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Economic Development Textbook Notes

by: Stephanie Scott

Economic Development Textbook Notes ECN 201 10

Marketplace > Washington College > Economics > ECN 201 10 > Economic Development Textbook Notes
Stephanie Scott
Washington College
GPA 3.92
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Chapter 1 book notes from Economic Development by Todaro Smith
Economic Development
Dr. Daniels
Class Notes
economic, development, Globalization, Strategies




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This 5 page Class Notes was uploaded by Stephanie Scott on Wednesday September 21, 2016. The Class Notes belongs to ECN 201 10 at Washington College taught by Dr. Daniels in Fall 2016. Since its upload, it has received 70 views. For similar materials see Economic Development in Economics at Washington College.

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Date Created: 09/21/16
The Economics of Development Textbook Notes (Economic Development Todaro Smith) Chapter 1 Introducing Economic Development: A Global Perspective 1.1 How the Other Half Live Absolute Poverty= unable to meet minimum levels of income, food, clothing, healthcare, shelter, and other essentials for living - 40% of population lives on less than $2 a day - a developed country’s typical nuclear family lives comfortably though they may face pressures to achieve material-financial status and deal with environmental degradation o in contrast: A Southern Asian rural family would average around 8 people in a small house with no electricity - huge contrast in living standards is even seen within single countries, developed and undeveloped Subsistence Economy= an economy in which production is mainly for personal consumption and the standard of living yields little more than basic necessities of life (food shelter clothing) - living at subsistence level is fine until a neighbor gains wealth, the new comparison results in envy and depression development= process of improving the quality of all human lives and capabilities by raising people’s levels of living, self-esteem, and freedom - poor people want more than the money, they want the empowerment, health, education, sanitary conditions/living standards that come with development developing countries= Asia, Africa, Middle East, Latin American, Eastern Europe (former Soviet Union) are presently characterized by low levels of living and other development deficits. Term used as synonym for less developed countries - developing countries struggle as the globe becomes more interconnected, they are not left unsupervised to figure their own economies out 1.2 Economies and Development Studies - Development studies focuses on problems and processes in Africa, Asia, and Latin America The Nature of Development Economics Traditional economies= an approach to economics emphasizing utility, profit maximization, market efficiency, and determination of equilibrium Political economy= the attempt to merge economic analysis with practical politics; to view economic activity in its political context - Traditional economics is completely rational, self-interested, and materialistic, whereas political economy takes into account the thought process for the benefit of the whole and the role of power in decision- making Development economics= the study of how economies are transformed from stagnation to growth and from low to high income status, and overcome problems of absolute poverty More Developed Countries (MDC)= now economically advanced countries of western Europe, north America, Australia, New Zealand, Japan Less Developed Countries (LDC)= synonym for developing countries - Development economics deals with economic, social, political, and institutional mechanism and their improvement of living standards - LDC’s often face multiple difference equilibriums in markets, and family/clan decisions may come before self-interest - Development economics must take harder look at the economic/cultural/political requirements for rapid structural institutional transformations efficiently in whole societies - Must look at what creates poverty traps in an economy Globalization= increasing integration of national economies into expanding international markets The Important Role of Values in Development Economies - Values are essential to economies, development/modernization hold implicit and explicit promises to a society based on living standards and social reform that are completely subjective o LDC populations hold a particular image of what ‘development’ looks like, it must be viewed within a social context o Even determining that certain things are ‘issues’ is a subjective judgement, it’s hard to really say what a developed country should look like - Economics can’t escape values; a nation must be convinced the ‘new’ values align with what they want, then goals can be made and strategies implemented to attain those values Economies are Social Systems: Need to go Beyond Simple Economics Social system=organizational and institutional structure of a society; incudes values, attitudes, power structure, traditionseconomy must be viewed within social system context - Interdependent relationships between economic and noneconomic factors which vary state to state Values= principles, standards, or qualities that a society/groups within a society consider desirable Attitudes= states of mind or feelings of an individual, group, or society regarding issues like material gain, hard work, saving, and sharing wealth Institutions= norms, rules of conduct, and generally accepted ways of doing things - Economic institutions are humanly devised constraints that shape human interaction (formal/informal) in economic life - Values attitudes and institutions (as well as development economics and social progress) play a huge role in the development process 1.3 What do We Mean by Development? - We don’t exactly know, it’s a working definition truthfully Traditional Economic Measures Income per capita= total gross national income of a country divided by total population Gross national income (GNI)= total domestic and foreign output claimed by residents of a country (gdp plus factor incomes) Gross domestic product (GDP)= total final output of goods and services produced by economy within territory by residences and non-residents, regardless of allocation between domestic and foreign claims - Development strategies formerly focused on rapid industrialization at the expense of ag and rural development and relied on the ‘trickle- down’ concept to alleviate poverty (eventually) The New Economic View of Development - Countries were meeting industrial goals but living standards remained the sameshift focus to “redistribution from growth” to eliminate poverty, inequality, and unemployment - Development is a multi-dimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, reduction of inequality and eradication of poverty Amartya Sen’s “capability” Approach - Income and wealth are essential for capability to function (what you CAN do); something the poor struggle with Functionings= what people do or can do with the commodities of given characteristics that they come to possess or control - 5 sources of disparities: (1) personal heterogeneities like a disability (2) environmental differences (3) social climate like crime rates (4) resource distribution within a family (5) standards for public acceptance, appear in public without shame - these change within each society, can’t be judged by real income levels and are hard to measure - individual’s valuation of a worthwhile life is not exactly what would give that person pleasure o a ‘functioning’ is achieving something with the means at your disposal capabilities= freedoms that people have, given their personal features and their command over commodities - living standards must evaluate actual well-being Development and Happiness - average level of happiness increases with the country’s average income, but only until average income hits 20K per capita (basically there’s no extreme poverty) - national happiness is affected by family relationships. Financial situation, work, community and friends, health, personal freedom, and personal values o happiness can vary country to country even if they have = average income Three Core Values of Development Sustenance= basic goods/services that are necessary to sustain an average human being at the bare minimum level of living Self-esteem= feelings of worthiness a society enjoys when social, political, and economic institutions promote human values (respect dignity integrity self-determination) Freedom=situation where society has a variety of alternatives to satisfy wants, and individuals enjoy real choices according to preferences - need enough money to liveimprove quality of life, and need god social self-esteem as cultures clash with tech (worthiness now tied to economic wealth and power; materialist world) - freedom from servitude (people, nature, or oppressive institutions) o wealth increases range of choice The Central Role of Women - women tend to be poorer in every way globally - yet the greatest growth economically comes from investing in and empowering women The Three Objectives of Development - development is physical a physical reality and state of mind 1. increase availability and distribution of basic life goods 2. raise levels of living (income, education, culture, and human values) 3. expand range of economic and social choices for individuals 1.4 The Millennium Development Goals Millennium Development Goals (MDG’s)= set f 8 goals made by the UN in 2000 1. Eradicate poverty an extreme hunger 2. Achieve universal primary education 3. Promote gender equality and empower women 4. Reduce child mortality 5. Improve maternal health 6. Fight HIV/AIDS, malaria, and other diseases 7. Promote environmental sustainability 8. Develop a global partnership for development - The goals were to be achieved by 2015 (had specific %ages to reach) - Set by consulting developing countries so their biggest issues would be addressed - Goals weren’t prioritized by UN and each goal was treated as separate although all are connected - Hard to determine how, individually, each of the goals would be considered ‘reached’ in each country Sector= subset of the economy, for uses in economic development - Teach, activity (industry and products), trade, and sphere (private and public) are all sectors


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