Introduction to Economic Development

GDP (Gross Domestic Product)

total monetary value of final goods/services produced in a country in a given period of time

Nominal GDP

production of goods and services at current prices

Real GDP

production of goods and services adjusted for inflation

GNI (Gross National Income)/ GNP (Gross National Product)

gross domestic product + income earned by residents - income earned domestically by non-residents

Capability approach

- Amartya Sen

- Resources > Capabilities > Functionings

- Framework for assessing well-being and development that focuses on individuals' capabilities to achieve valuable functionings, rather than solely on their resources or utilities

Resources

- means to achieving functionings

- purely instrumental value

- e.g. material goods, income

Capabilities

- real opportunities an individual has to generate valuable outcomes

- positive freedoms to achieve well-being

Functionings

- what people do or can do with the commodities of given characteristics that they come to possess or control

- doings and beings one values as part of well-being

what affects a person's ability to convert resources into capabilities?

personal characteristics and social arrangements

3 Objectives to Achieve Development

1) Increase availability and widen distribution of life-sustaining goods

2) Raise levels of living

3) Expand the range of economic and social choices available to individuals and nations by freeing them from dependence,

Relationship between happiness and human well-being

- greater happiness can expand an individual's capability to function

- average level of happiness in a country increases with average income

Characteristics of Developing Countries

- low living standards

- high poverty

- low productivity

- underemployment

- high population growth

- agricultural dependence

- weak institutions and markets

New economic view of development

- income isn't an automatic improvement in life quality

- other socioeconomic dimensions

- institutions are critical

MDGs (Millennium Development Goals) 2000

adopted by the UN to make substantial progress by 2015:

1) eradicate extreme poverty and hunger

2) achieve universal primary education

3) promote gender equality and empower women

4) reduce child mortality

5) improve maternal health

6) combat HIV/AIDS, Malaria and other diseases

7) ensure environmental sustainability

8) global partnership for development