Bastobota without reality chara

Environment plays a significant role in any economy. The world has become increasingly conscious about environmental issues since the 1970s. The Brundlandt report, “Our Common Future”, published in 1987 by World Commission on Environment and Development was a landmark publication that helped promote consciousness about environment. Another landmark event was the ‘Earth Summit’ convened in Rio de Janeiro in 1992 by the United Nations Conference on Environment and Development (UNCED). In this conference the Heads of States from all over the world adopted ‘Agenda 21’ - a list of concrete actions. Many of these promised actions have not been implemented yet. There is still much controversy about how to proceed. One fundamental controversy surrounds the relationship between economic development (growth) and environment.

Development and Environment: The anti-growth view

One school of thought believes that the quest for rapid economic growth is a fundamental cause for environmental damage and therefore not much can be done to save the environment unless people become less materialistic and learn to be satisfied with less economic growth. There are several types of environmental damage. The two most important are: resource depletion and environmental pollution. Common sense seems to suggest that there is indeed an antagonistic relationship between development and environment, for two reasons:

• More growth means more production, which in turn means more use of resources, and hence resource depletion. Examples: power stations are burning up fossil fuels; consumers and factories are using up forest resources; extension of cultivation into fragile lands is causing soil erosion and desertification; extensive irrigation in modern farming is drying up water reservoirs, etc.

• More production also means more pollution since pollution is usually the by-product of production. Examples: acid rain, hole in the ozone layer, air pollution, water pollution, etc.

Both kinds of environmental damage - depletion and pollution - endanger the prosperity, and even the survival, of future generations. Resources are of two types: renewable (ex. trees) and non-renewable (ex. oil). Depletion of non-renewable resources is seen clearly to endanger future prosperity, because whatever is used up today will not be available in future. Depletion of renewable resources is also thought to endanger future prosperity because it is argued that we are now depleting these resources much faster than they are able to regenerate themselves in the natural process. Thus, ‘environmental capital’ is rapidly depreciating, in respect of both renewable and non-renewable resources. Pollution also obviously endangers the future generations, by threatening to damage their health, their productivity, and in extreme cases, their very survival. So, economic growth is seen to be benefiting the present generation at the cost of future generation.

The new demand is for restraining growth. In some quarters, this demand takes the extreme form of turning the clock back on modernisation and returning to traditional life-styles. In less extreme form, this demand is expressed as a demand for ‘sustainable development’. This phrase was popularised by the Brundlandt report. There is a good deal of controversy on exactly what the phrase means. Roughly speaking, sustainable development means maintaining a kind of inter-generational equity: trying to meet today’s basic needs without seriously jeopardising the basic needs of future generations.

Development and Environment: A False Dichotomy

The other side of the debate argues that it is wrong to blame development or growth for environmental damage. Rather, development is said to be essential for protecting the environment and for protecting the poor from the worst consequences of environmental damage.

The argument proceeds along several lines.

Population pressure, environment and development
According to this line of argument, much of the environmental damage in the developing world is being caused by population pressure; and economic growth is essential to prevent this damage.

Example 1: Shifting cultivation. This form of cultivation uses up lots of land and burns up lots of plants and trees. When population density was low and land was plentiful, this system was justified. But as population growth has intensified, this system is causing unprecedented pressure on land leading to soil degradation and desertification. This is hurting the poor farmers themselves.

The solution lies not in clinging on to the traditional life style, but in adopting modern agricultural practices - intensive agriculture on limited amounts of land using modern technology i.e., to produce more and more food from the same piece of land - in other words, we need growth. Furthermore, growth is needed because only with higher income will come demographic transition, lower fertility and hence lessening of the population pressure that is causing the problem in the first place.

Example 2: Tragedy of the Commons. Traditional societies used to have ‘common property resources’ (CPR) i.e., properties owned by the whole community rather than individual persons or families. Ex. common grazing land, common water resources for fishing, common woodlands for collecting wood and fruits, etc.

