2. ๏ The increase of national wealth improves quality of life?
✓ Even if the indicators of the national wealth can show development,
though they don’t provide proper info about the allocation of: Free
health, education services, employability, κ.ο.κ. (QoL)
๏ Does the increase of national wealth contributes to human
development?
✓ Human Development Report 1996, published by the United Nations
Development Program, “human development is the end—economic
growth a means.”
What is development?
3. What is development?
๏ Historically speaking: Economic growth hasn’t lead to human
development (unemployment, weakened democracy,
overconsumption of natural resources)
๏ if environmental and social/human losses resulting from economic growth
turn out to be higher than economic benefits (additional incomes earned by
the majority of the population), the overall result for people’s wellbeing
becomes negative.
๏ According to the Human Development Report 1996, “during 1960–1992 not
a single country succeeded in moving from lopsided development with slow
human development and rapid growth to a virtuous circle in which human
development and growth can become mutually reinforcing.”
4. Sustainable Development
Sustainable Development is a new term:
Classical definition given by the United Nations World Commission
on Environment and Development in 1987 development is
sustainable if it “meets the needs of the present without
compromising the ability of future generations to meet their
own needs.”
Balancing those three diverse objectives = challenge for every
country:
Economic
Environmental
Social
5. International cooperation is necessary for sustainable development.
War and poverty are obstacles!
Sustainable Development
6. Comparing Levels of Development
Past: Countries are unequally endowed with natural
resources
Present: Α wealth of natural resources is not the most
important determinant of development success
Conclusion main indicator of the level of economic
development: productivity
physical capital, human capital, and natural capital
7. Calculation of productivity
Gross domestic product (GDP): the total final output of all
goods and services produced in a single year within a
country’s boundaries
Gross national product (GNP): GDP +incomes received by
residents from abroad
1. GDP ή GNP = wages plus interest plus profits plus rents.
2. GDP ή GNP = consumption plus investment plus
government purchases of goods and services, and net
exports (exports minus imports).
8. Per capita income
𝐆𝐍𝐏/𝐆𝐃𝐏
𝒄𝒐𝒚𝒏𝒕𝒓𝒚′ 𝒔 𝒑𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏
= per capita GNP/GDP
Disadvantages GNP and GDP per capita: They do not
show:
pollution, environmental degradation, and resource
depletion
unpaid work
the distribution of income and incidence of poverty
9. Purchasing power parity (PPP)
Number of units of a country’s currency required to buy the same
amount of goods and services in the domestic market as one dollar
would buy in the United States
nominal GNP per capita
Real GNP per capita : an indicator adjusted for the difference in prices for the
same goods and services between a country and the United States
Developing countries:
Real > Nominal GNP per capita
≠ Developed
10. Grouping Countries by Their Level of Development
Different criteria to group countries by their level of
development
o Most popular:
• Developed
• Developing
o The World Bank: GNP per capita (α) low-
income, (β) middle- income, (γ) upper-middle-income,
(δ) high-income,
11. Grouping Countries by Their Level of Development
The relatively accurate classification of countries into
“developing” and “developed” based on their per capita
income does not, however, work well in all cases:
- Israel, Kuwait, Singapore, and the United Arab Emirates.:
These countries are considered developing because of
their economic structure or because of the official opinion
of their governments, although their incomes formally
place them among developed countries
12.
13. GDP Growth
• 1965-1999 the average annual growth rate was 4.1 percent in low-
income countries.
• Will the poor countries reach the rich one? No, the gulf between the
average GNP per capita in developing and developed countries
continues to widen, because of the population growth.
14.
15. Predictions
Only 10 of the
developing countries
will reach in the next
100 years the
developed countries.
The poorer a country
is, the harder it is to
maintain the high
volume of investment
Such economic
growth can be socially
unsustainable–leading
to social stress and
conflict, detrimental to
further growth
16. • Soubbotina P. T. & Sheram K.A. (2000). Beyond economic growth, Meeting the
Challenges of Global Development. Washington, D.C.: The World Bank.
Reference
