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Chapter 2
ComparativeEconomicDevelopment
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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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;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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0 Characteristics o" the DevelopingWorldB Diversity ithin Commonality
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$le 2.0 ?hare o" the Pop!lationEmployed in the 6nd!strial ?ector in ?electedCo!ntries# 2000-2005 78
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0 Characteristics o" the DevelopingWorldB Diversity ithin Commonality
9. %nderdeveloped @inancial and =ther mar/ets
6mper"ect mar/ets
6ncomplete in"ormation
0. Colonial *egacy and eternal dependence
6nstit!tions
Private property
Personal taation
aes in cash rather than in /ind
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*o 6ncome Co!ntries oday AndDeveloped Co!ntries hen
Eight di""erences Physical and h!man reso!rce endoments
Per capita incomes and levels o" ,DP
Climate
Pop!lation sie# distri$!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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