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AGEC 340: International Economic Development Course slides for week 1 (Jan. 12-15)
Introduction to AGEC 340
• Review syllabus and handouts from the class website • Fill out background questionnaire • Use quick-feedback forms as needed
• What is “International Economic Development”?
• Why aren’t all countries equally developed?
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Why AGEC 340?What is International Economic Development?
– International: across or between countries
– Economic: what happens that is measurable “the economy” is production, consumption, trade
“economics” is our analysis of it
– Development: what happens over time
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• In economics, we try to…
• To forecast or recommend, we need theories…– like any way of thinking, but more explicit
How is economics different?
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• A key change over time is that people get richer
• In AGEC 340, we explain development using economics– observed facts result from “equilibrium” among “optimizers”
What about economics of development?
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Development involves accumulation of stuff, that economists call “capital”.
The accumulation of capital makes it more abundant and cheaper.
What happens during development?
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Development also involves innovation, which economists call “technical change”
Innovation makes it possible to produce more of what people want, from the resources they have.
What else happens during development?
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During development, we get richer… but do we get happier?
Maybe not…
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Why aren’t all countries equally developed?
First, let’s look at the data:http://graphs.gapminder.org/world
Then, looking across countries, we can ask:Where are the rich countries?
Where are the poor?
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Our textbook map of the world:Where are the rich? Where are the poor?
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GDP per capita by latitude, 1995
Source: Sachs, JD, “Tropical Underdevelopment.” NBER Working Paper 8119. Cambridge, MA: NBER.
The temperate regions are much richer than tropical areas
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Another view of the world…
Country sizes proportional to area
Source: www.worldmapper.org/display.php?selected=1
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Temperate regions produce much more income than the tropics
Country sizes proportional to total income
Source: www.worldmapper.org/display.php?selected=170Note: Areas weighted by 2002 total GDP in PPP US dollars.
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What about the tropics might slow growth? • Lack of natural resources?
• Culture or religion?
• History? (“The rich get richer & the poor get poorer”?)
• Local institutions and government policy?
• Technology, especially for health and agriculture?
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For next week…
Ethiopia (Ch. 2, p. 30)Colombia (Ch. 1, p. 1)
What is “poverty”? How can we measure and compare its severity, over time or across countries?