Multi-Level marketing class lectures_241044368-Lectures

Content type

User Generated

Subject

Business

Type

Note

Uploaded By

qbpznfgre1

Pages

Rating

Lecture notes: Economics of Development

Introduction

What is Development Economics ?

For people all around the world living in poverty it is important that countries in South East Asia such as

South Korea, Taiwan and China, as well as Brazil in South America recently have been able to get out of the

poverty trap. They are not so many, but there is a group of countries that have essentially completed the

transformation to become developed. I think, for countries in Africa such as the Gambia, it is relevant to

raise questions about the extent to which they can learn from experience of the newly industrialized

countries and if they are potential models for other countries to follow.

Another question arising is if economics can help us to better understand the process of development,

which is extremely complex, and if economics also can become an efficient tool for shaping adequate

development policies. Sometimes economists are criticized for being too narrow primarily focusing on the

task to increase economic growth, even if it is empirical evidence that economic growth often increase

inequality and, therefore, does not provide a sustainable solution for the poor. Furthermore, traditional

neoclassical economics have been developed to deal with developed economies emphasizing market

efficiency, while developing countries usually are lacking market institutions. Neoclassical economics

concerns the determination of equilibrium, while transformation from a developing to a developed

economy is characterized by disequilibrium processes and transactions out of (traditional) equilibrium.

In addition, with regard to understanding poverty and economic growth in Africa, it is extremely important

to understand the influence of geography; the intersection of climate, ecology and economic activity is

crucial. For example, since long, and in the Gambia, there has been a negative development of productivity

in agriculture which has depreciated the situation of the poor both in the rural and urban areas. A policy

breaking this trend must be based on analyses that can explain relations between poverty and

environmental destruction, for instance, deforestation destructing the quality of the soil. It links up with

the green revolution by including measures to increase the rate of technology diffusion that relies on

scientific discoveries of hybrid seed varieties.

In order to take account of the fact that poor countries differ from developed countries, development

economics also draws on other sciences than economics. When looking at the contribution by economic

science, we should admit that before the neoclassical school became mainstream, the classical economists

used the notion political economy instead of economics. This distinction is important when it comes to

development economics, which stresses the role of institutions. Accordingly, contemporary theory in the

field of development economics has sometimes pointed at poor governance as main cause of stagnation in

developing countries. It should be an important task to examine this explanation of why poverty persists

which cannot be done unless economic activity is viewed in its political context taking account of political

institutions.

Moreover, recently emphasis has been put on the importance of women for bringing about economic

change in Africa, which suggests that economic development should be seen in view of another important

institution: the extended family.

All in all, economists should recognize that mainstream, neoclassical economics is too narrow to address

issues on economic development. But also T/S view of political economy as concerned with the

relationships between politics and economics does not fully admit the importance of social and cultural

institutions, which were included in the classical economists’ understanding of political economy. For

example female genital cutting, which has a tremendous influence on the life of the women and their

ability to contribute to the development of the rural economy. A more complete understanding of

development economics recognizes that this field of study is rapidly evolving its own distinctive analytical

and methodological identity.

T/S are arguing that the ultimate purpose of development economics is to help us understand developing

economies in order to help improve the material lives of the majority of the global population. More

specifically, it is the study of how economies are transformed from stagnation to growth and from low-

income status to high-income status and to overcome problems of absolute poverty.

What do we mean by development

Not long ago, it was referred to poor countries, not as developing countries or economies, but as

underdeveloped. This was the ethnocentric perspective of the colonizers, who used the European culture,

which was considered as enlightened and as based on true knowledge, as a model for a developed Africa.

The colonizing states believed that they had a responsibility to transfer this culture, which was seen as

favorable to economic development. Inherent in this view was an idea that Africa had to pass the same

type of industrialization as Europe had done before. This kind of intellectual orientation is very interestingly

described by the Palestinian author Edward Said in a book called “Orientalism”.

Even if the way of referring to poor countries was changed, and they were now called developing countries,

the view of the development process was only slightly changed in the field of development economics.

Thus, proposed development policies have often focused on rapid industrialization, where manufacturing

and service industries increase at the expense of agriculture and rural development. Accordingly,

development has been synonymous to sustained growth in per capita income, i.e. output is growing

faster than the population. This measure brings increases in gross domestic product (GDI) into the fore,

but for the most part the well-being of the population has been in focus, which should be associated with

monetary growth of real per capita gross national income (GNI) (monetary growth of GNI per capita

minus the growth of inflation).

During the 1970s it became more and more obvious to those working in the field that even if the

economies were growing, a majority of the populations continued to be poor in combination with growing

inequality. Development was redefined instead emphasizing reduction or elimination of poverty,

inequality and unemployment within the context of a growing economy.

Furthermore, poverty is not just an assessment of income, but it is a fact of life that influence your self-

understanding as a person living a life that is not human as you are unable to control your hunger, diseases

and you know that you are unable to change this situation. This raises two questions about a how to

End of Preview - Want to read all 24 pages?

Access Now

Unformatted Attachment Preview

Lecture notes: Economics of Development Introduction What is Development Economics ? For people all around the world living in poverty it is important that countries in South East Asia such as South Korea, Taiwan and China, as well as Brazil in South America recently have been able to get out of the poverty trap. They are not so many, but there is a group of countries that have essentially completed the transformation to become developed. I think, for countries in Africa such as the Gambia, it is relevant to raise questions about the extent to which they can learn from experience of the newly industrialized countries and if they are potential models for other countries to follow. Another question arising is if economics can help us to better understand the process of development, which is extremely complex, and if economics also can become an efficient tool for shaping adequate development policies. Sometimes economists are criticized for being too narrow primarily focusing on the task to increase economic growth, even if it is empirical evidence that economic growth often increase inequality and, therefore, does not provide a sustainable solution for the poor. Furthermore, traditional neoclassical economics have been developed to deal with developed economies emphasizing market efficiency, while developing countries usually are lacking market institutions. Neoclassical economics concerns the determination of equilibrium, while transformation from a developing to a developed ...
Purchase document to see full attachment