1. Economic Growth v. Development F Development is defined by a broad collection of indicators –Output per person, education, health, freedom, fertility, quality of life, institutions, etc. F Growth is narrowly defined as the percent change in per capita output (measured by per capita GDP or GNP) F Economic development (and to lesser extent, growth) affect and are affected by population growth. F PRODUCTION makes wealth possible

2. GDP/GNP

3. Growth and GNP or GDP F (a) GNP v. (b) GDP –Value of final goods and services produced in a year u (a) by citizens of a given country u (b) within the political boundaries of a given country F Per capita GNP = GNP/Population F Per capita GDP = GDP/Population –Growth Rate Approximation u % change GNP - % change population

4. Real v. Nominal GDP/GNP F Because both prices and output change over time, we apply a correction to the GDP that essentially holds prices constant. This is called REAL GDP (or GNP). F Real GDP (or GNP) must be used to compare production levels over time.

5. GNP/GDP Problems F Omits non-traded goods –household production –illegal production and other “informal” market production F Goes up when bad things happen –war –oil spills –sickness F Fails to reflect resource non-renewable resource consumption

6. GNP/GDP Problems, Continued F Currency conversion problems F Real v. Nominal –Choice of base year emphasizes certain products and de-emphasizes others.

7. The Variety of Growth Experiences Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.

9. Percent of Age Group Enrolled in Tertiary Education

10. Population Growth Rates

11. Population Composition

12. Percent Under Age 14

13. Total Fertility Rate

14. Labor Market Structure F Formal Sector –most desired place to work –higher wages –unemployment exists F Informal Urban Sector –lower paid –absorbs new migrants F Rural Market –still the major employer in many countries

15. Labor Force Growth Rates

16. Population of Working Age and Labor Force Size

17. Structural Patterns in Employment F As agriculture declines in the course of development, labor migrates to the cities and enters the formal or informal labor market.

18. Can Industry Absorb a Rapidly Growing Labor Force? F Suppose 20% in Urban Sector and 80% in Rural Sector (Initially) F Suppose 3% labor force growth rate F Question: What percent growth in urban jobs are necessary for complete absorption? F See Excel Worksheet ExampleExcel Worksheet Example