The use of CPRs creates negative externality. When I use up these resources, only I gain from their use, but the loss of resources is shared by everybody. In pursuing my own gain, I inflict a loss on others - that is the negative externality. Social cost is thus greater than private cost. So, CPRs tend to be used up more than is socially desirable. In traditional societies, this tendency was curbed by imposing some kind of social sanctions on those who behaved selfishly. But as population pressure increased, competition for resources increased, social discipline broke down. CPRs began to be depleted rapidly - ‘tragedy of the commons’.

The solution lies in part in population control, but that is not possible with economic growth.

The poverty-environment nexus
This line of argument says that just as poor people are suffering the most from environmental damage, their poverty is also acting as a cause of environmental damage. There is a vicious circle here: poverty - environmental degradation - more poverty - more environmental damage, and so on. Growth is needed in order to break this circle. How does poverty cause environmental damage?

Example 1: Resource depletion. Poor people typically do not have enough land to earn a living, nor do they have the resources to invest modern inputs (such as fertilizers) heavily on their land to produce more food from the same plot. So, they look for new land. When the best lands are taken up, they move on to ‘marginal land’ i.e., fragile land which is not suitable for cultivation. The result is soil erosion, desertification, etc.

Also, they begin to exploit forest products, cutting trees, to build houses, to use as fuel and to sell to the market. Result is deforestation, soil erosion, desertification.

Example 2: Pollution. Poorer people have poorer facilities for clean water and sanitation. As a result, environmental hygiene is very bad in the localities where the poorest people live. This is responsible for many diseases, malnutrition and death. People talk of urban pollution from cars, factories etc. But the fact is that more people die of air pollution in rural areas than from air pollution in urban areas. In rural areas, air pollution takes the form of indoor pollution resulting from the burning of wood, dung, crop residue etc. for cooking and heating. These fuels emit toxic matter; cause respiratory diseases - a major cause of death in developing countries.

So, economic growth is needed to avoid these types of poverty-induced environmental degradation.

Environmental Kuznets Curve
This line of argument points to the fact increasing environmental pollution is not a necessary consequence of economic growth. It is true that initially pollution may rise with economic growth; but eventually growth itself will provide the resources required for controlling pollution. In other words, there is an environmental Kuznets’ curve - an inverted U-shaped curve: pollution first rises and then falls with economic growth. That’s why, the streets and the air of rich countries are much cleaner than those of say, China or Brazil.

The fact is that the rich countries can afford to take measures that limit the amount of pollution emitted by a given amount of resource use, while the poorer countries cannot. For example, waste disposal from chemical factories can be processed in such a manner that only a tiny amount of pollutants will be released into air and water, but such processing costs money. Poor countries cannot afford it. So, according to this line argument, the solution of the pollution problem lies not in stopping growth, but in accelerating growth so that the poor countries can move over to the falling side of the Kuznets curve. Modern research has shown that the idea of an environmental Kuznets curve is too simplistic. The relationship between pollution and growth depends on the type of pollution. For some types of pollutants (ex. the amount of sulphur dioxide in the air), there does seem to exist a Kuznets curve.

For other types (ex. urban sanitation), however, the relationship is downward sloping all throughout. For yet other types (ex. carbon dioxide emission), the general relationship is upward sloping. This last type is especially worrisome, for it cannot be reduced automatically with rising income. Conscious policies will be needed to curb it.

The basic lesson is: There is no inherent conflict between economic growth and environment. Nor can it be assumed, however, that economic growth will automatically take care of the environmental problem. Some environmental problems, such as those emanating from population pressure and abject poverty, will indeed be reduced by economic growth, but others will be exacerbated.

Economists and governments will have to think up policies that can strengthen the complementarities that exist between growth and environment and also policies that attenuate the conflicts that exist between the two. This is an active area of current environmental research.

