Introducing Economic Development: A Global Perspective PDF

Introducing Economic Development: A Global Perspective Lec 1  Personal Ethics Statement By downloading this course material presentation and using it, I am attesting to the fact that I am committing to not-use this material to upload this document i...

Introducing Economic Development: A Global Perspective Lec 1  Personal Ethics Statement By downloading this course material presentation and using it, I am attesting to the fact that I am committing to not-use this material to upload this document in part or its entirety on any website, chat group or any social media site or distributing this document in any form to others, during and after the current semester. I am fully informed and fully understand that this document has been complied and editorialized from the materials compiled from diverse sources (copyrighted and/or open sources) across time, such that the compilation in this document does not lay claim to originality of the content I understand and commit to uphold the spirit that this document is made available to me for non- commercial and pedagogical objectives and for the sole purpose of enabling me, as an aid to better learn the class-room presentations, course texts and readings assigned by the instructor. Further, I take full legal responsibility of any consequences flowing from my abuse of this covenant expressed in this Personal Ethics Statement, and that neither the course instructor (or his teaching assistant), nor the University of Ottawa will be implicated thereof. As well, I commit to adhere to the fraud policies outlined in the Regulations in the University of Ottawa’s ’s Undergraduate Studies Calendar Academic Fraud Webpage. ______________________________ __________________________ Signature Date ______________________________ __________________________ Last Name (print), First Name (print) Student Number 2  The Nature of Development Economics Traditional economics is concerned primarily with the efficient, least- cost allocation of scarce productive resources and with the optimal growth of these resources over time so as to produce an ever-expanding range of goods and services. Traditional neoclassical economics deals with an advanced capitalist world of perfect markets; consumer sovereignty; automatic price adjustments; decisions made on the basis of marginal, private-profit, and utility calculations; and equilibrium outcomes in all product and resource markets. It assumes economic “rationality” and a purely materialistic, individualistic, self-interested orientation toward economic decision making In brief, traditional economics emphasizes utility, profit maximization, market efficiency, and determination of equilibrium. Political economy goes beyond traditional economics to study, among other things, the social and institutional processes through which certain groups of economic and political elites influence the allocation of scarce productive resources now and in the future, either for their own benefit exclusively or for that of the larger population as well. Political economy is therefore concerned with the relationship between politics and economics, with a special emphasis on the role of power in economic decision making. 3  The Nature of Development Economics Development economics 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, South-Central America, and the formerly socialist transition economies. 4  Development Development is the process of improving the quality of all human lives and capabilities by raising people’s levels of living, self-esteem, and freedom. Development economics The study of how economies are transformed from stagnation to growth and from low- income to high- income status, and overcome problems of extreme poverty. The meaning and objectives of development include the provision of basic needs, reducing inequality, raising living standards through appropriate economic growth, improving self-esteem in relation to the developed countries, and expanding freedom of choice in the market and beyond. 5  The Study of Economic Development Raises some of the World’s Most Fundamental Questions For example: Why do living conditions differ so drastically for people across different countries and regions, with some so poor and others so rich? Why huge disparities also in health, nutrition, education, freedom of choice, women’s autonomy, environmental quality, market access, security, voice? Why is output per worker many times higher in some countries than others? Why do workers in some countries have fairly secure, formal jobs with regular, predictable pay, while in others most work with fluctuating and insecure earnings? Why are populations growing rapidly in some countries, on verge of shrinking in others? Why are public services insufficient, corrupt in some countries; effective in others? Why have some formerly poor countries made so much progress & others so little? How have child illness and death rates fallen so much in the world, and what can be done in places where they remain far higher than average? How can we measure impacts of government policies and NGO programs make in improving the wellbeing of the poor and vulnerable; what lessons have we learned? How did great divergences across countries come about? How does history matter? 6  Introducing Economic Development: A Global Perspective Substantial – even dramatic – progress in growth and poverty reduction in the developing world in the last quarter century. − Developing countries have faster growth than rich countries – but unevenly. − The income poverty rate has been more than halved. International economic relations are less one-sided - but also more fragile. The scale of challenges for sustainable economic development and ending poverty remains enormous. − Persistence of violent conflict; and other governance challenges. − Environment - impact of climate change; plus domestic environmental deterioration. Another active discussion − Future of the traditional path of manufactures-led growth: Manufacturing jobs for Africa next? Or robots? − Keeping the trade peace? − Conditions for repeat of global financial crisis/ great recession? − (Social and economic resilience to shifting world order?) Inclusive Growth, and the drive to zero-poverty – not a simple