Economic Development - Chapter 26

1. DEVELOPMENT ECONOMICS
CHAPTER 26: INTRODUCTION
TO ECONOMIC
DEVELOPMENT
Instructor: Monica Ebenezer
Course: IBDP

2. What is Development
Economics?
 The modern era of Globalization has induced an
increased health, wealth and comfort. People
have longer life spans. A parallel fact is 4/5th of
world’s population are in developing countries.
Having less than 1/5th of the world’s total
income. Many are in abject poverty.
 DEVELOPMENT Economics is a field of enquiry
that attempts to understand and address this
disparity.
 When a sector makes progress very quickly, it is
encouraging. Lessons learnt from such success
can be applied to other unlucky billions.
 ECONOMIC DEVELOPMENT – sustainable
increase in the living standard of a country
which is typically characterized by increase in
life span, education level and income.

3. Development over the years:
 Growing economics improved the
lives of most citizens. . Emphasis is
on investment in infrastructure,
creating productive capacity,
stimulating spending and increase
income level.
 Development is a broad measure of
economic well being that takes into
account factors beyond monetary
income (health, education and other
social indicators)

4. DEVELOPMENT Economics
 DEVELOPMENT Economics -> Branch
of economic theory grown up around
the idea to understand what makes
poor countries poor and rich
countries rich and make policy
changes that turn poor to rich
 UN created the UN DEVELOPMENT
PROGRAM (UNDP)in 1966 that brought
together development related agencies.
 By 1971, consolidated all such agencies
together funded by voluntary
contributors of UN Members.

5. The UNDP
 UNDP did a funded research project in
resource planning that dealt with
 Training Institutes
 Application of Modern Technology to
development.
 Building of economic and social
infrastructure.
 In 1990, Influenced BY Amartya Sen ,
The UNDP compiled and published
the “HUMAN DEVELOPMENT
INDEX”
 The HDI gives a broader evaluation of
economic well-being and became the
standard international benchmark
measure for quality of life

6. The UNDP (Contd…)
 After 1990, the HDI introduction
gathered monetum and culminated
into the UNDP’s “Millennium
Development Goals (MDG) Project”
which was an ambitious effort to
draw attention & resources to the
struggle of poor countries.

7. Growth and Development
 Economic growth -> increase in rGDP
over the previous year.
 Economists refine and clarify the idea-
measure it against population size and
relative spending power.
 Growth -> more money and activity in the
system
 Employment -> Resources used
effectively, something going right with the
system.
 Recession -> Decreased growth and
reduced economic size which triggers
attention and policy changes.

8. Development
 Changes in aspects of people’s lives
in many dimensions.
 Primary focus of Development
Economics
 Reduced poverty.
 Increased income amongst the world’s
poorest.
 Improvement of general living stds (Long
Life, General health, education
achievement and opportunity, measures
of income, employment in poor
countries)

9. Economic Growth
 Growth of actual production
 Growth of potential production
 Increase or shift to the right of LRAS
 Shift to the right of a country’s PPF

10. Sources of Economic Growth
1. The Natural Resource Base: Some
blessed with abundant natural
resource(bounty, wealth).wealth is
increased resources
2. Physical Capital: Land, building,
machinery, vehicle, offices and
equipment. Resources to purchase->
Savings. Intellect to improve-> highly
educated workforce.
3. Appropriate Technology
4. Human capital
5. Institutional factors