1. UDERSTANDING ECONOMIC DEVELOPMENT
Syllabus Outcomes:
Distinguish between economic growth and economic development
Explain the multidimensional nature of economic development in terms of reducing poverty, increasing standard of living and reduce inequality
Explain the most important source of economic growth in less developed countries

2. ECONOMIC DEVELOPMENT VS GROWTH
Economic Growth
Economic Development
Increase in output and income overtime
Measured by positive levels of GNP/GDP/GDP per capita
It does not consider impact on people’s standards of living or state of wellbeing /welfare
Increases in real per capita output and incomes
Focuses on improvements in standards of living of the population resulting from economic growth.
Measured by HDI – Human Development Index

3. WHAT IS ECONOMIC DEVELOPMENT?
Definition
Economic Growth Vs Economic Development
Characteristics
Measurement
Difference between developed, developing and developed
Features of developed, undeveloped and developing

4. WHAT IS ECONOMIC DEVELOPMENT?
Economic development is the process where increases in real per capita output and incomes are accompanied by improvements in standards of living of the population.

5. Reduction in poverty
Increased access to G+S
Provision of basic needs – food /shelter/health care/sanitation
Increased employment opportunity
Reduction of unemployment
Reduced inequality of income and wealth

6. Economic Growth
Economic growth – process of increased output and income, measured by GDP/ GDP per capita/ GNP or NNP

7. ECONOMIC ARGUMENT
Economist disagree on whether the focus of an economy should be on
Growth OR Development
Should growth be a priority? = assuming development follows OR
Should development be a priority?

8. Relationship between economic Growth and Development
Economic growth is a fundamental requirement of economic development.
WHY??
Economic Growth output incomes Standards of living Economic Development

9. Historical Perspective
Focus on economic development only new phenomena and changed overtime
In 1950/60’s – growth + develp are same
In 1960’s /70’s – many less devp countries were not performing as expected – Gap between rich /poor doubled -1975
No of people living in poverty (< $1 a day) increased

10. Historical Perspective Cont’d
Benefits of eco growth NOT achieved by poor countries.
WHY??
Eco growth occurred but did not work to eliminate poverty + improve living standards.
SOLUTION
New approach needed to deal with problems of less devp countries esp poverty/ income distrb and access to services.

11. What is Human Development?
Process of expanding human freedom to:
Satisfy hunger/ receive adequate food
Be free from preventable illness
Have adequate clothing + shelter
Have access to clean water + sanitation
Have access to education /training
Able to work

12. What is Human Development?
Enjoy freedom and legal protection
Participate in social and political lif
Freedom to develop and achieve potential in life

13. Human Vs Income Poverty
Human Poverty
Income Poverty
Income that is below the poverty line for that country.
Deprivation/ lack of opportunity that prevent people from leading decent standard of living (SOL)

14. SOURCES OF ECONOMIC GROWTH FOR LESS DEVELOPED COUNTRIES
Increased Q of physical capital
Increased Q of human capital
Increased q of land capital
Development and use of adequate technology for that country
Institutional changes

15. Define the following
Physical Capital – factors of production used in the production process ( investment in machinery, factories, equipment, tools) Human Capital – skills, abilities and knowledge acquired by people as well as achievement of good health Natural capital – everything that is included in land resources ( minerals, oils, gas)

16. Institutional Changes: availability of government authorities and services that support people in a country such a:
Law enforcement agencies – police
Tax systems
banks/ credit unions
Anti corruption institutions

17. Relating Eco Growth to Eco Development
Economic Development cannot happen without economic growth
BUT
Economic Growth can occur without eco devp
HOW??

18. C D B E A to B = No eco growth with some eco devp
B to C = eco growth with no eco devp
C- D = eco growth with eco devp
Industrial goods C D B E
Merit goods