1. Revision
Lecture 32

2. Lecture 1

3. What is Development Economics?
Use of economic analysis, methods and tools to understand the problems, constraints and opportunities facing developing countries
Causes of poverty
Roads to escape poverty
Development and growth over time
Theoretical and empirical work
We study the economic, social, political and institutional mechanisms that lead to development and transformation of the economies
CAN YOU GIVE EXAMPLES OF DEVELOPING COUNTRIES? 3

4. What is Development Economics? continued
How do people achieve material opportunities to live an acceptable life? (and what is acceptable anyway?)
We discuss broad tendencies and stylized facts, that depend on the context of each country. We have no (or few) universal laws….
We want to:
Achieve a better understanding of the problems of poor countries
Achieve a better understanding of how to apply economics
Answer policy questions 4

5. What Do We Mean by Development?
Traditional Economic Measures
Gross National Income (GNI)
Income per capita
Utility of that income?
The New Economic View of Development
Leads to improvement in well-being, more broadly understood
The Central Role of Women
To make the biggest impact on development, societies must empower and invest in women
Amartya Sen’s “Capability” Approach 5

6. Why Study Development Economics?
1. Moral and ethical reasons
Poverty is unfair
Inequality is unfair (at least at current levels)
Development is human right
2. Our own welfare
Global interactions (wars, environment, refugee)
Global coexistence
Trade and investment
3. Private interests
Job prospects
Perspectives on economics, common allround knowledge
4. Intellectuel curiosity
What causes inequality and poverty and what can be done?
Why do some countries grow and others don’t? 6

7. Comparative Economic Development
Lecture 2
Comparative Economic Development

8. Common Characteristics of developing countries
Lower levels of living and productivity
Lower levels of human capital
Higher levels of inequality and absolute poverty
Higher population growth rates
Greater social fractionalization
Larger rural population- rapid migration to cities
Lower levels of industrialization and manufactured exports
Adverse geography
Underdeveloped financial and other markets
Colonial legacies- poor institutions etc.

9. Some Basic Indicators of Development
Health
Life Expectancy
Education
HDI as a holistic measure of living levels
HDI also varies for groups within countries
HDI also varies by region in a country
HDI also reflects rural-urban differences

10. Characteristics of the Developing World: Diversity within Commonality
Lecture 3
Characteristics of the Developing World: Diversity within Commonality

11. 10 Characteristics of the Developing World: Diversity within Commonality
1. Lower levels of living and productivity
2. Lower levels of human capital (health, education, skills)
3. Higher Levels of Inequality and Absolute Poverty
Absolute Poverty
World Poverty
4. Higher Population Growth Rates
Crude Birth rates

12. 10 Characteristics of the Developing World: Diversity within Commonality
9. Underdeveloped Financial and Other markets
Imperfect markets
Incomplete information
10. Colonial Legacy and external dependence
Institutions
Private property
Personal taxation
Taxes in cash rather than in kind

13. Low Income Countries Today And Developed Countries Then
Eight differences
Physical and human resource endowments
Per capita incomes and levels of GDP
Climate
Population size, distribution, and growth
Historic role of international migration
International trade benefits
Scientific/technological research
Efficacy of domestic institutions

14. Lecture 4 Measuring Economic Growth and Development
The Process of Economic Development
Last lecture we said: The major question that development economics attempts to answer is why some countries are more developed than others?
But before we start trying to provide answers for this question, first we need to know what we mean by “being developed”? What do we mean by “development”? How do we measure development?

15. Is Development synonymous simply with Economic Growth
Is Development synonymous simply with Economic Growth? Different Development Goals of Society
Equality of opportunity
Rising income and standard of living
Equity in the distribution of income and wealth
Political democracy and wide-spread participation
Expanded role for women, minorities and all social classes in public life
Increased opportunities for education and self-improvement
Expanded availability of and improvements in health care
Public and private safety nets to protect the vulnerable
A clean and healthy environment
Efficient, competent and fairly administered public sector
A reasonable degree of competition in the private sector
Each one these goals stated up here can be important targets – although maybe with different weights – for the process of development of a country.
Yet if we wanted to compare countries with one another in terms of all these criteria, imagine how complex and difficult the comparison would turn out to be.

