1. Atanu Dey MTWTh 2:00 PM – 3:30 PM 3 Le Cont

2.  Discussions of the assignment  Questions 21-06-2011Meeting 2 / N171 / Atanu Dey2

3.  “Economic history is overwhelmingly a story of economies that failed to produce a set of economic rules of the game (with enforcement) that induce sustained economic growth.” -- Douglass North, Nobel Laureate  Policies matter  Politics matter 21-06-2011Meeting 2 / N171 / Atanu Dey3

4.  Gunnar Myrdal Swedish Nobel Laureate economist said 50 years ago that Asia will be mired in poverty ◦ Asia was already taking off. ◦ 50 years of successes in East Asia  China is the A-class students of American economics ◦ In just 15 years, more than 450 million Chinese got out of poverty between 1990 and 2005  Africa population with less than $1.25 per day went from <300 to 388 million in 2005  MDG of poverty reduction will not be achieved 21-06-2011Meeting 2 / N171 / Atanu Dey4

5.  What accounts for the successful? ◦ Botswana is very successful cases. Why?  Data exists in huge piles. But making right inferences is hard.  Growth is necessary but not sufficient for long term poverty reduction  US median income 2009 is lower than it was in 1997. ◦ GDP has increased, GDP per capita has increased ◦ People in the middle and bottom are not doing well. 21-06-2011Meeting 2 / N171 / Atanu Dey5

6.  They are distinct  Growth is necessary but not sufficient for poverty reduction  How to get growth  How are the benefits of growth to be shared  50 years ago it was shortage of capital for poor countries – The World Bank  The WB failed to make the promised difference  The focus was to change to policies 21-06-2011Meeting 2 / N171 / Atanu Dey6

7.  Output per US worker 10 times that of a worker in India, and 50 times that of a worker in Congo  Real income per capita ◦ US: $48k, India: $3K, Congo: $280  World Bank defines ◦ Low-income countries < $975 (2008 $) ◦ Lower-middle > $976 < $3855 ◦ Upper-middle > $3856 < $11,906 ◦ High-income > $11,907 21-06-2011Meeting 2 / N171 / Atanu Dey7

8.  What is a developing country?  Emerging markets?  Newly industrialized countries 21-06-2011Meeting 2 / N171 / Atanu Dey8

9.  Real income: per capita adjusted for purchasing power (Measure of the standard of living)  Health: life expectancy at birth, child mortality and undernourishment  Education by literacy and years of schooling  Human Development Index of the UNDP ◦ See the Human Development Reports ◦ http://hdr.undp.org/en/statistics/ http://hdr.undp.org/en/statistics/ ◦ Play around here http://hdr.undp.org/en/data/trends/http://hdr.undp.org/en/data/trends/ to see the trends 21-06-2011Meeting 2 / N171 / Atanu Dey9

10.  Lower levels of productivity and living  Lower levels of human capital (health, education, skills)  Higher levels of inequality and absolute poverty ◦ 20% of the poorest people globally receive on 1.5% of the world income (1.4 billion people) ◦ Living on less than $1.25 income per day ◦ What would it require to bring everyone above this poverty line? 21-06-2011Meeting 2 / N171 / Atanu Dey10

11.  About 2% of the income of the richest 10%  Scale of global inequality is unfathomable  Even within countries, there are extremes of wealth 21-06-2011Meeting 2 / N171 / Atanu Dey11

12.  Higher population growth rates ◦ 1800 CE: < 1 billion ◦ 1900 CE: 1.65 billion ◦ 2000 CE: 6 billion ◦ Late 2011: 7 billion  Large rural populations and rapid rural-urban migration  Lower levels of industrialization and manufactured exports  Adverse geography ◦ Tropical or semi-tropical 21-06-2011Meeting 2 / N171 / Atanu Dey12

13.  Underdeveloped markets  Lingering colonial impacts ◦ Extractive and exploitative policies ◦ Not development oriented 21-06-2011Meeting 2 / N171 / Atanu Dey13

14.  Physical and Human Resource Endowments  Relative Levels of Per Capita Income and GDP  Climatic differences  Population size, distribution and growth  The role of International Migration ◦ 60 million migrated to the Americas between 1850 and 1914 (world population was a fourth of today’s)  Brain drain?  Free trade 21-06-2011Meeting 2 / N171 / Atanu Dey14

15.  Next time 21-06-2011Meeting 2 / N171 / Atanu Dey15