The last two decades have been characterized by a set of changes that have modified the global political, economic, and social context of Latin American countries. In the early 1980s, the implementation of the so-called neoliberal economic model in the countries of the region totally changed the conception of “the rural” without prioritizing the role of rural areas in national economic development processes. The rural economy and small communities have been viewed mainly as the suppliers of labour for urban economic activity, with the consequent permanent migration of rural workers to work in urban areas or seasonal agro-export activities, leading to the gradual disappearance of small-scale rural agriculture.

In rural areas of Latin America and the Caribbean, poverty and extreme poverty are multidimensional phenomena influenced by cultural, social, and economic factors and characterized by:

social and economic exclusion and discrimination linked to ethnicity and gender;
lack of access or limited access to services to meet the basic needs of rural families (health, education, housing, and others); and
income levels below the minimum amount needed to obtain a basic set of goods and services, including food, for the family

Structural poverty (or “hard” poverty) is found mainly among indigenous communities and groups, rural women, and other ethnic minorities living in rural areas of the region. Those affected by this type of poverty generally have little or no schooling, few or no productive resources, limited knowledge about production, few work skills, and lack of access to basic and rural productive services. The term transitory poverty applies to families of small farmers and rural inhabitants without land, of both sexes, who are especially vulnerable to changes resulting from structural reform processes, cyclical internal and external economic crises, and social and political instability. These types of poor people generally own or have access to small plots of land, they have some degree of market involvement, and their incomes hover around the poverty line.

Sudden changes in economic policy or the occurrence of crises affect both farm and non-farm incomes of families in this group, causing periodic declines in their earnings and living conditions. Favorable economic conditions create a climate in which they can improve their incomes and living conditions, but ultimately the transitory poor lack sufficient productive goods and resources to enable them to stabilize their family incomes during periods of economic downturn. In the case of the structural poor, the lack of job skills limits their ability to find stable employment, increasing their dependence on agricultural activities for their income and subsistence. As for the transitory poor, their level of non-farm income is often far greater than their farm income.

More than 90% of the rural poor population of Latin America and the Caribbean is concentrated in four major ecological areas: (i) mountain slopes in subtropical zones (ii) humid and semi humid tropics; (iii) subtropical valleys; and (iv) coastal plains.

Causes of poverty:
A. Historical roots of rural poverty
B. Political instability
Coups d’état, civil wars, and military governments have been a permanent fixture in the political history of most of the countries. This political instability has been exacerbated by poor public administration and the corruption of the dominant political class, which inherited control over the wealth and benefits previously held by the colonial elite. History of limited and imperfect democracy.

C. Macroeconomic models and development policies
The result was the creation in most of the countries of agricultural and industrial sectors that were strongly protected and dependent on government support policies. Because the financial resources needed to apply these policies were beyond the capacity of the countries, the governments negotiated loans with international financial institutions and the international private banking system, thus triggering the spiral of debt in the countries of Latin America and the Caribbean and ushering in what came to be called the “lost decade.” During this period, many of the countries were controlled by military governments which added the cost of arms purchases to current public expenditure.

D. Less access to land
E. Insufficient investment in human and social capital
F. Insufficient development support services
G. gender issues, and ethnic issues in rural areas

Solutions:
 Access to land and property rights
 Eliminating gender inequalities in rural areas
 Developing and strengthening local social capital
 Competitiveness and globalization of markets
 Developing technology for small farmers and small rural businesses
 Supplying effective technical assistance services
 Innovative local financial services
 Supporting small rural businesses
 Development and regulation of rural labour markets
 Market competitiveness for farm and non-farm production
 Management and conservation of natural resource


(2004)

Business :

The human activity performed by individual or organisations of manufacturing , extracting, or buying & selling of goods or providing services in exchange for other goods , services or money, to the mutual benefits of the individuals or organisation concerned .

Functions of Business

1.Production :- Production involves the manufacture of goods or provision of services.

2.Personnel functions :- This involves in concentration with obtaining the best possible types of workers and creating the environment in which they can work most efficiently by providing appropriate pay, training and working arrangements.

3.Finance :- This is essential in any business in order to pay for suppliers and invest in new equipments , building and other assets .

