Economic Development Exam 1 Varghese

LDCs

less developed countries

DCS

developed countries

BRICs

Brazil, Russia, India, China, South Africa

MINT

Mexico, Indonesia, Nigeria, Turkey

transitional economies

countries in Russia and Eastern Europe that are trying to convert from communism to capitalism, with various degrees of success(examples- Poland, Ukraine)

China and India

50% of LDCs come from which two countries

growth

sustained growth in per capita income

development

no formal definition, more of a process with multiple features institutions, high education, low infant mortality, high employment

Gulf Oil producing states (Libya, Quatar)

High growth but not much development

Sri lanka, cuba

high development but not much growth

Exchange rate

does not take into account the differences in cost of non traded goods and services

Understatement ratio

LDCs GNPs areusually undervalued because presence of non traded goods. The non traded good price in LDCs < non traded good price in DCs.

Ex) same meal in US costs $10, in China costs $2

Same meal- still want to give same value

Understatement Ratio=GNP @ PPP/ GNP @ ER

GNP (PPP)

"actual" corrected GNP

GNP (exchange rate)

not corrected GNP

HDI (Human Devlopment Index)

"development index"

combines health (life expectancy), education ( many years of schooling), GNI per capita

Education Index

Expected years of schooling Index + Mean years of schooling index/ 2

Income Index

Ln( gross income per capita) - ln( gross national income per capita) / ln (max GNI per capita)- Ln(min gni per capita)

Human Development Index (HDI)

(Health Index X Education X Income Index)^1/3

gnp

Gross National Product, counts only products produced by nationals (citizens) of a country, whether they live in the country or not

when gnp> gdp- more workers abroad

gdp

gross domestic product- counts any goods/services produced IDOMESTICALLY (INSIDE a country), includes foreign residents

gdp>gnp- more production inside

gni

Gross National Income; a measurement of a country's income. It measures all the income "used" in country.

Fastest growing

East Asian Pacific

Worst

Sub Saharan Africa

80% (82 actual)

percentage of world population comes from ldcs

Phase 1

Beginning of Develop Economics- Spirit post WWII, increased growth, let us help countries, planning and governments

Phase 2

Economic policy best for ldcs, 60s- 80s-- development issues

Phase 3

Economic policy emergence

1990s- micro economics, experiments

Coexistence of Dcs and LDCs

HELPS- Can learn from DCs, science, ect

HURTS- Power relations, DCs take advantage of ldcs

Africa history

country carved out by Europeans (neat rectangles), tribes not so neatly placed (lands dispersed inexpertly)

- Inevitably conflict will arise

development economics

topics discussed in class that aren't mentioned in other courses- lack of institutions (without these how does an economy function), market failures (market doesn't produce best result), government failures

historic growth

no growth until 1820

Netherlands World leader- 1580-1820 g=.2%

1820-1890- UK g=1.2%

since 1890- US g=2.2%

mobility matrix

in the middle we do see some movement but not at ends (whoever is rich remains so, whoever is poor remains so)

the diagonal tells us what percent of countries remained same "rank"

PPP

purchasing power parity, more effective than ER because it takes into account non traded goods

Use gnp to

calculate economic strength of country

to understand standard of living in country

Quatar

. An example of GROWTH with NOT MUCH development is

per capita income

GNP or GDP divided by total population provides a measure of:

gnp greater than gdp

many citizens work abroad

gdp greater than gnp

using many workers from abroad

All final goods and services produced

A country's nominal GNP for a given year is defined as the total market

value of

The total number of Millennium Development Goals established in the year

2000 were

8

. Diminishing returns to capital means that as you add more capital

the additional contribution to output eventually declines.

The Solow Residual measures which of the following

Total Factor Productivity's impact on growth

Which of the following factors is NOT a core determinant of growth?

a. Factor accumulation

****B Market stabilization**********

c. Productivity growth

d. None of the above

MDGs

Millennium Development Goals

2000-2015

mushy, allows world to focus, fragile states did not benefit

Development patronizing

growth alone achieves most targets except for infant mortality rate and sub Saharan Africa

SDGs

Sustainable Development Goals

even more mushy

allows for world to focus

15

goals not well developed

no voice for private sector

not enough resources pledged, just word

Diamond's Theory

The reasons for West/ Europe gaining primacy in the world explained as the reasons were continental differences in the available wild plant and animal species suitable for domestication, resulting in earlier domestication of a more productive suite of domesticates in Eurasia, plus Eurasia's east/west axis that facilitated the spread of those domesticates throughout Eurasia.