Economic Development TodaroSmith_ch02

7/24/2019 Economic Development TodaroSmith_ch02

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Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Chapter 2

ComparativeEconomicDevelopment


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Copyright 2009 Pearson Addison-

Wesley. All rights reserved. 2-2

Comparative Economic Development

Vieed thro!gh the lens o" h!mandevelopment# the glo$al village appears

deeply $eteen the streets o" the haves andthose o" the have-nots.

%&DP#'!man Development (eport# 200)


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Common Characteristics o"developing co!ntries

*oer levels o" living and prod!ctivity

*oer levels o" h!man capital

'igher levels o" ine+!ality and a$sol!te poverty

'igher pop!lation groth rates ,reater social "ractionaliation

*arger r!ral pop!lation- rapid migration to cities

*oer levels o" ind!strialiation and man!"act!red eports

Adverse geography %nderdeveloped "inancial and other mar/ets

Colonial legacies- poor instit!tions etc.


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De"ining the Developing World

here are several classi"ication to de"inedeveloping orld.

World 1an/ classi"ied 20 economies ith apop!lation o" at least 30#000.

ran/s co!ntries on ,&P4capita in 2005

*oer 6ncome co!ntries 7*6C8 :) or less *oer middle income co!ntries 7*;C8

:) A&D 3


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W=(*D 1A&> C*A??6@6CA6=&

%pper middle income co!ntries 7%;C8

3


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%&DP C*A??6@6CA6=&

%&DP classi"ies co!ntries according to their

*evel o" h!man development incl!ding health

and ed!cation attainment.'!man Development 6ndeB A meas!re that

e+!ally eights average income #health and

ed!cational attainment


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;eas!ring Development "or !antitativeComparison across Co!ntries

,ross &ational 6ncome 7,&68

6t comprises ,DP pl!s the di""erence $eteen theincome o" domestic residents receive "rom a$road less

payment made to nonresident "or their services to thedomestic economy.

,ross Domestic Prod!ct 7,DP8

6n 2005 total ,DP o" the orld as


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Wesley. All rights reserved. 2-

;eas!ring Development "or!antitative Comparison across

Co!ntries 6n 2005# per capita income o" ?iterland had 3


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;eas!ring Development "or!antitative Comparison across

Co!ntries 6" *DC domestic prices are loer# PPP

meas!res o" ,&6 per capita ill $e higher

than estimated !sing "oreign echangerates as the conversion "actor


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?ome 1asic 6ndicators o"Development

'ealth

*i"e Epectancy

Ed!cation


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?ome 1asic 6ndicators o"Development

'D6 as a holistic meas!re o" living levels

'D6 ran/s all co!ntries on a scale o" ero7 loest h!man development8 to one 7 highest 'D8

1ased on three goals *ongevity as meas!red $y li"e epectancy at $irth

>noledgeB as meas!red eighted average o"

ad!lt literacy 7to-third8 and mean years o"schooling 7one-third8

?tandard o" living- (eal per capita on PPP $asis


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'!man Development inde

'D6437income inde8F437li"e epectancyinde8F 437 ed!cation inde8

'D6 remind !s that development meanh!man development# not G!st higherincome.


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C(66C6?; =& 'D6

,ross enrollment overstate the amo!nt o"schooling $eca!se in many co!ntries ast!dent ho $egins primary school isco!nted as enrolled itho!t consideringhether the st!dent drops o!t at somestage.

E+!al eight is given to all threecomponent.

&o attention to the role o" +!ality


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'D6 also varies "or gro!ps ithin co!ntries

'D6 also varies $y region in a co!ntry

'D6 also re"lects r!ral-!r$an di""erences


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a$le 2.3 Commonality andDiversityB ?ome 1asic 6ndicators


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@ig!re 2.3 '!man DevelopmentDisparities ithin ?elected Co!ntries


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@ig!re 2.3 '!man Development Disparitiesithin ?elected Co!ntries 7contin!ed8


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a$le 2.< '!man Development "or23 ?elected Co!ntries 7200< Data8


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a$le 2.< '!man Development "or 23?elected Co!ntries 7200< Data8

