Samara University

College of Social Sciences and Humanities

Department of Geography and Environmental Studies

Development Geography Course Module

By
Yoseph Gashaye (MA)

December, 2023
Samara University, Ethiopia

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Course Name: Development Geography
Course Code: GeES3011
Credit Hours/ECTS: 3/5
Pre Requisite Course: Economic Geography
Course Category: Major Course
Course Owner: Geography and Environmental Studies
Course Description
This course is designed to introduce students of geography about the concepts of development,
underdevelopment, development geography, and space and development. The course also
developed to acquaint students about indicators, regional variation in development, development
problems and factors affecting development, theories of development, development policy and
strategies, development in Ethiopia, and measures of growth and development.
Course Objectives
At the end of the course students will be able to:
 Understand the concept of development and development geography.
 Identify indicators of development and under development.
 Differentiate growth and development as well as developed and developing
countries.
 Understand sustainable development and sustainable development goals.
 Identify development problems and factors affecting development.
 Explain classical and neoclassical theories of development.
 Apply any development theory in solving different problems of the society.
 Explain the existing development policy and development strategies in the world.
 Understand the development problems of Ethiopia. Compute different measures of
growth and development.
Course Contents
1. Introduction
1.1. Definition of development geography
1.2. The concept of development
1.3. Indicators of development
1.4. Growth and development
1.5. Development and Underdevelopment
1.6. Space and development
1.7. Classification of countries & their defining characteristics
2. Sustainable Development
2.1. Meaning of sustainable development
2.2. Principles of sustainable development
2.3. Indicators of sustainable development
2.4. Sustainable development goals
3. Development Problems and Factors Affecting Development

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 3.1. Development Problems
3.1.1. Poverty
3.1.2. Inequality
3.1.3. Unemployment
3.1.4. Inflation
3.2. Factors affecting development
3.2.1. Social and Cultural
3.2.2. Historical
3.2.3. Environment
3.2.4. Economical
3.2.5. Political
4. Theory of Development
4.1. Rostow’s Growth model
4.2. Core-periphery model
4.3. Modernization theory
4.4. Dependency theory
4.5. Theory of Post Modernism
4.6. New (endogenous) Growth
4.7. Balanced vs unbalanced growth
4.8. Coordination Failure: The O-Ring Theory of Economic Development
5. Development Policy and Strategies
5.1. Development planning and policy making
5.1.1. Meaning of development planning
5.1.2. Development planning process
5.1.3. Types of development planning
5.2. Development strategies
5.2.1. Agricultural Development Led
5.2.2. Industrial Development Led
5.2.3. Import Substitution
5.2.4. Export Oriented Industrialization
5.2.5. Inclusive Growth
6. Development of Ethiopia
6.1. Development trends and status of Ethiopia
6.2. Regional Development Inequalities in Ethiopia
6.3. Challenges and Constraints of Development in Ethiopia
6.4. Development potentials of Ethiopia
6.5. Development policies and strategies of Ethiopia
7. Measures of Growth and Development
7.1. Gross Domestic Product (GDP)
7.2. Gross National Product (GNP)
7.3. GDP and GNP per capita
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7.4. Gini Coefficient
7.5. Income Poverty
7.6. Human Development Index
7.7. Multidimensional Poverty Index

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 1. Introduction
1.1. Definition of development Geography

Development geography examines the patterns, processes, and disparities related to the
economic, social, and political development of regions and countries.

Development geography explores how geographical factors, such as location, climate,

topography, and natural resources, interact with social, cultural, and economic factors to
shape development outcomes.

Key themes of development geography

1. Spatial Inequality:
2. Globalization:
3. Urbanization:
4. Rural Development:
5. Human Development:
6. Environmental Sustainability:
7. Political Economy of Development:

1.2. The concept of development

key aspects of the concept of development:

1. Economic Development: To enhance the standard of living, reduce poverty,

2. Social Development: focuses on improvements in social well-being, including
education, healthcare, housing, and access to basic services.
3. Human Development: emphasizes expanding people's choices and freedoms.
4. Sustainable Development: meeting the needs of the present without compromising
the ability of future generations to meet their own needs. It integrates economic,
social, and environmental dimensions.
5. Cultural Development: involves the preservation of cultural identity and diversity
6. Political Development: Political stability, good governance
7. Regional and Global Dimensions: Global development considers issues such as
international trade, aid, and cooperation among nations.
8. Inclusive Development: emphasizes reducing disparities

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 1.3. Indicators of development

Indicators of development are measures of well-being of societies, economies, and individuals.

1. Gross Domestic Product (GDP): GDP is a key economic indicator that measures the
total value of goods and services produced within a country's borders. .
2. Gross National Income (GNI): GNI is similar to GDP but also takes into account the
income earned by a country's residents from foreign investments and work abroad.
3. Human Development Index (HDI): The HDI is a composite index that combines
indicators such as life expectancy, education, and per capita income. It provides a
more comprehensive measure of development beyond economic factors.
4. Life Expectancy: Life expectancy at birth is a key indicator of the overall health and
well-being of a population.
5. Education Indicators:
 Literacy Rate: The percentage of the population that can read and write.
 Enrollment Rates: The proportion of the population enrolled in education.
6. Poverty Rate: The percentage of the population living below the poverty line
7. Employment Rate: The percentage of the working-age population that is employed.
8. Infant and Child Mortality Rates
9. Access to Basic Services:
 Access to Clean Water and Sanitation:
 Access to Healthcare:
10. Gender Development Index (GDI) and Gender Inequality Index (GII):
11. Environmental Sustainability Indicators:
 Carbon Emissions per Capita:
 Forest Coverage: The percentage of a country's land area covered by forests.
12. Political Stability and Governance Indicators:
 Political Stability: Measures the likelihood of political unrest or instability.
 Corruption Perception Index (CPI):
13. Infrastructure Development:
 Access to Electricity:
 Transportation Infrastructure:

1.4. Growth and development

Economic Growth:

 Definition: Economic growth refers to the increase in the production and consumption of
goods and services in an economy. It is typically measured by the growth rate of the
Gross Domestic Product (GDP).
 Focus: Economic growth emphasizes the quantitative expansion of the economy,

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 indicating an increase in the output of goods and services.
 Indicators: GDP growth rate, per capita income, industrial production, and employment
are common indicators of economic growth.
 Scope: Economic growth can occur without necessarily leading to improvements in other
aspects of well-being, such as education, health, or income distribution.

