Subsistence Economy Globalization

- An economy in which production is mainly for personal consumption and - The increasing integration of national economies into expanding
the standard of living yields little more than basic necessities of life— international markets.
food, shelter, and clothing.
Economics
Development
- social science
- The process of improving the quality of all human lives and capabilities - concerned with human beings and the social systems by which they
by raising people’s levels of living, self-esteem, and freedom. organize their activities to satisfy basic material needs (e.g., food,
shelter, clothing) and nonmaterial wants (e.g., education, knowledge,
Developing countries spiritual fulfillment
- Countries of Asia, Africa, the Middle East, Latin America, eastern Europe,
and the former Soviet Union, that are presently characterized by low Values Principles
levels of living and other development deficits. Used in the development
literature as a synonym for less developed countries. - standards, or qualities that a society or groups within it considers
worthwhile or desirable.
Traditional Economics

- is concerned primarily with the efficient, least-cost allocation of scarce

productive resources and with the optimal growth of these resources Attitudes
over time so as to produce an ever-expanding range of goods and
services. - The states of mind or feelings of an individual, group, or society
- An approach to economics that emphasizes utility, profit maximization, regarding issues such as material gain, hard work, saving for the future,
market efficiency, and determination of equilibrium. and sharing wealth.

Political Economy Institutions

- the social and institutional processes through which certain groups of - Norms, rules of conduct, and generally accepted ways of doing things.
economic and political elites influence the allocation of scarce productive Economic institutions are humanly devised constraints that shape
resources now and in the future, either for their own benefit exclusively human interactions including both informal and formal “rules of the
or for that of the larger population as well. game” of economic life in the widely used framework of Douglass North.
- with the relationship between politics and economics, with a special
Without such a perspective and some agreed measurement criteria, we
emphasis on the role of power in economic decision making.
would be unable to determine which country was actually developing and which
Development Economics was not.

- The study of how economies are transformed from stagnation to growth Traditional Economic Measures
and from low income to high-income status, and overcome problems of
- development has traditionally meant achieving sustained rates of growth
absolute poverty
of income per capita to enable a nation to expand its output at a rate
- economic, cultural, and political requirements for effecting rapid
faster than the growth rate of its population.
structural and institutional transformations of entire societies in a
- Income per capita is the total gross national income of a country
manner that will most efficiently bring the fruits of economic progress to
divided by total population.
the broadest segments of their populations.
- Levels and rates of growth of “real” per capita gross national income
More developed countries (MDCs) (GNI) (monetary growth of GNI per capita minus the rate of inflation) are
then used to measure the overall economic well-being of a population—
- The now economically advanced capitalist countries of western Europe, how much of real goods and services is available to the average citizen
North America, Australia, New Zealand, and Japan. for consumption and investment.
 - More focused on industrialization 1. To increase the availability and widen the distribution of basic life-
- Gross domestic product (GDP) is the total final output of goods and sustaining goods such as food, shelter, health, and protection.
services produced by the country’s economy, within the country’s 2. To raise levels of living, including, in addition to higher incomes, the
territory, by residents and nonresidents, regardless of its allocation provision of more jobs, better education, and greater attention to
between domestic and foreign claims. cultural.
3. To expand the range of economic and social choices available to
Amartya Sen identifies five sources of disparity between (measured) real individuals and nations by freeing them from servitude and dependence
incomes and actual advantages: first, personal heterogeneities, such as not only in relation to other people and nation-states but also to the
those connected with disability, illness, age, or gender; second, environmental forces of ignorance and human misery.
diversities, such as heating and clothing requirements in the cold, infectious
diseases in the tropics, or the impact of pollution; third, variations in social
climate, such as the prevalence of crime and violence, and “social capital”;
fourth, distribution within the family: Economic statistics measure incomes “There will be only one future—or none at all.”
received in a family because it is the basic unit of shared consumption, but
family resources may be distributed unevenly, as when girls get less medical
attention or education than boys do. Fifth, differences in relational
perspectives, for example, to be able to “appear in public without shame” may
require higher standards of clothing and other visible consumption in a richer
society than in a poorer one.

Richard Layard identifies seven factors that surveys show affect average
national happiness: family relationships, financial situation, work, community
and friends, health, personal freedom, and personal values.

Three Core Values of Development

Millenium Development Goals
Sustenance: The Ability to Meet Basic Needs All people have certain basic needs
without which life would be impossible. These life-sustaining basic human needs
include food, shelter, health, and protection

Self-Esteem: To Be a Person A second universal component of the good life is

self-esteem—a sense of worth and self-respect, of not being used as a tool by
others for their own ends. A feeling of worthiness.

Freedom from Servitude: To Be Able to Choose Freedom here is to be understood

in the sense of emancipation from alienating material conditions of life and from
social servitude to nature, other people, misery, oppressive institutions, and
dogmatic beliefs, especially that poverty is predestination. Freedom involves an
expanded range of choices for societies and their members together with a
minimization of external constraints in the pursuit of some social goal we call
development.

The Three Objectives of Development