NU EcoDev Chapter 1 - Course Pack-1.pdf

#01 Chapter 1 FLEX Course Material Students will become ss aware of the economic progress in the Asian Region, specifically how this region’s ups and downs in terms of economic growth. Students will...

#01 Chapter 1 FLEX Course Material Students will become ss aware of the economic progress in the Asian Region, specifically how this region’s ups and downs in terms of economic growth. Students will get to distinguish between Introductory and Overview economic development and economic growth. Students will learn to measure growth and economic development, specifically, through the many indicators. Module Goals  #01 s At the end of this module, the students are expected to have: ✓ formed themselves into a class section with three groups, ✓ each section will choose a particular developing country to use as the subject of their research about GDP growth, ✓ the World Bank data on GDP account shall be used as a reference. ✓ at least 10 periods (time-series of GDP growth, which include the most recent, (2019,2018,2017, 2016, 2015, 2014, 2013, 2012, 2011 and 2010. ✓ First group will analyze the data using the GDP growth rate. ✓ The second the data using, the GDP per capita. ✓ and Third Group – will analyze the data on population. ✓ Each student must write a reaction paper based on the differences between the two measures, the GDP growth and the A 10 Period time-series regression GDP per capita. analysis on Population Growth.  Economic Development in Asia Chapter 1 –Introduction and Overview Economic Development in Asia East Asian stands out because of the dynamic economic growth and development it has achieved throughout the postwar period. The development process begun in Japan when it opened its economy to increased trade and investment. The rapid industrialization quickly spread to the neighboring economies of South Korea, Singapore, Taiwan, and Hong Kong. Economic growth in this newly industrialized economies (NIEs), sometimes called the Asian “Tigers” averaged 8 percent a year in the three decades prior the Asian Financial Crisis in 1997. The industrialization experiences of Japan and these Asian “Tigers” formed the basis of the “East Asian Development Model”, which has now an accepted part of economic development literature. Economic Development in Asia Inspired by the success in Japan, and the NIEs, Indonesia, Malaysia, Thailand, and the Philippines developed strategies that promoted the inflow of foreign capital and encouraged exports. These outward-oriented economic policies fuelled rapid growth during the 1980s. China’s economic growth and development has likewise accelerated since the late 1970s when its government shifted to an open-door policy that promoted foreign investment and exports. Economic Development in Asia However, the remarkable economic record of the Asian economies was marred by the Asian financial crisis. Triggered by the collapse of the Thai baht in July 1977, equity markets and currencies throughout Southeast Asia came under great pressure, and the ensuing currency devaluations led to foreign capital flight. Consequently, in a matter of two month or so, Asia’s once vibrant economies were plunged into deep recession. This collapse, forced and unprecedented reappraisal of policies ranging from corporate government to exchange rate management. Economic Development in Asia After the sharp economic contraction in 1998, the region rebounded rapidly. In South Korea, for example, industrial production and GDP increased dramatically in 1999 while stock market values doubled in Thailand and Malaysia. The primary equity market indexes in Seoul, and Singapore returned to their pre-crisis levels. However, as the US economy slowed in 2001 and 2002, and war in Iraq and the spread of SARS virus took place in 2003, prospects for the region were adversely affected. Economic Development in Asia The financial crisis hampered progress in reducing poverty and addressing other social issues. The human development gains in health, education, poverty, and equality, and the distribution of income achieved by East Asia in the two decades prior to the crises was eroded to some degree, resulting in slower growth. There is no doubt, however, that the economies of East Asia are in the process of recovering from the crisis and the region, as a whole, will play a major role in the global economy. This course looks at both the history and the future outlook for the Asian region. Economic Development in Asia Difference between development economics and other branches of economics It looks at all of the other branches of economics within the context of economic development. It uses the tools developed in other branches of economics to analyze the problems and challenges of economic development. Measuring Growth & Development The concept of economic development is a broader and much more encompassing view than economic growth and relates to levels of social and humanitarian achievement and income distribution, as well as a narrower measure of per-capita income. An improvement in the living standards of the population can be used to deflate it to per-capita terms. An improvement in the living standards and how they change over time. To have some idea about the living Standards and how they change overtime, we look at GDP and GNP growth rates. Measuring Growth & Development However, the experiences of many economies have shown that economic growth can occur without any improvement in the quality of lives of its people. Human development indicators, such as life expectancy, infant mortality, and the average level of educational attainment have lagged behind those of the other countries in the Asian region. In order to include other factors that measure economic development, the concept of GDP and GNP need to be broadened. Measuring Growth & Development Use of GDP and GNP and exchange rate comparisons lead to patterns of growth over time. Other methods such as purchasing power parity can also be used to compare standards of living. When we speak of economic development, we usually mean economic growth accompanied by an improvement in the people’s quality of life. To a large degree, economic development results from economic growth. Other Measures Other Measures  Making Comparisons Between Countries Using the GDP measure, there are two methods used for comparing incomes between countries: purchasing power parity (PPP) method exchange rate Method PPP Method- develops a cost index for comparable baskets of consumption goods in the local currency and then compares this with prices in the United States for the same set of commodities. A country’s PPP is the number of units of the country’s currency required to buy the same amount of goods and services that a dollar would buy in the U.S. Exchange Rate Method – uses the exchange rate between the local currency and the U.S. dollar to convert the currency into its U.S. dollar equivalent. A country’s GDP and GDP per capita would then be valued accordingly, in U.S. dollars.  Summary Uniqueness of the Asian development progress (Asian Miracle Economies). Indicators of economic growth and development.