The Big Push Model is a concept in
development economics
Development economics is a branch of economics that deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural c ...
or
welfare economics
Welfare economics is a field of economics that applies microeconomic techniques to evaluate the overall well-being (welfare) of a society.
The principles of welfare economics are often used to inform public economics, which focuses on the ...
that emphasizes the fact that a
firm
A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...
's decision whether to industrialize or not depends on the expectation of what other firms will do. It assumes
economies of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...
and
oligopolistic
An oligopoly () is a market in which pricing control lies in the hands of a few sellers.
As a result of their significant market power, firms in oligopolistic markets can influence prices through manipulating the supply function. Firms in a ...
market structure. It also explains when the
industrialization
Industrialisation (British English, UK) American and British English spelling differences, or industrialization (American English, US) is the period of social and economic change that transforms a human group from an agrarian society into an i ...
would happen.
The major contributions to the concept of the Big Push were made by
Paul Rosenstein-Rodan in 1943 and later on by
Murphy
Murphy is an Irish surname meaning "Sea Warrior".
Origins and variants
The surname is a variant of two Irish surnames: "Ó Murchadha"/"Ó Murchadh" (descendant of "Murchadh"), and "Mac Murchaidh"/" Mac Murchadh" (son of "Murchadh") derived ...
,
Shleifer and
Vishny in 1989. Also, some contributions of
Matsuyama
270px, Matsuyama City Hall
270px, Ehime Prefectural Capital Building
is the capital city of Ehime Prefecture, on the island of Shikoku, in Japan and is also Shikoku's largest city. , the city had an estimated population of 505,948 in 243,541 h ...
(1992),
Krugman (1991) and
Romer (1986) proved to be seminal for later literature on the Big Push.
Analysis of this economic model usually involves using
game theory
Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed ...
.
The hallmark of the ‘big-push’ approach lies in the reaping of external economies through the simultaneous installation of a host of technically interdependent industries. But before that could become possible, we have to overcome the economic indivisibilities by moving forward by a certain “minimum indivisible step”. This can be realised through the injection of an initial big dose of a certain size of investment.
See also
*
Rostow's stages of growth
*
Ragnar Nurkse
Ragnar Wilhelm Nurkse (5 October 1907, Käru, Estonia – 6 May 1959, Le Mont-Pèlerin, Switzerland) was an Estonian-American economist and policy maker mainly in the fields of international finance and economic development. He is considered th ...
*
Ragnar Nurkse's balanced growth theory
*
Virtuous circle and vicious circle
A vicious circle (or cycle) is a complex chain of events that reinforces itself through a feedback loop, with detrimental results. It is a system with no tendency toward equilibrium (social, economic, ecological, etc.), at least in the shor ...
*
Strategy of unbalanced growth
*
Dual economy
References
*P Krugman, 1991: History vs Expectation. ''The Quarterly Journal of Economics''
*P Krugman, 1992: Toward a counter-counterrevolution in development theory. ''Proceedings of the World Bank Annual Conference on Development Economics''
*K Matsuyama, 1992: The market size, Entrepreneurship, and the Big Push. ''Stanford''
*KM Murphy, A Shleifer, RW Vishny, 1989: Industrialization and the Big Push. ''The Journal of Political Economy'' Vol. 97, pp. 1003–1026
*
*PN Rosenstein-Rodan, 1943: The Problems of Industrialisation of Eastern and South-Eastern Europe. ''The Economic Journal'' Vol.53
*
R Nelson, 1956: A Theory of the Low-Level Equilibrium Trap in Underdeveloped Economies. ''American Economic Review'' Vol. 46(5), pp. 894–908
*
UN Millennium Project, 2005: Investing in Development: A Practical Plan to Achieve the Millennium Development Goals. New York: United Nations
{{Partial Theories of Development-footer
Economics models