development economics ii prof. dr. hans h. bass jacobs university, spring 2010
Post on 22-Dec-2015
219 Views
Preview:
TRANSCRIPT
Development EconomicsII
Prof. Dr. Hans H. Bass
Jacobs University, Spring 2010
Feb. 11, 2010 2
Development Economics Agenda Feb. 11
1. Development: General Measures and Patterns1.1 Simple country classifications1.2 Holistic approaches
2. Structural characteristics of Low Economic Development2.1 Commonalities2.2 Differentiation processes
3. Development: Specific Measures and Patterns3.1 Absolute Poverty3.2 Inequality
Feb. 11, 2010 3
Dollar value (exchange rate parity*) of GNI pc = (GDP + net factor incomes from abroad) / population= a “first phase”–indicator of development (1950’s concept)* “Atlas method”
Threshold values of 2008:LICs: GNI pc ≤ $ 975LMICs: GNI pc $ 976 - $ 3,855UMICs: GNI pc $ 3,856 – $ 11,905---------------------------------------------= “Developing Countries (DCs)”HICs: GNI pc ≥ $ 11,906
1 Development: General Measures and Patterns1.1 Simple country classifications
GNI p.c. (exchange rate parity)
Feb. 11, 2010 4
(3*) Norway $ 87,070 HIC(22) Germany $ 42,440 HIC(56) Saudi Arabia $ 15,500 HIC(75) Russian Fed. $ 9,620 UMIC(82) Brazil $ 7,350 UMIC(127) China $ 2,940 LMIC(163) India $ 1,070 LMIC(179) Ghana $ 670 LIC(210) Burundi $ 140 LIC
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf* # 1 and 2 only approximates: Liechtenstein, Bermuda
GNI p.c., 20081 Development: General Measures and Patterns1.1 Simple country classifications
Feb. 11, 2010 5
Income groupings 2006
http://en.wikipedia.org/wiki/File:World_Bank_income_groups.svg
1 Development: General Measures and Patterns1.1 Simple country classifications
Feb. 11, 2010 6
Dollar value (exchange rate parity) of GNI pc = (GDP + net factor incomes from abroad) / population
Dollar value (Purchasing Power Parity) of GNI p.c. Explanation for deviations high share of non-tradables in LICs, unlimited supply of labor, dualistic economies ...= a modified “first phase”–indicator of development
Exchange rate parity vs PPP: Towards more holistic
approaches
1 Development: General Measures and Patterns1.1 Simple country classifications
Feb. 11, 2010 7
XRt PPP(3) Norway $ 87,070 $ 58,500 (4)(22) Germany $ 42,440 $ 35,940 (29)(56) Saudi Arabia $ 15,500 $ 22,950 (53)(75) Russian Fed. $ 9,620 $ 15,630 (71)(82) Brazil $ 7,350 $ 10,070 (95)(127) China $ 2,940 $ 6,020 (122)(163) India $ 1,070 $ 2,060 (155)(179) Ghana $ 670 $ 1,430 (181)(210) Burundi $ 140 $ 380 (208)
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf
GNI p.c., 20081 Development: General Measures and Patterns1.1 Simple country classifications
Feb. 11, 2010 8
1. Longevity as measured by life expectancy at birth2. Knowledge: by a weighted average of adult literacy (2/3) and
mean years of schooling (1/3)3. Standard of living: GDP p.c. at Purchasing Power Parity* and
adjusted for diminishing marginal utility of incomeStandardized from 0 to 1
Index = (actual value – minimum value) / (maximum value – minimum value)
Classification: low, middle, high “human development”= a “third phase”–indicator of development
Human Development Indicator (HDI)
1 Development: General Measures and Patterns1.1 Simple country classifications
1.2 Holistic approaches
Feb. 11, 2010 9
Feb. 11, 2010 10
Gender-related Development Index (UNDP)Human Assets Index (ECOSOC, based on nutrition, health,
education, and literacy)Gross National Happiness Index (Bhutan)
... and many more!
Bonini‘s paradox? Synergies and corollaries exist, but not necessarily
“trickle down“ effects
Further approaches1 Development: General Measures and Patterns
1.1 Simple country classifications1.2 Holistic approaches
Feb. 11, 2010 11
http://siteresources.worldbank.org/DATASTATISTICS/Resources/WDI07section1-intro.pdf
Feb. 11, 2010 12
http://siteresources.worldbank.org/DATASTATISTICS/Resources/WDI07section1-intro.pdf
Feb. 11, 2010 13
Synergies and corollaries exist, but not necessarily “trickle down“ effects!
