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Economic Development Ch.1.2023

The document discusses the multidimensional nature of poverty and economic development from the perspectives of those living in poverty in various countries. It defines key concepts like absolute poverty, subsistence economy, and economic development. Development economics is presented as having a broader scope than traditional economics by also considering social, political, and institutional factors. Amartya Sen's capability approach frames development and well-being in terms of peoples' real freedoms and abilities. The core values and objectives of development are outlined as sustenance, self-esteem, freedom from servitude, increasing life-sustaining goods, raising living standards, and expanding economic and social choices.

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Amgad Elshamy
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50 views4 pages

Economic Development Ch.1.2023

The document discusses the multidimensional nature of poverty and economic development from the perspectives of those living in poverty in various countries. It defines key concepts like absolute poverty, subsistence economy, and economic development. Development economics is presented as having a broader scope than traditional economics by also considering social, political, and institutional factors. Amartya Sen's capability approach frames development and well-being in terms of peoples' real freedoms and abilities. The core values and objectives of development are outlined as sustenance, self-esteem, freedom from servitude, increasing life-sustaining goods, raising living standards, and expanding economic and social choices.

Uploaded by

Amgad Elshamy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Introduction to Economic Development

How the Other Half Live


 When one is poor, she has no say in public, she feels inferior. She has no food, so
there is famine in her house; no clothing, and no progress in her family.
A poor woman from Uganda
 For a poor person everything is terrible—illness, humiliation, shame. We are cripples;
we are afraid of everything; we depend on everyone. No one needs us. We are like
garbage that everyone wants to get rid of. A blind woman from Tiraspol, Moldova
 Life in the area is so precarious that the youth and every able person have to
migrate to the towns or join the army at the war front in order to escape the
hazards of hunger escalating over here.
Participant in a discussion group in rural Ethiopia
 When food was in abundance, relatives used to share it. These days of hunger,
however not even relatives would help you by giving you some food.
Young man in Nichimishi, Zambia
 We have to line up for hours before it is our turn to draw water.
Mbwadzulu Village (Mangochi), Malawi
 [Poverty is] . . . low salaries and lack of jobs. And it’s also not having medicine, food,
and clothes. Discussion group, Brazil
 Don’t ask me what poverty is because you have met it outside my house. Look at the
house and count the number of holes. Look at the utensils and the clothes I am
wearing. Look at everything and write what you see. What you see is poverty.
Poor man in Kenya

A universal theme reflected in these seven quotes is that poverty is more than lack of
income – it is inherently multidimensional, as is economic development.

 Absolute poverty: a situation of being unable to meet the minimum levels of


income, food, clothing, healthcare, shelter, and other essentials.
 Subsistence economy: an economy in which production is mainly for personal
consumption and the standard of living yields little more than basic necessities of
life-food, shelter, and clothing.
 Economic Development: the process of improving the quality of all humane lives
and capabilities by raising peoples levels of living, self-esteem, and freedom.
 Developing countries: countries of Asia, Africa, The Middle East, Latin America, and
Eastern Europe that are presently characterized by low levels of living and other
development deficits used in the development literature as synonym for less
developed countries.
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 Economic growth: increase the growth of per capita income.

In defining development to include more than just the growth of per capita income,
there is an implicit assumption that the growth of per capita income alone is not
sufficient to guarantee the reduction of poverty and the growth of self-esteem.
Is it possible that there could be growth of per capita income without the achievement
of these other objectives?

Per capita income can show growth even when that growth does not touch vast
portions of the population. The growth may be centered in one area or sector of the
economy.
Economics and Development Studies
The Nature of Development Economics
Greater scope than traditional neoclassical economics and political economy.

 The traditional economics: an approach to economics that emphasizes utility, profit


maximization, market efficiency, and determination of equilibrium.
 Political economy: the attempt to merge economic analysis with practical politics-
to view economic activity in its political context. So political economy goes beyond
traditional economics to study, among other things.
 Development economics: It deals with the Economics, Social, Political & institutional
mechanisms, both public& private to bring rapid and large-scale improvement in
the levels of living for the people in poor countries such as Africa, Asia & Latin
America.

Economies as Social Systems: The Need to Go Beyond Simple


Economics
 Social system: the organizational and institutional structure of a society, including
its values, attitudes, power structure, and traditions.
 Social Systems
Interdependent relationships between economic and non-economic factors.
 Success or failure of development policy
Importance of taking account of institutional and structural variables along with
more traditional economic variables.

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Traditional Economic Measures
 Gross National Income (GNI): The total domestic and foreign output claimed by
residents of country. It comprises GDP plus factor incomes accruing to residents
from abroad, less the income earned in the domestic economy accruing to persons
abroad.
 Income per capita: Total GNI of country divided by total population.
 Utility of that income?

The New Economic View of Development: Leads to improvement in wellbeing, more


broadly understood.
Development economics must have a scope wider than traditional economics because
transformation of social institutions is necessary for development.
Development economics is the study of the
- Alleviation of absolute poverty.
- Transformation of institutions.
- Allocation of resources in developing countries.
Amartya Sen’s “Capability” Approach
- Functioning's as an achievement
- Capabilities as freedoms enjoyed in terms of functioning's
- Development and happiness
- Well-being in terms of being well and having freedoms of choice
- “Beings and Doings”:
Some Key “Capabilities”
Some Important “Beings” and “Doings” in Capability to Function:
1. Being able to live long
2. Being well-nourished
3. Being healthy
4. Being literate
5. Being well-clothed
6. Being mobile
7. Being able to take part in the life of the community
8. Being happy – as a state of being - may be valued as a functioning

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Three Core Values of Development
1. Sustenance: The Ability to Meet Basic Needs
The basic goods and services, such as food, clothing, and shelter that are
necessary to sustain an average humane being at the bare minimum level of living.
2. Self-Esteem: To Be a Person
The feeling of worthiness that a society enjoys when its social, political, and
economic systems and institutions promote humane values such as respect, dignity,
integrity, and self determination
3. Freedom from Servitude: To Be Able to Choose
A situation in which a society has at its disposable a variety of alternatives from
which to satisfy its wants and individuals enjoy real choices according to their
preferences.

The Three Objectives of Development


1. Increase availability of life-sustaining goods such as food, shelter, health, and
protection.
2. Raise levels of living including in addition to higher incomes, the provision of more
jobs, better education, and greater attention to cultural and humane values, all of
which will serve not only to enhance material well-being but also to generate
greater individual and national self-esteem.
3. Expand range of economic and social choices available to individuals and nations
by freeing them from servitude and dependence not only in relation to other people
and nations-states but also to the forces of ignorance and humane misery.

The Millennium Development Goals


Eight goals adopted by the United Nations in 2000
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

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