Global Economy

Economic Growth

Measured by GDP and GNP. Purely economical

Economic Development

A broader concept that includes economic growth along with improvements in living standards, education, and health.

Mainstream Economics

Neoclassical, Classical, Old economics. Self-interest, utility maximalization, market equillibrium

Methodological Pluralism

An approach in economics that incorporates various methodologies and perspectives to analyze economic phenomena, recognizing the complexity of economic systems.

Reflexivity

Human perspective and bias shapes economics, different from mainstream economics’ assumption of rationality.

Social science

Human behavior is shaped by interpretation, history, and institutions, not by an all emcompassing law like in the natural sciences.

Paul Samuelson

An influential economist known for his work in modern economics, particularly in welfare economics and the development of the neoclassical synthesis. Wrote a lot of economics textbooks

Robert Solow

Rational utility-maximalization. Neoclassical king

Heterodox critique

Mainstream economics doesn’t recognize the social aspect of economics. Humans are not rational and are shaped by their environment, interactions, institutions, behavior, etc. Mainstream economics ignores the power dynamics that perpetuate inequalityand the role of history and context in economic behavior.

Development as a belief system

Economic development functions similarly to religion. It works on a system of shared beliefs and goal of improving the human condition.

Contradictions in Economics

Development often comes at the expense of something whether environmentally or through exploitation. Who develops and who struggles is a question of power structures.

Definition of Development

Development is a process, not a category. Countries should not be separated as developed or developing but rather all working toward a better sovereignty.

Economic Growth

Quantitative measure of growth

Development

Broader term that encompasses economics, social, political changes.

Mainstream Economics

Humans as rational, utility maximalization, little government intervention.

Heterodox Economics

Markets are unstable, humans can be irrational, power structures and social justice is a part of economic reform.

Social Evolutionism

Having to catch up economically

Individualism

Self-maximalization

Economism

A belief that economic factors are the primary determinants of social and political phenomena.

Limits of the GDP

The GDP as a measure of development doesn’t address the social issues that persist. Ex: India has a pretty high GDP but a huge class disparity and low quality of life for the poor. In numbers India should be development but in reality they struggle with equity, education, etc.

Gilbert Rist

Development is a modern belief system like a religion.

Emile Durkheim

Religion as a belief system to influence collective action

Human Development Report

Human well-being is a necessity in development. Economics doesn’t equal development if the people are suffering in a good economy.

First wave of globalization

1850-WWI, era of industrialization

Second wave of globalization

WWII-1970s, Bretton Woods and exchange rates

Third wave of globalization

1980s-2000, Washington consensus, Neoliberalism

Fourth wave of globalization

2000s-now, China as a leader of industrialization

Fifth wave of globalization

2008-now, Financial globalization (economics change based on the economies of other countries due to interconnected trade), speculative capital (short-term investments are easier to make across borders, economies are more unstable)

GDP

Gross Domestic Product measuring total value of goods and services in a country

GNI

Gross National Income, GDP + Assets and income internationally

Middle-Income Trap

It’s hard for countries to go from middle-income to high-income because of structural barriers. Most countries that skyrocket to middle-income rely on commodities but struggle to change to manufactured goods so they’re always stuck in the middle income bracket. Need government intervention to bridge this but it’s hard

Chile economic model

Fast industrialization based economic growth. However, government didn’t invest in education to fill roles needed for high-skill jobs in manufacturing and research so they can’t transition to a high-income country. Also large income disparity

Friedrich hayek

Loved neoliberalism and free-market capitalism…..

Adam Smith

Division of labor, invisible hand, free markets.

David Ricardo

Comparative advantage, specialization in trade

Thomas Malthus

Malthusian trap, population growth as a limitor to economic development

Malthusian trap

Population increase leads to a higher demand of resources. If resources become scarce, conflicts arise, famine starts, development is stagnated.

John Stuart Mill

Utilitarianism, stationary state as a desirable outcome because instead of accumulating growth the country can begin distributing it #equity

Karl Marx

Class struggle, critique of capitalism, recognizes imperialism’s impact on development.