Development:

 Definition: Development is a broader concept that encompasses not only economic

growth but also improvements in the overall well-being and quality of life of
individuals and communities. It includes social, cultural, political, and environmental
dimensions.
 Focus: Development focuses on qualitative improvements in the living standards,
human capabilities, and societal conditions.
 Indicators: HDI, life expectancy, education indices, poverty rates, and environmental
sustainability indicators are commonly used to measure development.
 Scope: Development recognizes that the goal is not just to increase the size of the
economy but to ensure that the benefits of growth are distributed equitably, and the
overall well-being of the population is enhanced.

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 2. Sustainable Development
2.1. Meaning of sustainable development

Sustainable development is a concept that emphasizes meeting the needs of the present without
compromising the ability of future generations to meet their own needs.

2.2. Principles of sustainable development

1. Interdependence and Integration:

 Recognize the interconnectedness of economic, social, and environmental
systems.
2. Equity and Social Justice
3. Intergenerational Equity:
 Consider the needs and interests of future generations in decision-making.
4. Precautionary Principle:
 Exercise caution in the face of uncertainty or potential risks.
5. Conservation of Biodiversity and Ecosystems:
6. Resource Efficiency and Sustainable Consumption:
7. Resilience and Adaptability:
8. Community Participation and Empowerment:.
9. Global Cooperation:
10. Democratic Governance:
11. Cultural Diversity and Identity:
 Respect and promote cultural diversity and indigenous knowledge..
12. Climate Responsibility

2.3. Indicators of sustainable development

Economic Indicators:

1. Gross Domestic Product (GDP):

2. Green GDP or Net Domestic Product (NDP):
 Accounts for environmental degradation and resource depletion, providing a more
environmentally sensitive measure of economic performance.

Social Indicators:

3. Human Development Index (HDI): Includes indicators like life expectancy, education.
4. Poverty Rate: The percentage of the population living below the poverty line.
5. Gender Development Index (GDI) and Gender Inequality Index (GII):

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  Measure gender disparities in areas such as education, health, and income.
6. Access to Education

Environmental Indicators:

7. Carbon Footprint: Measures the total greenhouse gas emissions produced directly or
indirectly.
8. Biodiversity Index: Measures the variety of species in an ecosystem and their
abundance.
9. Water Quality Index: Assesses the health of water bodies by parameters like pH, .
10. Renewable Energy Share:

Governance and Institutional Indicators:

11. Corruption Perception Index (CPI):

 Measures the perceived levels of corruption in public sectors worldwide.
12. Rule of Law Index:
 Assesses the extent to which a country adheres to the rule of law.

Urban Development Indicators:

13. Urbanization Rate:

 The percentage of a country's population living in urban areas.
14. Access to Sanitation and Clean Water:
 Measures the percentage of the population with access to improved sanitation
facilities and clean drinking water.

Resilience and Adaptation Indicators:

15. Disaster Preparedness Index:

 Assesses a community's readiness to cope with and respond to disasters.
16. Climate Resilience Index:
 Measures a region's ability to withstand and recover from the impacts of climate

Corporate Sustainability Indicators:

17. Corporate Social Responsibility (CSR) Performance:

 Measures a company's commitment to ethical, social, and environmental
responsibility.
18. Sustainable Supply Chain Indicators:
 Assess the environmental and social impact of supply chain practices.

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Global Partnerships and Cooperation:

19. Official Development Assistance (ODA):

 Measures the financial support provided by developed countries to developing
countries for economic development projects.
20. Global Cooperation Index:
 Assesses a country's engagement in international cooperation and collaboration
for sustainable development.

2.4. Sustainable development goals

The 17 Sustainable Development Goals are as follows: United Nations in 2015 as part of the
2030

1. No Poverty (Goal 1): End poverty in all its forms everywhere.

2. Zero Hunger (Goal 2): End hunger, achieve food security
3. Good Health and Well-Being (Goal 3)
4. Quality Education (Goal 4)
5. Gender Equality (Goal 5): Achieve gender equality and empower all women and girls.
6. Clean Water and Sanitation (Goal 6)
7. Affordable and Clean Energy (Goal 7)
8. Decent Work and Economic Growth (Goal 8):
 Promote sustained, inclusive, and sustainable economic growth, full and
productive employment, and decent work for all.
9. Industry, Innovation, and Infrastructure (Goal 9):
10. Reduced Inequality (Goal 10)
11. Sustainable Cities and Communities (Goal 11)
12. Responsible Consumption and Production (Goal 12)
13. Climate Action (Goal 13)
14. Life Below Water (Goal 14):
 Conserve and sustainably use the oceans, seas, and marine resources.
15. Life on Land (Goal 15):
 Protect, restore, and promote sustainable use of terrestrial ecosystems
16. Peace, Justice, and Strong Institutions (Goal 16):
17. Partnerships for the Goals (Goal 17).

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 3. Development Problems and Factors Affecting Development
3.1. Development Problems

3.1.1. Poverty:

1. Income Inequality: Unequal distribution of wealth and income contributes to persistent

poverty, limiting opportunities for marginalized populations.
2. Lack of Access to Education: Limited access to quality education hinders social
mobility and economic opportunities, perpetuating the cycle of poverty.
3. Limited Access to Healthcare: Inadequate healthcare services contribute to poor health
outcomes, affecting productivity and perpetuating poverty.
4. Unemployment: Lack of job opportunities and underemployment can lead to income
instability and hinder poverty reduction efforts.
5. Rural Poverty: Agriculture-dependent economies may face challenges due to factors
such as low productivity, land degradation, and lack of access to markets.

