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(Ecope05) Chapter 01 - 081539

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12 views3 pages

(Ecope05) Chapter 01 - 081539

Uploaded by

felicildarobert7
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ECOPE05

Economic
Development
Module

Prepared by:
Dina Campos
CBA Faculty
CHAPTER 1
PRINCIPLES AND CONCEPTS OF
ECONOMIC DEVELOPMENT
Learning Objectives:
Define economic development and distinguish it from economic growth.
Identify key indicators of economic development.
Explain the role of various economic theories in understanding economic development.
Analyze the impact of structural economic change on development.
Discuss the challenges faced by developing countries.
Evaluate the effectiveness of different development strategies.

Development economics focuses primarily on the poorest two-thirds of the world’s


population. These poor are the vast majority, but not all, of the population of developing
countries, which comprise 82 percent of the world’s population. Many of them are
inadequately fed and housed, in poor health, and illiterate. Calculations based on national
accounts and income distribution indicate that about 700–1000 million (10–15 percent) of
the world’s 6.5 billion people (5.3 billion in developing countries) are poor or living on no more
than $1 a day.1 Most Americans, Canadians, and Britons have never seen poverty like that, the
overwhelming majority of which is in sub-Saharan Africa, South Asia, and East Asia.

Introduction to Economic Development

What is Economic Development?


Economic Development is a process of improving the economic and social well-being of a
nation's people.
It involves creating jobs, reducing poverty, and ensuring access to essential services like
healthcare and education.

Key Indicators of Economic Development:


Gross Domestic Product (GDP): Total value of goods and services produced within a
country's borders in a specific period.
Gross National Product (GNP): Total value of goods and services produced by a country's
citizens, regardless of location.
Human Development Index (HDI): Measures a country's overall achievement in three basic
dimensions of human development: a long and healthy life, education, and a decent standard
of living.
Economic Theories and Development
Classical Economics:
Focuses on the role of capital accumulation and technological progress in driving economic
growth.
Emphasizes the importance of free markets and minimal government intervention.

Keynesian Economics:
Argues that government intervention can stimulate economic growth, especially during
recessions.
Advocates for government spending on infrastructure and social programs.

Neoclassical Economics:
Emphasizes the role of efficient allocation of resources and market mechanisms in promoting
economic growth.
Focuses on individual choice and competition.

Structural Change and Development


Structural Change: The transformation of an economy from a primarily agricultural and rural
society to an industrialized and urban one.
Lewis Two-Sector Model: Explains the process of structural change, involving the movement of
labor from the traditional agricultural sector to the modern industrial sector.

Challenges of Economic Development

Poverty: A state of deprivation in which people lack the basic necessities of life.
Inequality: Unequal distribution of wealth and income among individuals or groups within a
society.
Unemployment and Underemployment: Lack of sufficient job opportunities.
Environmental Degradation: Damage to the environment caused by human activities.

Development Strategies
Import Substitution Industrialization (ISI): A strategy that emphasizes domestic production of
goods that were previously imported.
Export-Oriented Industrialization (EOI): A strategy that promotes economic growth by
expanding exports.
Sustainable Development: A development approach that meets the needs of the present
without compromising the ability of future generations to meet their own needs.

Economic development is a complex process influenced by various factors, including


economic theories, structural change, and government policies. By understanding the
principles and concepts of economic development, we can better appreciate the
challenges faced by developing countries and work towards sustainable and equitable
solutions.

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