase in national ____ ____ ______ ___ ______.
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