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Comparative Economic Development

The document defines developing countries based on income levels, human development, and international indebtedness, highlighting ten common features such as lower productivity, higher inequality, and underdeveloped markets. It discusses key indicators of development, including the Human Development Index (HDI), purchasing power parity, and gross national income. Additionally, it introduces the New Economic View of Development and Amartya Sen's Capability Approach, emphasizing the importance of human welfare and the ability to function over mere income measures.

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2 views4 pages

Comparative Economic Development

The document defines developing countries based on income levels, human development, and international indebtedness, highlighting ten common features such as lower productivity, higher inequality, and underdeveloped markets. It discusses key indicators of development, including the Human Development Index (HDI), purchasing power parity, and gross national income. Additionally, it introduces the New Economic View of Development and Amartya Sen's Capability Approach, emphasizing the importance of human welfare and the ability to function over mere income measures.

Uploaded by

jazlynfayebelen
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Comparative Economic

Development
Defining the Developing World

by per capita income

developing countries are those with low-, lower-middle, or upper-middle incomes

level of human development, including health and education attainments

through their degree of international indebtedness

emerging markets was introduced at the international finance corporation


suggest progress

10 important features that developing countries tend to have in common, on


average, in comparison with the developed world

1. Lower levels of living and productivity

2. Lower levels of human capital

3. Higher levels of inequality and absolute poverty

4. Higher population growth rates

5. Greater social fractionalization

6. Larger rural populations but rapid rural-to-urban migration

7. Lower levels of industrialization

8. Adverse geography

9. Underdeveloped financial and other markets

10. Lingering colonial impacts such as poor institutions and often external
dependence

Basic Indicators of Development

Real Income - purchasing power

Health - as measured by life expectancy, undernourishment, and child morality

Comparative Economic Development 1


Education - educational attainments as measured by literacy and schooling

Human Development Index (HDI) - index measuring national socioeconomic


development, based on combining measures of education, health, and adjusted real
income per capital

based on three goals or end products of development

1. A long and healthy life as measured by life expectancy at birth

2. Knowledge as measured by combination of average schooling attained by adults


and expected years of schooling for school-age children

3. A decent standard of living as measured by real per capita gross domestic


product adjusted for the differing purchasing power parity of each country’s
currency to reflect cost f living and for the assumption o diminishing marginal
utility of income

Purchasing Power Parity - defined as the number of units of foreign country’s


currency required to purchase the identical quantity of goods and services in the
local developing country market as $1 would buy in the United States

- calculation of GNI using a common set of international prices for all goods and
services, to provide more accurate comparisons of living standards

Gross National Income - total domestic and foreign output claimed by residents of a
country, consisting of gross domestic product (GDP) plus factor incomes earned by
foreign residents, minus income earned in the domestic economy by non-residents

Value Added - portion of product’s final value that is added at each stage of
production

Depreciation (of the capital stock) - wearing out of equipment, buildings,


infrastructure. and other forms of capital, reflected in write-offs to the value of the
capital stock

Capital Stock - total amount of physical goods existing at a particular time that
have been produced for use in the production of other goods and services

Comparative Economic Development 2


Gross Domestic Product (GDP) - measures the total value for the final use of
output produced by an economy, by both residents and non-residents

The New Economic View of Development

During the 1970s, economic development came to be redefined in terms of the


reduction or elimination of poverty, inequality, and unemployment within the
context of a growing economy

“Redistribution from growth” became a common slogan

Amartya Sen’s Capability Approach

“Capability to function” is what really matters for status as a poor or non-poor


person

As Sen insisted on, “the expansion of commodity productions are valued,


ultimately, not for their own sake, but as means to human welfare and freedom.”

“Sen argues that poverty cannot be properly measured by income or even by


utility as conventionally understood”

“What matters fundamentally is not the things a person has — or the feelings
these provide — but what a person is, or can be, and does, or can do.”

… from the wisdom of Amartya Sen


“What matters for well-being is not just the characteristics of commodities consumed,
as in the utility approach, but what use the consumer can and does make of
commodities.”

Functioning

what a person does )or can do) with the commodities of given characteristics
that they come to possess or control

a valued “being or doing”, and in Sen’s view, functioning that people have
reason to value can range from being healthy, being well-nourished, and well
clothed, to being mobile, having self-esteem, and “taking part in the life of the
community”

Comparative Economic Development 3


Comparative Economic Development 4

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