Ecomomics evelopment 10th y p todaro and smith chapter 01
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Chapter 1
Economics,
Institutions, and
Development:
A Global
Perspective
Copyright © 2009 Pearson Addison-Wesley. All rights reserved.
Economic Development
•
Development = Growth plus Change
•
Growth: sustained improvement in the level of per capita income
•
Change: sustained improvement in institutions and organizations that support growth
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
1-2
Growth
• Gross Domestic Product (GDP): Market value of all
final goods and services an economy produces in
one year
• Real GDP: GDP in constant prices
• GDP Per Capita = (Real GDP / Population) or income
per person
• Economic Growth = percentage change in Real GDP
per capita
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
1-3
Institutions
• Family: respect the authority & share
resources
• Culture: propensity to save & invest
• Religion: ability to bring about change
• Law: protect property rights and civil
liberties and enforce contracts
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1-4
Organizations
• Government: produce public goods and
regulate economic activities
• Education: increase productivity and expand
the range of economic and social opportunities
• Health: enable proactive participation in economic
and social activities
• Business: provide incentive for profit making,
resulting in growth and expansion
Copyright © 2009 Pearson AddisonWesley. All rights reserved.
1-5
Happiness and Development
•
There is not a perfect correlation between happiness and per capita income: people could be
poor, but happy; rich, but and unhappy
•
Once per capita income increases above $10,000 to $20,000, the percentage of people who
say they are happy tends to increase
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1-6
Happiness and Development
Factors affecting happiness:
• Family relationships
• Financial conditions
• Work satisfaction
• Community and friends
• Health and health-care services
• Personal freedom
• Personal
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© 2009
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Wesley. All rights reserved.
1-7
Income and Happiness Across Countries
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1-8
Three Core Values of Development
• Sustenance: The ability to meet basic
human needs including shelter, food,
health, education, safety
• Self-Esteem: To be a person with a sense of
self-respect and self-worth. To live with
dignity, respect, and honor
• Freedom from Servitude: To be able to
choose the path to prosperity and have the
opportunity to improve
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1-9
Objectives of Development
•
To increase the availability and distribution of basic human necessities
•
To improve the standard of living for the majority of the people
•
To expand the range of economic and social choices and opportunities
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1-10
Millennium Development:
Goals and Targets for 2015
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1-11
Millennium Development
Goals and Targets for 2015
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1-12
Economic Development
•
Inclusion of non-economic variables in designing development strategies
•
Achieving the Millennium Development Goals
•
“…One future-or none at all”
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1-13
