econ 450 development economics introduction · h fonseca econ 450 – development economics...

How the Other Half LiveFacts and Statistics

Meaning of DevelopmentIncome and Happiness

ECON 450 – Development EconomicsIntroduction

Henrique Veras de Paiva Fonseca

University of Illinois at Urbana-Champaign

Summer 2017

H Fonseca ECON 450 – Development Economics Introduction



Figure: My Hometown




Outline

1 How the Other Half Live

2 Facts and Statistics

3 What is the Meaning of EconomicDevelopment?

4 Income and Happiness: ComparingCountries




How the Other Half Live

When one is poor, she has no say in public, she feelsinferior. She has no food, so there is famine in her house; noclothing, and no progress in her family.

– A poor woman from Uganda





Life in the area is so precarious that the youth and everyable person have to migrate to the towns or join the army atthe war front in order to escape the hazards of hungerescalating over here.

– Participant in a discussion group in rural Ethiopia

When food was in abundance, relatives used to share it.These days of hunger, however not even relatives wouldhelp you by giving you some food.

– Young man in Nichimishi, Zambia





We have to line up for hours before it is our turn to drawwater.

– Mbwadzulu Village (Mangochi), Malawi

[Poverty is] . . . low salaries and lack of jobs. And its alsonot having medicine, food, and clothes.

– Discussion group, Brazil





Don’t ask me what poverty is because you have met itoutside my house. Look at the house and count the numberof holes. Look at the utensils and the clothes I am wearing.Look at everything and write what you see. What you see ispoverty.

– Poor man in Kenya





Figure: Nalim and Namgay’s family of Bhutan, with all of their possessions. The family of subsistence farmers lives in a 3-storyrammed-earth house in the hillside village of Shingkhey, Bhutan. Namgay, who has a hunched back and a clubfoot, grinds grain forneighbors with a small mill his family purchased from the government. They are paying for the mill as they can (often the payment is madein grain and mustard oil). Namgay is also a reader of sacred texts and conducts house cleansing and healing ceremonies for their 14-housevillage.





Figure: The Ukita Family in front of their home with all of their possessions, Tokyo, Japan. Published in Material World: A GlobalFamily Portrait





Figure: The Abdulla family with all of their possessions pose for a portrait in front of their home in Kuwait City, Kuwait. Published in thebook Material World, pages 236-237. Saif is a college professor who received his Ph.D. from Indiana University in the U.S. His older childrenhave attended school in the U.S. as well. Like many Kuwaitis the Abdullas enjoy a high standard of living, subsidized by the oil rich country.





Figure: The Natomo family with all of their possessions on the roof of their home in Kouakourou, Mali. Published in Material World,page 14. According to tradition Soumana is allowed to take up to four wives; he has two. Wives Pama and Fatoumata are partners in thefamily and care for their many children together. They have separate households but share meals in the courtyard of Pama’s house.





Figure: The Castillo Balderas family of Guadalajara, Mexico, outside their home with all of their possessions. Published in MaterialWorld: A Global Family Portrait.





Figure: The Skeen family of Pearland, Texas, outside their home with all of their possessions. Ricky Skeen and his wife Pattie Skeen,with their two children, Michael and Julie.





Figure: The Lagavale family with all their possessions in front of their house. The family lives in a 720-square-foot tin-roofed open-airhouse with a detached cookhouse in Poutasi Village, Western Samoa. The Lagavales have pigs, chickens, a few calves, fruit trees and avegetable garden. They farm, fish, and make crafts to support themselves. They also work for others locally, which helps supplement theirmodest needs.




Outline








Facts and Statistics





Almost half the world – over 3 billion people – live on less than$2.50 a day.1 billion children live in poverty (1 in 2 children in the world).

640 million live without adequate shelter,400 million have no access to safe water,270 million have no access to health services.





Nearly a billion people entered the 21st century unable to read abook or sign their names.




Outline








The Nature of Development Economics

Traditional economics is concerned primarily with the efficient,least-cost allocation of scarce productive resources and with theoptimal growth of these resources over time so as to produce anever-expanding range of goods and services.

Political economy goes beyond traditional economics to study,among other things, the social and institutional processesthrough which certain groups of economic and political elitesinfluence the allocation of scarce productive resources now andin the future, either for their own benefit exclusively or for that ofthe larger population as well.





Traditional economics is concerned primarily with the efficient,least-cost allocation of scarce productive resources and with theoptimal growth of these resources over time so as to produce anever-expanding range of goods and services.Political economy goes beyond traditional economics to study,among other things, the social and institutional processesthrough which certain groups of economic and political elitesinfluence the allocation of scarce productive resources now andin the future, either for their own benefit exclusively or for that ofthe larger population as well.





Development economics has an even greater scope.In addition to being concerned with the efficient allocation ofexisting scarce (or idle) productive resources and with theirsustained growth over time, it must also deal with the economic,social, political, and institutional mechanisms, both public andprivate, necessary to bring about rapid and large-scaleimprovements in levels of living for the developing nations.




What is the Meaning of Economic Development?

Traditional Economic Measures

Gross National Income (GNI)Income per capita

The New Economic View of DevelopmentLeads to improvement in well-being, more broadly understood





Traditional Economic MeasuresGross National Income (GNI)

Income per capita






Traditional Economic MeasuresGross National Income (GNI)Income per capita





The New Economic View of Development

The experience of the 1950s and 1960s, when many developingnations did reach their economic growth targets but the levels ofliving of the masses of people remained for the most partunchanged, signaled that something was very wrong with thenarrow traditional definition of development.In short, during the 1970s, economic development came to beredefined in terms of the reduction or elimination of poverty,inequality, and unemployment within the context of a growingeconomy.




Amartya Sen’s "Capability" Approach

Functionings as an achievementWell being in terms of being well and having freedoms of choice

Capabilities as freedoms enjoyed in terms of functionings"Economic growth cannot be sensibly treated as an end in itself.Development has to be more concerned with enhancing the liveswe lead and the freedoms we enjoy."





Characteristics of Developing nations:

1 Most commodity and resource markets are highly imperfect;2 Consumers and producers have limited information;3 Major structural changes are taking place in both the society and

the economy





Characteristics of Developing nations:1 Most commodity and resource markets are highly imperfect;

2 Consumers and producers have limited information;3 Major structural changes are taking place in both the society and

the economy





Characteristics of Developing nations:1 Most commodity and resource markets are highly imperfect;2 Consumers and producers have limited information;

3 Major structural changes are taking place in both the society andthe economy





Characteristics of Developing nations:1 Most commodity and resource markets are highly imperfect;2 Consumers and producers have limited information;3 Major structural changes are taking place in both the society and

the economy




The Three Objectives of Development

Increase availability of life-sustaining goodsRaise levels of livingExpand range of economic and social choices




Outline








Income and Happiness: Comparing Countries




Bhutan’s Gross National Happiness Index

The Gross National Happiness (GNH) Index was created by byHis Majesty the Fourth King of Bhutan, Jigme SingyeWangchuck in the 1970s to replace the traditional GDP percapita in measuring the level of development.The four pillars of GNH philosophy:

Sustainable developmentPreservation and promotion of cultural valuesConservation of the natural environmentEstablishment of a good governance





Figure: Slogan about Gross National Happiness in Thimphu’s School ofTraditional Arts.





Figure: Bhutan’s fourth Dragon King, Jigme Singye Wangchuck


econ 450 development economics introduction · h fonseca econ 450 – development economics...

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