intro development economics

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DEVELOPMENT ECONOMICS

FOREIGN TRADE UNIVERSITYFaculty of International Economics

HOANG Bao [email protected]

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Syllabus

CHAPTER 1: Introduction to the developing world

CHAPTER 2: Introduction to development economics

CHAPTER 3: Theories of Economic growth

CHAPTER 4: Structural change

CHAPTER 5: Human welfare and development


Textbooks


Grading and Assignments

• Class Participation (10%)

• Mid - Term (30%)

including

- Exam or Assignments (20%)

- Presentation (80%)

• Final exam (60%)

….and EXTRA….


Chapter 1INTRODUCTION TO THE DEVELOPING WORLD

1. World development : A comparison

2. Countries/ economies classification

3. A piece of history

4. Characteristics of the Developing World




2. Countries classification

2.1. World Bank’s classification

• by income group

• criteria: GNI per capita

► Be careful!

higher per capita income in a country does not

always mean that its people are better off than

those in a country with lower income


2. Countries/ economies classification

World Bank’s classification of countries by income group(USD, World Bank AtlasMethod)



2.2. UNDP’s classification

• Criteria: HDI (Human Development Index)

• Income (PPP method)

• Life expectancy

• Education

• Before 2009: 3 groups (based on HDI value)

• Since 2009: 4 groups



Human Development Index and its components (HDR 2013)



(Human Development Report 2010)

GNI per capita GNI rank HDI HDI rank

Kuwait 55719 5 0, 771 47

Bahamas 25201 34 0,784 43



The First, the Second and the Third World

Backward and Advanced economies

Less or under-developed and more or

developed countries

Developing and Developed countries

The South and the North


What do we mean by “Third World” ?

Alfred Sauvy (1952)

Historical perspective: Cold War

→ Third world = countries that perceive themselves as

neither the Communist Soviet (Second World)

nor the Capitalist NATO (First World)

→ former colonies (not all)lower level of development


3. A piece of history

Low-income countries today and developed countries in their earlier stage? (Todaro, Smith (2011). Economic Development, 11th ed., Part one, p.71-77)

• 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


4. Characteristics of the Developing World

4.1. Common Characteristics of developing

countries

4.2. Diversity or Disparities


4.1. Common Characteristics of developing countries

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.


4.1. Common Characteristics of developing countriesGNI per capita 2009 (PPP,international $)

Low income 1,199 Middle income 6,357 Lower middle income 4,758 Upper middle income 12,479 Low & middle income 5,586 East Asia & Pacific 5,989 Europe & Central Asia 12,628 Latin America & Caribbean 10,342 Middle East & North Africa 7,927 South Asia 2,972 Sub-Saharan Africa 1,996 High income 36,473 Euro area 33,829

(Source: World Development Indicators database, World Bank, 27 September 2010)





Infant mortality rate per 1,000 live births 1960 1970 1980 1990 2000 2009 HIGH INCOME Euro area 35.84954 23.066 13.09066 7.758871 4.613703 3.406593 France 23.8 15.1 10.2 7.3 4.3 3.2 Germany 35 22.4 12.9 7 4.4 3.5 Australia 20.3 17.6 10.9 7.6 5.1 4.3 Canada 28 18.5 10.3 6.8 5.3 5.3 Japan 31.5 13.2 7.4 4.5 3.2 2.4 Monaco 6.7 3.9 3.4 United Kingdom 22.6 17.9 12.2 8 5.6 4.6 United States 25.9 20 12.5 9.3 7.1 6.8 MIDDLE INCOME Europe & Central Asia (developing only) 68.64309 55.42677 43.14339 32.44426 18.97707 Argentina 59.9 58.2 37.7 25 18.8 13 Bangladesh 162.5 158 136.7 102.3 65.6 41.2 China 82.8 46.1 36.8 29.8 16.6 India 160.4 126.2 103.2 83.8 67.6 50.3 Lao PDR 141.1 127.2 108.3 63.5 45.8 Thailand 102.2 71 46.4 26.5 17.3 12 Vietnam 44.6 39.1 23.6 19.5 Jamaica 56.5 47.6 36.7 27.7 26.8 25.9 Sub-Saharan Africa (all income levels) 133.1498 116.1388 109.4806 97.98216 80.77413

(Source: World Development Indicators database, World Bank, 27 September 2010)



Virtuous and vicious cycle of poverty/ poverty trap



Share of global income (2005)



People Living in Poverty, 1981-2002


4.2. Diversity or DisparitiesShare of the Population Employed in the Industrial Sector

in Selected Countries, 2000-2005 (%)



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

(Source: Todaro, Smith, 2009)

intro development economics

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