16. Measuring Economic Growth and Development
What is the criterion for development?
1. The economic growth / income criterion:
GNP, GDP, rate of growth
Simple and easy to use
Yet does it really capture development?
2. The indicators criterion:
e.g. Human Development Index (HDI), PI, GDI, GPI
More comprehensive and realisitc
Yet difficult to measure and use for international comparisons
The most common criterion used as an indicator of development: income per capita – as a substitute or proxy for evaluating the overall level of national development and welfare.
The rate of growth of income (or per capita income) is then be used to judge the progress a nation makes over time.
While using this criterion, actually economists/researchers/policy makers are quite aware that the development of a nation actually incorporates much more than average income per person and the growth rate of that income. Development incorporates the diverse and broad aspirations of what might be called “good life” in all its economic, social and political dimensions.
Yet the common criterion of income per capita is continued to be used as a substitute or proxy for evaluating the overall level of national development and welfare BECAUSE it is so SIMPLE and therefore CONVENIENT.
Yet it is also often – and increasingly more so in the recent decades – criticized for not capturing the overall state of development; for being a too superficial and hence misleading criterion for development.
Therefore another criterion used is the so-called “indicators” criterion, that tends to be more comprehensive and realistic yet complicated and difficult to measure.

17. Lecture 5 Human Development Approach and Capability Approach: Concepts and Evolution

18. HD Approach
HD approach differ from other approaches in three important ways
-- definition of ends and means
--concern with human freedoms and dignity
--concern with human agency i.e. the role of people in development
There are several implications in adopting HD approach and framework as compared to other approaches
-- The focus of policy can not be based merely on the generation of more and more income. How additional income is used, and the degree to which it improves the quality of people’s lives must be given equal weight.

19. Measuring Economic Growth and Development - Human Rights Approach
Lecture 6

20. Human Rights Approach
standard of living, education, protection of the family, democracy, participation, rule of law, and protection against enslavement, torture, cruel or inhuman or degrading treatment or punishment.
Subsequent human rights conventions have translated these human rights into legally binding form (under human rights international law).
First generation rights (civil, political), second generation: economic, social, cultural
Legally binding international treaties provide more specific protection to particular groups (e.g. women and children) and in relation to particular violations (e.g. slavery and racial discrimination)

21. Human Rights Approach
The primary burden for upholding human rights is assigned to nationa-states or governments.
Coordination with others:NGOs,national institutions, other countries, international organizations
What are the obligations of nation states? More than 150 countries have promised to defend the core civil, political rights and social, cultural, economic rights recognized in international human rights law.
Three types of obligations: (a) to respect human rights; (b) to protect human rights; (c) to promote human rights
International recognition of individual and collective obligations was underlined by the adoption of the Declaration on the Right to Development by the UN General Assembly in 1986

22. 2. Economic Development – Basic Need Approach or Physical Quality of Life Approach
Lecture 7

23. The following aspects are analyzed under basic needs approach,:
(i) How much goods and services are produced?
(ii) What goods and services are being produced?
(iii) How goods and services are being produced?
(iv) What will be the effects of production and distribution on the society?

24. Measurement of Economic Development with Good Governance and Humane Governance Index
Lecture 8

25. Types of Good Governance:
The good governance has three types:
Good political governance
Good civic governance and
Good economic governance

27. 1. Re-Distribution with Growth (RWG)
Lecture 9

28. Theories or Methods of Income Distribution:
(1) To enhance the growth of GNP by raising the savings, and allocate the resources in a better way so that all the sections of the economy could be equally benefited.
(2) To take steps to get education, loans and other public services for the poorest sections of the society.
(3) The fiscal systems of the countries be devised in such a way that the distribution of income could move in favor of the poor class.
(4) The existing assets of the countries be mobilized in favor of the poorest class as the case of taking up Land Reforms.

