Basic concepts of Development: Lecture Note


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Basic concepts of Development: Lecture Note

  1. 1. The Basic Concepts of Development: Lecture Note Henok Teka 1
  2. 2. Outline: Definitions and Meaning of Development Measures of Development Core values of Development Objectives of Development Levels of Development BASIC CONCEPTS OF DEVELOPMENT 2
  3. 3. Meaning of Development Development/Economic Development/ is a concept tied to the demise of feudalism and the evolution of capitalism. TRADITIONAL ECONOMIC MEANING: - There is a stress on the industrialization often at the expense of agriculture and rural development. - DEVELOPMENT is seen as an economic phenomena in which rapid gains in overall growth would either trickle down to the masses in the form of jobs and other economic opportunities. - Development: is the CAPACITY of the national economy, whose initial economic condition has been more or less static for a long time to GENERATE and SUSTAIN an annual increase in its GROSS NATIONAL PRODUCT at rates of 5% to 7% 3
  4. 4. Meaning CNTD’ 4 NEW ECONOMIC VIEW: - DEVELOPMENT is the reduction or elimination of poverty, inequality and unemployment within the context of a growing economy. - The development of PEOPLE rather than development of things. - The Challenge of Dev’t is Improved quality of life. - Development means less poverty, cleaner environment, more equal opportunity, greater individual freedom and a richer cultural life. - Therefore, Development is a multi dimensional process involving changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of poverty.” (Todaro and Smith, 2006) - Development is both a physical reality and a state of mind for attaining a better life.
  5. 5. Meaning CNTD’ - Sen’s “Capabilities” Approach: 1985  Economic growth is not an end in itself and has to enhance the lives people lead and the freedoms that they enjoy  Capability to function is what matters for status as a poor/non-poor person and it goes beyond availability of commodities  Capabilities: “freedom that a person has in terms of the choice of his functionings,…”  Functioning is what a person does with commodities of given characteristics that they come to possess/control. The concept of functioning reflects the various things a person may value doing. 5
  6. 6. How is Development measured? 6
  7. 7. Measurement CNTD 7 Growth measurements Economic growth: the value of output of goods and services within a year. Indicators:  GDP – The value of output produced within a country during a time period  GNP – The value of output produced within a country plus net property income from abroad  GDP/GNP per head/per capital: Takes account of the size of the population  Real GDP/GNP: Accounts for differences in price levels in different countries  PPP Measure: the number of units of a country’s currency required to purchase the same basket of goods and services in the local market that a US $1 would buy in the USA. Drawback of growth indicators: Reliability of data? Distribution of income? Quality of life? Black/informal economy?
  8. 8. Development: incorporates the notion of a measure of the welfare of humans in a society. As such it is a normative concept – open to interpretation and subjectivity It may also incorporate measures such as (other than listed above):  National Product per person, Occupational Structure of the Labor Force, Consumption of Energy per Person, Productivity per Worker, Transportation & Communication per person, Consumption of Manufactured Metal per Person,  Other Rates- Literacy, Caloric intake, % of income spent on food, Amount of savings per person…  Longevity – Life expectancy  Knowledge – Access to Education, literacy rates  Standard of living – GDP per capita: Purchasing Power Parity (PPP) HDI Measures CNTD 8
  9. 9. In short, development can be measure through three general variables: Economic indicators of development--GNP/GDP, Per capita income, value added, employment structure etc. Social indicators of development--education, literacy, health, welfare Demographic indicators of development--life expectancy, infant mortality, rate of natural increase, birth rate, doubling time Measurement CNTD Other indicators 9
  10. 10. Core Values of Development Three basic core values as a practical guideline for understanding development are:  SUSTENANCE: The ability to meet basic needs - When life sustaining basic human needs like food, shelter, health and protection are absent UNDERDEVELOPMENT exists. Purpose of Development is to create an environment in which all people can expand their capabilities and opportunities can be enlarged for both the present and future generations  SELF-ESTEEM: To be a Person - Self-Esteem is having a sense of worth and self-respect, of not being used as a tool by others for their own ends. DEVELOPMENT is legitimized as a goal because it is an important perhaps even indispensable, way of GAINING ESTEEM.  FREEDOM FROM SERVITUDE: To be able to choose - FREEDOM is to be understood in the sense of EMANCIPATION from alienating material conditions of life and from social servitude to nature, ignorance, other people, misery, institutions and dogmatic beliefs. 10
