Par

tOne
Pr
inci
plesandConcept
s
Chapt
er1
I
ntr
oduci
ngEconomicDev
elopment
:
AGlobal
Per
specti
ve

 KeyConcept
s
Ascuriousasst udent
swhor egist
ertotakeDev elopmentEconomi csmaybe, t
hei
rknowledge
andexper i
enceofthedevelopingworldwil
lvarywi del
y.Thefi
rstmainpointofChapter1i
st o
emphasizehowdi f
fer
entli
feinthedevel
opingwor l
dis.Thr
oughexampl esofdebtcr
isesandoil
shocks,theideathattheworl
di sbecomingincreasingl
yint
erdependentandthatact
ionstakeni
n
thedevelopedwor l
dcanhav eapr of
oundimpactont hedevel
opingworld.

Thesecondpointistoprovi
deanov ervi
ewoft henat ur
eofdev elopmenteconomicsasafiel
d.A
defenseofdevel
opmenteconomi csasadi st
inctfi
eld,r
at herthananaggl omer
ati
onofother
economicssubfi
elds,
isoff
ered.Amaj orthemeoft hebook, thatdev el
opmenteconomicsmust
encompassthestudyofinst
itut
ionalandsocial,
aswel laseconomi c,
mechani
smsf or
moder ni
zi
nganeconomywhi l
eelimi
natingabsolut
epov erty
,isintroduced.

Theplanofthebookisi
ntr
oducedthr
oughaseriesof30cri
ti
calquesti
onsofdevel
opment
economics.Dependi
ngontheamountofmateri
alcover
edbytheinstr
uctor
,st
udentsshoul
dbe
ablet
ointell
i
gentl
yaddr
essmostofthesequest
ionsbytheendofthecourse.

Sect i
on1. 3looksdeeperint othemeani ngofdev el
opmentandof fersboththet radit
ional
economi cmeasur esandt heneweconomi cv i
ewofdev elopmentt hatismultidimensi onal.Thi
s
alternativeapproachisclosel yti
edtot hediscussionofSen’ s“Capabili
ti
es”appr oach, f
irst
i
nt roducedi nthe7thedition.Further,
thissectiontalksspecifi
call
yabouthappi nessint he
cont extofeconomi cdev elopment ,r
elati
ngt helevelofhappinessnotonl ytolev elofincomebut
toot herfact or
ssuchasdemocr ati
cfreedomsandt hequal i
ty
ofsoci alrelati
onshi
ps.Ther oleofnormat i
vev al
uesi ndevelopmenteconomi cs—asubj ect
deal i
ngwi thhumanmi seryandhumanpot ential
,withequityaswel laseffi
ciency ,
wi t
hcul tur
al
changet hatcauseslossesaswel lasgai ns,andwi t
ht r
ansferaswel lascreationofweal th—is
alsost ressed.

Theconclusionisthatdevel
opmentisbothaphy si
cal r
eali
tyandast ateofmi nd.Themeaning
andobjecti
vesofdev el
opmentincl
udetheprovisi
onofbasi cneeds,reducinginequal
it
y,r
aisi
ng
l
ivi
ngstandar dst
hroughappropri
ateeconomicgrowt h,i
mprovingself-
esteem inrel
ati
ontothe
devel
opedcount ri
es,andexpandi
ngfreedom ofchoiceinthemar ketandbey ond.

Section1.4present
sanindepthexaminat
ionoftheUN’sMi
ll
enni
um Devel
opmentGoals(MDGs).
Thisincludesamor ecomprehensi
veli
stofthegoal
sthemsel
ves(appear
inginTabl
e1.1)anda
discussionoftheshort
comingsoftheMDGs.Finall
y,t
hecasest
udyonBr azi
latt
heendoft he
chapt erhasbeenrevi
sedandupdated.

©2015Pear
sonEducat
ion,
Inc.
 Chapt
er1 I
ntr
oduci
ngEconomi
cDev
elopment
:AGl
obal
Per
spect
ive 3

 Lect
ureSuggest
ions
Itmightbebesttobegi nwit
hadiscussi
onoft hi
schapter’
spr ol
ogueandtofocusonthe
authors’
statement(page3)thatt
hescaleoft r
ansf
ormat i
oni ntheworl
deconomyisimmense.
HansRosl i
ng’svi
deo“ 200count
ri
es,200y ear
s,4minutes”(readil
yavai
l
ableonYouTube)canbe
usedtoconf i
rmthispointi
nanentertai
ningway.Itmightalsobehelpfult
omentionthatgr
oss
worldproducthasmor ethandoubledbetween1985and2012.