matter of continuing along a trend line! 7  Box: The Experience of Poverty – Voices of the Poor When one is poor, she has no say in public, she feels inferior. She has no food, so there is famine in her house; no clothing, and no progress in her family. - A poor woman from Uganda For a poor person everything is terrible—illness, humiliation, shame. We are cripples; we are afraid of everything; we depend on everyone. No one needs us. We are like garbage that everyone wants to get rid of. - A blind woman from Tiraspol, Moldova Life in the area is so precarious that the youth and every able person have to migrate to the towns or join the army at the war front in order to escape the hazards of hunger escalating over here - Participant in a discussion group in rural Ethiopia When food was in abundance, relatives used to share it. These days of hunger, however not even relatives would help you by giving you some food. - Young man in Nichimishi, Zambia 8  Box: The Experience of Poverty – Voices of the Poor (Continued) We have to line up for hours before it is our turn to draw water. —Mangochi, Malawi [Poverty is]... low salaries and lack of jobs. And it’s also not having medicine, food, and clothes. - Discussion group, Brazil Don’t ask me what poverty is because you have met it outside my house. Look at the house and count the number of holes. Look at the utensils and the clothes I am wearing. Look at everything and write what you see. What you see is poverty. - Poor man in Kenya A universal theme reflected in these seven quotes alone is that poverty is more than lack of income – it is inherently multidimensional, as is economic development. 9 Development: Traditional Economic Concepts Gross domestic product (GDP) is the total final output of goods and services produced by the country’s economy, within the country’s territory, by residents and non-residents (i.e., all resident producers), regardless of its allocation between domestic and foreign claims. Real GDP is adjusted for inflation. Gross domestic product per capita is GDP divided by midyear population. Gross national income (GNI) is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP) plus factor incomes earned by foreign residents, minus income earned in the domestic economy by non-residents. Gross national income per capita is GNI divided by midyear population. Developing countries, also called less developed countries (LDCs) in the development literature, are in Asia, Africa, the Middle East, Latin America, eastern Europe, and the former Soviet Union that are presently characterized by low levels of living and other development deficits. More developed countries (MDCs) are presently the economically advanced capitalist countries of western Europe, North America, Australia, New Zealand, and Japan. Hans Rosling’s video: https://www.youtube.com/watch?v=jbkSRLYSojo 10  Countries Classified by Their Average Levels of Development: An Intro Countries are often classified by levels of income and human development. The World Bank classifies countries according to four ranges of average national income: Low, Lower-Middle, Upper-Middle, and High. The income classification aims to indicate available economic capacity and reflect a country’s level of development. Low-Income Country (LIC) Countries with a GNI per capita of less than $1,145 in 2023. Lower-middle income countries (LMCs) Countries with a GNI per capita incomes between $1,146 and $4,515 in 2023. Upper-middle income countries (UMCs) Countries with a GNI per capita between $4,516 and $14,005 in 2023. High income countries (HICs) Countries with a GNI per capita greater than $14,005 in 2023. https://blogs.worldbank.org/en/opendata/world-bank-country-classifications-by-income-level-for-2024-2025 11 Changes in Country Economic Development In 1987, 30% of countries reporting to the World Bank were classified as low-income and 25% as high-income countries. By 2023, these overall ratios have shifted down to 12% in the low-income category and up to 40% in the high-income category. Some regional highlights: 100% of South Asian countries were classified as low- income countries in 1987, whereas this share has fallen to just 13% in 2023. In the Middle East and North Africa there is a higher share of low-income countries in 2023 (10%) than in 1987, when no countries were classified to this category. In Latin America and the Caribbean, the share of high- income countries has climbed from 9% in 1987 to 44% in 2023. Europe and Central Asia has a slightly lower share of high- income countries in 2023 (69%) than it did in 1987 (71%). https://blogs.worldbank.org/en/opendata/world-bank-country-classifications-by-income-level-for-2024-2025 12  World Bank Group Country Classification by Income Level https://blogs.worldbank.org/en/opendata/world-bank-country-classifications-by-income-level-for-2024-2025 13  Four Stylized Living Standards Strata Country level averages are very informative. Real gross world product per capita has more than tripled(3.17 times) between 1960 and 2023 (implying growth per year of 1.85%) and is 47% higher than it was at the turn of this century (implying annual growth of 1.6% from 2000 to 2023). These data can be found on the Saint Louis Federal Reserve’s website in the Federal Reserve Economic Database (or FRED). https://fred.stlouisfed.org/series/NYGDPPCAPKDWLD However, the level of analysis (and concern) is ultimately the individual, not the country or region. These four strata are stylized - not intended to represent real families. Certainly, not all the living conditions apply most of the one- to-three billion people in each of the strata; and Broad stylized characteristics can help us visualize what living standards differences mean in daily life. 14  “Typical” Conditions in the Poorest of the Strata Close to one billion people live at the lowest stratum. A majority (almost 700 million in 2024) of them live below the $2.15 per day extreme poverty line. Often live in remote rural areas. Majority of food is grown by the people who consume it. Shelter and furnishings often made by those who use them. Few passable roads particularly in the rainy season. Younger children attend school irregularly; school may be difficult to access. Many have never seen a high school. No hospitals, no electricity connection. No improved water supplies; water collected in reused commercial buckets from sources (such as a spring or stream) that are often contaminated; a kilometer or more walk from home. 15  “Typical” Conditions in the Poorest of the Strata (Continued) Walk in battered flip-flop sandals (if not bare feet). Children may be malnourished, suffering from conditions including protein deficiency. Food tends to be the same every meal, often lacking in vital nutrients. Food cooked over an open fire in a mud house. Smoke escapes from a hole in the roof, likely causing breathing problems. When it rains the roof may leak. Floor may be just mats over mud, on which the family sleeps. Parasites may gain entry to the house through the floor. 