  11. 11. Objectives of Development  Three Objectives of Development: 1. To increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health and protection. 2. To raise levels of living including in addition to higher incomes, the provision of more jobs, better education and greater attention to cultural and humanistic values , all of which will serve not only to enhance material well-being but also to generate greater individual and national self-esteem. 3. To expand the range of economic and social choices available to individuals and nations by freeing them from servitude and dependence not only in relation to other people and nation states but also to the forces of ignorance and human misery.11
  12. 12. The level of Development - Terms to explain the level of development Developed/Developing or Underdeveloped LDC/MDC/NIC North/South (vs. East/West) First/Second/Third/Fourth World Transition economies Emerging economies (The Brandt Line) The distribution of MDC and LDC 12
  13. 13.  North-South Gap-most countries in the Core are above 30 degrees latitude  Viewed from a Polar Projection-more countries are clustered in an inner core, while less developed countries are relegated to a periphery or outer ring.  20% of the World’s population controls 85% of the wealth  Poorest 20% lives in the Southern Hemisphere Levels of Development CNTD… 13
  14. 14. Immanuel Wallerstein’s ‘Core-periphery model’ - It is a new approach to developed and developing or underdeveloped idea  Core-the nations with a high level of prosperity with dominant economies globally - High level of education, salary and technology. It generate more wealth in the world economy.  Periphery-poor nations that are dependent on the core as markets for raw materials and sources of technology - Low level of education, salary and technology. It generate less wealth in the world economy  Semi-Periphery-better off than periphery, but still dominated by the core to some degree - Exploited by Core but they exploit the Periphery. Serve as a buffer between core and periphery. 14
  15. 15. Conditions in LDCs • High birth rates, moderate death rates and low life expectancy, High infant mortality rates- large population under age 15 yrs. • Poor health care & shortage of doctors, Poor sanitation, lack of fresh and clean water, Poor nutrition and protein deficiency are common. • Low per capita income with many women & children doing hard manual labor • High illiteracy rate with low levels of education, Great disparity between rich & poor, small middle class, Urban areas overcrowded, lack of services, rapid urban migration. • Subsistence farming on small landholdings •Affected by a condition of poverty cycle (Poverty cycle page 17)  Political instability and corruption Exploitation of natural resources and workers regardless of consequences Dependence of agricultural products or primary products such as mineral resources Misuse of foreign assistance Misguided priorities Cultural resistance to modernization… Conditions That Hamper Development 15
  16. 16. Global Economic Disparities Roots: Much of the disparity existed as Colonialism was established by European nations. - The Industrial Revolution increased the need for raw materials and markets for finished goods. - Neo-colonialism refers to the economic dominance of the core over the former colonial nations-economic rather than political control. A changing world Till 1980’s there were 3 blocs  First World-The Capitalist West-the most advanced nations-democratic & capitalist  Second World-The Communist East of the Soviet Union & its Eastern European Satellites, Red China, N. Korea & Vietnam  Third World-non aligned nations with mixed economies and state control-now an obsolete term Now a days,  More Developed Countries-(MDCs) have high levels of industrialization, urbanization & standard of living  Underdeveloped (UDCs or LDC’s) or Developing Countries are moving toward developed status-not as highly industrialized or urbanized with a lower standard of living World Bank- classification by income level  High Income-(US, Canada, Western Europe, Japan, Australia…)  Upper Middle Income-(Mexico, Brazil, Chile, Argentina, Poland…) 16
  17. 17. 17 Vicious circle
  18. 18. 18 The End Henok Gebremedhin Teka