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International 350: Cross Regional Studies: Week 2 Notes

by: Hansss

International 350: Cross Regional Studies: Week 2 Notes INTL 350 01

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These are notes for week 2! Taken on January 20th and January 22nd!
Cross Regional Studies: International Development
Professor Boessenecker
Class Notes
Economics, development, wheelan, develop world, developing world
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This 5 page Class Notes was uploaded by Hansss on Saturday January 9, 2016. The Class Notes belongs to INTL 350 01 at College of Charleston taught by Professor Boessenecker in Spring 2016. Since its upload, it has received 25 views. For similar materials see Cross Regional Studies: International Development in International Studies at College of Charleston.

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Date Created: 01/09/16
Keeping Score 1/20/16  What things are important in development? o Income o Health o Leisure o Quality of life o Clean environment What is GDP?  “The market value of all goods & services produced in an economy” P. 193  More precisely: o The market value for all final goods & services produced in the economy Market Value  Some goods are more valuable than others. So to measure total output, it doesn’t make sense to add up quantities. Instead, GDP uses market values to determine how much each good or service is worth & then sums up the total Of all final  Intermediate vs. Final goods o Ex. The bread on the finished sandwich for the consumer is the finished product Within a Country o U.S GDP is the market value of the goods & services produced by labor & property located in the U.S, regardless of the nationality of the workers or the property owners o GNP (Gross National Product)- the market value of all final goods & services produced by a country’s permanent residents wherever located, in a year.  Older measure, not often used In a Year o GDP often tells us how much the nation produced in a year, not how much accumulated in its entire history What is NOT included in GDP? o Work that is not paid for or non-market production: household production volunteer work, etc.  In the 1950’s, mothers stayed at home, work was not counted toward GDP  Now, more women working, more nannies, house cleaners- labor counted toward GDP  Subsistence Agriculture  Extra-legal…legal but not “officially” counted o Ex. Babysitting  Environmental Degradation (bads) o GDP adds the market value of final goods & services but does not subtract the value of bads  Ex. Pollution, loss of animal or plant species, crime are all examples  Leisure o Time spent not working. It is an improvement of well-being  Underground Economy- illegal or underground market transactions (unreported & therefore difficult to measure) o Illegal- sale of drugs or counterfeit DVDs o Legal but under the table to avoid taxation- paying house keepers in cash to avoid declaring income  Used Goods o Ex. You buy a 2000 Ford truck in 2012…No one was employed in 2012 to produce the car. The production of the 2000 Ford truck was included in GDP in 2000.  Financial Transactions o The buying & selling of securities (buying & selling of stocks)  Government transfer payments (Social Security payments & unemployment)  Private transfers- parents give money to children, grandparents give money to grandkids  National Accounts o Who credits GDP figures?  Government statistical offices… o Are there international standards for things like GDP?  Yes! They are set by the United Nations o Do you think that the data is truly comparable? That all countries have the same quality of data?  No! Why?  Lack of funding  War  Corruption Africa suffers from the most amount of poor data  Involves a lot of guesswork for numbers  The data itself is bad Africa has a lot of problems with GDP and other economic statistics Choosing a Measure  “any measure of economic progress depends on how you define progress”  Correlated to things we care about GDP Growth What is GDP growth?  The growth rate of GDP… Growth rate for counties with already small numbers will see higher percentage of growth Ex. Haiti- 9%, USA- 4% Real vs. Nominal Real GDP- Accounts for inflation  this is the method always used  Constant prices Nominal GDP- Has not be adjusted for inflation  Current prices- which change from year to year Why do we care about Real vs. Nominal?  So we can know the difference of prices depending on inflation Miracle in Venezuela?  In recent years, it has had one of the world’s fastest growing nominal GDP’s  Between 1997 & 2007 Venezuelan nominal GDP grew by an average of 28% each year- much faster than nominal GDP in the USA or even in booming economies like China GDP per capita  A country’s GDP divided by its population Why do we care about population size? What about distribution of income? Is it reflected in GDP or GDP per capita?  Doesn’t tell us anything about distribution of income Types of GDP in action...  Ex. USA vs. China Purchasing Power Parity (PPP)… Real GDP per capita purchasing power parity  The concept of PPP allows one to estimate what the exchange rate between two currencies would have to be in order for the exchange to be on par with the purchasing power of the two countries’ currencies o Important because of non-tradeable goods & services Another way to think about it…  PPP conversion factor is in the number of units of a country’s currency *only when we use PPP exchange rate is China surpassing the USA *more accurate than market exchange rates *difficult to determine What are other measure we might use to measure growth?  Productivity- Wheelan talks about price of things in terms of hours worked o Even through prices have increased, are we better or worse than a century ago in terms of productivity?  Health- Wheelan talks about India’s health care infrastructures o Human Development Index (HDI)  Happiness? Alternative Measures of well-being?  Unemployment  Poverty o Poverty rate- the fraction of people who fall under the poverty line  Poverty line is an arbitrary number…internationally people often refer to people living under $1 & $2 a day  Income Inequality o Gini Index- ranges from 0-100 without representing the total inequality & 100 represents a situation where 1 person earns all of the income  Size of government  Budget deficit/surplus  Current account surplus/deficit  National savings  Demographics- characteristics of a population o Why do we have to worry about an aging population? Let My Dataset change your Mindset Old Mindset?  Western World o Long life, small family  Developing World o Short life, large family What time period does this mindset fit?  1950’s Left Behind?  Which countries still fit the “developing world”? o Sub-Saharan Africa  What is one of the largest benefits of developing later? o You can apply the technologies that others discovered earlier in your development path…  China got healthier first while the USA got rich first & then healthier New Mindset?  The world is converging…is this true? o However, not true for the bottom billion & it’s not sustainable


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