16  “Typical” Conditions in Second- lowest of the “Strata” Around 3.5 billion people (44% of the global population) remain poor by a standard that is more relevant for upper- middle-income countries ($6.85 per day in 2024). Typical person in this second-lowest “strata” not officially classified as extremely poor. (From perspective of a rich country seem very poor indeed). Typical family may live on about twice the $2.15 per person poverty line. Almost as likely to live in an urban area (or peri-urban area) Employment probably informal, companies not registered, no worker protections. Or, work in own small family enterprises. Get around with well-used but functioning bicycles. https://www.worldbank.org/en/topic/measuringpoverty 17  “Typical” Conditions in Second- lowest of the “Strata” (Continued) Water from a tap, typically outdoors; may walk or bike 50+ meters to get there. Water often still unsafe (without boiling or adding chlorine). Majority do not cook over open fires; use kerosene or other improved energy source. Family usually has improved floor; often improved walls and roof. But house still somewhat subject to the elements. Sleep disrupted by seemingly constant noise. Likely suffer from one or more components of multidimensional poverty – But for at least 80%, fewer deprivations than classified “multi- dimensionally poor”. 18  “Typical” family in the second- highest of the strata More than two billion people in the second-highest stratum. Could have $15 per person per day. More than three-quarters of people in the world lives on less than $15 a day. Family considered solidly middle income by global standards. Such families typically live in urban areas. Jobs still usually not very stable and often informal. Cooking on manufactured burners using kerosene, or electric plates. Have a television in their house. 19  “Typical” family in the second- highest of the strata (Continued) Get around with a motorbike. Children likely to survive early childhood. Probably attend some post-primary school, though often not complete it. Most adults and many teenagers have a mobile phone (typically not a smartphone). Water typically delivered through a tap to their house. A majority lack what people in the highest of the strata consider full indoor plumbing. Their city likely exhibits high inequality; sharp contrasts in living conditions. 20  “Typical” family in highest of the strata Close to a billion people live at the highest stratum. Most other people in the world would consider them rich. They are some distance above the World Bank high income line. A family in this strata might live on $75 per person per day. Many may feel their status is precarious, aware of the gulf. between their life and the ultra-rich; but most still work in formal jobs, generally with some protections. Live in a comfortable suburban house with a yard, or a large apartment. Full indoor plumbing taken for granted. Many comfortable features, including often a separate bedroom for each child. Central air conditioning, central heating, as prompted by climate. 21  “Typical” family in highest of the strata (Continued) House filled with consumer goods, including high speed internet, smartphones, laptops, home entertainment centers… Array of appliances - stove, refrigerator, dishwasher, microwave. Access to fresh food year round – though they may eat fast food. Children would probably be healthy – except for a growing incidence of obesity. Children generally get good medical care if they need it. Would expect to complete their secondary education. Likely gain at least some postsecondary education. Choose from a variety of careers. Can expect to live to an average age of close to 80 years. 22  Movement up strata Often people born on one stratum spend their lives on it, albeit typically making some progress within it. Sometimes, transformative progress is highly visible and takes form in the course of a single person’s life. Look at the China vignette, and the country case study on China. 23  Test Yourself (Source: 5. There are 2 billion children in the Hans Rosling) world today, aged 0 to 15 years old. 1. In all low-income countries across How many children will there be in the world today, how many girls the year 2100, according to the finish primary school? United Nations? A. 20%; B. 40%; C. 60% A: 4 ; B: 3; C: 2 billion 2. Where does the majority of the 6. The UN predicts that by 2100 the world population live? world population will have increased A: Low-income; B: Middle-income; C: by another 4 billion people. What is High-income countries. the main reason? 3. In the last 20 years, the proportion There will be more of age: A: children of the world population living in (below 15); B: adults (15 to 74); C: very extreme poverty has … old people (75 and older). A: almost doubled; B: remained 7. How did the number of deaths per more or less the same; C: almost year from natural disasters change halved. over the last hundred years? 4. What is the life expectancy of the A: More than doubled; B: Remained world today? about the same; C: Decreased to less than half. A: 50; B: 60; C: 70 years 24  Test Yourself (Source: Hans Rosling) 8. There are roughly 7 billion people in the world today. Which map shows best where they live? (Each figure represents 1 billion people.) 