Development Economics key concepts

economic development

economic growth in addition to improved human welfare

human development

purchasing power

how much goods and services can be consumed with a fixed amount of money

GDP

C + G + I + (X - M); a value-added measure

GNI

GDP + money inflows from abroad - money outflows; a measure of income

purchasing power parity (PPP)

a calculation of GNI through standardised set of international price levels for all goods/services to compare living standards across countries. This is interpreted as a number of units

The Big Mac Index

classical growth theory

popularised in the ‘50s-’60s, s —> I

Rostow’s 5 stages of economic growth

1. Traditional society

2. Pre-conditions for take-off

3. Take-off

4. Drive to maturity

   1. age of mass consumption

The Harrod-Domar Model

a classical growth theory pitting economic growth as a result from the national net savings rate and a greater K:Y ratio.

cyclical logic of increased s → increased I → k accumulation → higher economic growth → increased s

s/

Lewis 2 Sector model

a simplification of a national economy into an agricultural and industrial sector

Solow model

a neoclassical growth theory with a free market focus that decomposes growth into K, L and productivity (technology)

Y = AK^aL^1-a

growth effect

change in the growth rate of a variable

level effect

change to a level of a variable with no change to its growth rate