BUSECO2 - A: Economics Development

Economics
●​ Process through ●​ Concerned with
●​ Allocation of resources, manage resources which the overall rate of increase
○​ Proper, efficient, effective education, in national
■​ Kasi people have unlimited wellbeing, health, income
wants income and living
●​ A social science that deals with proper ●​ Broader in nature
allocation of scarce resources
○​ Human behavior Economic Growth ≠ Economic Development
○​ Interaction to satisfy wants & ●​ Kasi may inequality
needs/interests ●​ Only parts lang sa sector may growth pero
■​ Relationships sa ibang parts not
●​ Use of resources ○​ Like sa situation sa manila
○​ Inputs to outputs ■​ Tabi ng hotel is squatter area
○​ Goods used to create another
goods/services
○​ Scarce = limited
■​ Problem: distribution Macroeconomics
●​ Depends sa gov’t ●​ The behavior and performance of an
system economy as a whole
○​ Hatiin equally ●​ The aggregate changes in the economy
○​ Capacity to ●​ large-scale or general economic factors
pay ●​ Difference from microeconomics
■​ Amount of resources is IDR ○​ Scale and scope
sa price ●​ Concepts
●​ Needs ○​ Income and output
○​ Food ○​ Unemployment
○​ Shelter ○​ Inflation and deflation
○​ Clothing ○​ Macroeconomic policies
○​ Education ■​ Monetary policy
○​ Access to healthcare ■​ Fiscal policy
●​ Wants
○​ Not necessary Indicators of Development
○​ U can live without it ●​ Gross Domestic Product (GDP) per capita
●​ Adam Smith ●​ Gross National Income (GNI) per capita
○​ Father of Economics ●​ Total Economic Welfare
●​ Human Development Index (HDI)
Economic Development vs Economic Growth
Economic Development Economic Growth Developing World
●​ “Group of countries that fare relatively and
●​ Qualitative ●​ Quantitative similarly poorly in social and economic
●​ Process of ●​ Limited sa measures” (World Bank)
improving overall production of
human conditions goods/services
○​ Poverty ●​ GDP, GNI
○​ Inequality
○​ Exploitatio
n
●​ HDI
Developing Country vs Developed Country ○​ Low income
○​ Middle income
Developing Country Developed Country
○​ High income
●​ Also known as the ●​ Also known as ●​ HDI measures human development in 3
least-developed industrialized areas:
country, country ○​ Health
●​ A country with ○​ Education
third-world
high standard of
country ○​ Standard of Living
living
●​ A country with a ●​ Has strong and
relatively low sophisticated Structural Diversity of Developing Countries
standard of living economy 1.​ Historical Background
●​ Has a moderate ●​ Used advanced ○​ Large portion of developing
to low HDI technology countries were once colonies or
●​ Has a low GDP colonized but the extent to which this
and/or GNI has affected the countries varies
greatly like some gained more
●​ Afghanistan ●​ Australia positive outcome than others
●​ Brazil ●​ Canada ■​ Greatly depends on the
●​ India ●​ Germany
length of time the countries
●​ Japan
●​ Kenya were colonized or whether or
●​ New Zealand
●​ Mexico ●​ Singapore not the colonizers traded
●​ Nigeria ●​ South Korea freely with them
●​ Philippines ●​ Switzerland ○​ Colonial background nations have
●​ Thailand ●​ UK typically modeled their economic
●​ Ukraine ●​ USA structures, as well as their
●​ Vietnam educational and social institutions,
on those of their colonial rulers
Low Income Country High Income Country
2.​ Size & Income Level
●​ With less than ●​ With more than
$1,035 GNI per 12,615 GNI per ○​ Geographic Area
capita capita ■​ Larger countries often have
Middle Income Country diverse climates, natural
●​ Between $1,036 resources and ecosystems
and $12,615 GNI (opportunity and challenge)
per capita ■​ Larger land area provides
more space for agriculture,
industrial development and
Concept of Development infrastructure
●​ Bringing about social change that allows ●​ Logistical challenges:
people to achieve their human potential connectivity and
●​ Judged by its impact on people governance
○​ Not only by changes in their income ■​ Vast coastlines have
○​ Generally in terms of their choices, additional advantage for
capabilities, and freedom trade and tourism
●​ Countries are alternatively called ○​ Population
“backward”, “underdeveloped”, “less ■​ Large population can offer a
developed” and “developing” substantial domestic market
●​ World Bank classifies economies according for goods and services
to GNI per capita ■​ stimulate economic activity
●​ Economies are classified as and attract investment
 ■​ Can be challenging to ■​ Ethnic Groups
