Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Chapter 1 Economics, Institutions, and Development: A Global Perspective
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-2 Economic Development Development = Growth plus Change Growth: sustained improvement in the level of per capita income Change: sustained improvement in institutions and organizations that support growth
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-3 Growth Gross Domestic Product (GDP): Market value of all final goods and services an economy produces in one year Real GDP: GDP in constant prices GDP Per Capita = (Real GDP / Population) or income per person Economic Growth = percentage change in Real GDP per capita
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-4 Institutions Family: respect the authority & share resources Culture: propensity to save & invest Religion: ability to bring about change Law: protect property rights and civil liberties and enforce contracts
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-5 Organizations Government: produce public goods and regulate economic activities Education: increase productivity and expand the range of economic and social opportunities Health: enable proactive participation in economic and social activities Business: provide incentive for profit making, resulting in growth and expansion
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-6 Happiness and Development There is not a perfect correlation between happiness and per capita income: people could be poor, but happy; rich, but and unhappy Once per capita income increases above $10,000 to $20,000, the percentage of people who say they are happy tends to increase
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-7 Happiness and Development Factors affecting happiness: Family relationships Financial conditions Work satisfaction Community and friends Health and health-care services Personal freedom Personal values
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-8 Income and Happiness Across Countries
Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 1-9 Three Core Values of Development Sustenance: The ability to meet basic human needs including shelter, food, health, education, safety Self-Esteem: To be a person with a sense of self-respect and self-worth. To live with dignity, respect, and honor Freedom from Servitude: To be able to choose the path to prosperity and have the opportunity to improve
Copyright © 2009 Pearson Addison-Wesley. All rights reserved Objectives of Development To increase the availability and distribution of basic human necessities To improve the standard of living for the majority of the people To expand the range of economic and social choices and opportunities
Copyright © 2009 Pearson Addison-Wesley. All rights reserved Millennium Development: Goals and Targets for 2015
Copyright © 2009 Pearson Addison-Wesley. All rights reserved Millennium Development Goals and Targets for 2015
Copyright © 2009 Pearson Addison-Wesley. All rights reserved Economic Development Inclusion of non-economic variables in designing development strategies Achieving the Millennium Development Goals “…One future-or none at all”