4.Marketing :- This involves the research of the market and the needs and requirements of the customers .

TYPES OF BUSINESS ORGANISATIONS

Sole Trader :- In this form of business organisation one person provides the capital or permanent finance & in return , retains full control of the business & enjoys all the profits . He/ she is also liable for any debts of the business.

There are no legal formalities of forming the business as a sole trader . But under the Business Act 1985 a business using a trade name must conform to 3 basic requirements: -

a)The name of the owner must be displayed on all documents.
b)The owner must disclose information relating to ownership to any one who has dealings with the business.
c)A notice concerning ownership must be displayed in the business premises.

• Advantages

The owner has his own freedom to do what ever he wants to do.
He needs not to consult with any one while taking any decision, and thus no time is also wasted.
He /she alone enjoys the profit.
He /she has personal contact with the workers and customers.
Any new business strategy being taken needs not to be disclosed to others.

• Disadvantages

The source of finance is limited.
The firm is likely to grow.
The success depends upon the owner’s energy and continuing fitness.
All loss has to be borne by him/her.
No continuity possible if the owner dies.

Partnership : A partnership is an association of individuals and is not a legal entity in its own right . Consequently it cannot sue or be sued in its own name, but instead each of the partners has to be named. Each partner is liable for any debt of the business. Moreover, every partner, when acting on behalf of the firm, acts as an agent of the partnership and can thus bind his or her fellow partners.

• Advantages

The source of finance is more.
As a number of partners are available, each can select each of the responsibilities of the business.
The partners share the losses.
As a number of partners are available, each of them are expected to be specialized different sectors.

• Disadvantages

The profits are shared among the partners.
There may be argument between each of the partners.
If a partner makes a decision the other partners has to agree to that decision.
The partners have unlimited liability.

 The partnership agreement should deal with :-

The nature of the business, and date of commencement.
The amount of capital put into the business by each of the partner.
The method by which the profits and losses are to be shared.
The voting rights.
The role of each partner.
The duration of the partnership, and methods of dissolving the partnership.
Arbitration procedure if partners cannot reach agreement.
Arrangements to cover absence, retirement and the admission of new partner.
Arrangements concerning finance, book – keeping, etc.
Authority to sign contracts.

 If there is no written partnership deed , then the partners :-

are entitled to an equal share of the profits .
are entitled to participate in the management of the business .
decisions are settled on a majority basis .

Limited liability (joint stock) company :- Companies differ from partnership , sole trader , in that the act of incorporation creates a new legal entity distinct from the shareholders who own the company.
Companies can make contracts and sue or be sued. All action taken by the company, including the contracting of debt, are actions of the company rather then the actions of the individual owners.
The shareholders enjoy the privilege of limited liability, which means that they are only liable for debts amounting to what they have spent on the business.

•Private Limited Companies :- This type of companies are found in the private sector , and are owned by a number of shareholders who have limited liability . The business is not allowed to sell share in the Stock Exchange.

•Public Limited Company :- This type of companies are found in the private sector , and are owned by a number of shareholders who have limited liability . The business is allowed to sell share in the Stock Exchange to raise funds.

Economic Systems

There are three main types of economic systems: free market (capitalist), plamed (command) and mixed. The difference between the three systems stems from the, amount of government interference which takes place in the production and distribution of the goods and services.

THE FREE MARKET SYSTEM (also the Laissez-faire system)

Features of this System

In the free market system, there is no government interference in the working of the economy. The price mechanism is its main feature, prices of goods and services being determined by the demands made by the consumers and by the willingness of producers to supply these goods and services.

More over the resources are owned by the individuals , not by the state .

Advantages of free market economy :-

1.People are encouraged to work hard , because opportunities exist for individuals to accumulate high levels of wealth.

2.People can spend their money how they want ; they can choose to set up their own firm or they can choose for whom they want to work.

3.Through competition, less efficient producers are priced out of the market : more efficient producers supply their own products at lower prices for the consumers, and use factors of production more efficiently.