11. In 1996, tigers, giant pandas, and black rhinos were all listed as endangered. How many of these three species are more critically endangered today? A: Two; B: One; C: None of them. 9. How many of the world’s 1-year- 12. How many people in the world old children today have been have some access to vaccinated against some electricity? disease? A: 20% B: 50%; C: 80% A. 20%; B. 50%; C. 80% 13. Global climate experts 10. Worldwide, 30-year-old men believe that, over the next have spent 10 years in school, on 100 years, the average average. How many years have temperature will … women of the same age spent in A: get warmer; B: remain the same; school? C: get colder. Years: A: 9; B: 6; C: 3 years 25  Test Yourself (Source: 5. There are 2 billion children in the Hans Rosling) world today, aged 0 to 15 years old. 1. In all low-income countries across How many children will there be in the world today, how many girls the year 2100, according to the finish primary school? United Nations? A. 20%; B. 40%; C. 60% A: 4 ; B: 3; C: 2 billion 2. Where does the majority of the 6. The UN predicts that by 2100 the world population live? world population will have increased A: Low-income; B: Middle-income; by another 4 billion people. What is C: High-income countries. the main reason? 3. In the last 20 years, the proportion There will be more of age: A: children of the world population living in (below 15); B: adults (15 to 74); C: very extreme poverty has … old people (75 and older). A: almost doubled; B: remained 7. How did the number of deaths per more or less the same; C: almost year from natural disasters change halved. over the last hundred years? 4. What is the life expectancy of the A: More than doubled; B: Remained world today? about the same; C: Decreased to less than half. A: 50; B: 60; C: 70 years 26  Test Yourself (Source: Hans Rosling) 8. There are roughly 7 billion people in the world today. Which map shows best where they live? (Each figure represents 1 billion people.) 11. In 1996, tigers, giant pandas, and black rhinos were all listed as endangered. How many of these three species are more critically endangered today? A: Two; B: One; C: None of them. 9. How many of the world’s 1-year- 12. How many people in the world old children today have been have some access to vaccinated against some electricity? disease? A: 20% B: 50%; C: 80% A. 20%; B. 50%; C. 80% 13. Global climate experts 10. Worldwide, 30-year-old men believe that, over the next have spent 10 years in school, on 100 years, the average average. How many years have temperature will … women of the same age spent in A: get warmer; B: remain the school? same; C: get colder. Years: A: 9; B: 6; C: 3 years 27  The Correct Answers 1: C, 8: A, 2: B, Hans Rosling’s video: 9: C, 3: C, https://www.youtube.com/watch?v=jbkSRLYSojo 10: A, 4: C, Source: Hans Rosling, Ola Rosling, Anna 11: C, Rosling Rönnlund, Factfulness: Ten 5: C, 12: C, Reasons We’re Wrong About the World— 6: B, 13: A and Why Things Are Better Than You Think, 7: C, Sceptre, 2018. How did you do? Did you get a lot wrong? https://dn720005.ca.archive.org/0/items/hans-rosling- ola-rosling-anna-rosling-ronnlund-factfulness-ten- Did you feel like you were doing a lot of reasons-were- guessing? wron/Hans%20Rosling%2C%20Ola%20Rosling%2C%20An On average only 7% —less than one in ten!— na%20Rosling%20R%C3%B6nnlund%20- %20Factfulness_%20Ten%20Reasons%20We%E2%80%99 get it right. Most people do extremely badly. re%20Wrong%20About%20the%20World%E2%80%94an You are in very good company. d%20Why%20Things%20Are%20Better%20Than%20You %20Think-Sceptre%20%282018%29.pdf 28  What Do We Mean by Development? Traditional Economic Measures Gross National Income (GNI) Income per capita Utility of that income? The New Economic View of Development: Leads to improvement in well-being, more broadly understood. Amartya Sen’s “Capabilities” Approach: Capabilities of “Beings and Doings”: ‘”Doings” are activities we are able to undertake. “Beings” refers to the kinds of persons we are able to be. Functionings as an achievement: Functionings are ‘doings and beings’, that is, various states of human beings and activities that a person has achieved such as being well-nourished, getting married, being educated, and travelling Capabilities as real freedoms enjoyed in terms of opportunities people have to achieve functionings—doings and beings. Development and happiness. Well-being in terms of being well and having freedoms of choice. 29  Economic Well-Being Basic indicators of well-being: Real income, health, and education. Real Gross National Income (GNI) per-capita, i.e. income, is one measure of the material means people have to achieve well- being. GNI can be calculated from national GDP obtained by using the Purchasing Power Parity method to better reflect what people can buy at local market prices, rather than the market exchange rates. Furthermore, what people experience by spending income is assessed by social indicators, such as: Literacy, schooling Health conditions and services Housing and Political freedoms and social/community life. 30  Well-Being: Freedoms People still need to have capabilities to transform material income – means of living –into actual opportunities and freedom for personal development and outcomes that enhance well-being. Economic well-being as freedom: “What people can positively achieve is influenced by economic opportunities, political liberties, social powers, and the enabling conditions of good health, basic education,…, influenced by the exercise of people’s freedoms, through the liberty to participate in social choice and in the making of public decisions …” - Amartya Sen 31  Capabilities and Functionings Approach This approach emphasizes the importance of individual freedoms and opportunities (capabilities) and the actual achievements or states of being (functionings) that people can attain. In essence, it focuses on what people are able to do and be, rather than solely on economic indicators. Capabilities Definition: The real opportunities or freedoms people have to lead the kind of life they value. Example: Access to education, healthcare, or the ability to participate in community life. Functionings Definition: The actual beings and doings that individuals achieve with their capabilities. Example: Being well-nourished, being educated, or having a job. 32  Capabilities and Functionings Approach Key Principles: Freedom: The ability to make choices and pursue one's goals and aspirations. Agency: The ability to take action and make decisions that affect one's life. Participation: The ability to engage in social and economic activities that contribute to one's well-being. Implications: Beyond GDP: the capabilities and functionings approach goes beyond traditional measures of economic growth, such as GDP, to consider the broader aspects of human well-being. It shifts the focus to a more holistic view of human development, considering factors like health, education, and social participation. It seeks to understand and address the underlying inequalities that prevent individuals from achieving their full potential. Human Development: This approach emphasizes the importance of human development, including education, health, and social participation, in achieving human well-being. 