Economics · Theories of Economic Growth
In Paul Rosenstein-Rodan's 'Big Push' model of economic development, coordination failure among private investors arises primarily because:
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- 1Labour productivity is constant and equal across all sectors
- 2Capital markets perfectly allocate resources without transactional barriers
- 3Increasing returns exist completely independently across various industries
- 4Private returns to investment are lower than social returns due to external economies✓
Correct answer
Private returns to investment are lower than social returns due to external economies
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