Disadvantages of free market economy

1.As the economy is free the wealthier members of the society tend to hold most of the economic and political power, while the poorer members have much low influence. Then is an unequal distribution of resources and sometimes production concentrates on luxuries, i.e. the wants of the rich.

2.The price mechanism may not work efficiently where services need to be provided or the benefit: of society as a whole (such as defense, education and health services).

3.Since the profit motive is all-important to producers, they may ignore social costs of production, such as pollution. Short-term profit performance may be considered more important than long-term growth.

4.Although. in theory factors of production such as labour are 'mobile' and can be switched from one market to another, in practice this is a major problem and can lead to hardship through unemployment. It also leads to these scarce factors of production being wasted, by not using them to fullest advantage.

5.Some firms may use expensive advertising campaigns to sell products which are basically the same as many other- products currently on sale. Other firms, who control most of the supply of some goods, may choose to restrict supply and therefore keep price artificially high or, with other suppliers, they may agree the prices to charge and so price will not be determined by the interaction of supply and demand.

THE PLANNED SYSTEM

This is also known as the command system .

Features of this system

Unlike the market economy, where the government plays no direct role in deciding what is produced the planned system relies exclusively on the State. The government will decide what is made, how it is made, where it is made, how much is made and how distribution takes place.

The resources - the factors of production - are controlled by the government on behalf of producers and consumers. Price levels are not determined by the forces of supply and demand but are fixed by the government.

Advantages of the planned system

1.Central planning can lead to the full use of all the factors of production so reducing or ending unemployment.

2.Economies of scale become possible due to mass production taking place.

3.' Natural monopolies ' such as the supply of domestic power, or defence, can be provided by central planning

4.There is less concentration on making luxuries for those who can afford them and greater emphasis on providing a range of good and services for all the population.



Disadvantages of the planned system

1.Consumers have little influence over what is produced and people may have little say in what they do as a career.

2.Since competition between different producers is not as important as in the market economy, there is no great incentive to improve existing systems of production or work. Workers are given no real incentive to work harder and so production levels are not as high as they could be.

3.The existence of such a powerful and large bureaucracy can lead to inefficient planning and to problems of communication. Furthermore, government officials can become over privileged and use their position for their personal gain rather than for the good of the rest of the society.

THE MIXED ECONOMY

There are no economies in the world that are entirely 'market' or 'planned': all will contain elements of both systems.

Features of this system

The mixed economy includes elements of both market and planned economies. The government operates and controls the public sector firms which includes health and education. The private sector is largely governed by the price mechanism and market forces.

Advantages

1.The necessary services, which make no profit are provided in this economy.

2.As in this economy private sector is there, individuals will work hard to make profit, as all profits will be enjoyed by him.

3.Prices of goods & services in the private sector are kept down through competition taking place.

2002

Introduction:
Financial statement provides the primary means for managers to communicate about the financial condition of their organization to outside parties. Investors, lenders, financial analysts and government agencies are among the users of financial statements. In this point it falls into the external category. Investors buy capital stock, from which they hope to receive dividends and an increase in value. So they face risk, as the risk that dividends will be reduced or not paid or the market price of the stock will drop. In this case, the goal is to achieve a return that makes up for the risk taken. In general, the grater the risk taken, the grater the return required as compensation.


Ratio Analysis:
It is an important way to state meaningful relationships between companies of financial statement. Ratios are guided or short cuts that are useful in evaluating the financial position & operations of a company & in company them to provides.

The current ratio

Many creditors feel that a current ratio of 2.0 higher is relying too heavily on the current ratio may not be advisable.


1) Current Ratio = Current Asset / Current Liabilities

= 20147354 / 19624156

= 1.03

Here it is lower then the satisfactory rate.

The quick ratio

Creditors generally use the rule of thumb that a quick ratio of at least 1:1 is satisfactory.