Further approaches1 Development: General Measures and Patterns
1.1 Simple country classifications1.2 Holistic approaches
Feb. 11, 2010 14
Development Economics Agenda Feb. 11
1. Development: General Measures and Patterns1.1 Simple country classifications1.2 Holistic approaches
2. Structural characteristics of Low Economic Development2.1 Commonalities2.2 Differentiation processes
3. Development: Specific Measures and Patterns3.1 Absolute Poverty3.2 Inequality
Feb. 11, 2010 15
Adverse geography (?) Lower levels of living, characterized by low incomes, high
(income) inequality, poor health, and inadequate education (incl. Illiteracy)
High rates of population growth and dependency burdens Large rural populations but rapid rural-to-urban migration Substantial dependence on agricultural production and
primary-product exports, high export concentration ratios Lower levels of industrialization and manufactured exports
Common characteristics of DCs
2 Structural charateristics of Low Economic Development
2.1 Commonatlities
Feb. 11, 2010 16
Lower levels of human capital and low levels of productivity (lack of complementary capital); scarcity of jobs in the urban “formal” sector, “informal” employment (sponge function)
Low sophistication of financial and other markets, imperfect markets prevailing
Lack of “good governance”, weak institutions
Common characteristics of DCs
2 Structural charateristics of Low Economic Development
2.1 Commonatlities
Feb. 11, 2010 17
Developing countries may differ in
size historical / colonial background endowments of physical and human resources ethnic and religious composition relative importance of its public and private sectors degree of dependence on external economic and political
forces distribution of power within the nation
2 Structural charateristics of Low Economic Development
2.1 Commonatlities2.2 Differentiation processes
Differences
Feb. 11, 2010 18
Newly Industrializing Economies (NICs)
Characteristics: rapid economic growth rapid changes in sector composition ( speeding up
the Fourastié process)
Differentiation processes include: Catching up ...
2 Structural charateristics of Low Economic Development
2.1 Commonatlities2.2 Differentiation processes
Feb. 11, 2010 19
Possible Causes: high investment into education subtle combination of opening up to world markets
and protection of “infant industries” strong influence of the government on the economy relatively equal distribution of income and wealth
(IBRD, inofficial)
Catching up ...2 Structural charateristics of Low Economic
Development2.1 Commonatlities
2.2 Differentiation processes
Feb. 11, 2010 20
http://siteresources.worldbank.org/DATASTATISTICS/Resources/WDI07section1-intro.pdf
Convergence vs divergence Neo-classical growth theory vs New Growth theory
Feb. 11, 2010 21
Least Developed Countries
Extremely low per capita income (>$ 750) Low level of human development as measured by the Human
Assets Index (HAI) High vulnerabilty to economic shocks as measured by the
Economic Vulnarability Index (EVI), based on agricultural output, export earnings, disadvantages from population size and natural disasters
ECOSOC 2003
and falling behind ...2 Structural charateristics of Low Economic
Development2.1 Commonatlities
2.2 Differentiation processes
Feb. 11, 2010 22
DCs among transformation economies Transformation from a centrally planned economy with
predominance of collective property to a de-centrally planned economy (coordinated by markets) with a predominance of private property of producer goods
Low or lower-middle income p.c., (relatively) high HDI Comparatively high importance of industry, albeit obsolete
technologies posing high stress on the environment Dualistic structure of foreign trade (West/East) Budget deficits and current account deficits (M>X)
... or dramatic changes in institutions
2 Structural charateristics of Low Economic Development
2.1 Commonatlities2.2 Differentiation processes
Feb. 11, 2010 23
Development Economics Agenda Feb. 11
1. Development: General Measures and Patterns1.1 Simple country classifications1.2 Holistic approaches
2. Structural characteristics of Low Economic Development2.1 Commonalities2.2 Differentiation processes
3. Development: Specific Measures and Patterns3.1 Absolute Poverty3.2 Inequality
Feb. 11, 2010 24
“unable to command sufficient resources to satisfy basic needs“
international poverty line: $ 1 (1.25) or $ 2 per day in PPP
national poverty lines based on local household surveys
total poverty gap (TPG)
Absolute poverty3 Development: Specific Measures and Patterns3.1 Absollute Poverty
Feb. 11, 2010 25
What is bad about inequality? Gini Coefficient
Inequality3 Development: Specific Measures and Patterns
3.1 Absollute Poverty3.2 Inequality
Feb. 11, 2010 26
Gini Coefficient3 Development: Specific Measures and Patterns
3.1 Absollute Poverty3.2 Inequality
Feb. 11, 2010 27
What is bad about inequality? Gini Coefficient Kuznets Curve
Inequality3 Development: Specific Measures and Patterns
3.1 Absollute Poverty3.2 Inequality
Feb. 11, 2010 28
http://www2.wwnorton.com/college/econ/dev6/exercises.htm
chapter 1, Tasks 1 + 2
Development Economics Exercise (optional)
top related