3.1.2. Inequality:

1. Income Inequality: Disparities in income distribution can lead to social tensions and
hinder social cohesion.
2. Gender Inequality: Unequal opportunities for women in education, employment, and
decision-making contribute to overall societal inequality.
3. Access to Resources: Unequal access to land, water, and other resources can perpetuate
social and economic disparities.
4. Social Injustice: Discrimination based on race, ethnicity, religion, or other factors can
lead to systemic social injustice.
5. Urban-Rural Divide: Disparities between urban and rural areas can result in unequal
access to infrastructure, services, and economic opportunities.

3.1.3. Unemployment:

1. Structural Unemployment: Changes in the economy, such as shifts in industries or

technological advancements, can lead to persistent structural unemployment.
2. Youth Unemployment: High rates of unemployment among the youth population can
lead to social unrest and hinder future development.
3. Underemployment: Many individuals may be employed in jobs that do not fully utilize
their skills or provide adequate income.
4. Informal Economy: Large segments of the workforce may be engaged in the informal
sector, lacking job security and access to social benefits.

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3.1.4. Inflation:

1. Purchasing Power Erosion: Inflation can erode the purchasing power of the currency,
affecting the affordability of goods and services.
2. Uncertainty for Businesses: High or unpredictable inflation rates can create uncertainty
for businesses, impacting investment and economic growth.
3. Fixed Income Challenges: Individuals on fixed incomes, such as retirees, may struggle
to maintain their standard of living during periods of inflation.
4. Interest Rate Impact: Central banks may adjust interest rates to control inflation,
impacting borrowing costs and investment.
5. Global Economic Factors: Inflation can be influenced by global economic conditions,
trade policies, and commodity prices.

3.2. Factors affecting development

3.2.1. Social and Cultural Factors

1. Education
2. Healthcare
3. Social Norms: Cultural practices and societal norms
4. Demographics: Population structure, including age distribution
5. Social Capital: Trust, networks, and community relationships

3.2.2. Historical Factors:

1. Colonial Legacy
2. Conflict and Wars
3. Cultural Heritage
4. Post-Independence Policies: The policies adopted after gaining independence

3.2.3. Environmental Factors:

1. Natural Resources: The abundance or scarcity of natural resources

2. Climate Change
3. Biodiversity
4. Geographical Location: Access to coasts, navigable rivers, and favorable climates
5. Natural Disasters

3.2.4. Economic Factors:

1. Infrastructure: transportation and communication networks

2. Trade Policies: Open and fair trade policies can stimulate economic growth,
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 3. Income Inequality: Disparities in income distribution
4. Access to Finance: Availability of credit and financial resources
5. Global Economic Trends: International economic conditions, such as recessions or
economic booms, can impact a country's economic development.

3.2.5. Political Factors:

1. Political Stability
2. Governance and Institutions
3. Corruption.
4. Policy Decisions
5. International Relations.

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 4. Theory of Development
4.1. Rostow’s Growth model

Rostow's Development Model, is a theory that outlines a linear progression of economic

development through a series of stages.

Stages of Rostow's Growth Model:

1. Traditional Society:

 Characteristics:
 Predominantly agrarian economy.
 Limited use of technology.
 Subsistence farming is the dominant economic activity.
 Traditional social structure and customs prevail.
 Key Features:
 Low levels of productivity and income.
 Limited technological development.
 Societal focus on preserving established traditions.

2. Pre-Conditions for Take-Off:

 Characteristics:
 Introduction of new technologies and infrastructure.
 Emergence of a more dynamic economic environment.
 Increased investments in education and healthcare.
 Key Features:
 Transition from traditional to more modern economic practices.
 Initial investments in infrastructure and human capital.
 Development of a more diversified economy.

3. Take-Off:

 Characteristics:
 Rapid economic growth and industrialization.
 Increased investment in various sectors.
 Emergence of a more entrepreneurial class.
 Key Features:
 Significant increases in productivity and output.
 Growth of manufacturing and industrial sectors.

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  Development of transport and communication infrastructure.

4. Drive to Maturity:

 Characteristics:
 Continued economic growth and diversification.
 Technological innovation becomes widespread.
 Increased urbanization and changes in social structure.
 Key Features:
 Consolidation of economic gains and industrialization.
 Expansion of education and research.
 Increased standard of living.

5. Age of High Mass Consumption:

 Characteristics:
 Advanced industrialization and technological sophistication.
 High levels of income and widespread affluence.
 Shift towards a service-oriented economy.
 Key Features:
 High standards of living for the majority of the population.
 Dominance of service industries.
 Greater emphasis on leisure and non-material goods.

Criticisms of Rostow's Model:

1. Eurocentrism: Rostow's model has been criticized for its Eurocentric perspective, as it
assumes a linear path of development based on the experiences of Western nations.
2. Assumption of Linearity: Critics argue that development does not necessarily follow a
linear trajectory, and different societies may take diverse paths.
3. Neglect of Social and Political Factors: The model tends to focus on economic factors,
neglecting the influence of social and political dynamics on development.
4. Environmental Concerns: Rostow's model does not consider the environmental impact
of rapid industrialization and growth.
5. Limited Cultural Considerations: The model assumes a universal process of
development without adequately considering cultural variations and differences.

4.2. Core-periphery model

The core-periphery model describes the spatial distribution of economic power and development
within a region or country.

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The core represents the economically advanced and developed center, while the periphery
comprises less developed and often resource-dependent areas.

