ECO 102 Development Economics Aisha Khan Continuation of Summer 2009 Section G & I REvision

Chapter One and Two Sen’s Capabilities approach Diversity between countries due to many reasons HDI Gini Index Common characteristics between developing countries

Structural diversity Consider the following: The size of the country Its historical and colonial background Its endowments of physical and human resources Its ethnic and religious composition The relative importance of public and private sectors Nature of industrial structure Degree of dependence on external forces Distribution of power within a nations

HDI = +

Gini coefficient

Common characteristics Low levels of living Low levels of productivity High rates of population growth and dependency burdens Substantial dependence on agricultural production Prevalence of imperfect markets and limited information Dominance, dependence and vulnerability in IR IR= international relations

Historic growth and contemporary development Chapter Three Primary focus of many countries is increasing growth rates Capital accumulation Growth in population Technological progress Kuznets 6 characteristics of econ growth

6 characteristics High rates of growth of per capita output and population High rates of increase in total factor productivity High rates of structural transformation High rates of social and ideological transformation The propensity of economically developed countries to reach out to the rest of the world for markets and raw materials Limited spread of this growth to a third fo the population

Chapter Four Classic theories of development The linear stages of growth model Rostow’s stages of growth Harrod-domar model Theories and patterns of structural change Lewis model  “Two-sector surplus labor” Patterns of development The international dependence revolution Neocolonial dependence model The false-paradigm model The dualistic-development thesis Neo-classical, free market counter revolution

Rostow’s stages of Growth Traditional society Preconditions for take-off into self-sustaining economic growth Take-off The drive to maturity The age of high mass consumption Countries needed to follow the right steps to achieve the next stage

Neocolonial dependence model Center  developed countries Periphery  LDC’s Organizations help reinforce this structure Perpetuation of underdevelopment

False paradigm model States underdevelopment is due to Faulty inappropriate advice Provided by uninformed and biased international experts from developed countries Offer sophisticated concepts leading to inappropriate policies Leading university intellectuals get their education from developed nations

Dualistic-development thesis World of dual societies  rich vs poor Increasing divergences Superior vs inferior takes place in the same space Growing inequalities will never vanish Inherent tendency to increase ( the discrepancies ) No “trickle down”  actually there is a “development of underdevelopment”

The Neoclassical Counterrevolution Counterrevolution called for Developed countries  supply-side macro, rational expectations, privatization Developing nations  freer markets, dismantling public ownership, government regulation of economic activities Underdevelopment is due to poor resource allocation due to incorrect pricing policies and too much state intervention

Contemporary Models of Development Chapter Five Romer model Multiple equilibria and Big-Push

Romer model g-n = β/[1-α+β] g= output growth rate n= population growth rate

Multiple Equilibria Individual investment level D1 D2 D3 Average investment level

Midterm Exam FRIDAY, September 11th During Class Session Make sure to bring calculators Content: chapters 1, 2, 3, 4, 5 Objective and Subjective Included Case study analysis

Presentations Starting week of September 14 One presentation per class Same groups and same Q&A Requirements Must research up-to-date statistics for the country in the case study Must use the case study as a reference into the development of the country Encouraged to research outside the case study and to link in class development theories Must conclude with recommendations for the development process of each country

Marking Presentations 5% - Group Performance 5% - Individual Performance 5% - Presentation Presentations PowerPoint presentations (slides) 20-25 min presentations (each person MUST speak 5 mins) Q&A: after the presentations Another group will be assigned the task of asking questions after the presentation. Once this group is done asking questions  the rest of the class can pitch in.