7contin!ed8


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a$le 2.5 '!man Development 6ndeVariations "or ?imilar 6ncomes 7200< Data8


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0 Characteristics o" the DevelopingWorldB Diversity ithin Commonality

. *oer levels o" living and prod!ctivity

2. *oer levels o" h!man capital 7health#ed!cation# s/ills8

3. 'igher *evels o" 6ne+!ality and A$sol!tePoverty A$sol!te Poverty

World Poverty


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@ig!re 2.< ?hares o" ,lo$al 6ncome#2005


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a$le 2.) he 2 ;ost and *eastPop!lated Co!ntries and heir Per

Capita 6ncome# 2005


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@ig!re 2.5 %nder-5 ;ortality (ates#990 and 2005


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a$le 2.: Primary ?chool Enrollmentand P!pil-eacher (atios


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@ig!re 2.) Correlation $eteen %nder-5 ;ortality and ;otherHs Ed!cation


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@ig!re 2.: People *iving in Poverty#9-2002


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a$le 2. Cr!de 1irth (ates Aro!nd theWorld# 2005


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5. ,reater ?ocial @ractionaliation

). larger (!ral Pop!lations $!t (apid (!ral-

to-%r$an ;igration :. *oer levels o" 6nd!strialiation and

;an!"act!red Eports

. Adverse ,eography (eso!rce endoments


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a$le 2.9 he %r$an Pop!lation inDeveloped Co!ntries and Developing(egions


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a$le 2.0 ?hare o" the Pop!lationEmployed in the 6nd!strial ?ector in ?electedCo!ntries# 2000-2005 78


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9. %nderdeveloped @inancial and =ther mar/ets

6mper"ect mar/ets

6ncomplete in"ormation

0. Colonial *egacy and eternal dependence

6nstit!tions

Private property

Personal taation

aes in cash rather than in /ind


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*o 6ncome Co!ntries oday AndDeveloped Co!ntries hen

Eight di""erences Physical and h!man reso!rce endoments

Per capita incomes and levels o" ,DP

Climate

Pop!lation sie# distri$!tion# and groth

'istoric role o" international migration

6nternational trade $ene"its ?cienti"ic4technological research

E""icacy o" domestic instit!tions


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ConvergenceI

Evidence o" !nconditional convergence ishard to "ind

Per capita income convergenceI


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@ig!re 2. Convergence among =ECDCo!ntries $!t Divergence in the World

as a Whole


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@ig!re 2.9 Per Capita ,DP ,roth in25 Developing Co!ntries# 995-2005


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@ig!re 2.0 ,roth Convergence andA$sol!te 6ncome Convergence


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*ong-(!n ca!ses o" ComparativeDevelopment

?chematic (epresentation ,eography

6nstit!tional +!ality- colonial and post-colonial Colonial legacy- pre colonial comparative

advantage

Evol!tion and timing o" E!ropean development

6ne+!ality- h!man capital

ype o" colonial regime


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@ig!re 2. ?chematic (epresentationo" *eading heories o" Comparative

Development


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(ole o" 6nstit!tions

Acemogl!# Johnson# and (o$insonHsKreversal o" "ort!neL and etractiveinstit!tions

1annerGee and 6yerHs # Kproperty rightsinstit!tionsL. *andlords vers!s c!ltivators


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Case ?t!dyB Pa/istan

A


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Case ?t!dyB 1angladesh


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Concepts "or (evie

A$sol!te poverty

1rain drain

Cr!de $irthrate

Convergence

Death rate

Dependency $!rden

Developed orld

Economic 6nstit!tions @oreign echange

,ross domestic prod!ct7,DP8

,ross national prod!ct7,&P8

'!man Development

6nde 7'D68 6mper"ect mar/ets

6ncome gap

6ncome ine+!ality

6ncomplete in"ormation


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Concepts "or (evie 7contHd8

6n"ant mortality rate

6nternational poverty line

*a$or prod!ctivity

*east developedco!ntries 7**DCs8

*evels o" living

*o income co!ntries7*6Cs8

;aln!trition

;iddle-incomeco!ntries 7;6Cs8

;ied economicsystems

&ely ind!strialied

co!ntries 7&6Cs8

Physical reso!rces


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