WHY DO SOME COUNTRIES DEVELOP? WHY DON’T

OTHERS?

WHAT IS DEVELOPMENT?

•One definition: “The increasing capacity to make rational use of natural and human resources for social ends.”

•Is development an absolute or relative concept? Is development linear?

•Is development just about economics or something bigger?

And why should we care anyway?

HOW DO WE MEASURE DEVELOPMENT?

Measurement issues:

•Growing rich/poor gaps within countries (GINI measures)

•Population and development

•PPP vs. GNP vs. GDP

THE OLD DEVELOPMENT PROBLEM

GNP per capita (1980 dollars)Low income countries

1950: $164

1980: $245

1990: $353

Developed countries 1950: $3,841

1980: $9,648

1990: $19,820

Since 1990? The south has split… with “the bottom billion” on one end and the emerging BRIC on the other.

 

SOME DATA ON HOW THINGS ARE CHANGING

ROBERT WADE’S TAKE:

HOW BAD IS IT?

Chart shows the distribution of the world’s population by average income of each country (using compatible data from 1993, the most recent year available). Income is measured in terms of purchasing power over comparable bundles of goods and services, or purchasing-power parity (PPP), rather than in terms of actual exchange rates.

WHO IS GROWING? (AND WHAT THAT CAN TELL US)•The titans: Brazil, Russia, China, & India (mostly just the last two).

•Let’s look at some data…

SOME MORE DATA…

SOME MORE DATA…

SOME MORE DATA…

SOME MORE DATA

SOME MORE DATA

WHAT DO COUNTRIES NEED TO CHANGE TO DEVELOP?

Is under-development just do to a lack of capital and different timelines?

•W.W. Rostow’s proposed this as a “a non-Communist Manifesto”

•What are the stages of development? And why is growth exponential instead of linear?

•Why will poor countries with access to capital easily catch up?

•The bottom line: higher rich-poor gaps are natural, temporary, and show that things are improving

•Two approaches to fixing these kind of problems:

•Increasing international development aid and knowledge transfer (e.g., World Bank Programs)

•State capitalism (a type of “mercantilism)

Why might culture explain underdevelopment?•Max Weber’s argument

•The Protestant work ethic•Scientific rationalism•Individualism•Meritocracy

•Modern concerns•Clientelism/patron-client networks•Lootable assets, rent seeking, and “Kleptocracies”

•How do we “modernize” “traditional” cultures for growth?: Democratization and globalization; Cultural exchange programs; investment in “soft power”

Is underdevelopment mostly the product of weak/interventionist states and bad government?•Structural adjustment programs: Economic freedom, trade, & comparative adv.•State building programs: Dealing with weak, multi-national, & undemocratic states•How do we address these problems?

•The IMF and the Washington Consensus•Institution building initiatives •By-passing the state with micro-finance and globalization

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Is underdevelopment is caused by the First World and can’t be solved by developing states?•The legacies of colonialism•The world system: the core and the periphery•Purposeful underdevelopment: enclave economies, and domestic elites, and international debt•IMF, World Bank, and WTO as capitalist agents

Can states break out of the system?•What was ISI (import-substitution industrialization) and why did it fail?•Did ISI have any positive long-term consequences? Brazil and India as examples