Development Economics: Intro & Evolution

Introduction to Development Economics

• Development economics addresses why some countries are poor while others are rich
• It seeks paths on how to reduce poverty to give everyone a minimum standard of living, freedom from hunger, and freedom from fear.

Evolution and Revival of Development Economics

• Development economics emerged as a distinct field post-World War II
• Classical economists, such as Adam Smith and Karl Marx, were concerned with countries' growth and income distribution.
• Modern development economics has revived interests in saving, investment, trade, and labor mobilization for structural changes
• There's also focus on the poorer countries for a fairer deal from the world economy, viewing the world economy as biased.

New International Economic Order & Sustainable Development Goals

• Endorsed by major multilateral agencies like the UN, World Bank, and IMF; these were established post-WWII
• The Sustainable Development Goals (SDGs), set in 2015 with a target achievement by 2030, replaced the Millennium Development Goals from 2000-15

Globalization and Interdependence

• Increased globalization—greater interdependence among countries—is a key factor in development economics
• Understanding globalization's meaning and how interdependence manifests is important in development economics.

Core of Development

• Development should go beyond income per capita and embrace economic and social goals like self-esteem and freedom
• Development should encompass all economic and social objectives and values that countries strive for.

Perpetuation of Underdevelopment

• Forces within the world economy historically create divisions between rich and poor countries
• Factors include production structure differences, unequal trade, poor countries depending on rich ones, and international institutions.
• These factors can create a loop of stagnation for countries left behind.

Development Economics as a Subject

• The study of development economics as a subject is a relatively new phenomenon.
• Political concerns with poverty and poorer nations is also recently recognised
• There is now a global consensus on raising people’s living standards, which wasn't always the case historically.

Historical Attitudes and Changes

• Poverty was often blamed on the poor themselves and was seen as a labor source until the 19th century.
• In the 20th century emerged understanding on how poverty stifled effort, investment, and growth
• Post-WWII, national and international bodies were created to promote development.

Factors in the Rising Importance of Development Economics

• Factors include the great depression of the 1930's and the aftermath of the war
• Poor countries now being aware of their backwardness
• Growing awareness of the vast amount of poor
• Interdependance between countries in the world economy

Academic Origins

• The revival is in mechanics of growth and development and is a focus of progress
• Progress of people and nations material well being are now the centre of writing

Lessons and the Timescale for Development

• Development is a natural but lengthy process, with Europe taking three centuries to progress
• Much of development economics focuses on speeding up development while considering freedom and democracy

The Role of Technology and Trade

• The pessimism of classical economic theory has been changed by technical progress and global trade.
• The pool of technology can be drawn upon with more welfare
• Static efficiency gains are weaker than potential dynamic gains from trade for developing countries

Planning and Market Mechanisms

• After WWII, there was planning and interference with market mechanisms
• Although unfettered free enterprise can lead to failure there is also market failure as well as government failure
• Developing countries use the Harrod-Domar model to calculate investment needs to achieve income growth

Decline and Resurgence of Development Economics

• Apparent failures in many developing countries in the 1970's questioned the status of development economics
• Hirschman said that it's born out of the rejection of monoeconomics
• Monoeconomics is universality of neoclassical economics, neo-marxism asserted relations between countries

Factors in Development

• Development success has been observed due to observed success of free-market developing countries
• Development depends on the integration of developing countries into world bringing benefits to rich and poor people.
• Development economics focus' on mobilizing labour and industrialisation
• Has resurged due to increasing numbers of international evidence especially in South East Asia and China

Differences Between Poor and Rich Countries

• Poor countries differ structurally from rich ones, requiring different models, especially in resource allocation and long-term growth
• Social cost-benefit analysis and theories regarding disequilibrium have been developed in developing countries due to their structural differences

Core Task of Development Economics

• Provision of a general framework for an understanding of the pace and rhythm of growth and development
• Development economics attempts to explain the nature of that process

Interdisciplinary Nature of Development Economics

• Development economics has a unified body of theory although there are different areas
• Compartments arise due to the economics and the nature of the subject

The New Empirical Age

• Theorizin has left the stage and given way to more and more empirical work
• Work is available by large data sets which can be handled via user-friendly software for easy acess
• Both theory and empiricals are required in todays studies. Also a 4 stage proccess should follow
  • Stage 1: empirical description of the relevant phenomenon.
  • Stage 2: formulation of a relevant theory that might explain the phenomenon.
  • Stage 3: testing and estimation of theory, maybe leading to a modification or replacement of previous theories.
  • Stage 4: use of 'best' theory for purposes of prediction and policy evaluation.

Call for a New International Economic Order

• Call to help developing nations increase awareness of material improvements
• Should provide people freedom from poverty and basic life necessities
• Made during the UN General Assembly, pledged to:
  • establish a new economic order for the states
  • inequalities should be corrected + existing injustices be redressed
  • eliminate the widening gap between countries
  • ensure social development
  • ensure peace and justice for future generations

Programme of Action

• Call for actions such as:
  • terms of trade improvements
  • greater access to developed countries in trade
  • financial assistance + easier debt payments
  • reform of the International Monetary Fund
  • international food programme
• Reinterated by various UN agencies. UN World Summit focused on social and employment issues

Copenhagen Declaration

• Focus was on full equality of employment
• Declared equality between genders, healthcare to be a basic right
• Develop social policies
• Allocate budgets to social needs
• The IMF + World bank should show more attention when desinging programmes
• The UNCTAD called for new policy in debt relief, commodity policy, trade promotion and aid.