2) Quick Ratio = Cash marketable securities and receivable (net) / Current liability

= 130642 + 73223000 + 865000 + 61854 / 19624156

= 7428496 / 19624156

= 3.78

In this case, it’s way high.


3) Current cash debt coverage ratio


Current cash debt coverage ratio = Net cash provided by operating activities /
Average current liabilities

= (493063) / 19624156

= (0.025)

This ratio at least should be positive. Here it is on minus side.

4) Receivable turnover


Receivable turnover = Net Sales / Average trade receivables (net)

= 13226625 / 865000 + 150000 + 61854

= 13226625/ 1076854

= 12.28

Creditors are interested in receivables turnover and the average age of receivables as indicators of how quickly the company’s receivables are converted into the cash required for operations and debt repayment. Investors and creditors use receivables turnover as one more index of management efficiency.


5) Asset turnover

Asset turnover = Net sales / Average total assets

= 13226625 / 8637000

= 1.5314

6) Profit Margin on sales

Profit Margin on sales = Net Income / Net sales

= (226654) / 13226625

= (0.0171)

Here profit margin on sales is on negative side. It is not at all satisfactory.


7)Rate of return on assets

Rate of return on assets = Net income / Average total assets

= (226654) / 8637000

= (0.0262)


Rate of return on Common stock equity


8)Rate of return on Common stock equity = Net income minus preferred dividends /
Average common stockholder’s equity

= (226654) / 73223000

= 0.0030

It is even lower then one.



Earnings per share


9)Earnings per share = Net income minus preferred dividends / Weighted shares
outstanding

= (226654) / 20000000

= (0.0113)

Earning per share is on negative side.


Payout ratio

10) Payout ratio = Cash dividends / Net income

= (21114) / (226654)

= 0.0931

Debt to total assets


11) Debt to total assets = Total debt / Total assets or equities

= 21434156 / 92327665

= 0.2321


Times interest earned

12) Times interest earned = Income before interest charges and taxes / Interest
charges

Cash debt coverage ratio

13) Cash debt coverage ratio =
Net cash provided by operating activities / Average total liabilities

= (280544) / 23763647

= ( 0.0118)

Book value per share

14) Book value per share = Common stockholder’s equity / Outstanding shares

= 73223000 / 20000000

= 3.66115



2001

Dependency Theory developed in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch. Prebisch and his colleagues were troubled by the fact that economic growth in the advanced industrialized countries did not necessarily lead to growth in the poorer countries. Dependency can be defined as an explanation of the economic development of a state in terms of the external influences--political, economic, and cultural--on national development policies Dependent Development is a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected….when some countries (the dominant ones) can expand and be self-sustaining, while others (the dependent ones) can do this only as a reflection of that expansion, which can have either a positive or negative effect on their immediate development.

There are three common features to these definitions which most dependency theorists share. First, dependency characterizes the international system as comprised of two sets of states, variously described as dominant/dependent, center/periphery or metropolitan/satellite. The dominant states are the advanced industiral nations in the Organization of Economic Co-operation and Development (OECD). The dependent states are those states of Latin America, Asia, and Africa which have low per capita GNPs and which rely heavily on the export of a single commodity for foreign exchange earnings. Second, both definitions have in common the assumption that external forces are of singular importance to the economic activities within the dependent states. These external forces include multinational corporations, international commodity markets, foreign assistance, communications, and any other means by which the advanced industrialized countries can represent their economic interests abroad. Third, the definitions of dependency all indicate that the relations between dominant and dependent states are dynamic because the interactions between the two sets of states tend to not only reinforce but also intensify the unequal patterns. Moreover, dependency is a very deep-seated historical process, rooted in the internationalization of capitalism.

Associated development is a part of dependent development, which came after the dependent development. Former Brazilian president Fernando Henrique Cardoso coined the phrase “associated dependent development” to describe the relationship between national political power and international economic forces in Brazil. Cardoso is a strong critic of the new authoritarian government, and is especially critical of their economic policies. Fernando Cardoso takes a look at all the different effects that development policies have taken on Brazil in the last few decades. Within this analysis Cardoso intends to prove that the regime within Brazil has brought about many changes that help Brazil as a nation, not all of the changes have been economic but some have also been social and political. Thus, the changes help to elevate Brazil to the standards that are set by the rest of the industrialized world.