33  Some Important “Beings” and “Doings” in Capability to Function: Being able to live long Being well-nourished Being healthy Being literate Being well-clothed Being mobile Being physically secure Being able to take part in the life of the community Being happy – as a state of being - may be valued as a functioning What other examples would you suggest are important? 34  Growth Is Not An End In Itself: An Input In Development & Freedom From Poverty Growth makes it possible to achieve other important objectives of individuals and societies. Behavioural economics: People continue to accumulate. experiences and objectives that make them happy –or unhappy– their overall level of well- being tends to remain fairly unaffected. Marriage or winning a lottery or a large tax refund has a strong positive boost initially but is gone within a year: revert to long- run baseline well-being. Baseline is determined primarily by individual personalities (genetics?) and the course of action/events that those personalities pursue. 35 Amartya Sen’s “Capability” Approach Amartya Sen: Poverty is the absence of one or more of the basic capabilities that are needed to achieve minimal functioning in the society in which one lives – basic human liberties and rights, education, health, etc. Functionings as an achievement. Capabilities as freedoms enjoyed in terms of functionings. Development and happiness. Well-being in terms of being well and having freedoms of choice. “Beings and Doings”. 36  Details on Amartya Sen’s Capability Approach 1 Sen: “Economic growth cannot be sensibly treated as an end in itself. Development has to be more concerned with enhancing the lives we lead and the freedoms we enjoy.” What matters fundamentally is not things a person has—or feelings these provide—but what a person is, or can be, and does, or can do. That is, not just characteristics of commodities consumed as in the utility approach, but the uses a consumer can and does make of commodities. Think beyond availability of commodities and consider uses to address “functionings” - what a person does (or can do) with commodities of given characteristics they come to possess or control. Valued functionings range from very basic - being adequately nourished to very complex - e.g. being able to take part in community life. 37 Details on Amartya Sen’s Capability Approach 2 Disparities between income and advantages are due to factors including: ‒ Personal heterogeneities ‒ Environmental diversities ‒ Variations in social climate ‒ Intra-household distribution; and ‒ Differences in relational perspectives such as minimal social expectations. 38  Details on Sen’s Capability Approach 3 Measuring individual well-being by levels of consumption of goods and services confuses the role of commodities by regarding them as ends in themselves rather than as means to an end. For nutrition, the end is health and what one can do with good health, as well as personal enjoyment and social functioning. Measuring well-being with utility is not a sufficient improvement over measuring consumption to capture the meaning of development. A person’s own valuation of what kind of life would be worthwhile is not necessarily the same as what gives pleasure to that person. 39  Details on Sen’s Capability Approach 4 Consider functionings as resulting from choices, given capabilities. “The functioning of a person is an achievement; it is what the person succeeds in doing with the commodities and characteristics at his or her command… bicycling has to be distinguished from possessing a bike… [and] from the happiness generated by [bicycling]… Or, you can think of goods leading in part to functioning, and from there to “utility” (as happiness resulting from functioning). Sen suggests subjective well-being as a psychological state is a functioning—that could be pursued alongside functionings such as health and dignity. 40  The New Economic View of Development Development, in its essence, represents the whole gamut 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 is 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. 41  Economies as Social Systems & Role of Values in Development Economics Social system: The organisational and institutional structure of a society, including its value, attitudes, power structure and traditions. Values: Principles, standards, or qualities that a society or groups within it consider worthwhile or desirable. Attitudes: The state of mind or feelings of an individual, group, or society regarding issues such as material gain, hard work, saving for the future, and sharing wealth. Institutions: Norms, rules of conduct, and generally accepted ways of doing things— “rules of the game” of economic life. Political economy: The attempt to merge economic analysis with practical politics—to view economic activity in its political context. 42  Three Core Values of Development What constitutes the good life? 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. They relate to fundamental human needs that find their expression in almost all societies and cultures at all times. Three Values of Development 1. Sustenance: The Ability to Meet Basic Needs: The basic goods and services, such as food, clothing, and shelter, that are necessary to sustain an average human being at the bare minimum level of living. 2. Self-esteem: To Be a Person: The feeling of worthiness that a society enjoys when its social, political, and economic systems and institutions promote human values such as respect, dignity, integrity, and self-determination. 3. Freedom: To Be Able to Choose: 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. 