TUTORIAL DISCUSSION ADS504

DISCUSSION QUESTION: CHAPTER 1

1) Explain any 4 sources of economic growth.

The first resources is Natural resources and it is include land, minerals, fuels, climate
and the focus is on their quantity and quality. At this point what should we do is improving the
quantity and quality of land resources. Increases in the quantity of land available for agriculture
will increase economic growth. However, the extent to which this happens is limited by the
extent to which bush land can be converted to agricultural land (and this process may have
negative effects on soil erosion and quality, and contribute to deforestation globally). All
economic resources are scarce and have an opportunity cost. As bush land is increasingly used
for agricultural purposes, it is no longer a habitat for wildlife.

The relative scarcity of land in the face of a growing population means that the law of
diminishing returns might also become relevant. This law predicts that, if an increasing amount
of labor is applied to a fixed quantity of land, the marginal productivity of the labor will fall. This
was the basis of the argument put forward by the Reverend Thomas Malthus. To prevent this
loss in productivity, the quality of the land must be improved. This can be done through the
application of better technology through improved irrigation, fertilizers and pest control.

The second resources is Human resources are such as the supply of labor and the
quality of labor. The quantity of labor is important. Increases in the population can increase the
number of young people entering the labor force and these increases in the supply of labor can
increase economic growth. Increases in the population can also lead to an increase in market
demand thus stimulating production.

However, it is not simply the amount of labor that will lead to economic growth. It is also the
quality of that labor. This will depend on the educational provision in countries. Improving the
skills of the work force is seen as being a key factor in promoting economic growth. Many LDCs
have made enormous efforts to provide universal primary education. As more and more capital
is used, labor has to be better trained in the skills to use the capital, such as servicing tractors
and water pumps, running hotels and installing electricity. It should always be remembered that
education spending involves an opportunity cost in terms of current consumption and thus it is
often referred to as investment spending on human capital.
 The third resources are Physical capital and technological factors such as machines,
factories, roads and will focus on their quantity and quality. The things should do is Improving
the quantity and quality of capital resources. When looking at capital resources such as
machinery, equipment and so on, it is important to distinguish between directly productive
capital such as plant and equipment, e.g. factories and indirectly productive capital such as
infrastructure or facilitating capital, e.g. roads and railways. The process of acquiring capital is
called investment. However, like many economic decisions, there is an opportunity cost involved
in any investment decision. The opportunity cost of capital investment is the current
consumption foregone. This makes it tempting not to invest, but the level of investment and the
quality of investment will directly affect the level of economic growth - particularly in the long
term. The efficiency of the labor force and the other factors of production will depend upon the
amount and quality of capital they have. In LDCs, some investment comes from abroad in the
form of foreign direct investment. This is usually through multinational enterprises locating in a
country. There has been criticism of some investment in LDCs as to whether it is appropriate,
but this is an issue we ill look at later. If production moves from being labor intensive to capital
intensive, unemployment and poverty may increase, so there may be a difficult transition
process for an economy aiming to develop through investment which is not geared towards the
needs of the population.

Capital formation is a Technology and its use is another important aspect of development
and countries have to try to keep up with technological change wherever possible. Have a
careful think about the issues that are associated with this technological change and then follow
the link below to compare the issues that you have identified with ours. Technological change
and innovations

In addition to the fundamental factors of population, natural resources and capital formation,
there is the vitally important fourth factor of technology. Here the developing countries do have
one advantage in that they can rely on the technological skills of more advanced countries.
Initiating technology is us to developing countries do not have to pass through the slow process
associated with the industrial revolutions that formed part of the development process of the
now more advanced economies. Both Japan and the USA showed this when they emerged
during the latter half of the nineteenth century. The Japanese government took an active role in
stimulating the pace of development and in building rail systems and utilities. They relied heavily
on adapting the processes already applied in other industrialized economies. Their success is
well documented.

Risk-taking and innovation from the histories of Japan and the USA, it might seem that
adaptation of foreign technology is an easy way to foster development. You might say ' just go
abroad, copy more efficient ways of doing things, put them into effect at home, then sit back and
wait for the extra output to appear.' Of course, it is not quite that easy. A few technical experts
armed with some plans will not solve all the problems of the developing world! Alas, it is not as
cut - and - dried a task as that to adapt foreign technology to meet the special conditions
encountered in the developing world. Remember, the advanced technology used in developed
economies was designed to fit their systems and beliefs. They have high wages, plentiful capital
relative to labor, and ample skilled engineers. Many of these conditions do not prevail in the
poorer countries.

The last but not least is Institutional factors where these may include the banking
system, the legal system and important factors like a good health care system. A good banking
system provides the financial infrastructure that enables businesses to flourish and grow. This
makes it an important driver of economic growth. Often such a system is lacking in developing
countries. For the educational system, this could also be included under the human resources
heading above. Growth requires a high quality, well educated workforce. This in turn needs a
good educational system to provide for as many people as possible. A healthy workforce and
population is just as important as a well-educated one. This means a good health care system.
Then for Infrastructure, the economic activity needs an infrastructure to support it. Roads, ports,
telecommunications networks - all these are vital elements to support economic development.
 DISCUSSION QUESTION: CHAPTER 2

Discuss 4 approaches to addressing poverty in Malaysia.

First approaches to addressing poverty in Malaysia is strategy for poverty eradication was
providing employment opportunities in higher paying job, while welfare handouts were reserved
for the aged and disabled who could not find employment.

Second is Increase in the quality of life such as provide electricity and water, build
community halls and mosques, roads, drainage system, construction of new houses.

Third is Increase income of the community such as open opportunity on new land
development, village industries, provide marketing facilities.

And the last one is Human resource development such as study tours, special training such
as marketing, rural technology workshops.
DISCUSSION QUESTION: CHAPTER 3

Identify any 4 factors that determine the size of labor force.

First factors that determine size of labor force is the size of the population,

The Second factors are the growth of the population,

The third factors are the sex distribution

And the fourth factors are age distribution

Identify any 4 importance of agricultural sector to the economy of this country.

1) Provides job opportunities - Statistics shows that about 20 – 30% of Malaysian labour
force working in this sector.
2) Contribution of the agricultural sector in the Gross Domestic Product (GDP) - Contribute
to the national income– 8.1 – 8.6%
3) Provide food for the population - local production can supply (50 – 60% of local
demands)
4) Reducing foods import and increasing the export of local food – will save the country’s
foreign exchange
DISCUSSION QUESTION: CHAPTER 5

Identify 4 factors which attract foreign investors to Malaysia