The Concept of Development

What is the difference between development economics and

mainstream economics?

• Development Economics enhancement of living conditions as the goal; expanding supply of food, housing, medical services, education; structural change in production process

• Neoclassical Economics focus on supply and demand as determinant of outputs, prices, and distribution. Individuals are utility maximizers and firm seek profit. Based on available information and rational choice decisions over how factors of production are distributed.

What is the difference between growth and development?

• Leaves out issues of distribution-- Egypt grew at over 6% 2005-2008 and per-capita rose from $1350 to $2030 but poverty increased from 19% to 24%.

• Externality and non-marketability• Market bias• Length of life• Quality of life given means available

Sen’s Definition

• Functionings achieved which reflect commodities, public goods, possibility of using private goods freely provided by the state

• Incorporate negative freedom not just achievements

• How to give weight to various needs for a minimum living standard

Why does Sen view values as integral to defining development?Implications?

Would Collier agree? Why?