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Questions and Answers
What is the primary focus of development economics?
In the context of the Capabilities Approach, what is meant by 'functionings'?
How are capabilities defined within Amartya Sen's framework?
Which of the following is considered an indicator of development?
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What does the term 'institutions' refer to in the context of economic development?
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What is the primary source used for the data on under-5 mortality rates?
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What percentage of income do the poor typically spend on food?
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Which of the following factors is NOT a barrier faced by the poor?
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What is the median family size among the poor as reported?
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How much of their budget do the poor typically allocate to education?
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What does the income dimension of the Human Development Index (HDI) measure?
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Which of the following assets is commonly owned by the poor?
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Which of the following is NOT a typical income source for poor households?
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Study Notes
Development Economics
- Development economics focuses on understanding the transformation of economies from stagnation to growth, from low-income to high-income status, and overcoming issues of extreme poverty.
Institutions and Social Systems
- Institutions are the rules, norms, and shared practices within a society that shape and constrain interactions.
- Social systems refer to the organizational and institutional structures of a society, taking into account values, attitudes, and power structures.
Development as Progress
- Development is viewed as the improvement of human quality of life, with focus on raising living standards, self-esteem, and freedom.
Capabilities Approach
- Amartya Sen's Capabilities Approach emphasizes the concept of functionings, which are what individuals can do or achieve with available commodities.
- Functionings are different from possessing goods or feeling utility (happiness).
- Capabilities represent the freedoms or opportunities that people have, given their personal characteristics and control over resources.
Indicators of Development
- Gross National Income (GNI) adjusted for purchasing power parity (PPP) is used to compare income across countries.
- Multiple dimensions of inequality (income, wealth, opportunity, etc.) are considered in measuring development.
- Poverty rates are monitored as a key aspect of development.
- Health indicators, such as life expectancy, are crucial for measuring well-being.
- Education attainment, including enrolment and literacy rates, are vital for development progress.
Inequality
- The text highlights that inequality is often a significant problem in developing countries.
Poverty
- The text mentions that reducing or eliminating poverty is a central goal of economic development.
Human Development Index (HDI)
- HDI is a composite index.
- It uses geometric mean to combine three dimensions: health (life expectancy at birth), education (average years of schooling and expected years of schooling), and income (log of PPP-adjusted GNI).
The Economic Lives of the Poor
- Banerjee and Duflo's research highlights key characteristics of the lives of the poor, using data from surveys like the World Bank Living Standards Measurement Survey and RAND Family Life Surveys.
- Households of the poor often have a large family size (7-8 people) with multiple adults.
- A significant portion of household income is spent on food.
- Some money is spent on special events like weddings.
- The poor typically spend very little on entertainment or electronic devices.
- Asset ownership varies greatly between countries but radios, televisions, and bicycles are common.
- Diets of the poorest often fall below 1400 calories per day.
- There is a lack of reporting on happiness among the poor.
Barriers to Development
- The poor often lack specialized skills, which limits their income potential.
- Small-scale businesses create challenges for growth.
- The poor face difficulties saving money due to limited access to secure means of storing savings and inflation.
- Access to formal credit is typically limited, relying on informal loans with high interest.
- Lack of insurance protection exposes the poor to risk.
- Incomplete land records and weak property rights create obstacles for economic advancement.
- Poor infrastructure hampers development efforts.
- Public schools often provide low-quality education, limiting human capital development.
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Description
This quiz covers key concepts in development economics, including the transformation from low to high-income economies and the role of institutions and social systems. It also explores the Capabilities Approach by Amartya Sen, focusing on human quality of life improvements.