43  What Do We Mean by Development? The Central Role of Women Globally, women tend to be poorer than men; they are also more deprived in health, education and in freedoms in all its forms. Moreover, women in developing countries have primary responsibility for child rearing, and the resources that they are able to bring to this task will determine how readily the cycle of transmission of poverty from generation to generation can be broken. Children need better health and education, and studies from around the developing world confirm that mothers tend to spend a significantly higher fraction of income under their control for the benefit of their children than fathers do. Women also transmit values to the next generation. To make the biggest impact on development, societies must empower and invest in women. 44  What Do We Mean by Development? Development is a multidimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as acceleration of economic growth, reduction of inequality, and poverty eradication. Institutions: Constitutions, laws, regulations, social norms, rules of conduct, and generally accepted ways of doing things. Economic institutions are “humanly devised” constraints that shape human interactions, including both informal and formal “rules of the game” of economic life. Social system: The organisational and institutional structure of a society, including its values, attitudes, power structure, and traditions. Development, in its essence, represents the whole gamut of change by which a 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. 45  What Do We Mean by Development? The Central Role of Women Globally, women tend to be poorer than men; they are also more deprived in health, education and in freedoms in all its forms. Moreover, women in developing countries have primary responsibility for child rearing, and the resources that they are able to bring to this task will determine how readily the cycle of transmission of poverty from generation to generation can be broken. Children need better health and education, and studies from around the developing world confirm that mothers tend to spend a significantly higher fraction of income under their control for the benefit of their children than fathers do. Women also transmit values to the next generation. To make the biggest impact on development, societies must empower and invest in women. Three Objectives of Development Increase availability of life-sustaining goods. Raise levels of living. Expand range of economic and social choices. 46  Happiness of Greek Antiquity Happiness is often understood as a state of well-being and contentment. Western philosophers have expanded this definition to include broader concepts of fulfillment, virtue, and purpose in life. The Western philosophers of classical Greek antiquity, especially Plato and Aristotle, argued that happiness comes naturally when we cultivate qualities such as self-discipline or courage. Aristotle’s concept of eudaimonia encapsulates happiness as a state of flourishing achieved through virtuous living and the realization of one’s full potential. For Aristotle, happiness is not merely about fleeting pleasures but about living a life of moral excellence and cultivating intellectual and moral virtues. Of course, different things make different people happy. But Aristotle believed that the universality of ‘reason’ was the key to a sort of objective definition of happiness, when it was supported by the virtues of our character. 47  Happiness in the Modern Western Hedonism: Hedonistic philosophers, such as Epicurus, emphasize the pursuit of pleasure and the avoidance of pain as central to happiness. Utilitarianism: Actions are morally right if they maximize overall happiness or well-being in society, measured in terms of pleasure and the absence of pain. Existentialism: Philosophers, such as Jean-Paul Sartre and Albert Camus, approach happiness from a perspective that confronts the inherent absurdity and uncertainties of human existence. Existentialism emphasizes individual freedom, choice, and personal responsibility in creating meaning and happiness in a seemingly indifferent universe. Modern psychology contributes valuable perspectives on happiness, emphasizing factors such as positive emotions, meaningful relationships, and personal fulfillment. Positive psychology interventions, such as gratitude exercises, mindfulness practices, and fostering social connections, have been shown to enhance subjective well-being and overall life satisfaction. This approach emphasizes the importance of cultivating positive emotions, engaging in activities that promote personal growth and development, and nurturing supportive relationships—all of which contribute to long-term happiness and psychological well-being. 48  Happiness in Aztecs Perspective The Aztecs, who lived in modern-day Mexico, in the pre-Columbian times— before the arrival of the Spanish conquistadors, the Aztecs had a philosophically rich culture asked: how is one supposed to live, given that pain and transience are inescapable features of our condition? The answer is that we should strive to lead a rooted, or worthwhile life. The word the Aztecs used is neltiliztli, meaning ‘rootedness’, achieved at four separate levels. 1. The Aztecs grounded themselves in the body with a regimen of daily exercises, somewhat like yoga. 2. Be rooted in our psyches. The aim was to achieve a sort of balance between our ‘heart’, the seat of our desire, and our ‘face’, the seat of judgment. 3. At a third level, one found rootedness in the community, by playing a social role. These social expectations connect us to each other and enabled the community to function. 4. Finally, one was to seek rootedness in teotl, the divine and single being of existence. The Aztecs believed that ‘god’ was simply nature, an entity of both genders whose presence was manifest in different forms. Rootedness in teotl was mostly achieved obliquely, via the three levels above. A life led in this way would harmonise body, mind, social purpose and wonder at nature. Aztec philosophy encourages us to question this received of the Greeks’ idea of happiness, where reason and pleasure are intrinsic to the best performance of our life’s act on the world’s stage. 