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Chapter 22 (11)
Developing Countries:
Growth, Crisis, and Reform
◼ Chapter Organization
Income, Wealth, and Growth in the World Economy
The Gap between Rich and Poor
Has the World Income Gap Narrowed Over Time?
Structural Features of Developing Countries
Developing-Country Borrowing and Debt
The Economics of Financial Inflows to Developing Countries
The Problem of Default
Alternative Forms of Financial Inflow
The Problem of “Original Sin”
The Debt Crisis of the 1980s
Reforms, Capital Inflows, and the Return of Crisis
East Asia: Success and Crisis
The East Asian Economic Miracle
Box: Why Have Developing Countries Accumulated Such High Levels of International Reserves?
Asian Weaknesses
Box: What Did East Asia Do Right?
The Asian Financial Crisis
Lessons of Developing-Country Crises
Reforming the World’s Financial “Architecture”
Capital Mobility and the Trilemma of the Exchange Rate Regime
“Prophylactic” Measures
Coping with Crisis
Case Study: China’s Pegged Currency
Understanding Global Capital Flows and the Global Distribution of Income: Is Geography Destiny?
Box: Capital Paradoxes
Summary
© 2015 Pearson Education, Inc.
13. The production function in both countries is given by Y = AKαL1-α. We can convert this into a per
worker production function by dividing both sides by L. Y/L = AKαL-α = A(K/L)α. For ease of notation,
let lowercase letters denote per worker values so that y = Akα.
