1. Development Economics: the International Perspective
Why are some countries rich while others are poor?

2. 4 Types of Economic Systems
Objective: Given *
Theory of Development
4 Types of Economic Systems
the student will distinguish these systems by writing a short essay discussing how the Three (3) Key Economic questions are addressed by one economic model, with 90% accuracy.
Pineda

3. Development is… Standard of Living
The sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area.
The scope of economic development includes the process and policies by which a nation improves the economic, political, and social well-being of its people
Standard of Living
A level of material comfort as measured by the goods, services, and luxuries available to an individual, group, or nation.

4. Specifically, DEVELOPMENT is concerned with
3 Key Questions:
What Should Be Produced?
How Should It Be Produced?
For Whom Should It Be Produced?
Why not just live “naturally?” – live off the earth, as Adam and Eve did!

5. PowerPoint Conclusion
Address the 3 Key Economic Questions:
What Should Be Produced?
How Should It Be Produced?
For Whom Should It Be Produced?

6. The Four Types of Economic Systems or Models of Development
Four very different types of Economic Systems have evolved as different societies have placed different emphasis on different goals and priorities in their efforts to answer the Three Key Economic Questions.
How do you go from here
to here?

7. I. Traditional Economy
Family or community based economic system that relies on custom and ritual to make its choices.
Examples:
Aborigines (Australia)
Yanomami (Amazon)
Tribes (Africa/Asia)
Any Subsistence Economy

8. I. Traditional Economy Disadvantages: Advantages:
Very cultural
Very close with family and friends
Roles are defined in their tribe/group
They look out for each other
Disadvantages:
It is not very revolutionary
Have to hunt at a young age
No technology
Not much access to goods and services
Limited progress

9. II. Market Economy
Individual or consumer based economic system that relies on the consumption choices of consumers. 
Examples:
The U.S.A. (Remember this during Food, Inc. & Cowspiracy)
Japan
Most of Latin America

10. II. Market Economy Disadvantages: Advantages: Inequality
Large variety of goods and services
Individual rights
Disadvantages:
Inequality
Crime because people can't afford things
Not sustainable

11. III. Command Economy
Centrally controlled economy where the government makes all decisions.
Examples:
Cuba
North Korea, China to a degree
Any Communist Country or Dictatorship

12. III. Command Economy Disadvantages: Advantages: Not much freedom
Things distributed equally
Less crime
Less poverty
Disadvantages:
Not much freedom
No say
Less satisfaction of Goods and Services

13. IV. Mixed Economy Command & Free Market
Economic system that incorporates some governmental involvement into a market based economy.
Examples:
Germany
Japan
Mexico
China

14. Theory of DEVELOPMENT To achieve development countries MUST:
-allocate resources effectively,
-ensure the optimal growth (+) of resources,
-create markets,
-educate its people,
-ensure the flow of economic benefits (employment; income; retirement)

16. 1. Developed – A nation where the average income is higher than in developing nations, where the economy relies on many export goods, and where farming is conducted by advance methods.
-High GDP, Exports, Diversification, Education
2. Developing - A nation where the average income is lower than in industrial nations, where the economy relies on a few export crops, and where farming is conducted by primitive methods.
-Low GDP, Exports, Diversification, Education

17. GDP - total dollar value of all final goods and services produced in a nation in a single year.
Exports – goods sold to other countries.
Diversification – spreading of investments among several different types of accounts to lower overall risk.
Education- the act or process if imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing one self or others intellectually for mature life.
Crop – the cultivated produced of the ground; i.e. wheat crop.
Primitive – being the first or earliest in existence

18. Development: Assessment 1
Please discuss how the Three Key Economic Questions are addressed by one of the following economic models.
Traditional Economy
Free Market (Capitalism) Economy
Mixed Economy
Command Economy

19. Relate development to our society & the 3rd World
Objective: Given *
Relate development to our society & the 3rd World
Define 1st and 3rd World
Explain poverty
the student will compare and contrast development in our society and the 3rd World by creating a comparison chart listing characteristics for each, with 100% accuracy.
Pineda

20. Definitions of 1st and 3rd World Free market solutions
Objective: Given *
Definitions of 1st and 3rd World
Free market solutions
Barriers of Development
Marx’s class struggle
TSWBAT write a three paragraph essay on 1st and 3rd world, barriers of development, free market vs. command, or Marx’s class struggle, with 90% accuracy.
Pineda

23. The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions.

25. Defining the 1st and 3rd World
Sao Paolo, Brazil

26. The World Divided *
First World – refers to developed or industrialized nations such as US; most of Europe; & some of Asia
Third World – developing nations such as some LatAm; most Africa; parts of Asia
Pineda

27. Characteristics of the 3rd World*
Low standard of living: low incomes, inequality, poor health and inadequate education
Low level of productivity: low education standards, low levels of health care, lack of investment
High rates of population growth and high dependency ratios i.e. proportion of the popular under 15 and over 64 who are supported by people between 15 and 64
High unemployment and underemployment
Calcutta, India
Pineda

29. Four Barriers to Growth*
Institutional and Political Factors
International Financial Barriers
International Trade Barriers
Social and Political Factors
Pineda

30. Institutional & Political Factors (reasons)
a. Ineffective Tax Systems
b. Political Corruption / Instability
c. Unequal Distribution of Income
d. Informal Market
e. Lack of Infrastructure

32. Political Instability*
USA GB
France
Germany
Japan
Italy
Canada
Russia
Pineda

33. II. International Financial Barriers
a. Debt
b. Non-Convertible Currency
c. Capital Flight

34. *
Pineda

35. III. International Trade Barriers
a. Single Crop Economy
b. Minimal Exports
c. Maximum Imports

36. IV. Social & Cultural Barriers
a. Religion
b. Culture
c. Tradition

37. Market Economics, Ways out of poverty:*
Natural Factors: abundance of natural resources especially land.
Human Factors and Human Capital: skills, experience, education and health of the population
Physical Capital: Accumulation of factors of production especially infrastructure
Institutional Factors: banking and finance
Pineda

38. Karl Marx & Frederick Engels on Society & Its Problems
The Communist Manifesto (1848) Marx & Engels argued that human history…is the story of social classes and their struggles with each other: bourgeoisie (have) and the proletariat (have not).
As long as poor and rich exist, equality = dream.
Communism: a system in which all property and wealth is owned in a classless society by all the members of that society. *
Karl Marx & Frederick Engels on Society & Its Problems
Pineda

39. Karl Marx on Society & its Problems
Society’s problems stem from class struggle – owners of production vs. workers.
Businesses seek to monopolize resources to maximize profit.
Workers are doomed under Capitalism.
Solution to society’s problems: workers take hold of the means of production.
How: proletarian revolution to establish new Gov’t with a Command Economy
Under CE: production is commanded to serve the interests of the people.
Free-Market or Command Economy??? *
Karl Marx on Society & its Problems
Pineda

40. Models of Development Short Essay Exam
Directions: on a blank sheet of paper, in the best writing possible, answer one of the following questions in 1-3 paragraphs.
Define the first and third world. Provide and explain at least three characteristics of each.
Explain the “Market Economy” or “Free Market Economic” model AND how this model offers to move nations out of poverty or towards development.
Explain Karl Marx’s “class struggle.” Of the four models of development, explain his model and how it will bring an end to the class struggle.
Explain the four barriers of development or growth.