Key Characteristics of the Core-Periphery Model:

1. Core:
 Economic Power: highest level of economic development, industrialization
 Infrastructure: well-developed transportation, communication, and utilities.
 Diversified Economy:
 Education and Innovation:
 Urbanization: higher urbanization rates and the presence of major cities.
2. Periphery:
 Economic Dependence
 Resource Extraction
 Limited Infrastructure
 Lower Educational Opportunities
 Income Disparities

Dynamics of the Core-Periphery Model:

1. Economic Relationships:
 The core often exploits peripheral regions for resources and cheap labor.
 Economic activities in the periphery may be oriented towards meeting the
demands of the core.
2. Spatial Interaction:
 Economic activities, trade, and investment are concentrated in the core, leading to
higher levels of spatial interaction within the core regions.
 Peripheral regions may have limited access to markets and opportunities for
economic interaction.
3. Development Disparities:
 The core experiences faster economic growth, technological progress, and overall
development.
 Peripheries may lag in development, facing challenges such as poverty,
unemployment, and limited access to education and healthcare.
4. Policy Implications:
 Government policies and economic development strategies often focus on
reducing disparities between the core and periphery.
 Infrastructure development and targeted investment may be implemented to
stimulate economic growth in peripheral regions.
5. Global Context: The core-periphery model is not only applicable within individual
countries but can also be observed on a global scale. Globalization may reinforce or

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 challenge core-periphery dynamics at an international level.

4.3. Modernization theory

It seeks to explain the process of societal evolution and transformation from traditional, agrarian
societies to modern, industrialized ones. The theory suggests a linear path of development that
societies are expected to follow as they modernize.

Core Assumptions of Modernization Theory:

1. Linear Development: Suggesting that societies progress through identifiable stages,

moving from traditional to modern forms.
2. Convergence: There is an expectation that societies, as they modernize, will converge
toward a common set of values, institutions, and structures characteristic of modern
Western societies.
3. Structural Transformation: Modernization is associated with a shift from agrarian
economies to industrial and service-oriented economies.
4. Social Change: As societies modernize, there is an expectation of significant social
change, including changes in family structures, roles, and values.
5. Institutional Development: Modernization is often linked to the development of specific
institutions, such as democracy, education, and market-oriented economies.
6. Technology and Innovation: The adoption of modern technology and innovation

Stages of Modernization:

1. Traditional Stage:
 Characterized by subsistence agriculture, limited technology, and traditional
social structures.
 Low levels of literacy and education.
2. Take-Off Stage:
 Introduction of modern technologies and institutions.
 Emergence of industrial and commercial activities.
 Initial improvements in education and healthcare.
3. Drive to Technological Maturity:
 Widespread adoption of modern technology.
 Continued economic growth and diversification.
 Advancements in education and research.
4. High Mass Consumption:
 Achievement of high levels of affluence.
 Shift towards a service-oriented economy.
 High standards of living and greater consumption of non-essential goods.

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Criticisms of Modernization Theory:

1. Eurocentrism: Critics argue that the theory is Eurocentric, as it assumes that Western
models of development are universally applicable.
2. Cultural Bias: Modernization theory tends to undervalue the role of indigenous cultures
and assumes that the Western model of development is the ideal.
3. Assumption of Homogeneity: The theory assumes a homogenous path of development
for all societies, overlooking the diversity of historical, cultural, and social contexts.
4. Dependency Critique: Dependency theorists argue that modernization theory ignores
the impact of historical and economic relationships, suggesting that certain countries are
dependent on others for development.
5. Gender Blindness: The theory has been criticized for not adequately addressing gender
dynamics and often overlooking the role of women in development.
6. Unrealistic Linearity: The linear progression proposed by modernization theory
oversimplifies the complex and non-linear nature of development.

4.4. Dependency theory

Dependency theory is a perspective in the field of international relations and development

studies that emerged in the late 1950s and early 1960s as a response to the perceived limitations
and Eurocentrism of modernization theory.

Dependency theorists argue that the global economic system is structured in a way that
perpetuates the economic and political dominance of certain countries (the "core") over
others (the "periphery" or "dependent" nations).

The theory emphasizes the historical and structural conditions that lead to the dependence of
less developed countries on more developed ones.

Key Tenets of Dependency Theory:

1. Core-Periphery Structure:
 The global system is characterized by a core-periphery structure, where a small
group of powerful, industrialized nations (the core) dominate and exploit less
developed nations (the periphery).
2. Historical Exploitation:
 Dependency theorists argue that historical processes, including colonialism and
imperialism, have contributed to the underdevelopment of certain regions.
3. Unequal Exchange:
 The theory suggests that trade between core and periphery countries is
characterized by unequal exchange, where the prices of raw materials from the

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 periphery are lower than the prices of manufactured goods from the core.
4. Imperialism and Capitalist Expansion:
 Dependency theorists view imperialism and capitalist expansion as mechanisms
through which core nations maintain control over the economic resources of the
periphery.
5. Structural Constraints:
 The global economic and political structures, such as international institutions and
trade agreements, are seen as perpetuating the dependency of less developed
nations.
6. Underdevelopment as a Systemic Outcome:
 Underdevelopment is not viewed as a lack of progress or a temporary stage but
rather as a systemic outcome of the global economic structure.

Implications of Dependency Theory:

1. Limited Economic Diversification:

 The periphery may become locked into producing and exporting a limited range
of primary goods, hindering economic diversification.
2. Debt and Economic Vulnerability:
 Dependency theorists highlight how loans and financial aid can lead to
indebtedness and economic vulnerability for periphery nations.
3. Social Inequality:
 The theory emphasizes how global economic structures contribute to social
inequality within and between nations.
4. Development Strategies:
 Dependency theory suggests that traditional development strategies, such as
export-led growth, may perpetuate dependency rather than fostering true
development.
5. Importance of Collective Action:
 Addressing dependency requires collective action and structural changes in the
global economic system rather than focusing solely on individual national
development policies.
6. Role of the State:
 The state is seen as having a crucial role in mediating the relationship between
core and periphery, with some dependency theorists advocating for state-led
development strategies.

Criticisms of Dependency Theory:

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 1. Overemphasis on Economic Factors:
 Some critics argue that dependency theory tends to overemphasize economic
factors and neglect the role of domestic policies and governance in
underdevelopment.
2. Assumption of Powerlessness:
 Dependency theory has been criticized for portraying less developed nations as
passive victims without agency.
3. Heterogeneity of the Periphery:
 Critics point out that dependency theory tends to homogenize the periphery and
overlooks internal differences among less developed nations.
4. Changes in the Global Economy:
 The global economy has undergone significant changes since the formulation of
dependency theory, with the rise of newly industrialized nations challenging the
traditional core-periphery model.

