What do you think would be the Cobb-Douglas single best prescription for poor countries to catch up with the rich?

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The question asks about the Cobb-Douglas single best prescription for poor countries to catch up with rich ones, so we should evaluate each option against the standard growth framework.
Option 1: 'to increase their stock of capital' This is a component many growth models (including Cobb-Douglas with capital accumulation) emphasize: higher capital per worker can raise output. However, simply increasing capital without addressing efficiency or allocation may yield diminishing returns, misallocation risks, or underutilization if the economy isn’t using the capital well. The prescription may be necessary but not necessarily sufficient on its own.
Option 2: 'to increase their labor force' Growing the labor supply can boost potential output, but in a Cobb-Douglas framework the long-run catch-up depends more on capital deepening and total factor productivity rather than just more workers. Without accompanying capital accumulation or productivity gains, a larger labor force may not translate into sustained higher per-worker output, and could lower capital per worker if investment doesn’t keep pace.
Option 3: 'to find more efficient ways to allocate and use capital and labor' This aligns with the idea that technology, institutions, and policy reforms that improve how resources are allocated—ensuring that capital and labor are used where they yield the highest returns—are central to convergence. In the Cobb-Douglas context, improving efficiency (productivity, factor allocation, and institutional quality) can raise total factor productivity and the effective use of existing inputs, supporting catch-up even when parameters of the production function are shared across countries.
Option 4: 'to ask help of the rich countries' While external assistance can play a role, the Cobb-Douglas framework focuses on domestic allocation and productivity dynamics. Relying on aid or external inputs alone does not constitute the internal mechanism by which growth and catch-up are achieved in the model, and may not guarantee lasting convergence unless it translates into sustainable efficiency gains.
Option 5: 'none of the above' If the intended theoretical stance emphasizes efficiency in allocation (as in Option 3), this option would be incorrect. However, determining this depends on whether one accepts the efficiency-focused prescription as the best within the Cobb-Douglas framing, versus other considerations about the roles of capital deepening and productivity.
In sum, examining the options through the Cobb-Douglas lens suggests that improving how resources are allocated and used (Option 3) targets the core mechanism of enhancing efficiency and productivity, whereas the other options highlight components or externalities that are not by themselves the singular best prescription for convergence. The distinction lies in favoring efficiency and allocation improvements over merely expanding inputs or seeking external aid without addressing structural efficiency gains.

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What do you think would be the Cobb-Douglas single best prescription for poor countries to catch up with the rich?

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ECON*3020*W04 ECON Quiz 1- Requires Respondus LockDown Browser

What do you think would be the Cobb-Douglas single best prescription for poor countries to catch up with the rich?

View Explanation

Log in for full answers

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ECON3020W04 ECON Quiz 1- Requires Respondus LockDown Browser

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