Development Economics

BEF I & BET I

Concepts in Development Economics
• Describe the Concepts of Development
• Being able to relate Economic development
to Economic growth
• Explain Different Development Goals
Outline: BASIC CONCEPTS OF DEVELOPMENT
• Definitions and Meaning of Development
• Core values of Development
• Objectives of Development
• Economic Growth and Economic Development
• Development Goals MDG and SDG
Introduction-An Overview of Development
• Economics is defined as a social science which dealing with
allocation of scarce resources to satisfy human wants. There
are basically three key points for us to note in this definition:
• Economics is a social science concerned with human
behaviour.
• It deals with allocation of scarce resources which include
land, labour, capital and management.
• It is concerned with satisfaction on human wants, and this
involves the problem of choice among alternatives.
Introduction-An Overview of Development

• What is development: The process of

improving the quality of all human lives and
capabilities by raising people’s levels of
living, self-esteem, and freedom.
Introduction-An Overview of Development
• Example: Now imagine that you are in a remote rural area
in the Western part of Tanzania, where many small clusters
of tiny huts dot a dry and barren land. Each cluster
contains a group of extended families, all participating in
and sharing the work. There is little income because most
goods (food, cloths, shelter and other goods) are made and
consumed by the people themselves-there is a subsistence
economy. There are few passable roads, no hospitals,
electric wires, or water supplies. Suppose now a new road
is being built that will pass near this village? What will it
bring to this village?
Introduction-An Overview of Development
• Means for prolonging life through improved medical
care.
• It will also bring more information about the world
outside, along with the gadgets of modern
civilization.
• The possibilities of a “better” life will be promoted, and
the opportunities for such a life will become feasible.
• To understand the depth of some of their deprivations
more clearly through interaction with outside world.
What Do We Mean by Development?
• In strictly economic terms, development has traditionally meant
achieving sustained rates of growth of income per capita to
enable a nation to expand its output at a rate faster than the
growth rate of its population.
• Levels and rates of growth of “real” per capita gross national
income (GNI) (monetary growth of GNI per capita minus the
rate of inflation) are then used to measure the overall economic
well-being of a population how much of real goods and services
is available to the average citizen for consumption and
investment.
What Do We Mean by Development?