4.5. Theory of Post Modernism

Postmodernism is a broad intellectual and cultural movement that emerged in the mid-20th
century as a critical response to modernism and its various assumptions about knowledge,
society, and culture.

Postmodernism is characterized by a rejection of grand narratives, skepticism toward

universal truths, and an emphasis on the role of power, language, and discourse in shaping
social reality. It has influenced a wide range of disciplines, including philosophy, literature, art,
architecture, sociology, and cultural studies.

Key Tenets of Postmodernism:

1. Rejection of Grand Narratives:

 Postmodernism challenges the idea of overarching, universal narratives that claim
to explain the entirety of human history or societal development. Instead, it favors
multiple, fragmented, and localized narratives.
2. Skepticism of Truth and Objectivity:
 Postmodernism questions the notion of objective truth and argues that knowledge
is shaped by various perspectives and power structures. Truth is seen as subjective
and context-dependent.
3. Deconstruction:
 Deconstruction is a method used in postmodernism to analyze and critique texts,
revealing the inherent contradictions and multiple meanings within them. It
challenges the binary oppositions present in language and thought.
4. Cultural Relativism:

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  Postmodernism embraces cultural relativism, recognizing that different cultures
have distinct ways of understanding and interpreting the world. There is no single,
superior cultural perspective.
5. Fragmentation and Pluralism:
 Postmodernism celebrates diversity, fragmentation, and pluralism. It rejects the
idea of a single, unified identity or set of values and embraces the multiplicity of
identities and perspectives.
6. Hyperreality:
 The concept of hyperreality suggests that in a postmodern world, the boundary
between reality and representation becomes blurred. Simulacra and simulations,
rather than authentic experiences, dominate contemporary culture.
7. Power and Knowledge:
 Postmodernism emphasizes the relationship between power and knowledge. It
argues that knowledge is not neutral but is influenced by power structures and
societal discourses.
8. Consumer Culture:
 Postmodernism often critiques consumer culture, arguing that it is characterized
by the commodification of experiences and the superficiality of mass media and
advertising.
9. Playfulness and Irony:
 Postmodernism often employs playfulness, irony, and intertextuality as literary
and artistic devices. It challenges traditional forms and conventions.

While postmodernism has been influential, it has also faced criticism for being overly skeptical,
relativistic, and at times obscure. Additionally, its rejection of grand narratives and universal
truths has been contested by those who argue for the importance of certain shared values and
objective realities.

4.6. New (endogenous) Growth

The New Growth Theory, also known as endogenous growth theory, represents a departure from
traditional neoclassical growth theory by emphasizing that economic growth is not solely
determined by external factors such as capital accumulation and technological progress.
Instead, it places a greater emphasis on internal or endogenous factors within the economic
system.

Key Features of New Growth Theory:

1. Human Capital:
 Human capital, including education and skills, is considered a crucial factor in
economic growth.

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 2. Innovation and Research & Development (R&D):
 Unlike neoclassical growth theory, which often treated technological progress as
exogenous, new growth theory emphasizes the role of endogenous technological
change.
3. Increasing Returns to Scale:
 New growth theory introduces the concept of increasing returns to scale,
suggesting that as the scale of production increases, the cost per unit decreases.
This can lead to persistent growth as opposed to diminishing returns, which is a
feature of neoclassical growth theory.
4. Knowledge Spillovers:
 The diffusion of knowledge and technology across firms and industries can
contribute to broader economic growth.
5. Entrepreneurship:
 Entrepreneurship and the creation of new businesses are emphasized as important
drivers of economic growth.
6. Network Effects:
 The theory recognizes the role of network effects, where the value of a product or
service increases as more people use it.
7. Public Policy:
 Policies that encourage education, research and development, and the protection
of intellectual property rights are considered important.
8. Endogenous Saving and Investment:
 Unlike neoclassical growth models where savings and investment rates are
exogenously determined, new growth theory considers these rates as
endogenously determined by factors such as income, technological progress, and
education.

Criticisms of New Growth Theory:

1. Empirical Challenges:
 Some critics argue that despite its theoretical advancements, new growth theory
faces challenges in terms of empirical validation and measurement.
2. Inequality Concerns:
 The theory has been criticized for not addressing issues of income inequality
3. Resource Constraints:
 Critics argue that new growth theory does not adequately address the potential
constraints on resources and the environmental impact of sustained economic
growth.
4. Policy Implementation Challenges:
 Implementing policies that effectively stimulate innovation and human capital
accumulation can be challenging.

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 4.7. Balanced vs unbalanced growth

1. Balanced Growth

Balanced growth refers to the simultaneous and proportional development of multiple sectors
of an economy. The goal is to ensure that no particular sector is left significantly behind.

 Characteristics:
 All sectors of the economy grow at similar rates, maintaining a relative
equilibrium.
 Employment opportunities are distributed across various sectors, preventing the
concentration of jobs in specific industries.
 Infrastructure development is evenly spread to support growth in different regions
and sectors.
 The focus is on achieving a harmonious and well-rounded development across the
economy.
 Advantages:
 Minimizes regional and sectoral disparities.
 Reduces the risk of economic imbalances and structural distortions.
 Promotes inclusive development by spreading the benefits of growth across
different segments of the population.
 Challenges:
 Achieving perfect balance is often difficult due to varying sectoral requirements
and external factors.
 Rapid changes in technology or global economic conditions can disrupt balanced
growth plans.

 Flexibility:

Balanced Growth: Generally requires a more comprehensive and flexible approach,

considering the diverse needs of different sectors and regions.

