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Development Economics: The wealth and poverty of nations. Charles Wheelan

by: Hansss

Development Economics: The wealth and poverty of nations. Charles Wheelan INTL 350 01

Marketplace > College of Charleston > International Studies > INTL 350 01 > Development Economics The wealth and poverty of nations Charles Wheelan
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These notes cover classes for week 1! January 13th-January 15th!
Cross Regional Studies: International Development
Professor Boessenecker
Class Notes
Economic Development, Economics, wheelan, trade, growth




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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 41 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
1/13/15 International Studies 350: Economic Development It is easier for countries with already really low numbers to increase rapidly, which is why it is easier for them experience rapid economic growth. 13 of the fastest growing economies in the world 1. Ethiopia 2. Turkmenistan 3. Democratic Republic of Congo (DRC) 4. Myanmar/Burma 5. Ubekistan 6. Ivory Coast 7. Papua New Guinea 8. Indian 9. Bhutan 10.Mozambique 11.Tanzania 12.Rwanda 13.China Summary of countries:  Many have small GDP’s  Many are poor Why are there people who live on less than $2 a day?  Their economies have failed Why? How can we fix their economies?  Economists only know how to make rich countries rich Government Institutions  “good”- laws, law enforcement, courts, basic infrastructure, effective tax collection  “bad”- corruption o Examples  Bribes, judges  Good governance matters! Property Rights What is meant by property rights?  Laws which dictate how individuals can control, benefit, & transfer property  Having a title or something similar that shows ownership & which can be transferred to others Why are property rights important? 1. Can be used as collateral a. Property holds lots of value by having legal ownership, one can borrow against that value 2. Less time spent protecting property if you have enforceable legal ownership a. This allows individuals more time working outside the home & become more productive Government Regulation  Examples o Russian regulation & a Coca-Cola vending machine o Peruvian experiment trying to set up a one person business without any bribes Human Capital What is it?  The skills, knowledge, experiences, etc. possessed by individuals or populations  Most often thought in terms of education What is “brain drain”?  When the educated people leave the country Is it just a problem for poor countries?  No, people leaving rural areas to go to cities. o Ex. Iowa Geography  Give incentives to pharmaceutical companies to do research on tropical diseases  Open economies- industrialized Trade  Open economies grow faster than closed economies  Closed economies often plagued with other problems that are bad for development 1/15/16 Fiscal & Monetary Policy What is the fiscal policy?  Government spending- where do they get money? o Borrowing o Taxing What is Responsible Fiscal Policy?  Don’t over borrow. Make sure that you can repay. What is Monetary Policy?  Has interest rates  Central bank is in control of the money o The Federal Reserve or the “Fed” in the USA  Increases the money supply (print money) o Decreases interest rates  People borrow & spend- stimulates the economy o Drawback  INFLATION  Decrease the money supply (take money out of circulation) o Increases the interest rates  People borrow less & spend less  Slows down the economy o Drawback  Unemployment What is Responsible Monetary Policy?  Don’t print too much money Run Away Inflation What is the annual U.S inflation rate?  Less than 0.5% Famous cause of hyperinflation?  Germany between the World Wars o In 1923, the rate of inflation hit 3.25 x 10^6 percent per month (prices double every 2 days) Zimbabwe in the 2000’s  The peak monthly rate was 79.6 billion%, which is equivalent to a 98% daily rate, or around 7 x 10^106 percent yearly rate o At that rate prices were doubling every 24.7 hours  When it gets this bad, people stop using the official currency (not a Zimbabwe dollar driven economy) o Trade goods & services instead Natural Resources Is having Natural Resources good, bad, or neutral for the economy?  They matter less than you would think?  Actually may do more bad than good? What is Dutch Disease?  The negative impact on an economy of anything that gives rise to a sharp inflow of foreign currency o Ex. The discovery of large oil reserves & other valuable minerals  The origin of the phrase is the Dutch economic crisis of the 1950’s following the discovery of the North Sea natural gas Why is this bad?  The currency inflows lead to currency appreciation o Ex. The country’s currency becomes more expensive in relation to other currencies  This makes the country’s other products less price competitive on the export market  Also leads to higher levels of cheap imports & can lead to deindustrialization as industries apart from resources exploitation are moved to cheaper locations  Model country in SSA- Botswana o They have diamonds Democracy Is it a necessity for growth?  China vs. India? o India is a democracy What did Amayarta Sen say about famines?  P.309  This does not mean there is not a malnourishment in democracies… War What about war?  “nearly three quarters of the world’s billion poorest people are caught in a Civil War or have recently been through one” P.310  Example of a country that came out of devastating war & grew fast? o Japan out of World War II Women What part do women play in development?  Not allowing women in the workforce is the equivalent of not using half of your resources o Ex. Golden Age in the U.S & role women paid (in 1940’s & 1950’s)  Women spend money more responsibly


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