• During the 1970s, economic development

came to be redefined in terms of the
reduction or elimination of poverty,
inequality, and unemployment within the
context of a growing economy.
“Redistribution from growth” became a
common slogan.
Development
• The questions to ask about a country’s development are
therefore: What has been happening to poverty? What has
been happening to unemployment? What has been
happening to inequality? If all three of these have declined
from high levels, then beyond doubt this has been a period
of development for the country concerned.
• If one or two of these central problems have been growing
worse, especially if all three have, it would be strange to
call the result “development” even if per capita income
doubled
Meaning of Development
• Development must therefore be conceived of as a
multidimensional process involving major
changes in social structures, popular attitudes,
and national institutions, as well as the
acceleration of economic growth, the reduction of
inequality, and the eradication of poverty.
Meaning of Development
• Development, in its essence, must represent the
whole range of change by which an entire social
system,
• tuned to the diverse basic needs and evolving
aspirations of individuals and social groups within that
system,
• moves away from a condition of life widely perceived
as unsatisfactory toward a situation or condition of life
regarded as materially and spiritually better.
Development economics
• It has an even greater scope. In addition to being concerned with the
efficient allocation of existing scarce (or idle) productive resources
and with their sustained growth over time, it must also deal with the
economic, social, political, and institutional mechanisms, both public
and private, necessary to bring about rapid (at least by historical
standards) and large-scale improvements in levels of living for the
peoples of Africa, Asia, Latin America, and the formerly socialist
transition economies.
The Three Objectives of Development
• We may conclude that development is both a physical
reality and a state of mind in which society has, through
some combination of social, economic, and institutional
processes, secured the means for obtaining a better life.
Whatever the specific components of this better life,
development in all societies must have at least the
following three objectives:
The Three Objectives of Development
• To increase the availability and widen the distribution of basic life-
sustaining goods such as food, shelter, health, and protection
• To raise levels of living, including, in addition to higher incomes, the
provision of more jobs, better education, and greater attention to
cultural and human values, all of which will serve not only to enhance
material wellbeing but also to generate greater individual and
national self-esteem
• To expand the range of economic and social choices available to
individuals and nations by freeing them from servitude and
dependence not only in relation to other people and nation-states
but also to the forces of ignorance and human sadness
Three Core Values of Development
• The appropriate answer for developing nations today is
not necessarily the same as it would have been in
previous decades. But at least three basic components
or core values serve as a conceptual basis and practical
guideline for understanding the inner meaning of
development. These core values— sustenance, self-
esteem, and freedom—represent common goals
sought by all individuals and societies.
Three Core Values of Development
• Sustenance: The Ability to Meet Basic Needs All people have certain basic
needs without which life would be impossible. These life-sustaining basic
human needs include food, shelter, health, and protection.
• When any of these is absent or in critically short supply, a condition of
“absolute underdevelopment” exists. A basic function of all economic
activity, therefore, is to provide as many people as possible with the means
of overcoming the helplessness and misery arising from a lack of food,
shelter, health, and protection.
• Without sustained and continuous economic progress at the individual as
well as the societal level, the realization of the human potential would not
be possible.
•
Three Core Values of Development
• Self-Esteem: To Be a Person A second universal component of the good life is self-
esteem a sense of worth and self-respect, of not being used as a tool by others for their
own ends. All peoples and societies seek some basic form of self-esteem, although they
may call it authenticity, identity, dignity, respect, honour, or recognition.
• The nature and form of this self-esteem may vary from society to society and from
culture to culture. However, with the proliferation of the “modernizing values” of
developed nations, many societies in developing countries that have had a profound
sense of their own worth suffer from serious cultural confusion when they come in
contact with economically and technologically advanced societies.
• This is because national prosperity has become an almost universal measure of worth.
Due to the significance attached to material values in developed nations, worthiness and
esteem are nowadays increasingly conferred only on countries that possess economic
wealth and technological power—those that have “developed.”
Three Core Values of Development
• Freedom: To Be Able to Choose A third and final universal value that
should constitute the meaning of development is the concept of
human freedom. Freedom here is to be understood in the sense of
freeing from alienating material conditions of life and from social
servitude to nature, other people, misery, oppressive institutions, and