2. Unbalanced Growth:

 Definition:
 Unbalanced growth, on the other hand, involves the deliberate and strategic
development of specific sectors or regions to achieve targeted economic
outcomes.
 Characteristics:
 Certain sectors or regions experience faster growth compared to others.
 Development efforts may be concentrated in high-potential industries or areas

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 with a comparative advantage.
 The focus is on maximizing the efficiency and productivity of key sectors.
 Advantages:
 Allows for rapid economic development in strategically important areas.
 Capitalizes on the strengths and potential of specific sectors.
 Can lead to the emergence of specialized economic zones with global
competitiveness.
 Challenges:
 May exacerbate regional and sectoral disparities
 Over-reliance on specific industries
 Other sectors or regions may feel neglected, leading to social tensions.

 Flexibility:

 Unbalanced Growth: Offers more flexibility for targeted interventions and policy
measures to stimulate growth in specific areas.

A balanced approach is often seen as desirable for long-term sustainability and inclusive
development, while unbalanced growth strategies may be employed for rapid economic
transformation in certain sectors or regions. The challenge lies in finding the right mix and
adapting strategies based on evolving economic conditions and priorities.

4.8. Coordination Failure: The O-Ring Theory of Economic Development

The O-Ring theory of economic development, introduced by economist Michael Kremer in 1993,
provides insights into the role of coordination and complementarities in economic
production.

Key Concepts of the O-Ring Theory:

1. Complementarities:
 Complementarities exist when the productivity of one factor is enhanced by the
presence or quality of another factor.
2. Coordination Failure:
 Coordination failure occurs when a mismatch or lack of coordination between
different components or factors in the production process leads to suboptimal
outcomes. .
3. Threshold Effect:
 This suggests that certain economic activities or production processes may require
a minimum level of skill or quality to avoid catastrophic failure. Below this
threshold, the productivity of the entire process may be severely compromised.

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 4. Escaping the Low-Skill Equilibrium:
 In some situations, economies may find themselves trapped in a low-skill
equilibrium, where low levels of skill result in low productivity and limited
incentives for skill acquisition. Escaping this equilibrium requires overcoming
coordination failures and raising skill levels to reach the threshold where
complementarities can lead to higher productivity.

Implications for Economic Development

1. Investment in Human Capital

 The O-Ring theory suggests that investing in human capital, particularly in skills
that complement each other in production processes, is crucial for economic
development.
2. Role of Education and Training
 Policies that enhance education and training can help break the low-skill
equilibrium by raising the overall skill level and fostering complementarities in
the workforce.
3. Importance of Institutions:
 Efficient institutions that facilitate coordination and collaboration among
economic agents are vital for overcoming coordination failures.
4. Economic Policies:
 Policies that target the removal of barriers to coordination, such as improving
infrastructure, reducing information asymmetries, and fostering a conducive
business environment, can contribute to economic development.
5. Globalization and Comparative Advantage:
 The O-Ring theory also has implications for understanding comparative
advantage in the global economy. Countries may specialize in industries that
leverage their existing skill base and where complementarities play a significant
role.

While the O-Ring theory provides valuable insights into the importance of coordination and
complementarities in economic development, it is just one perspective among many theories of
economic growth and development. It highlights the interconnectedness of economic factors and
the role of coordination in determining overall productivity and economic outcomes.

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 5. Development Policy and Strategies
5.1. Development strategies

Development strategies are comprehensive plans or approaches adopted by countries or regions

to promote economic growth, social progress, and overall improvement in the quality of life for
their citizens.

1. Agricultural Development Led

2. Industrial Development Led
3. Import Substitution
4. Export Oriented Industrialization
5. Inclusive Growth

1. Agricultural Development Led:

 Focus: This strategy emphasizes the development of the agricultural sector as a primary
driver of economic growth.
 Objectives: It aims to increase agricultural productivity, modernize farming techniques,
provide infrastructure support to rural areas, and ensure food security.
 Benefits: Boosts rural incomes, reduces poverty, creates employment opportunities, and
contributes to overall economic development, especially in agrarian economies.

2. Industrial Development Led:

 Focus: This strategy prioritizes the growth of the industrial sector to drive economic
development.
 Objectives: It aims to stimulate industrialization, promote manufacturing, and upgrade
technological capabilities to diversify the economy.
 Benefits: Creates employment, encourages technological innovation, and enhances
economic competitiveness by expanding the industrial base.

3. Import Substitution:

 Focus: This strategy aims to reduce dependency on imported goods by encouraging

domestic production of goods that were previously imported.
 Objectives: Encourages local industries to produce goods that were previously imported,
reducing reliance on foreign products.
 Benefits: Reduces trade deficits, strengthens domestic industries, and promotes self-
sufficiency in key sectors.

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4. Export-Oriented Industrialization (EOI):

 Focus: EOI aims to promote economic growth by focusing on producing goods for
export markets.
 Objectives: Encourages industries to produce goods that are competitive in international
markets, often through incentives such as tax breaks and subsidies.
 Benefits: Generates foreign exchange earnings, creates employment, and drives
economic growth through increased exports.

5. Inclusive Growth:

 Focus: This strategy emphasizes ensuring that the benefits of economic growth are
distributed equitably across society, reducing income disparities and promoting social
inclusion.
 Objectives: Aims to create opportunities for all segments of society to participate in and
benefit from economic growth.
 Benefits: Reduces poverty, enhances social cohesion, and creates a more sustainable and
resilient economy by ensuring that growth benefits reach marginalized groups.

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 6. Measures of Growth and Development
1. Gross Domestic Product (GDP)
2. Gross National Product (GNP)
3. GDP and GNP per capita
4. Gini Coefficient
5. Income Poverty
6. Human Development Index
7. Multidimensional Poverty Index

7.1. Gross Domestic Product (GDP)

Definition: GDP is the total value of all goods and services produced within the borders of a
country within a specific time period.

Use: GDP provides an overall picture of the economic performance of a country and is used to
compare the economic performance of different countries.

Calculation: There are three main approaches to calculating GDP:

1. Production (or Output) Approach: This approach calculates GDP by adding up the
value of all goods and services produced in various economic activities.
2. Income Approach: GDP can be calculated by summing up all incomes earned by
individuals and businesses in the economy, including wages, profits, and taxes.
3. Expenditure Approach: GDP is calculated by summing up all expenditures made in the
economy, including consumption, investment, government spending, and net exports
(exports minus imports).

