8 the Bottom Billion 2003 Version

8/9/2019 8 the Bottom Billion 2003 Version

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The Bottom BillionThe Bottom Billion

Mama, Why are tayo so Poor?

Development Economics 3rd World Econ


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Its Adam and Eves FaultIts Adam and Eves Fault


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BASIC Econ PrinciplesBASIC Econ Principles

y Scarcity

There is enough to satisfy everyones needsbut not everyones greed

y Opportunity CostTo gain something you must sacrifice

something else.

Ex: to gain immortal life you must sacrifice

virgins

Err better example: To go to debate camp youhad to sacrifice your weekend


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Supply and Demand


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Supply and DemandSupply and Demand

y When price is high,

demand falls

y When price is high,

supply increases

y In a normal market,

they meet in an

equilibrium point


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Inflation and HyperinflationInflation and Hyperinflation

y When government

prints too much

money there is

inflationy When Money Supply

is too high, its value

decreasesy When Inflation is

Hyper, it is

Hyperinflation


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Other PrinciplesOther Principles

y Trade makes people better off

y Incentives work

y

There is a trade off between inflation andfull employment

y Many at least of every Econ class flunk

Econometrics


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Some Roles of GovernmentSome Roles of Government

y Let the market be Invisible Hand

y Intervene in market failure

y

Provide public goodsy Basic Services

y Infrastructure

y

Pump prime the economy in times ofcrisis C+I+G+(x-m) = GNP


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That was traditional EconomicsThat was traditional Economics

y Development Economics deals with the

challenges of development (particularly

the developing [not 3rd world])

y Assumptions of Perfect Market and even

supply curves are questioned

y New measures of development are added


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Some realitiesSome realities

y Supply curve in third world is not infinite

y Low investment in human capital

y History of colonialism

y Feudal Systems

y Dictators, corruption and instability

y

Massive Poverty


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Contentious Issues 1: Measures ofContentious Issues 1: Measures of

SuccessSuccessy GNP Gross National Product

y GDP Gross Domestic Product

y GNH Gross National Happiness

(Bhutan)

y Lorenz Curve and Gini Coefficient

Measures ofInequality

y Human Development Index

y Green GDP


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Issue 2: Population ControlIssue 2: Population Control

y Marginal Benefit vs Marginal Cost of

having a child

y Child Labor as offshoot

y Is population so bad?

y Aging Europe Labor Market analysis


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Issue 3: Migration (of humans)Issue 3: Migration (of humans)

y Broader than economics ideally will also

talk about identity, nationalism, etc.

However, for purely pragmatic purposes

Economic Analysis

y Push and Pull

y Risks Trafficking,Congestion,

Asymmetric Informationy Balances out labor problems

y Will wages equalize over time?


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Issue 4: The Food CrisisIssue 4: The Food Crisis

y Malthusian Population Trap

y Green Revolution

y Will discuss the environment issue later

y Agriculture (as export) vs Industry or

Service

y Biofuel production and S/D analysis


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Issue 5: Widespread Poverty (akaIssue 5: Widespread Poverty (aka

Penury)Penury)


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Poverty Alleviation ModelsPoverty Alleviation Models

y Aid or Trade?

y Microfinance

y Social Entrepreneurship

y Fair Trade

y CSR


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Issue 6: Raw Material UtilizationIssue 6: Raw Material Utilization

y Should our miners mine for a mine that is

being mined by a foreign mining company?

y Types of resources: Renewable and Non-

Renewable (Depletion)

y Social License to Operate

y Privatization,Corporatization and

Nationalization


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Issue 7: TaxIssue 7: Tax ngng inaina momo

y Should there be global taxes? Tobin tax

for currency? Carbon tax?

y Should there be exit taxes on currency?

y Flat, Progressive, Regressive Tax

y Should we remove the tax on oil?

y What are subsidies and how do they

work?


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Issue 8: GlobalizationIssue 8: Globalization

y Good or bad for third world?

y WTO, ILO, IMF and World Bank

y Globalization of everything trade, ideas,

media, communication, people, persons

and humans


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New Strategies for the BottomNew Strategies for the Bottom

BillionBilliony Make production more efficient by

specialization

y Make education relevant (though natural

market forces tend to do this)y Invest in human capital

y Interventions must be GROUNDED!!!(Flying cats, Nestle,Child labor in Davaoand Golden Kuhol)

y The poor is a viable market, borrower,lender and entrepreneur


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Thanks I hope for your own goodThanks I hope for your own good

you took down notes :Dyou took down notes :D

8 the Bottom Billion 2003 Version

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