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    Supplement: Comparative Economic Development

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    khup gwte
    todaro smith chapter 2 slides economic and development. There is comparative economic development.

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    Supplement: Comparative Economic Development

    Uploaded by

    khup gwte
    167 views42 pages
    todaro smith chapter 2 slides economic and development. There is comparative economic development.

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    TodaroSmith EconDev ch02

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    todaro smith chapter 2 slides economic and development. There is comparative economic development.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    167 views42 pages

    Supplement: Comparative Economic Development

    Uploaded by

    khup gwte
    todaro smith chapter 2 slides economic and development. There is comparative economic development.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 42
    At a glance
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    The document discusses various characteristics of developing countries and how countries are classified based on income levels. It also covers indicators used to measure development such as GDP, HDI, life expectancy, etc.

    Common characteristics of developing countries discussed include lower levels of living and productivity, lower levels of human capital, higher poverty and population growth rates.

    The World Bank scheme ranks countries based on GNI per capita into groups such as LIC, LMC, UMC and OECD.

    Chapter 2

    Supplement
    Comparative
    Economic
    Development

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved.


    Suppmentary Lecture
    Common Characteristics of developing
    countries (based on Todaro text 10th edition)
    • Lower levels of living and productivity
    • Lower levels of human capital
    • Higher levels of inequality and absolute poverty
    • Higher population growth rates
    • Greater social fractionalization
    • Larger rural population- rapid migration to cities
    • Lower levels of industrialization and manufactured exports
    • Adverse geography
    • Underdeveloped financial and other markets
    • Colonial legacies- poor institutions etc.

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-2


    Defining the Developing World

    • World Bank Scheme- ranks countries on


    GNP/capita
    – LIC, LMC, UMC, OECD (see Table 2.1 and
    figure 2.1)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-3


    Table 2.1 Classification of Economies
    by Region and Income, 2007

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-4


    Table 2.1 Classification of Economies by
    Region and Income, 2007 (continued)
    (Latin America and the Caribbean) (Sub-Saharan Africa)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-5


    Table 2.1 Classification of Economies by
    Region and Income, 2007 (continued)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-6


    Figure 2.1 Nations of the World,
    Classified by GNI Per Capita

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-7


    Measuring Development for Quantitative
    Comparison across Countries

    • Gross National Income (GNI)


    • Gross Domestic Product (GDP)
    • PPP method instead of exchange rates as
    conversion factors (see figure 2.2)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-8


    Figure 2.2 Income Per Capita in
    Selected Countries

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-9


    Table 2.2 A Comparison of Per Capita
    GNI, 2005

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-10


    Some Basic Indicators of
    Development

    • Health
    • Life Expectancy
    • Education
    • HDI as a holistic measure of living levels
    – HDI also varies for groups within countries
    – HDI also varies by region in a country
    – HDI also reflects rural-urban differences

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-11


    Table 2.3 Commonality and
    Diversity: Some Basic Indicators

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-12


    Figure 2.3 Human Development
    Disparities within Selected Countries

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-13


    Figure 2.3 Human Development Disparities
    within Selected Countries (continued)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-14


    Table 2.4 Human Development for
    23 Selected Countries (2004 Data)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-15


    Table 2.4 Human Development for 23
    Selected Countries (2004 Data)
    (continued)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-16


    Table 2.5 Human Development Index
    Variations for Similar Incomes (2004 Data)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-17


    10 Characteristics of the Developing
    World: Diversity within Commonality

    • 1. Lower levels of living and productivity


    • 2. Lower levels of human capital (health,
    education, skills)
    • 3. Higher Levels of Inequality and Absolute
    Poverty
    – Absolute Poverty
    – World Poverty
    • 4. Higher Population Growth Rates
    – Crude Birth rates

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-18


    Figure 2.4 Shares of Global Income,
    2005

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-19


    Table 2.6 The 12 Most and Least
    Populated Countries and Their Per
    Capita Income, 2005

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-20


    Figure 2.5 Under-5 Mortality Rates,
    1990 and 2005

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-21


    Table 2.7 Primary School Enrollment
    and Pupil-Teacher Ratios

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-22


    Figure 2.6 Correlation between Under-
    5 Mortality and Mother’s Education

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-23


    Figure 2.7 People Living in Poverty,
    1981-2002

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-24


    Table 2.8 Crude Birth Rates Around the
    World, 2005

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-25


    10 Characteristics of the Developing
    World: Diversity within Commonality

    • 5. Greater Social Fractionalization


    • 6. larger Rural Populations but Rapid Rural-
    to-Urban Migration
    • 7. Lower levels of Industrialization and
    Manufactured Exports
    • 8. Adverse Geography
    – Resource endowments

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-26


    Table 2.9 The Urban Population in
    Developed Countries and Developing
    Regions

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-27


    Table 2.10 Share of the Population
    Employed in the Industrial Sector in Selected
    Countries, 2000-2005 (%)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-28


    10 Characteristics of the Developing
    World: Diversity within Commonality

    • 9. Underdeveloped Financial and Other markets


    – Imperfect markets
    – Incomplete information
    • 10. Colonial Legacy and external dependence
    – Institutions
    – Private property
    – Personal taxation
    – Taxes in cash rather than in kind

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-29


    Low Income Countries Today And
    Developed Countries Then
    • Eight differences
    – Physical and human resource endowments
    – Per capita incomes and levels of GDP
    – Climate
    – Population size, distribution, and growth
    – Historic role of international migration
    – International trade benefits
    – Scientific/technological research
    – Efficacy of domestic institutions

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-30


    Convergence?

    • Evidence of unconditional convergence is


    hard to find
    • Per capita income convergence?

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-31


    Figure 2.8 Convergence among OECD
    Countries but Divergence in the World
    as a Whole

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-32


    Figure 2.9 Per Capita GDP Growth in
    125 Developing Countries, 1995-2005

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-33


    Figure 2.10 Growth Convergence and
    Absolute Income Convergence

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-34


    Long-Run causes of Comparative
    Development

    • Schematic Representation
    – Geography
    – Institutional quality- colonial and post-colonial
    – Colonial legacy- pre colonial comparative
    advantage
    – Evolution and timing of European development
    – Inequality- human capital
    – Type of colonial regime

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-35


    Figure 2.11 Schematic Representation
    of Leading Theories of Comparative
    Development

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-36


    Role of Institutions

    • Acemoglu, Johnson, and Robinson’s


    “reversal of fortune” and extractive
    institutions
    • Bannerjee and Iyer’s , “property rights
    institutions”. Landlords versus cultivators

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-37


    Case Study: Pakistan

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-38


    Case Study: Bangladesh

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-39


    Concepts for Review

    • Absolute poverty • Gross national product


    • Brain drain (GNP)
    • Crude birthrate • Human Development
    • Convergence Index (HDI)
    • Death rate • Imperfect markets
    • Dependency burden
    • Income gap
    • Developed world
    • Economic Institutions • Income inequality
    • Foreign exchange • Incomplete information
    • Gross domestic product
    (GDP)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-40


    Concepts for Review (cont’d)

    • Infant mortality rate • Malnutrition


    • International poverty • Middle-income
    line countries (MICs)
    • Labor productivity • Mixed economic
    • Least developed systems
    countries (LLDCs) • Newly industrialized
    • Levels of living countries (NICs)
    • Low income countries • Physical resources
    (LICs)
    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-41
    Concepts for Review (cont’d)

    • Primary industrial • Resource endowment


    sector • Secondary industrial
    • Production function sector
    • Purchasing power • Tertiary industrial
    equivalent sector
    • Purchasing power • World Bank
    parity (PPP)

    Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-42

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