dogmatic beliefs, especially that poverty is predestination. Freedom
involves an expanded range of choices for societies and their
members together with a minimization of external constraints in the
pursuit of some social goal we call development
• Freedom: A situation in which a society has at its disposal a variety
of alternatives from which to satisfy its wants and individuals enjoy
real choices according to their preferences.
Discussion Questions
• What do you hope to gain from this course on development
economics?
• What do you understand about economic development
• It has been said that ending extreme poverty and achieving genuine
development are possible but not inevitable and that this gives the
study of economic development its moral and intellectual urgency.
What is meant by this?
Economic Growth and Economic
Development
• Economic growth and economic development are often used
interchangeably. However, there are two distinctions between two
concepts.
• Economic growth means increase in output or production.
• Economic development means both more output or production and
changes in the technical and institutional arrangements by which
factors of production are produced and distributed.
Growth
• Growth in a human being means the increase in weight and height of
the individual. These are purely physical in nature like increases in
weight from 5 kilos to 50 kilos or increases in height from 91
centimeters to 191 centimeters.
Growth
• In similar fashion, growth in a country’s economy means increases in
physical output or production.
Economic Growth
• Economic growth: refers to increases in a country’s production or
income per capita. Production is usually measured by gross national
product or gross national income. So development was
synonymously taken to be sustained growth in per capita income,
i.e. output is growing faster than the population.
• However in 1970s it was evidently that even if economies were
growing, a majority of the populations continued to be poor in
combination with growing inequality. It was redefined to include the
reduction or elimination of poverty, inequality, and unemployment
within the context of a growing economy.
Economic growth
• Economic growth: the value of output of goods and services within a year.
Indicators:
• GDP – The value of output produced within a country during a time period
• GNP – The value of output produced within a country plus net property
income from abroad
• GDP/GNP per head/per capital: Takes account of the size of the population
• Real GDP/GNP: Accounts for differences in price levels in different
countries
• PPP Measure: the number of units of a country’s currency required to
purchase the same basket of goods and services in the local market that a
US $1 would buy in the USA.
Development
• Development in human means not only physical growth but
also the necessary changes that he has to undergo to
develop into a matured individual.
• This means that the individual’s attitudes, habits, emotions,
feelings and intelligence must have undergone changes to fit
into the concept of matured individual.
Development
• In similar fashion, development in a country’s economy means both
increases in output or production and changes in the technical and
institutional arrangements by which the factors of production are
produced and distributed.
Economic development
Economic development refers to economic growth accompanied by
changes in output distribution and economic structure.
These changes may include:
• An improvement in the material well-being of the poorer half of the
population
• A decline in agriculture's share of GNP and a corresponding increase
in the GNP share of industry and services
• An increase in the education and skills of the labour force
• Substantial technical advances originating within the country
Economic development:
• Increase in number of people who live in cities rather than in country side
• Accelerating then decelerating, population growth during which country’s
age structure changes dramatically.
• Consumption pattern also changes; as people no longer spend all their
income on necessities but instead move to consumer durables and later to
leisure-time products and services.
• The key feature about development is that it has to come from within;
people of the country must be the major participant in the process that
brought about these changes in structure. This participation in
development process implies participation in the enjoyment of the benefits
of development as well as the production of those benefits
Economic development
• Economic development is shaped not only by
economic factors but also by non-economic
factors like environmental, social, and cultural
conditions of the economy.
ECONOMIC GROWTH VS.
ECONOMIC DEVELOPMENT
• One can get the economic growth of a country by comparing its GDP
at present with the GDP last year. However, it is not so easy to
measure development as it is based upon many parameters such as
health, education, literacy levels, and life expectancy and so on.
ECONOMIC GROWTH VS.
ECONOMIC DEVELOPMENT
• Examples of countries like China India and other developing countries
that have huge GDP but not labeled developed because of their lowly
ranks on other parameters such as health, education and life
expectancy is enough to demonstrate the difference between
economic growth and development.
• In the study of economics, economic growth is taken as a quantitative
measure while development is both a quantitative as well as a
qualitative measure which makes it difficult to quantify.
Next Session Module Activity
• Targets of 8 Millennium Goals
• Meaning of MDGs I 1
• Reason for MDGs 1
• Targets of 17 Sustainable development goals
• Meaning of SDGs 1
• Reason for SDG 1
Development Goals