Despi tesuchadv ances, t

remendousdi spari
tiescont i
nuet oexi st.Intermsofeasi l
yaccessi bl
e
statisti
cs“Pov er
t yFact sandSt at
ist
ics”
(http://www.global i
ssues. org/art
icl
e/26/pov erty_facts_and_ stat
s)pr ovidesdat aont heshar eof
thewor l
d’spopul ati
onl i
vingon$1, $1.25,$1.45, $2,$2. 5,and$10aday .Par t
icularl
yst r
iki
ngfor
manyst udentsist hef actthat ,
in2005, 80%oft hewor l
d’spopul ationear ned$10orl essaday .
Sev eralexcell
entbooksat tempttogi vesomei deaoft her angeofl iv
ingst andardsf ound
throughoutt hewor l
d.Forexampl e,TheMat erialWor ld
(http://wwwpbs. org/wgbh/ nov a/
wor l
dbalance/ mat eri
al .
html)byPet erMenzel l.Thisbook
present sphotogr aphicpr ofil
esoft ypi
calfami l
iesar oundt hewor ldwi t
hal loftheirpossessions
placedi nfrontoft heirhomes.Asonegoesf rom onef ami lytothenextt heinstructorhasthe
oppor tuni
tytohi ghli
ghtt hei mpor t
antdiffer
encesbet weennat ionsandr egionsandt otouchon
keyi ssuesofgr owt handdev el
opment .

Oneoft hekeyst rengt hsoft hischapt eristhati

tdoesnotr ushtothehar dnumber sthat
supposedl ymeasur edev elopment .Thedi scussionofSen’ sCapabil
iti
esappr oach, t
hef arl
ess
thanper fectrelat
ionshi pbet weeni ncomeandhappi ness, andwhatt heaut hor
sr efertothethree
corev aluesofdev el opmentar ewel lworthspendi ngaf airamountofcl asst i
meexpl ori
ng.Class
ti
meshoul dalsobespentdi scussi ngt he30cr i
ticalquestionsli
stedonpages11- 14oft hetext
andt henaski ngst udent st oident i
fy3or4quest i
onst hattheyarepar t
icularl
yinterestedin
exploring.Aski ngeachst udentt olistwhatt heyconsi dertobe“ cri
ti
cally”cri
ti
cal questi
onsona
sheetofpaper ,collectingt heirresponses, andthent ryingt odi
rectther estofthet er
mt o
addressi ngthemostcommonl yment i
onedcr i
ti
cal questionsforthatclasswi l
l behel pf
ulin
furt
herdr awi
ngst udent sinandhol dingtheirattenti
ont hroughoutthet erm.

Atthissamepoi nt,t
hei nstructormightalsowishtogetsomei deaofst udents’ experi
ences
travel
ingtodevelopi
ngcount ri
esand, i
nassubt l
eawayasi spossi bl
e,determi nehowshaky
theirunderst
andingoft hewi derworldis.Theinstr
uctorperhapscoul ddrawonhi sorherown
experiencesandgivesomebackgr oundast ohowheorshef irstbecamei nterestedi n
Dev el
opmentEconomi cs.Thi smay–t hroughthekindsofquest ionsasked-hel pt heinstr
uctor
furt
hergaugest udents’levelofsophisti
cati
oninthisarea.Thisisnotsomet hi
ngt hatshouldbe
or,can,besettl
edinthef i
rstoneort woclassesandwi l
ldevelopov erthecour seoft heterm.

Inmanyuni v ersit
ies,theeconomi cdev elopmentcoursewill
bef i
ll
edwithstudentswhoar enot
maj or
ingineconomi cs.Thesestudentsmaycomef rom di
ff
erentcoll
egeswithmaj orssuchas
anthropology ,sociol
ogy ,orpoli
ti
calscienceorbusiness(management ,fi
nance,etc.).Theymay
havehadasl ittl
easonesemest erofintroductor
yeconomics.Giventhatyouaret eachi ngan
economi cscl ass,youmaywi sht oremindt hestudentsoft
hisfactandofferwhat everhel pyou
can.Gi venv i
deocapt uresoftware,youmi ghtconsiderr
ecordi
ngsomepr i
merst hatt hencould
bemadeav ail
ablet ostudentsthroughcour semanagementsof twaresuchasBl ackboar dor
Moodl e.Youcer t
ainlyshoulduset hefirstclassortwotosetthestagefortheappr oachy ouwil
l
take,whetheri twillbemor einterdi
scipli
nary ,
moreeconomic,mor emathematical and

©2015Pear
sonEducat
ion,
Inc.
4 Todar
o/Smi
th •Economi
cDev
elopment
,Twel
ft
hEdi
ti
on

quant
it
ati
ve,
mor
ehi
stor
ical
,orsomecombi
nat
ion.