49  Pathways to Happiness in the East Cultural perspectives significantly influence how happiness is understood and pursued across different societies and traditions. For example, Eastern philosophies like Buddhism and Taoism emphasize inner peace, spiritual growth, and detachment from material desires as pathways to happiness. Buddhist teachings on mindfulness, compassion, and the Four Noble Truths offer practical guidance on overcoming suffering (dukkha) and attaining lasting happiness (sukha). The concept of nirvana in Buddhism represents a state of ultimate liberation and freedom from suffering, achieved through ethical conduct, mental discipline, and wisdom. In contrast, Western societies often equate happiness with economic prosperity, individual achievement, and personal fulfillment of desires, reflecting cultural values of ambition, competition, and material success. 50  Figure 1: Income and Happiness: Comparing Countries Factors Affecting Average National Happiness Family relationships, Financial situation, Work, Community and friends, Health, Personal freedom, and Personal values. Survey evidence shows that people are happier when: Not poor, not unemployed, Not divorced or separated, Have high trust of others in society, Enjoy high government quality with democratic freedoms, and Have religious faith. Note: The data on the x-axis is drawn from the World Bank World Development Indicators. The y-axis uses the Cantril Self-Anchoring Striving Scale from the Gallup Source: Richard Layard, Happiness: World Poll, asking respondents to imagine a ladder with steps from 0 (worst possible life for you) to 10 (best possible life for you) and answer. On which step of the ladder would you say you personally feel you stand at this time? Lessons from a New Science, 2005. https://cep.lse.ac.uk/layard/annex.pdf 51  Does Money Lead to Happiness? Life Satisfaction and Income per Person Easterlin paradox: Once basic needs are satisfied, higher income per person does not increase happiness, and the level of income relative to others, rather than the absolute level of income, matters. Source: Betsey Stevenson and Justin Wolfers, Wharton School at the University of Pennsylvania. 52 The Human-centric GNH (Gross National or Domestic Happiness) The GNH Index, informed by Sen’s work and first proposed by Bhutan, is comparable to the OECD (Organization for Economic Cooperation and Development) Better Life Index and the Social Progress Index (SPI). GNH is distinct in that it has a religious component. The government uses surveys to measure GNH. People are asked various questions about their social well-being, their living conditions, their main concerns, and their religious practices. It uses the outcome of the surveys to set policy objectives. For example, Asia is embarking on a cultural reawakening and trying to transform society by reinterpreting its own rich traditions – Confucianism, Taoism, Buddhism, Hinduism and Sufism. 53 Top 25 of Happiest Countries The Gallup World Poll for the World Happiness Report 2024. The annual survey, which asks respondents to rate their current lives on a scale of 0 to 10, with 10 being the best possible life for them. Nordic countries dominate the top 10. Younger adults reflects their spending less time interacting with people in person than on social media as well as worries about money, loneliness and anxiety about their own future and what is happening in the world around them. Young people have more social interactions, but feel more lonely than those 60 and older. Older adults are often happier because they tend to view life as more finite and precious, are less self- focused and more grateful. 54 55 The Millennium Development Goals 2000–2015; and The 2015–2030 Sustainable Development Goals Millennium Development goals (MDGs): Eight goals adopted by the United Nations in 2000, a blueprint for the subsequent 15 years (to 2015): ‒ 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 56  MDG Retrospective: Was the Glass Half Full or Half Empty? Shorthand: “Halving Poverty” (and Halving Hunger). Income poverty target reached – by official definition of fraction living under $1 a day equivalent (now adjusted in Sep 2022 to $2.15). Progress on hunger (fraction hungry fell from about 23% to 14%) but not halved – and nearly 900 million still hungry. Under-5 Mortality dropped 41%: progress; but not nearly cut by two-thirds. Maternal deaths about halved – but not cut by three-quarters. Clean drinking water target met, and slum target met; sanitation goal not met. Great progress against several diseases including TB and malaria Progress on enrollments, but universal goal not met - 57 million children still not in primary school – generally the poorest. Development assistance is now probably falling in real terms. 57  Some criticisms that were raised concerning the original MDGs framework Not ambitious enough, it merely projects past rates of improvement. Goals not prioritized; stove-piped: overlooks goal complementarity. Setting a specific end date could discourage aid if targets not met. The $2.15 a day poverty measure misses intensity of poverty. $1.25 (or $2.15 as purchasing-power adjusted) per day is too low a bar. Lack of goals on reducing rich country agricultural subsidies, which harm low income farmers in developing countries. Nothing on improving legal and human rights of the poor. No goals for slowing climate change harming developing countries. Nothing on expanding gender equity outside of / beyond education. 15 years was too long to prod early action and accountability of leaders. No goal on global social safety net guaranteeing minimums of life. Did not seem to apply to developed countries except as aid donors. For discussion: As you read about the Sustainable Development Goals (SDGs), to what extent were these MDGs criticisms addressed? 58  Sustainable Development Goals Adopted by the UN on 26 Sept. 2015. To be achieved by 2030. Features 17 goals, with 169 targets. Go to https://sustainabledevelopment.un.org and search for 'sdgs’. New Underlying Principles: ‒ Universality principle: Applies to every nation (with action encouraged from every sector). ‒ Integration principle: Must achieve all goals; to do so account for their interrelationships. ‒ Transformation principle: Not “piecemeal” steps. 