A multi-dimensional process that involves significant qualitative and quantitative improvements overtime in human welfare including expanding choices to give peoples lives value and meaning.
Tradtional vs new view?
Traditionally- economic growth, structural change, improvement in social indicators
New- reduction or elimination of poverty, inequality and unemployment within a growing economy
Key development objectives?
Sustenance- ability to meet basic needs, above international poverty line
Self-esteem- raising standards of living, self worth, dignity
Freedom from servitude- political and relgious freedoms
Millenium development goals?
Now the sustainable development goals which began in the 1990s.
Includes ending of poverty, education, gender equality, protecting ecosystems
Diverse nature of developing economies?
Size (population, income, area)- climate, control problems, resource endownment
Historical background- former colonial powers
Physical and human resource endownments- landlocked, cliamte conditions, mountains or desert
Ethnic and religious composition- conflict
Importance of public and private sector
Industiral structure
External dependence
Political structure and interest groups
Sectoral balance?
shows the proportion of employment and output in each industrial sector changes as an economy develops
Primary sector- extractive
Secondary sector- manufacturing and construction
Teritary sector- services such as financial services
Changes in sectoral balance?
Primary dominace- small surplus in food creates leisure time, tech advancement creates demand for agricultural machinery allowing further surpluds and income from trade. Aspirations increase and the demand for consumer goods grow, increasing the growth of the secondary sector.
Secondary dominance- tech progress release rural workforce, comparative advantage becomes secondary as the products can be traded for higher values. Higher living standards allow for demand for services and tertiary grows
Features of economy developing?
Primary sector is in contintual relative decline, share of tertiary sector continutally ruses
Manufacturing initially rises then declines
The rise in dominance of each sector is supported by its preceding sector
Causes of sectoral change?
Changes in income levels- more spent on secondary and tertiary products than primary
Demographic change
Education
Applying new tchnology
Government action
Problems of sectoral change?
Factor immobility
Structural unemployment
Rural to urban migration- falling productivity from unemployment, overcrowding
Neglect of agriculture
Classify LEDCs?
Low income- GNI less than $1145
Lower-middle income- GNI less than $4515
Upper-middle income- GNI less than $14005
Higher income- greater than $14005
Used to eradicate poverty, aid, common problems and policy
common characteristics of developing nations?
Low levels of living, low levels of factor productivity, high rates of population growth and dependency burdens, high levels of underemployment/ informal economy, dependence upon agriculture and primary exports, imperfect markets/ limited information, vulnerable in international relations
Measurements of development?
Living standards- clean water, calorie intake
Growth
Health
education
poverty
Development diamonds- composite measure portraying relationships among four socioeconomic indacators
HDI
Development diamonds?
Uses life expectancy, gross primary school (or secondary) enrolement, access to safe water, GNP per capita
A polygon is formwed with the size and shape portraying development.
another country is overlapped and any point outside the referenced diamond shows a value better than average
HDI?
Includes health, education and standards of living
0 represents the worst while 1 represents the best
Measures relative not absolute development
Can be disaggregated to show difference social classes, or regions etc
Highest is Switzrland with 0.967
Lowest is Somalia with 0.380
Benefits of national income statistics?
Money value to real values- using the GDP/GNP deflator
Per capita measures
Cost of living differences
Issues measuring economic welfare?
Composition of output- military expenditure
Distribution of income
Issue of accuracy
Problems of ommission- informal economy, non-marketted (subsistence farming)
Other qualitative factors eg political freedoms, leisure, social environment
Obstacles to development?
The resource curse- the Dutch disease, volatile commodity prices, enclave effects, neglect of human resources, political effects
Low levels of health, life expectancy and education
Poor infrastructure
Low levels of technology and capital
MEDC protectionsm policies
Poor governance
Public sector debt
Rapid population growth
Resource curve?
the abundance of natural resources tends to cause less economic growth, less democracy, lower development outcomes
The dutch disease- high export demand causes currency appreciation making industries less competitive
Volatile commodity prices- difficult for government planning
Enclave effects- temporary high profits reduce diversification and over reliance, prevents sectoral change
Neglect of human resources
Political effects- collusion, lower democracy
MEDC protectionsim trade policies?
Impose tariffs, quotas and other protectionisms either individually or in trading blocks. Difficult for LEDCs to industralise.
MEDCs are losing their comparative advantage in manufacturing so are using protectionism to maintain low costs
poor governance?
Failure to protect property rights
Forced labour, discrimination
Power elites controlling an economy
Stateless areas
Public goods- lacking education, healthcare, transport
World Happiness Report?
A poll asks people to rank between 0-10 (10 being the best) on their view of their lives based on questions focussed on their own freedom, health and other factors which they view as important for affecting their life quality. This differs from national income measures as the questions are not based on weaith. More qualitative as specific standards aren't needed to be classed as a particular ranking
Savings gap?
Occurs in lower income countries, where high levels of extreme poverty make it difficult to generate sufficent savings to provide funds needed for investment projects. This increases reliance on aid or borrowing from overseas
Public sector debt?
Opportunity cost of spending on education, clean water and healthcare
Slower growth- negative multiplier effect due to money leaving circular flow of income
Capital flight- large scale withdrawal of investment funds to a less risky economy.
Rapid population growth?
Decling GDP per capita
High dependency burdens
Increases poverty and inequality
Restricts education
Negative impact on health
Environmental degradation
Continuous cycle which worsens overtime
Causes of sectoral change
Education- work within services
applying new technology- releases rural workforce
Difference in YED in sectors- inelastic primary, elastic secondary
Demographic changes- falling death rates, long life expectancy allow greater education