Components of GDP:

1. Consumption (C): Spending by households on goods and services.

2. Investment (I): Spending by businesses on capital goods, residential construction
3. Government Spending (G): Expenditures by the government on goods and services.
4. Net Exports (Exports - Imports): The value of a country's exports minus its imports.

Types of GDP:

1. Nominal GDP: The value of goods and services produced in a given year, expressed in
current prices without adjusting for inflation.
2. Real GDP: Nominal GDP adjusted for inflation or deflation, providing a more accurate

28
 measure of an economy's overall production.

Significance:

1. Economic Health: GDP is a key indicator of a country's economic health and is used to
assess the overall performance and growth of the economy.
2. Standard of Living: Per capita GDP, obtained by dividing GDP by the population, is
often used as a measure of the average standard of living.
3. Policy Formulation: Policymakers use GDP data to make informed decisions about
economic policies, such as fiscal and monetary measures.

Limitations:

1. Excludes Informal Economy: GDP may not fully capture economic activities in the
informal sector, which can be significant in some economies.
2. Ignores Income Distribution: GDP does not provide information about how income is
distributed among the population.
3. Non-Market Transactions: Certain valuable activities, such as unpaid household work,
are not included in GDP.

7.2. Gross National Product (GNP)

Definition: GNP is similar to GDP but also includes the income earned by a country's residents
from overseas investments, minus the income earned by foreign residents within the country.

Use: GNP provides a broader view of a country's economic performance by accounting for
income earned abroad.

Calculation: GNP can be calculated using various approaches, similar to GDP:

1. Production (or Output) Approach: Summing up the value of all goods and services
produced by a country's residents, both domestically and abroad.
2. Income Approach: Calculating GNP by adding up all incomes earned by a country's
residents, including wages, profits, and taxes, both domestically and from foreign
investments.
3. Expenditure Approach: Summing up all expenditures made by a country's residents,
including consumption, investment, government spending, and net exports (exports
minus imports), both domestically and internationally.

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Components of GNP:

1. Gross Domestic Product (GDP): The value of all goods and services produced within
the country's borders.
2. Net Foreign Factor Income: The net income earned from foreign investments, which is
the difference between income earned by the country's residents abroad and income
earned by foreign residents within the country.

Significance:

1. Global Economic Position: GNP provides a more comprehensive measure of a country's

economic performance by considering both domestic and international economic
activities.
2. National Income: GNP reflects the total income generated by a country's residents,
regardless of where they are located.
3. Economic Relationships: GNP helps in understanding a country's economic
relationships with the rest of the world and its impact on the overall economic well-being
of its residents.

Limitations:

1. Dependence on Foreign Investments: Countries heavily dependent on foreign

investments may have a high GNP but may not fully benefit from this income
domestically.
2. Exchange Rate Fluctuations: GNP can be influenced by changes in exchange rates,
which may not necessarily reflect changes in the real economic conditions of a country.

7.3. GDP and GNP per Capita

Definition: Per capita GDP and GNP are obtained by dividing the total GDP or GNP by the
population of the country. It gives an average measure of economic output per person.

Use: Per capita measures help assess the average standard of living and are useful for comparing
the economic well-being of people in different countries.

1. GDP per Capita:

It is obtained by dividing the total Gross Domestic Product (GDP) of a country by its population.

30
 Total GDP
Formula: GDP per Capita=
Population

Significance:

 Standard of Living: GDP per capita is often used as an indicator of the average standard
of living in a country. Higher GDP per capita generally suggests a higher standard of
living.
 Economic Comparison: It allows for comparisons between countries by providing an
average economic output on a per-person basis.
 Development Assessment: Changes in GDP per capita over time can indicate the
economic development or decline of a country.

Limitations:

 Income Inequality: GDP per capita does not account for income distribution, so a high
average does not necessarily mean that all individuals in the country have a high standard
of living.
 Quality of Life: It does not consider factors such as environmental quality, healthcare, or
education, which are crucial components of well-being.

2. GNP per Capita:

Definition: GNP per capita, similar to GDP per capita, measures the average economic output
per person but takes into account the Gross National Product (GNP) instead of Gross Domestic
Product (GDP). It includes the income earned by the country's residents both domestically and
abroad.

Total GNP
Formula: GNP per Capita=
Population

Significance:

 Global Income Impact: GNP per capita provides a more comprehensive view of the
average income because it considers the income earned by a country's residents from
foreign investments.
 International Comparisons: It helps in comparing the average income levels of
different countries, considering both domestic and international economic activities.

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Limitations:

 Dependency on Foreign Investments: Countries with a high GNP per capita but heavily
dependent on foreign investments may not fully benefit from this income domestically.
 Exchange Rate Fluctuations: Like GDP per capita, GNP per capita can be influenced
by changes in exchange rates, which may not reflect changes in the real economic
conditions of a country.

7.4. Gini Coefficient

Definition: The Gini Coefficient is a measure of income inequality within a population. It ranges
from 0 to 1, where 0 represents perfect equality, and 1 represents perfect inequality.

Use: It helps to understand the distribution of income within a country. Higher Gini coefficients
indicate greater inequality.

7.5. Income Poverty

Definition: Income poverty refers to a situation in which individuals or households do not have
sufficient financial resources to meet their basic needs for a standard of living that is considered
acceptable within a particular society or location.

Measurement: Poverty is often measured by setting a poverty line, which represents the
minimum level of income required to cover basic needs such as food, shelter, clothing, and
access to essential services. Individuals or households with income below this threshold are
considered to be living in poverty.

Key Aspects:

1. Poverty Line: The poverty line is determined based on the cost of a basket of goods and
services necessary to maintain a basic standard of living. This can vary between countries
and regions.
2. Relative Poverty: In addition to absolute poverty (measured against a fixed standard),
relative poverty considers an individual's or household's income in relation to the overall
distribution of income in a society.