59 60  Three Global Goals to 2030: End extreme poverty; Fight inequality & injustice; and Fix climate change These hinge on major efforts from private, scientific, public and non- profit actors alike. Challenges like lifelong skill-building for employment and decarbonized energy systems offer just two examples where both business leadership and technological advances will be They include: jobs, infrastructure, social inclusion, instrumental to success. public institutions, successful cities in an urbanizing world, and robust protection of natural assets. 61  The 17 Sustainable Development Goals, Table 1 Goal 1. End poverty in all its forms everywhere Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture Goal 3. Ensure healthy lives and promote well-being for all at all ages Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Goal 5. Achieve gender equality and empower all women and girls Goal 6. Ensure availability and sustainable management of water and sanitation for all Goal 7. Ensure access for all to affordable, reliable, sustainable, modern energy Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation Source: United Nations. See: https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals 62  Table 1: The 17 Sustainable Development Goals (Continued) Goal 10. Reduce inequality within and among countries Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable Goal 12. Ensure sustainable consumption and production patterns Goal 13. Take urgent action to combat climate change and its impacts Goal 14. Conserve and sustainably use oceans, seas and marine resources for sustainable development Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development Source: United Nations. See: https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals 63 Table 1.2: Global Ambitions: Selected Targets of the Sustainable Development Goals* 1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $2.15 a day 2.1 By 2030, end hunger and ensure access by all people… to safe, nutritious and sufficient food all year round 2.2 By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women… 3.1 By 2030, reduce the global maternal mortality ratio to less than 70 per 100,000 live births 3.2 By 2030… reduce neonatal mortality [below] 12 per 1,000 live births and under-5 mortality [below] 25 per 1,000 live births 3.8 Achieve universal health coverage… access to quality essential health-care… affordable essential medicines and vaccines for all 4.1 By 2030 ensure all girls and boys complete free, equitable, quality primary and secondary education… 64  Table 1.2: Global Ambitions: Selected Targets of the Sustainable Development Goals* (Continued) 4.2 By 2030, ensure that all girls and boys have access to quality early childhood development, care and pre-primary education 5.1 End all forms of discrimination against all women and girls everywhere 5.2 Eliminate all forms of violence against all women and girls in public and private spheres, including trafficking, sexual, other types of exploitation 5.3 Eliminate all harmful practices, such as child, early and forced marriage and female genital mutilation 6.1 By 2030, achieve universal and equitable access to safe and affordable drinking water for all 6.2 By 2030, achieve access to adequate and equitable sanitation and hygiene… with attention to the needs of women and girls 7.1 By 2030, ensure universal access to affordable, reliable and modern energy services 8.1 Sustain… at least 7 per cent gross domestic product growth per annum in the least developed countries 65  Table 1.2: Global Ambitions: Selected Targets of the Sustainable Development Goals* (Continued) 10.1 By 2030… sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average 11.1 By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums 12.4 By 2020, achieve environmentally sound management of chemicals and wastes… reduce their release to air, water and soil 13.a [Mobilize] $100 billion annually by 2020 to address the needs of developing countries in the context of meaningful [climate change] mitigation 16.2 End abuse, exploitation, trafficking and all forms of violence against and torture of children 17.12 Realize timely implementation of duty-free and quota-free market access on a lasting basis for all least-developed countries… *For the full target list see the SDG website: https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals 66  Discussion Topic: The SDGs What are some key similarities and differences between the SDGs and the earlier MDGs? To what extent do the same criticisms apply to SDGs as were raised in the past concerning the MDGs? If you think one or more criticisms are addressed – at least in part – please explain. Example: How significant is adopting the “Universality” principle? If you think a new criticism is relevant – specific to SDGs, or that applies also to MDGs but not listed above – please specify; explain. Regardless of your specific views about the SDGs: do you think it is better to have these goals [or perhaps even any goals] than not to specify international development goals? How, or why not? Do you have a proposal for how to remedy a problem that you specify or that has been raised? 67  Concluding Observations The importance of Development Economics. Inclusion of non-economic dimensions in designing development strategies. Increasing capabilities to function as a central concept of development – Development as freedom. Achieving the Sustainable Development Goals (SDGs). “…One future-or none at all”. 68  Concepts for Review Absolute Poverty Less developed countries (LDCs) Attitudes Capabilities Millennium Development Goals (MDGs) Developing countries More developed countries Development (MDCs) Development economics Political economy Freedom Functionings Self-esteem Globalization Social system Gross domestic product Subsistence economy Gross national income (GNI) Sustenance Income per capita Institutions Traditional economics Values 69  Copyright Some content in this presentation is copyright of Cengage, Macmillan, McGraw Hill and/or Cambridge University Press, and/or Pearson Canada. Please refer to the course syllabus for the referenced course textbooks. This work is protected by U.S. and Canada’s copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honour the intended pedagogical purposes and the needs of other instructors who rely on these materials. 70