Chapter 1 DF

INTRODUCING ECONOMIC
DEVELOPMENT: A GLOBAL
PERSPECTIVE
Chapter 1
INTRODUCTION
 Two pictures of the developing world
 Rural Africa vs. China
 Great development drama
2
1.1 INTRODUCTION TO SOME OF THE WORLD’S
BIGGEST QUESTIONS
 Why do living conditions differ so drastically for people across different
countries and regions, with some so poor and others so rich?
 Why are there such disparities not only in income and wealth, but also
in health, nutrition, education, freedom of choice, women’s autonomy,

environmental quality, access to markets, security, and political voice?
 Why is output per worker many times higher in some countries than
others?
 Why do workers in some countries have fairly secure, formal jobs with
regular, predictable pay, while in other countries such jobs are

extremely scarce and most work in informal settings with fluctuating
and insecure earnings?
 Why are populations growing rapidly in some countries, while on the
3
verge of shrinking in others?
DEVELOPMENT
 The process of improving the quality of all human lives and
capabilities by raising people’s levels of living, self-esteem, and
freedom.
4
1.2 HOW LIVING LEVELS DIFFER AROUND THE WORLD
 Often, countries as a whole are divided into four groups “stylized strata”
based on their average levels of income or other standards of well-being,
introduced in the following section.
1. Bottom:
 Extreme income poverty
 Income line under $1.90 per day
 Subsistence economy
 Remote rural areas
 Bad education
2. Second-lowest:
 Extremely poor
 Twice as rich as the bottom,
 Have around 3.80 dollars everyday per person
 5
Urban or rural areas
 Tap-water, but outside
1.2 HOW LIVING LEVELS DIFFER AROUND THE WORLD
(CONT’D)
3. Second-highest
 Middle income
 15 dollars everyday per person (more than 3/4 of world population is
below that)
 Urban areas
 Kids will go to post-primary school, but unlikely to finish
 Tapwater in their house
4. Highest stratum
 75 dollars per day per person
 Plenty of goods, high speed internet, smartphones, an array of
appliances
 A car per each adult 6
1.3 HOW COUNTRIES ARE CLASSIFIED BY THEIR
AVERAGE LEVELS OF DEVELOPMENT: A FIRST LOOK
 Countries are often classified by levels of income and human
development, as we examine in detail in the next chapter
 The World Bank classifies countries according to four ranges of
average national income: Low, Lower-Middle, Upper-Middle, and

High.
 LIC: GNI per capita $1,145 or less in 2023
 LMC: GNI per capita between $1,146 and $4,515; ($2860 in BD in 2023)
 UMC: GNI per capita between $4,516 and $14,005
 HIC: GNI per capita more than $14,005.
7
1.3 HOW COUNTRIES ARE CLASSIFIED BY THEIR
AVERAGE LEVELS OF DEVELOPMENT: A FIRST LOOK
 Gross national income (GNI): The 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
nonresidents.
 GDP is the total market value of all finished goods and services
produced within a country in a set time period. GNI is the total

income received by the country from its residents and businesses
regardless of whether they are located in the country or abroad.
8
1.4 ECONOMICS AND DEVELOPMENT STUDIES
 Development economics: The study of how economies are
transformed from stagnation to growth and from low- income to high-
income status, and overcome problems of extreme poverty.
 Development economics incorporates research in political economy and
institutional, behavioural and experimental economics; it overlaps and
links with other subfields including labour, public, urban, agricultural,
environmental, and international economics.
 Development finance is the efforts of local communities to support,
encourage and catalyze expansion through public and private investment
in physical development, redevelopment and/or business and industry.
 In addition to traditional topics in economics such as the efficient
allocation and growth of productive resources, development economics
must also address the economic, social, political, and institutional 9
mechanisms.
1.4.2 THE CENTRAL ROLE OF WOMEN
 Development scholars generally view women as playing a central
role in the development drama, which must be the first thought
rather than an “afterthought.”
 Globally, women tend to be poorer than men; they are also more
deprived in health, education and in freedoms in all its forms.

 To make the biggest impact on development, then, a society
must empower and invest in women.

 Today, most development specialists conceive of development as
a multidimensional process involving major changes in social

structures, popular attitudes, and national institutions etc.
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INTRODUCING ECONOMIC

 Great development drama

in health, nutrition, education, freedom of choice, women’s autonomy,

regular, predictable pay, while in other countries such jobs are

average national income: Low, Lower-Middle, Upper-Middle, and

 UMC: GNI per capita between $4,516 and $14,005

 HIC: GNI per capita more than $14,005.

produced within a country in a set time period. GNI is the total

deprived in health, education and in freedoms in all its forms.

must empower and invest in women.

a multidimensional process involving major changes in social

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