Indicators and Measurements:

1. Headcount Ratio: The percentage of the population living below the poverty line. For
example, a headcount ratio of 10% means that 10% of the population is living in poverty.

32
 2. Poverty Gap: The average shortfall of the income of the poor from the poverty line,
indicating the depth of poverty.
3. Severity of Poverty: It takes into account not only the incidence and depth but also the
inequality among the poor.

Causes of Income Poverty:

1. Unemployment: Lack of job opportunities can lead to income poverty.

2. Low Wages: Insufficient wages for work performed.
3. Underemployment: People may have jobs, but they are not able to work full-time or are
engaged in low-productivity work.
4. Lack of Education: Limited education and skills can restrict access to well-paying jobs.
5. Health Issues: High medical expenses and poor health can contribute to income poverty.

Global Perspective: International organizations, such as the World Bank and the United
Nations, use global poverty lines to assess and compare poverty levels among countries..

Policy Implications: Governments and organizations implement various policies and programs
to address income poverty. These may include social welfare programs, education and skills
training initiatives, healthcare access, and measures to promote employment and economic
growth.

Challenges: Defining and measuring poverty can be complex, and the effectiveness of anti-
poverty initiatives may vary. Additionally, multidimensional approaches that consider factors
beyond income, such as health and education, are increasingly recognized for a more holistic
understanding of poverty.

7.6. Human Development Index (HDI):

Definition: The Human Development Index (HDI) is a composite statistical measure used to
assess and rank countries based on three key dimensions of human development:

1. Health (Life Expectancy): Measured by life expectancy at birth.

2. Education (Mean and Expected Years of Schooling): Comprising the average number
of years of schooling for adults aged 25 years and older and the expected number of years
of schooling for children entering school.
3. Standard of Living (Gross National Income per Capita): Calculated using the Gross
National Income (GNI) per capita, adjusted for purchasing power parity (PPP).

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Calculation:

1. Life Expectancy Index:

Life Expectancy − Minimum Life Expectancy

Life Expectancy Index=
Maximum Life Expectancy − Minimum Life Expectancy

2. Education Index:

(Mean Years of Schooling+ Expected Years of Schooling)/2

Education Index=
Maximum Years of Schooling

3. GNI per Capita Index:

log (GNI per Capitaat PPP)− log ¿ ¿

The HDI is then the geometric mean of these three indices:

√3 Life Expectancy Index × Education Index ×GNI per Capita Index

Interpretation:

 HDI values range from 0 to 1, where 1 indicates the highest possible level of human
development.
 Countries are classified into four categories based on their HDI: low, medium, high, and
very high human development.

Significance:

 The HDI provides a more comprehensive measure of development than purely economic
indicators like GDP per capita.
 It reflects the overall well-being of a population by considering health, education, and
standard of living.

Limitations:

 Simplification: The HDI simplifies complex issues and may not capture all dimensions
of human development.
 Inequality: It does not account for inequality within countries; two countries with the
same HDI might have different levels of inequality.

34
  Variable Weights: The equal weighting of the three dimensions may not reflect the
relative importance placed on these aspects by individuals or societies.

Updates: The HDI is periodically updated by the United Nations Development Programme
(UNDP) to reflect changes in global development trends.

Global Impact: The HDI is widely used for international comparisons and has influenced global
development policies and priorities. It provides a valuable tool for policymakers, researchers,
and advocates working toward improving human well-being worldwide.

7.7. Multidimensional Poverty Index (MPI):

Definition: MPI goes beyond income poverty and considers multiple deprivations such as
health, education, and standard of living.

Use: It provides a more holistic understanding of poverty by considering various dimensions and
helps in crafting targeted anti-poverty policies. These measures collectively offer a
comprehensive view of a country's growth and development, considering economic, social, and
inequality aspects.

Key Characteristics:

1. Multiple Dimensions: MPI considers various dimensions of well-being, such as health,

education, and standard of living, to capture a more holistic view of poverty.
2. Indicator Selection: Specific indicators within each dimension are chosen to represent
the lack of well-being. For example, indicators of health might include nutrition and child
mortality.
3. Intensity of Poverty: MPI not only identifies who is poor but also measures the intensity
of their poverty by considering the number and intensity of deprivations they experience.

Calculation:

1. Indicator Selection: Indicators are chosen for each dimension, such as health, education,
and standard of living.
2. Deprivation Thresholds: For each indicator, a deprivation threshold is set, indicating the
minimum level considered acceptable.
3. Deprivation Count: Individuals are identified as deprived if they fall below the
deprivation threshold in any of the selected indicators.
4. MPI Calculation: The MPI is calculated as the product of the incidence of poverty (the
percentage of people identified as deprived) and the intensity of poverty (the average
percentage of deprivations experienced by the poor).

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MPI=Incidence of Poverty x Intensity of Poverty

Dimensions and Indicators:

1. Health Dimension: Indicators may include nutrition and child mortality.

2. Education Dimension: Indicators may include years of schooling and child enrollment.
3. Standard of Living Dimension: Indicators may include access to cooking fuel,
sanitation, safe drinking water, electricity, and housing.

Interpretation:

 The MPI is a percentage, ranging from 0% (no deprivation) to 100% (all indicators show
deprivation).
 A lower MPI indicates lower levels of multidimensional poverty.

Significance:

 MPI provides a more nuanced understanding of poverty by considering various aspects of

well-being beyond income.
 It helps policymakers identify specific areas of deprivation and design targeted
interventions.
 MPI is particularly useful in capturing the complexities of poverty experienced by
different groups within a population.

Limitations:

 Data Availability: The accuracy of MPI depends on the availability and quality of data
for each indicator.
 Subjectivity: The selection of indicators and deprivation thresholds involves some
subjectivity and may vary across countries.
 Complexity: The multidimensional nature of MPI makes it more complex to calculate
and interpret compared to traditional income-based measures.

Global Impact: The MPI is widely used globally to assess and compare poverty levels across
countries. It complements income-based measures like the Human Development Index (HDI)
and contributes to a more comprehensive understanding of development and poverty eradication
efforts.

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