Millenium Development Goals + Sustaniable Development Goals

• Countries agreed to a set of goals for 2015
  • eradicate poverty and hunger
  • achieve universal education
  • promote gender equality
  • reduce child deaths
  • improve health
  • combat diseases
  • achieve environmental sustainability
• As of 2015 a new set of goals were laid out which are more ambitious
  • goals for poverty
  • hunger
  • health
  • education
• Addresses urbanization, infrastructure + environmental change. Each goal addresses aspects of poverty.

Globalization and Economic Interdependence

• The increasing globalization of the world creates independance
• Three eras in the last 150 years
• First capital flows + migratation
• Second freeing of trade after war
• Third advances in technology
• Definition of greater economic dependance via goods + services
• Trade, financial + labour flows, developing depend on each other. All increasing independance decreasing borders.

Forces that Increase Interdependance

• These include:
  • Freeing of trade
  • Global capital markets
  • Foreign investment
  • Global value chains
  • greater movement of people
  • the spread of technology

All Apects Make Countries Vunerable To

• World downturns
• Financial crisis such as Asias
• Commodity price rises
• Damage done by globalition (concern groups)
• Find rules, institutions, maintain global markets

Globalization Problems Must be Tempered With

• These include
  • ethics
  • equity
  • inclusion
  • human security
  • sustainability
  • development
• When 1 countrys action impacts another it is a public good or externality
• International society tasks aim to maximize goods that promote (tech, health) + limit public bad
• (disease,pollution) to poor countries

Economic Impacts

• Globalization + interpendance impact economy impairs
• Never more evident than the 80's - energy prices, debt crisis
• Brandt report - survival aid depends on developing of poor nations

Adverse Trends

• Rising poverty with inflation
• International money disorder
• Balance deficits
• Protectionism
• Tensions between resources
• These trends havent changed to much since the 1980's

Brandt Report called for

• A long term approach to meeting countries needs
• Resource transfers
• Increase agriculture productivity
• Stabilization for key commodities
• Help ease global trade exports
• Develop progammes
• International income tax / new fund
• Link money for aid to countries
• Policies to help balance
• This is relevant today + represent countries who suffer most + all parties benfit from it

Moral Obligation

• Concern in the developed countries is not just survival, moraility
• Help comes through support

Definition of Development

• Development - change
• transformation within countries
• Development - an objective of policy + what purpose
• Recent concept involved exclusively growth targets
• The distributional consequences and types of output of society

Factors Impacting Development

• This required embraces values - societies strive, this isn't easy,
• Important parts which create:
  • life sustenance
  • provision + basic needs
  • the poor must be raised
  • self-esteem / people must feel self respect
  • equal terms
  • developing must remove dependance
  • freedoms of wants
  • being able to know and choose

Related Factors

• Freedom = people determining destiny imprisonment on subistence education
• Material development = human expands options

Sen

• Entitlements- bundles commondities access uses obligations
• Capabilities - person reflects achievement
• View of living - combination to function assess people

The Meaning of Development

• Freedom is the primary objective of improving and increasing prosperity
• Freedom to remove unfreedoms = liberty, expand of capita

Viewpoints Involving Development

• Ethical development - Qizilsbash focuses on development Suggest values
  • low levels of nutrition, health, sanitation and security
  • capacity + literacy
  • aspiration + self respect
  • autonomy
  • freedom, joy
  • relations with others
  • accomplishment
  • understanding

When Development will Occur

• A whole expansion + well being consistent the needs of justice & freedom.

Issues That Clearly Develop

• More basic fundamental needs
• Improved basic sense of self worth
• Expansion peoples euntitlemns + freedom
• Difficult to measure - as a mental capacity/state than measurable in indexes.

The Transformation of Societies

• Help understand the nature + cause of poverty in low income. From mostly rural, to urban where goods + services are utilised
• Some countries hardly participated, why?
• The early revolution - countries now advantages
• Help other countries now industrialised 1960's
• In africa not developed
• Condition of agriculture is very important

Conditions Impacting Advancement

• Agriculture depends on economic and climate
• Tropics = under developed
• Helped urban areas as well
• Internal conditions e population or problems.
• Psychological condition = ethic, science, intellect = advance more
• External relations effect development through colonialism

General Conclusion

• If 1 country has economic gain for a long period process of called ''circular + causational effect''
• Some cases strong impacts needed for poverty

Economic Development

• challenging branch that addresses fundamental issues, some have money while some poor
• long period while tacking poverty
• Economic development requires increase + greater society, requires values to achieve and enable
• It means a bigger challenge because structural force that are created from poor country must gain the aid and investment.