Millennium Development Goals

(MDGs)
and
Sustainable Development Goals
(SDGs)
Millennium Development Goals (MDGs)
• In September 2000, leaders of 189 countries gathered at the United
Nations headquarters and signed the historic Millennium Declaration,
in which they committed to achieving a set of measurable goals that
provide a framework for development planning for countries around
the world by the target date of 2015.
• The Millennium Development Goals (MDGs) are commonly described
as a “roadmap for world development by 2015”.
Continue…..
There are eight goals with 21 targets. They are following-
• Eradicate extreme poverty and hunger
• Achieve universal primary education
• Promote gender equality and empower women
• Reduce child mortality
• Improve maternal health
• Combat HIV/AIDS, malaria, and other diseases
• Ensure environmental sustainability
• Develop a Global Partnership for Development
Continue…..
Millennium Development Goals
• For 15 years, the MDGs drove progress in several important areas:
reducing income poverty, providing much needed access to water and
sanitation, driving down child mortality and drastically improving
maternal health. They also kick-started a global movement for free
primary education, inspiring countries to invest in their future
generations. Most significantly, the MDGs made huge strides in
combatting HIV/AIDS and other treatable diseases such as malaria
and tuberculosis.
Key MDG achievements
• More than 1 billion people have been lifted out of extreme poverty
(since 1990)
• Child mortality dropped by more than half (since 1990)
• The number of out of school children has dropped by more than half
(since 1990)
• HIV/AIDS infections fell by almost 40 percent (since 2000)
MDG’s to SDG’s
• The Sustainable Development Goals (SDGs) were born at the United
Nations Conference on Sustainable Development in Rio de Janeiro in
2012. The objective was to produce a set of universal goals that meet
the urgent environmental, political and economic challenges facing
our world.
• The SDGs replace the Millennium Development Goals (MDGs), which
started a global effort in 2000 to tackle the indignity of poverty.
• The MDGs established measurable, universally-agreed objectives for
tackling extreme poverty and hunger, preventing deadly diseases, and
expanding primary education to all children, among other
development priorities.
The Sustainable Development Goals (SDGs)
• The Sustainable Development Goals (SDGs), officially known as
Transforming our world: the 2030 Agenda for Sustainable
Development, are an intergovernmental set of aspiration goals.
• On 19 July 2014, the Open Working Group of the UN General
Assembly proposed for the SDGs to the Assembly.
• On 5 December 2014, the UN General Assembly accepted report
which of OWG proposals.
• On 25 September 2015, the 193 countries of the UN General
Assembly adopted the 2030 Development Agenda.
Continue…..
The Five Elements of the Sustainable Development Goals are:
• People
• Planet
• Prosperity
• Peace
• Partnership
Continue…..
• There were 17 goals with 169 proposed targets
for these goals and 304 proposed indicators to
• Life on Land
show compliance. • Life below Water
• Gender Equality
• Peace and Justice
• Good Health
• Good Jobs and Economic
• Partnership for Goals
• Growth • No Poverty
• Reduce Inequality • No Hunger
• Responsible Consumption • Sustainable Cities and
• Renewable Energy
• Climate Action
• Community
• Clean Water and Sanitation • Innovation and
• Infrastructure
Continue…..
Continue…..
The key challenges for Tanzania for implementing the SDGs as
• Integration in the national planning process
• Financial and non-financial resources
• Institutional mechanism for implementation
• Data for Monitoring
• Participation and accountability
Continue…..
• Different institutions and Policy advisors have
argued that SDG’s can work more better than
MDG’s
• Next slides try to outline the Reason for why
SDG’s can work for all nations
1. The sustainable development goals (SDGs) are more globally
collaborative than the millennium development goals (MDGs)
• The MDGs were largely determined by OECD countries and
international donor agencies. The SDGs have been produced by
detailed international negotiations that have involved middle-income
and low-income countries. The SDGs are universal – they apply to all
countries and actors. The SDGs are holistic – they cover poverty
reduction and inequality, sustainability and economic growth with job
creation.
• David Hulme, director, Global Development Institute, Manchester, UK
@brookspoverty
2. The private sector now has a greater role to
play
• The private sector are far more engaged in the SDGs than they ever
were in the MDGs, through initiatives such as UN Global Compact and
Impact2030. The propensity of the commercial world to supplement
global development efforts is vast and, in my opinion, still
undervalued and under-explored within the development community.

• Louise Erskine, head of programmes and research, Career Volunteer,

London, UK @CareerVolnteer
3. The MDGs were not rooted in human rights
standards
• The SDGs are a step forward. But if development is to be inclusive and
just, and leave no one behind, it must be rooted strongly in human
rights principles and standards. The MDGs and much mainstream
development policy has failed to give adequate priority to challenging
systemic patterns of discrimination and disadvantage – violations of
rights – that keep many people in poverty. David Mepham, UK
director, Human Rights Watch, London, UK @mephamd
4. The SDGs are inclusive
• Seven SDG targets explicitly refer to persons with disabilities; an
additional six targets refer to people in vulnerable situations, while
seven targets are universal and two refer to non-discrimination.
Inequality for me is not just measured in terms of growth but in terms
of making sure the most excluded can exercise their human rights.
• Marion Steff, policy advisor: social inclusion, Sightsavers, London, UK,
@mllemarionamtl
5. The indicators present opportunities for civil
society engagement
• I am excited by the potential of leveraging the indicators framework
to expand opportunities for local action and local partnership. We
have some exciting examples of civil society already working to create
new opportunities for engagement with government at a local level to
make progress on justice, legal identity and other themes.

• Peter Chapman, programme officer, Open Society Justice Initiative,

Washington DC, USA
6. The UN can inspire the world with the SDGs
• If you view the UN’s main role as promoting progressive ideas and/or
changing international social norms (as Tom Weiss and Richard Jolly
do), then the SDGs will be another evolutionary step in getting people
around the world to think a little bit more as global citizens and think
about poverty, inequality, sustainability, consumption and
discrimination, and do something. David Hulme
SDG
• The SDGs are a bold commitment to finish what started, and tackle
some of the more pressing challenges facing the world today. All 17
Goals interconnect, meaning success in one affects success for others.
• Dealing with the threat of climate change impacts how we manage
our fragile natural resources, achieving gender equality or better
health helps eradicate poverty, and fostering peace and inclusive
societies will reduce inequalities and help economies prosper. In
short, this is viewed as the greatest chance we have to improve life
for future generations.