manage large population ●​ Vary in size, influence
○​ Income and geographical
■​ Often have lower average distribution
incomes compared to ■​ Cultural Diversity
developed economies ●​ Source of pride and a
■​ Raising per capita income is potential driver of
key objective for eco tourism and cultural
development industries
●​ Signifies ■​ Social Dynamics
improvement in living ●​ Influence social
standards, reduces dynamics
poverty, increased ○​ Intergroup
purchasing power relations,
3.​ Physical and Human Resources social
○​ Physical Resources cohesion and
■​ Natural Resources potential
●​ Minerals, fossil fuels, conflicts
fertile land, water ○​ Religious Composition
■​ Land & Agriculture ■​ Major religions
●​ Providing food ●​ Islam, Christianity,
security, employment Hinduism, Buddhism
opportunities, raw ●​ Own beliefs, practices
materials for and rituals
industries ■​ Religious diversity
■​ Infrastructure ●​ Diversity adds to the
●​ Transportation cultural tapestry and
networks, energy can foster religious
infrastructure, tolerance and
communication dialogue
systems, water and ■​ Influence on society
sanitation facilities ●​ Crucial for promoting
○​ Human Resources inclusive
■​ Population development and
●​ Potential labor force ensuring religious
and consumer market freedom
■​ Workforce
●​ Contributes to various *Characteristics & Implications
sectors such as agri, 1.​ Identity and Social Cohesion
manuf, services, and ○​ Balancing these identities
informal economy with a sense of national unity
■​ Education & Skills and social cohesion is vital
●​ To reduce poverty, for stability and inclusive
investments in development
education, vocational 2.​ Interethnic and Interreligious
training and technical Relations
skills development ○​ Harmonious interethnic and
4.​ Ethnic & Religious Composition interreligious relations are
○​ Ethnic Composition crucial for fostering peace,
 understanding and ○​ Foreign and often excessively
cooperation capital-intensive technologies of
3.​ Political Representation and Power production
Sharing ○​ Dependence on external forces and
○​ Ensuring equitable other external factors
representation and ○​ Economic External Dependence
addressing power ■​ International Trade
imbalances are essential for ■​ Technology Transfer
inclusive governance ■​ Financial Dependence
○​ Socio-Political External Dependence
5.​ Relative Importance of Public and ■​ Cultural Influence
Private Sector ■​ Social and Human
○​ Public Sector Development
■​ Called the state sector 7.​ Political Structure, Power and Interest
■​ Comprised both public Groups
services and public ○​ Decision-makers are typically urban
enterprises industrialists, bankers, foreign
■​ Direct government manufacturers, the military and
investment and large rural unionists
works programs (dominated) ○​ Development will not be possible
○​ Private Sector without corresponding changes in its
■​ Referred to as the citizens social, political and economic
sector institutions
■​ Owned by private groups ○​ Political Institutions
■​ Special tax allowances ○​ Power dynamics
(dominated) ○​ Interest groups
○​ Historical and political circumstances
play a major role in determining the
relative importance Common Characteristics of Developing Nations
○​ Economic policies will be different 1.​ Holistic Measure of Living Levels: HDI
for countries with large public ○​ HDI
sectors and with sizable private ■​ emphasizes that people and
sectors their capabilities should be
○​ Industrial Structure the ultimate criteria for
■​ Agricultural, manufacturing assessing the development
and services of a country, not economic
■​ Vary depending on nature growth alone (UNDP)
structure and degree of ■​ Index measuring national
interdependence among its socioeconomic development,
primary, secondary and based on combining
tertiary industrial sectors measures of education,
6.​ External Dependence: Economic & health and adjusted real
Socio-political income per capita (Todaro
○​ Size, resource endowment, and and Smith)
political history ○​ BASICALLY a summary measure of
○​ International investment and trade average achievement in key
with developed nations dimensions of human development:
 ○​ Sub-Saharan Africa
■​ Faces high rates of
population growth
■​ World’s poorest country
○​ Consequences
■​ Climate change
■​ Food security
■​ Biodiversity loss &
overexploitation of resources
○​ Traditional vs Current HDI ○​ Causes
Traditional HDI Current HDI ■​ Increase fertility rates
■​ Increase life expectancy