Emphasizethatdev elopmenteconomi csisanexciti

ngsubjecttostudyandt eachbecauseit
doesnotfocusjustononecount r
y,butonalll
ess-devel
opedcount r
ies.Furtheremphasizethat
youwillt
ryt
ot eachkeyconcept sandideaswhichcanbeappl iedtot heexper i
encesofmany
devel
opingcount r
ies.Theseconcept sandideasareimportantforunder st
andingwher ethe
devel
opingcount r
iesar etoday
,aswel laswhattheiropt
ionsarefort hefuture.Youmi ghtalso
wishtoemphasi zet hatther
earguablyisnootherareaofeconomi cst hati
smor erel
evanttothe
major
ityofthewor ld’speople.

The30basi cquestionscanbeusedt omot i

vatestudentint
erestinthesubjectaswell as
presentanovervi
ewofwhatt heclassi
sallabout.I
tcanbeemphasi zedthatther
ei snoone
answertothegener al questi
onofwhysomecount ri
esar emoredev el
opedt hanothers.There
areasmanydi ff
erentopi nions
onwhatal essdevel oped-countr
yshoulddotobecomemor edev el
oped.Agoodappr oachi sto
presentdi
ffer
ingviewpoi ntsthr
oughoutthecourseandl ett
hest udentsmakeupt heirmindson
thei
rown.

I
fyouhavedevel
oping-
count
ryexperi
ence,ment
ioningsomeofyourownexper
ienceswith,“
How
t
heOtherHal
fLive,
”isawayofintr
oducingthef
irstchapt
erandr
eall
yget
ti
ngstudents’
attent
ion.

 Di
scussi
onTopi
cs
Encouragingcl
asspar t
ici
pati
onisagoodwayt omoti
vat
et hestudent
sandmaket
hem f
eel
i
nv ol
vedin
thelear
ningprocess.Thefir
stfewweeksofclassi
npart
icularar
econduci
vet
othi
ssor
tof
exerci
se.Twoideasf ordi
scussionsatt
hisst
ageare:
 Whati sthemeani ngofeconomi cdevel
opment ?Whydowenotseeast r
ongerrel
ati
onship
betweeni ncomeandhappi ness,especi
all
yonceincomehasri
senabove$10,000-
$20,000a
yearperper son?
Isi tpossiblefort
hewholewor ldtobedev el
oped?Thi
scanbeaninter
esti
ngquesti
ont oask
atthebegi nni
ngofthecourseandt henagainattheendoft
hecourse.

©2015Pear
sonEducat
ion,
Inc.
 Chapt
er1 I
ntr
oduci
ngEconomi
cDev
elopment
:AGl
obal
Per
spect
ive 5

 Sampl
eQuest
ions
Shor
tAnswer
1.Prov
ideadefini
ti
onofdevel
opmenteconomi cs.Just
if
yyourchoicecareful
l
y.
Answer:Seethesect
ioni
nChapter1enti
tled,“TheNatur
eofDev elopmentEconomics,
”on
pages9–10forsomeideasabouthowt hest
udent
smi ghtanswert hi
squest
ion.
They
shouldi
nsomewaysayt hatdevelopmenteconomicsismor ethanjustgr
owthin
GDP.

2.Indefi
ningdev elopmenttoincl
udemor ethanjustt hegrowt hofpercapi taincome, thereis
animpli
citassumpt i
onthatthegrowt hofpercapi tai
ncomeal oneisnotsuf f
icientt
o
guarant
eet hereductionofpovertyandt hegrowt hofself-esteem.I sitpossiblethatthere
coul
dbegr owthof
percapitai
ncomewi thouttheachievementoft heseot herobj ecti
ves?
Answer:Percapi t
aincomecanshowgr owthev enwhent hatgr owthdoesnott ouchv ast
porti
ons
ofthepopul at
ion.Thi
spoi ntiscl
earlymadei nChapt er5.Thegr owthmaybe
centeredinonear eaorsectoroftheeconomyf orexampl e.Al
so, mostdev eloped
countrieshave,atsomet i
mei ntheirhistori
es,intr
oducedpol i
ciesemphasi zing
equalit
y .

