Development Economics

1. CH=9
1. Human capital: Education and Health in Economic Development.
2. The central role of education and health
3.Educationand healthare the basicobjectivesof development.
4. Health is central to wellbeing and education is essential for a satisfying and rewarding life .
5. Educationplaysa key role in the ability of a developing country to absorb modern technology.
6. Healthis prerequisite forincreasesinproductivitywhile successful educationreliesonadequate
health as well.
7. Investing in education and health
8. The human capital approach
9. Human capital is the term economists often use for education health and other human
capacities that can raise productivity when increased.
10. After an initial investment is made, a stream of higher future income can be generated
from both expansion of education and improvements in health
11. As a result a rate of return can be deduced and compared with returns to other
investments
12. The human capital approach focuses on their indirect abiliy to increase utility by
increasing incomes
13. Child labor:
14. Chilid labor is widespread problem in developing countries
15. When children under age 14 work their labor time at minimum disrupts their schooling
16. the health of child workers isgnificantly worse that of children who do not work
17. physical stunting among child laborers is very common
18. a large fraction of laboring children are subject to especially cruel and exploitative
working conditions
The gender gap Women and education (100%)
19. The rate of return on women education is higher than that on men most developing
countries
20. Increasing women education not only increases their productivity on the farm and in the
factory but also results in greater labor force participation later marriage lower fertility
and greatly improved child health and nutrition
21. Improved child health and nutrition and more educated mothers leadto multiplier effects
on the quality of a nation human resources for many generations to come
22. Because women carry a disproportionate burden of the poverty and landlessness that
permeates developing societies any significant improvements in their role and status via

2. education can have an important impact on breaking the vicious cycle of poverty and
inadequate schooling
Consequences of gender bias in health and education
23. Expansion of basic education of girls earn among the very highest rates of return of any
investment
24. Education of girls one of the most cost effective means of improving local health
standards
25. Inferior education and health care access for girls shoes the interlinked nature of
economic incentives and the cultural setting
26. Greater mother’s education generally improves prospects for both her sons and
daughter’s health and education
CH:13
Trade strategies for development:
The fourfold categorization:
1. Primary outward looking policies (encouragement of agricultural and raw materials)
2. Secondary outward looking poling policies (promotion of manufactured exports)
3. Primary inward looking policies (mainly agricultural self-sufficiency)
4. Secondary inward looking policies (manufactured commodity self-sufficiency
through import substitution)
5. Outward looking development policies- encourage not only free trade but also the
free movement of capital,workers, enterprises and student, the multinational
enterprise and an open system of communications.
6. Inward looking development policies stress the need for LDCs to evolve their own
styles of development and to control their own destiny.
This means policies to encourage indigenous learning by doing in manufacturing and
the development of indigenous technologies appropriate to country resource
endowments.
Advocates of import substitutionbelievethat (100%)
1. LDCs should initially substitute domestic production of production of previously
imported simple consumer goods.
2.Then substitute through domestic production for a wider range of more of more
sophisticated manufactured items all behind the protection of high tariffs and
quotas on these imports.
3.In the long run the benefits of greater domestic industrial diversification and the
ultimate ability to export some previously protected manufacture goods.
As economies of scale low labor costs and positive externalities of learning by doing
cause the domestic prices to become more competitive with worlds prices.
Advocates of export promotion believe that:

3. 1.Both primary and manufactured good cite the efficiencyand growth benefits of free
trade and competition
2. The importance of substituting large word markets for narrow domestic markets
the distorting price and cost effects of protection
Most LDCs have employed both strategies with different degrees emphasis at one
time or another.
Export promotion:
1.Relatively low income elasticity for demand for agricultural foodstuffs and
raw materials.
2. Develop country population growth rates are now at or near the
replacement level.
3.the price elasticity of demand for most primary commodities is relatively
low.
4.The development of synthetic substitutes like cotton rubber sisal jute hide
skins and copper.
5.The growth of agricultural protection in the developed countries
ON THE Supply Side:
1.the most important is the structural rigidity of many rural production systems in
developing countries.
2.In developing nation with markedly dualistic farming structures any growth in
export earnings is likely to be distributed very unevenly among the rural population.
3.Agricultural marketing boards act as middlemen between in the farmers and
export markets.
4. The pernicious effects of developed country trade policies and foreign aid policies
that depress agricultural prices LDCs and discourage production.
LDCs may be able to realize the potential benefits of their comparative advantage in
word primary commodity markets only if they can
Import substitution (IS)
1.Import substation entails an attempt to replace to commodities that are being imported,
usually manufactured consumer good, with domestic sources of production and supply.
2.The typical strategy is first to erect tariff barriers or quotas on certain imported commodities,
then to try to set to up a local industry to produce these goods.
3.This involves joint ventures with foreign companies which is encouraged to set their plants
behind the wall of tariff protection and given all kinds of tax and investment incentives.

4. 4.Eventually it is hoped the infant industry will grow up and be able to compete in world
markets.