29. MILLENIUM DEVELOPMENT GOALS (MDGs) A global agenda for development Lecture 10

30. MDG FRAMEWORK
COMMITS INTERNATIONAL COMMUNITY TO AN EXPANDED VISION OF DEVELOPMENT
PROMOTES HUMAN DEVELOPMENT AS KEY TO SOCIAL AND ECONOMIC PROGRESS
CREATES GLOBAL PARTNERSHIP FOR DEVELOPMENT
CONSOLIDATES TARGETS ESTABLISHED BY INTERNATIONAL CONFERENCES INTO EIGTH ESSENTIAL GOALS
FIRST SEVEN MUTUALLY REINFORCING, AIMED AT REDUCING POVERTY IN ALL FORMS
EIGTH GOAL – GLOBAL PARTNERSHIP FOR DEVELOPMENT – IS ABOUT MEANS TO ACHIEVE FIRST SEVEN – “A GRAND BARGAIN”

31. Theories of Economic Development - 1
Lecture 11

32. Nurkse's Model of Vicious Circle of Poverty (VCP) and Economic Development

34. Theories of Economic Development - 2
Lecture 12

35. Big Push Theory By Rosenstein Rodan Definition and Explanation: The Big Push Theory has been presented by Rosenstein Rodan. The idea behind this theory is this that a big push or a big and comprehensive investment package can be helpful to bring economic development. In other words, a certain minimum amount of resources must be devoted for developmental programs, if the success of programs is required.

36. Theories of Economic Development - 3
Lecture 13

37. W.W. Rostow's Stages of Economic Growth:
W.W. Rostow was an American economist who presented 'Stages of Growth' model of development. According to Rostow,
the process whereby all the developed industrial nations of the world transformed themselves from backwardness to prosperity can be described in terms of a series of stages.
These stages of economic growth are:
Traditional society,
(2) Pre-conditions to take-off,
(3) Take-off,
(4) Drive to maturity,
(5) High mass consumption. They are discussed below:

38. Theories of Economic Development - 4
Lecture 14

39. Leibenstein's Critical Minimum Effort

40. Harvey Leibenstein is of the view that UDCs are characterized by vicious circle of poverty (VCP) which keeps them around a low income per capita equilibrium state. The way out of this impasse is a certain 'Critical minimum effort' which would raise the per capita to a level at which sustained development could be maintained. In other words, a UDC will have to introduce 'Stimulus' in an amount which should be more than a critical level for the sake of change. Leibenstein says that every economy is subject to 'Shocks and Stimulants'. A shock has the impact of reducing the per capita income initially; while a stimulant tends to increase it.

41. Dualism and the Concept of Dual Societies
Lecture 15

42. Definition of Dualism
Dualism is a concept which represents the existence and persistence of increasing divergences between rich and poor both at world level and at country levels.

43. Dualistic Theories
Lecture 16

44. There are different theories which are of the view that the poverty and underdevelopment of poor countries is attributed to their dualistic character.
Social Dualism,
(2) Technological Dualism and
(3) Financial Dualism.

45. Technological Dualism
Lecture 17

46. Definition and Explanation: Professor Higgins has developed the theory of Technological Dualism. "The use of different production functions in the advance sector and in the traditional sectors of UDCs".

47. Rural-Urban Migration Model
Lecture 18

48. 1. Lewis Model of Unlimited Supply of Labor Arthur Lewis in the mid 1950s presented his model of unlimited supply of labor or of surplus labor economy. By surplus labor it means that part of manpower which even if is withdrawn from the process of production there will be no fall in the amount of output.