3.I
nwhatwayi sdev el
opmenteconomi csgreateri
nscopethantradi
ti
onaleconomics?
Answer
:Dev elopmenteconomicsmustencompasst hestudyofinsti
tut
ional
,pol
i
tical,
and
soci
al aswellaseconomicmechani smsformodernizi
nganeconomywhi le
el
iminatingabsol
utepovert
yandt ransf
ormingst
atesofmi ndaswellasphy si
cal
conditi
ons.Moredetai
lsfoundinthechapter.

4.Makeacaset hatdevel
opmenteconomicsmightbemer
elyacombi
nat
ionofal
ltheot
her
subfi
elds
ofeconomi cs,onl
yappli
edt
ol ow-
incomecountr
ies.
Answer :SeeQuestion3above.

©2015Pear
sonEducat
ion,
Inc.
6 Todar
o/Smi
th •Economi
cDev
elopment
,Twel
ft
hEdi
ti
on

5.Whatdoyouthinkar
et hemostseri
ousobst
acl
estofurt
herprogr
essinthedev el
opi
ng
worl
d?
Answer
:Themai npointher
eistoensur
ethatst
udentsaret
hinki
ngcarefull
yaboutthe
i
ssuesrai
sedinthetext
.Youmayalsowishtodrawfrom t
hecrit
icalquest
ionson
Pages9–11.

6.I
nr ev
iewi
ngdiscussi
onsofli
fei
ndev elopi
ngcountri
es,whatisi
taboutl
i
f est
ylesi
nthelow-
i
ncomecountriescompar
edwi t
hli
festylesi
nthehigh-i
ncomecountri
esthatmoststri
kes
you?Why?
Answer:Thi
sisanopen-endedquestiontosti
mulaterefl
ect
ion.

7.I
thasbeensaidthat“under
dev
elopmentisast
ateofmi
nd.”Comment.
Answer
:Youmayl ookforadi
scussi
onofther
oleofmodernval
uesi
nthedev
elopment
pr
ocess,
asonPages12–14oft hetext
.

8.Doy outhinkitisinthemat eri

ali
nterestsofhigh-
incomecount ri
est ohel
plow- i
ncome
countr
iesimpr ovetheireconomicper formance?Whyorwhynot ?
Answer:Answer smi ghttouchoni ncreasi
ngthemar ketforproductsi
nwhi chhigh-i
ncome
countrieshaveacompar ati
veadv ant
age,reduci
ngt hedangersofregionalwarand
ter
rorism,reducingint
ernationalt
ransmissionofdisease,andcurbinginter
nati
onal
migration.

9.Howishappi nessrelatedt odevelopment?

Answer
:Answer sshoul dmaker efer
encetothecorrel
ati
onbetweenhappinessandi ncome
l
ev elaswel last ouchont heconnect
ionbetweenhappinessandsoci al
relati
onships,per sonalanddemocrati
cf r
eedoms,rel
i
giousbeli
efs,andhealth,
amongot herf actorsli
stedonPage20.Fur t
her,
answersshouldincludea
discussiononhappi nessasbeingapar tofAmarty
aSen’sconceptoff unct
ionings.

10.Whatar
et heMi l
l
enni um Devel
opmentGoal s(MDGs)andhowdi dtheycomeabout ?What
doyouconsidertobet hemosti mportantoft heseandwhy ?
Answer
:Theanswershoul dstr
essthatt hegoal scov erabr oadr angeofobject
ivesbot
h
economi candsoci al
.Thesewer eputf orwardsot hatdevelopi
ngcountri
eswould
havenumer icaltar
getsagainstwhi cht heirprogresscoul dbejudgedand,where
warranted,appropri
ateassi
st anceof fered.Ani nteri
m assessmentoftheMDGs
canbef oundat :www.unmilleniumpr oject.
org.
11.Whyarewomenof tenreferredtoaspl ayi
ngacent r
al r
oleineconomi cdevel
opment ?
Answer
:Ananswershoul dincludehowwomencani nfl
uencewhet herornotthenext
generati
onwi l
lbei mpov erishedthroughtheirroleofchil
drearingbasedont he
resourcestheybr i
ng
tothistaskandt hev aluest heypasstotheirchil
dren.Anot herkeypointthat
shouldbement ionedi st hatempirical
l
y,woment endt oal
locateahigher
percentageofthei ncomeundert heirowncont rolt
ot hefami l
yandchi l
drenthan
men.

