Section 3.2 Introduction to Economic Development

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Section 3.2 Introduction toEconomic Development
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Development Economics
Introduction

• What is Economic Development?
• Income and Growth?
• Poverty and Inequality?
• Health and Happiness?
• Market Economy?
• Political Rights and Freedoms?

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Development Economics
Introduction

• Four Essential Aspects of Understanding Economic
  Development in Class
• Define development to the extent possible
• Describe different ways to measure development
• Describe theory to understand the mechanisms that
  make developing countries different
• Examine empirical evidence to see if theory is
  right

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Development Economics
Introduction Some Facts

• There are currently almost 6.7 billion people in
  the world
• In developing countries it is estimated that
  (2003)
• 826 million people do not have enough food
• 1 billion people have no access to safe drinking
  water
• 2.4 billion have no sanitation
• 10,000 children die EVERY DAY from diseases
  caused by contaminated water
• Source Weil (2003)

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Development Economics

• Introduction (cont)
• Life expectancy at birth
• 77 for 1.1 billion who live in UN classified
  high human development countries (HDC)
• 67 for 4.05 billion in medium HDC
• 53 for 840 million in low HDC

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Development Economics

• Introduction (cont)
• Other indicators
• High income 443 cars per 1,000
• Low income 9 per 1,000

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Development Economics

• Introduction (cont)
• Other indicators
• Canada 667 telephone lines per 1,000
• Bangladesh 4 telephone lines per 1,000.

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Development Economics

• Introduction (cont)
• Other indicators
• Continent of Africa 13 of worlds population
  uses 2.9 of electricity
• USA 5 of worlds population uses 25 of
  electricity.

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Development Economics

• Introduction (cont)
• Other indicators
• 20 of the world that lives in the richest
  countries have 62 of the wealth.
• 1.2 billion have incomes of less than 1 per day.
• 2.5-3 billion have less than 2 per day.

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Development Economics

• Introduction (cont)
• Differences within countries over time are just
  as dramatic
• Life expectancy in Japan 1880 35
• Life expectancy in Japan today 81
• Between 1775 and 1975 the average height of a
  male in Great Britain increased 3.6 inches from
  better nutrition.

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Development Economics

• Introduction (cont)
• Differences within countries over time are just
  as dramatic
• Since late 1800s in the United States the
  fraction of income spent on recreation has
  tripled.
• The fraction spent on food has decreased by 2/3.
• In 1870 the average work week in US was 61 hours,
  now 34.

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Development Economics

• Introduction (cont)
• Even poor countries are rich by historical
  standards
• Egypt, Indonesia and Brazil have higher life
  expectancy then British nobility in 1900.

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Development Economics

• Introduction (cont)
• Things are getting better? - perhaps
• Fraction of people with incomes less than 1 fell
  by 1/3 from 1980 to 1998.
• But growth rate differences continue to be a
  problem.

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Development Economics

• Introduction (cont)
• Growth rate differentials lead to quickly
  increasing inequality

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Institutional Features

• Higher population growth rates
• Higher percentage of agricultural production and
  rural residents
• Rapid rural to urban migration
• Large involvement in international trade, much of
  it in primary products and light manufactures