Critical Minimum Effort is the minimum amount of investment that is required to push the economy towards a path of sustained growth in the per capita income. Underdeveloped countries suffer from the vicious circle of poverty and fail to progress because of shocks being higher than stimulants. Shocks are income depressing factors like population, while stimulants are income increasing factors like investment.
In simple words, underdeveloped countries suffer from a lack of investment and other factors necessary to boost the economy and make it progress. That is why Leibenstein recommends a Critical Minimum Effort in the form of a investment to help the economy develop and increase per capita income.
9 окт 2024