Cardoso holds three main goals. The first is to take a look at how the new regime emerged and why it is different from other political movements, the second deals with other thinkers views on the regime and the third deals with Brazilian development of the future. Cardoso referred to internal conditions and attention was drawn not only to economic structures but also to social classes, the distribution of power in the society and the role of the state. He regarded that the national bourgeoisies of the dependent societies are capable of shaping development if they are potentially powerful. Cardoso is also very critical of the role of the 1964 dictatorial regime. He feels that the outstanding growth that the country has experienced under that regime is misleading. The despotic regime has allowed for a diffusion of Brazilian culture into an increasingly internationalist arena, both commercial and in the media. Cardoso also points out that the continued growth under the regime has not involved most Brazilians. The gains have been beneficial to the small middle class and elites, while the majority of Brazilians have gotten relatively poorer.

The infant-industry argument is the argument that protection is necessary to enable an infant industry to grow into a mature industry that can compete in world markets. As an example, if Bangladesh wants to produce cars, it will try to prevent importing cars from foreign countries for some times, so that in this time the car manufacturers of Bangladesh becomes efficient enough to compete with the existing car producers of the world market.

This argument of Infant industry claims that protection is warranted for small new firms especially in less developed countries. New firms have little chance of competing head-to-head with the established firms located in the developed countries. Developed country firms have been in business longer and over time have been able to improve their efficiency in production. They have better information and knowledge about the production process, about market characteristics, about their own labor market, etc. As a result they are able to offer their product at a lower price in international markets and still remain profitable. A firm producing a similar product in less a developed country, on the other hand, would not have the same production technology available to it. It's workers and management would lack the experience and knowledge of its developed country rivals and thus would most likely produce the product less efficiently. If forced to compete directly with the firms in the developed countries the LDC firms would be unable to produce profitably and thus could not remain in business.

(2003)

Initially, growth was achieved along with equity for somw countries. Equity itself stimulated further growth and growth further enhanced equity by facilitating broad-based human capital formation which will make human capital further stimulated growth and this way the circle continued. When the economy is growing rapidly, the demand for education rises because people realize that there will be enough opportunity to make use of their education. Supply of education also rises, because rapid growth enables governments as well as private entrepreneurs to find more resources for education. So, growth stimulates further human capital formation, which in turn helps to achieve rapid growth with equity; and thus the circle continues.

Empirical evidence shows that countries which have a more equal distribution of income at the initial stage tend to grow faster (Birdsall and Sabot 1995). As the countries have equality, more people will send their children to school. This will result in better health care and better education. And for these effects, portion of human capital will rise and it will lead to more growth. This will act as a circle.

(2003)

This two theories has come from some extreme free marketers( negative freedom ) who do not approve of any kind of redistribution and from Isaiah Berlin and Amartya Sen (positive freedom) who take the stand that state or government should provide some basic requirments.

Hayek and Nozick are mainly the two thinkers of positive freedom theory. This theory is not on the efficiency grounds, but on the grounds of personal liberty. Hayek gave the theory that Personal liberty is inviolable, but redistribution will violate it. He described, different people have different values; they can never agree on what an equitable distribution is. So, any attempt to deviate from the market outcome through redistribution must conflict with someone’s interests, taking away his property against his will. This will violate his personal liberty. Nozick added the proviso that each person has an inviolable right to personal property so long as that property was acquired in a legitimate manner. For both Hayek and Nozick, liberty means negative freedom - the freedom not to be coerced.

The theory of positive freedom described as “the freedom to live a decent life - freedom from hunger, illiteracy, disease, etc.” If market outcome is very inequitable, then many people will not have the resources to acquire those positive freedoms. Govt may then be right to redistribute.