New Development Economics

Market failures, asymmetric information, coordination failures

Asymmetric Information

Principals (lenders) do not know if the agents (borrowers) will actually repay their debts. Leads to moral hazard (Principals take on the risk)

Pareto efficiency

Pareto efficiency = The state of which you cannot make one person more well off without making someone less well off. Equal access to utility

Market equillibrium

The points where supply meets demand

Latin America Debt Crisis

Illustrates moral hazard, market failure, information asymmetry, New Development Economics principals

Keynesian Economics

Active government intervention is necessary to boost economic development. In times of recession, the government can boost stimulation of the economy by cutting taxes or investing themselves.

Say’s Law

Supply creates its demand. if you produce something it will find a customer base

Keynesian rejection of Say’s law

Demand determines production. If there is no demand, there is no employment.

Involuntary Unemployment

Classical economists argue that fluctuation of wages in the labor market will sort themselves out. However, Keynesian economics argues that even if wages fall so businesses are motivated to hire more people, if there is still no demand theres no point in hiring more people. Demand controls supply which controls employment which controls economy.

Joseph Schumpeter and Creative Destruction

Economic progress is driven by the destruction of old techniques and the implementation of new innovations. Though the economy may suffer temporary setbacks from the destruction, the trend will remain upward.

Latin American Structuralism Critique on Keynesian theory

Critiques Keynesian theories because governments do not always have the capacity to stimulate the economy when necessary. See the dependency theory in Latin America

Utilitarian Approach

Measures development as quality of life, happiness. Hard to really measure and standardize happiness

Capability Approach

Amartya Sen. Income is not the sole measure of development but access to doing things is (capabilities). Development is freedom.

Capability Approach components

Functionings: Achievements or outcomes. Capabilities: Opportunities. Conversion factors: Social, environmental, personal factors influencing resource use.

Ex: Functioning: Being educated

Capabilities: Education, universities, teachers

Conversion Factors: Low government investment in public schools, need to work so can’t attend school, etc.

Human Develpoment Index

Measures well-being beyond GDP. Arbitrary indication of development

Latin American Structuralism

Prebisch and Singer. Core-periphery dynamics. Core influences periphery countries. There are declining temrs of trade (country needs to export more to match their imports aka their export goods aren’t worth that much) that disadvantage commodity exporting countries (aka like all of Latin America)

Import Substitution Industrialization (ISI)

Implementation of protectionist policies to promote self-sufficiency. First impose protectionist policies and focus on providing basic consumer goods. Then, diversify the economy by investing in manufacturing goods. When you become efficient enough, open the market and boom ur rich. But, this leads to a lot of debt and dependence on foreign investment because lots of countries that use ISI simply don’t have the funds to do it on their own.

Dependency theory

Prebisch, Paul Baran, Fernando Cardoso. Core-periphery. Underdevelopment is structural. Core countries purposefully keep these countries in debt and force them to adopt Western economic frameworks that perpetuate economic stagnation. Core countries need periphery countries to continue giving them the raw materials so that they can dominate manufacturing. They don’t want these countries to be self-sufficient because it would hurt the core.

World Systems Order

Core, Semi-periphery, Periphery. Introduces semi-periphery as an intermediary to the dependency theory. Semi-periphery exists to keep the periphery not completely dying. Semi-periphery is like BRICS

Financialization as Global Control

Basically all the debts and institutions that keep core countries at the core. Thanks WB and IMF for imposing neoliberal policies!

Feminist Economic Critique

Development has a patriarchal lens. Especially economic growth only calculates labor but doesn’t include care work and unpaid labor which is a burden held by most women in childcare, domestic work, elder care, etc..

Women in Development

Focuses on integrating women into economic processes aka getting more women employed. Focuses on implementing women into a broken system rather than changing the system to fit women in.

Women and Development

Highlights strctural inequalities and capitalism’s role in gendered labor exploitation. Compares men and women and not women in isolation, changing the system not fitting women in. Hard to implement and change in reality

Gender and Development

Transforms gender relations rather than just including women. Acknowledges women intersectionality, empowers women’s freedoms, and challenges gendered roles. Calls for systemic changes which are basically impossible to implement