12.Whatarethemosti mportantcharact
eri
sti
cst
hathav
eshapedBrazi
l
’seconomicandsocial
pr
ogressduringthelastt
hreedecades?
Answer:Discussionshouldi
ncludethelar
gedegr
eeofi
ncomeinequal
it
y,theneedf
orland

©2015Pear
sonEducat
ion,
Inc.
 Chapt
er1 I
ntr
oduci
ngEconomi
cDev
elopment
:AGl
obal
Per
spect
ive 7

ref
orm asaresultoftheduali
sti
cnat
ureofthel
andtenur
esystem andthe
envir
onmentalchall
engefacedbywhatisoneoftheworl
d’smostenvi
ronment
all
y
div
ersecountr
ies.

©2015Pear
sonEducat
ion,
Inc.
8 Todar
o/Smi
th •Economi
cDev
elopment
,Twel
ft
hEdi
ti
on

 Mul
ti
pleChoi
ce
1.Count
ri
est endtobeclassi
fi
edasmor eorl
essdev
elopedbasedon
a. t
helit
eracyrate.
b. t
hepov ert
yrate.
c. t
helevelofincomepercapita.
d. t
hetypesofgoodst heyproduce.
Answer:C

2.Whichofthef oll
owi
ngdemonst
rat
esi
nter
nat
ional
int
erdependence?
a. theoilshocks
b. thedebtcrisi
s
c. globalwarming
d. alloft
heabov e.
Answer :D

3.Asubsist
enceeconomyis
a. averylowi
ncomeeconomy.
b. aneconomyinwhichpeopl
emakewhattheyconsume.
c. aneconomyinwhichpeopl
erecei
vef
oodforpay.
d. al
loftheabove.
Answer:B

4.Devel
opmenteconomi csisthestudyoft
he
a. al
levi
ati
onofabsolutepoverty
.
b. tr
ansformat
ionofinsti
tuti
ons.
c. al
locati
onofresourcesindevel
opi
ngcount
ri
es.
d. al
loftheabove.
Answer:D

5.Devel
opmenteconomi csmusthaveascopewi dert
hantradi
ti
onal
economi
csbecause
a. val
uesandat ti
tudespl
ayli
ttl
eroleinthepaceofdevel
opment.
b. peopl
eindev elopi
ngsoci
eti
esdol essuti
li
ty-
maximi
zing.
c. tr
ansf
ormationofsociali
nsti
tuti
onsisnecessar
yfordevel
opment.
d. all
oftheabov e.
Answer:C

6.Agooddef init
ionoft
hemeani ngofdev el
opmenti
sthe
a. eli
minationofabsol
utepov er
ty.
b. i
mpr ovementinthequalit
yofl i
fe.
c. ful
fi
ll
mentoft hepotent
ialofindiv
idual
s.
d. all
oftheabov e.
Answer:D

©2015Pear
sonEducat
ion,
Inc.
 Chapt
er1 I
ntr
oduci
ngEconomi
cDev
elopment
:AGl
obal
Per
spect
ive 9

7.Whichoft hefoll
owingisnotani mpor t
antobj ecti
veofdev
elopment
?
a. increasesinpercapitaincome
b. theexpansionofav ail
ablechoices
c. increasesinindi
vi
dual andnationalself
-esteem
d. alloftheabov ear
ei mportantobjecti
vesofdev el
opment
Answer :D

8.TheMill
ennium DevelopmentGoalsincl
ude
a. el
iminatingthepropor
tionofpeopl
eli
vi
ngonl
esst
han$1perday
.
b. uni
versal pr
imaryeducati
on.
c. i
ncreasingexportsbyonehalf.
d. al
loftheabov e.
Answer:B

9.Thecor evaluesofdevel
opmentincl
ude
a. i
ncr easi
ngincomeperperson.
b. reducingtheinequal
i
tyofincome.
c. theabi l
i
tytomeetbasicneeds.
d. alloftheabove.
Answer :C

©2015Pear
sonEducat
ion,
Inc.