●​ Initiated in 1990 ●​ Initiated in 2010 ■​ Migration
●​ Uses arithmetic ●​ Used geometric ○​ Dependency burdens
mean mean ■​ High DB means there is a
difficulty for working-age
○​ How to calculate the current HDI? people to support ages below
15 and above 64
●​ Not all are
accommodates for
their needs
■​ Low DB means people in
their working age have more
sufficient number of people
that they can support within
the population
2.​ Low Levels of Productivity and Living 4.​ Dominance, Dependence, and
○​ May impact unmotivated workers Vulnerability in International Dependence
and production ○​ International Dependence
○​ Delay or lack to sustainability of ■​ A country like developing
achieving their goals ones who rely upon strong
○​ Affect individual’s living cost or countries who can control
efficiency and contribute to their
■​ Shortage of resources for economic, political and social
their needs development
○​ Causes ○​ DC role
■​ Poor management ■​ To provide raw materials and
■​ Lack of employees cheap labor
■​ Bad relationships between ■​ To provide products that are
workers sold thrice in the market
■​ Overwhelming works (not helping to its low economic
properly divided tasks) growth
■​ Weak organizational ○​ Allows more integration towards the
structure developed and developing countries
3.​ High Rates of Population Growth and ○​ External Dependence and Unequal
Dependency Burdens International Relations
○​ High birth rates, low death rates ■​ DC have become less
○​ Affects the resources needed and influential and organized in
relied on by the community international affairs
 ■​ DC have weaker bargaining b.​ Structural Transformation
positions i.​ High rates of economic
■​ DC frequently express structural transformation
significant concern over a ii.​ High rates of social and
variety of cultural ideological transformation
dependence: c.​ International Spread
●​ News and i.​ International economic
entertainment outreach
●​ Business practices ii.​ Limited international spread
●​ Way of life of economic growth
●​ Social norms B.​ Four Approaches Development as
■​ DC are reliant on the Growth
developed world to preserve a.​ Linear Stages Theory
environment for sustainable i.​ Rostow Framework
development 1.​ Traditional society
■​ 8 differences have 2.​ Preconditions for
occasionally presented takeoff
serious challenges: 3.​ Takeoff
●​ Lower P and H 4.​ Drive to maturity
resource 5.​ Ages of mass
endowments consumption
●​ Lower per capita ii.​ Harrod-Domar Growth Model
income 1.​ Objective is to create
●​ Climatic features the steady state
●​ Population size, growth rate
distribution and 2.​ Determined by how
growth rate efficiently a country
●​ Historical role of uses its capital
international a.​ Capital-output
migration ratio
●​ International trade b.​ Savings ratio
benefits b.​ Structural Change Models
●​ Basic indigenous i.​ Lewis’ two-sector model
scientific and 1.​ Traditional
technological (agricultural),
research and overpopulated rural
development subsistence sector w/
capabilities surplus labor
●​ Efficacy of domestic 2.​ High productivity
institutions modern (industrial)
sector, surplus labor
Theories and Models of Development is transferred
A.​ Kuznet’s Six Characteristics of Modern ii.​ Chenery’s pattern of
Economic Growth development
a.​ Aggregate Growth 1.​ Transformation from
i.​ High rates of per capita agri
output and population growth 2.​ To an industrial econ
ii.​ High rates of total factor for sustained growth
productivity increase
 3.​ Accum of both human ○​ Econ growth is primarily driven by
and physical; capital factors within the economic system
c.​ International Dependence itself, rather than external factors
i.​ Neocolonial Dependence B.​ Underdevelopment as a Coordination
Model Failure
1.​ Indirect growth of C.​ Kremer’s O-Ring Theory of Development
Marxist thinking
2.​ Result of historical
evol of highly unequal
international capitalist
system
ii.​ False-paradigm model
1.​ Result of faulty and
inappropriate advice
by well-meaning
2.​ Inappropriate policies
merely serving vested
interests
iii.​ Dualistic-development thesis
1.​ As the divergence
between rich and
poor nations
d.​ Neoclassical Counterrevolution
i.​ About
1.​ Liberalization or the
opening up of
markets
2.​ Drawing investment
and increasing the
rate of capital accum
ii.​ Objective
1.​ Efficient production
and proper price
systems
iii.​ Approaches
1.​ Free market
approach
2.​ Public choice
approach
3.​ Market-friendly
approach

Contemporary Models of Development and