49. Fei-Ranis (FR) Model of Dual Economy
Lecture 19

50. The two economists John Fei and Gustav Ranis presented their dual economy model. There was a flaw in Lewis model that it did not pay enough attention to the importance of agriculture sector in promoting industrial growth. But Fei-Ranis (FR) model of dual economy explains how the increased productivity in agri. sector would become helpful in promoting industrial sector. In this respect, it presents three stages whereby a UDC moves from stagnation to self-sustained economic growth. Thus, this model is treated as an improvement over Lewis model of unlimited supply of labor.

51. Michael P. Todaro's Model of Rural-Urban Migration
Lecture 20

52. In case of UDCs it is being observed that inspite of heavy unemployment and under employment in urban areas a big migration is taking place from rural areas to urban areas. This situation contradicts Lewis model. As during 1960s to 1970s the urban population increased by 60%, 52% and 51% in Africa, Latin America and South Asia respectively. While in these regions the rural population increased by 16%. This shows that the massive unemployment exists in the urban areas of these regions. This, according to Todaro, is due to that mobility and migration which is taking place from rural areas to urban areas. Thus, the Todaro model of rural-urban migration states: "Despite mass unemployment in cities people are migrating from villages to towns and cities".

53. Agriculture and Economic Development
Lecture 21

54. Economics of Agricultural Development/Stages of Agricultural Development
Lecture 22

55. Transformation from Peasant Subsistence Farming to Specialized Farming:
In respect of agri. production and agri. development the economists present three stage, which are as:
(1) The subsistence farming: It is most primitive type of farming which is characterized with low productivity and the produced output is just for the sake of subsistence.
(2) The mixed farming: Where the farmers not only produce for their personal consumption but also for the sale in the market.
(3) The commercialized farming: In such stage of farming the agri. productivity is higher and whole of the produced output is sold in the market. Now we discuss them in a turn.

56. Strategy for Agricultural and Rural Development
Lecture 23

57. Most of the developing countries of Asia, Africa and Latin America are passing through stage I to stage II.
They have to face a lot of problems in their agri. sector whereby agri. sector fails to contribute to their development.
The economists present a lot of proposals whereby the agri. sector would be able to play its dynamic role in the development of poor countries.
They are as:
Improving Small Scale Agriculture - Technology and Innovation
Institutional and Pricing Policies - Providing the Necessary Economic Incentives

58. Role of Agriculture in Economic Growth
Lecture 24

59. Land Reforms or Agrarian Reforms
Lecture 25

60. Meaning and Definition:
The land reforms or agrarian reforms means all those measures which are aimed at removing those obstacles which are responsible for keeping the agriculture sector backward socially and economically.
Through these measures not only changes will be brought in the use and the distribution of the land, but the relationships between land lords and tenants will also be improved.
Thus due to land .reforms govt. gets legal right over the possession of the lands of people (big landlords).
However, in this connection govt. pays the compensation, in certain cases.

61. Green Revolution (GR)
Lecture 26

62. When better and superior seeds are used; the fertilizers, pesticides, herbicides and sprays are used; and the farm machinery like tractors, harvesters, tube wells and threshers etc., are used to enhance the agriculture output and agri. productivity - such all is given the name of Green Revolution (GR).
Thus because of GR, the high yielding seeds, fertilizers, agri. machinery water and better technology will become available.
Consequently, the production function for any crop or crops will shift upward in agriculture sector leading to increase the agri. output.

63. Problems/Demerits of Green Revolution (GR)
Lecture 27

64. Apparently this scheme of GR looks very attractive that it will lead to bring a revolution in agri. But Prof. Hala Mynit has presented a lot of problems regarding GR.
Technical Problems:
(2) Organizational Problems:
(3) Central Economic Issues:
(4) Side Effects of Green Revolution:

65. Human Capital: Education and Health in Economic Development
Lecture 28

66. Poverty, Inequality, and Development
Lecture 29

67. Trade Policy in Developing Countries
Lecture 30

68. Policies Import-Substituting Industrialization
Problems of the Dual Economy
Export-Oriented Industrialization: The East Asian Miracle

69. Foreign Aid for Development Assistance
Lecture 31

70. Revision
Lecture 32