ECON3550 MIRTERM.docx - ECON3550 MIRTERM Section 1 What is...

This preview shows page 1 - 3 out of 11 pages.

ECON3550 MIRTERM Section 1: What is development Economics and how is it different from Neoclassical Economics? oStudy of how economies are transformed from stagnation to growth and from low-income to high income status and overcome problems of poverty and humandeprivation.oTraditional neoclassical economics Concerned with the efficient least cost allocation of scarce productive resources so as to produce an ever-expanding range of goods and services. It assumes the market is perfect. On the other hand,development economics Concerned with the social, economic, and political processes through which economic growth is brought about. It assumes the markets are imperfect. What do we mean by developmentand how is it different from economic growth?oDevelopment focus on improving fiscal, economic and social conditions. Development is the big picture. Economic growth is the increase in what a country produces over time. It’s measured by GDP, which is a measurement of development. Amartya Sen’s approach of Development as FreedomoDevelopment is viewed as expansions in freedoms such as:Freedom from hunger and povertyFreedom from ignoranceFreedom from disease and poor healthFreedom from repression and lack of civil libertiesFreedom from intolerance Freedom from fear and insecurityAmartya Sen’s Capability ApproachoCapabilitydefined as freedoms that people have given their personal features and their command over commodities.1.Personal heterogeneities: Age, gender, disability, health status2.Environmental disparities: climate, pollution3.Social climate: public health care, educational facilities, presence or absence of crime, and nature of social relationships4.Relational perspectives: some goods such as higher standards of clothing may be essential to ‘appear in public without shame’5.Distribution within the familyoThe purpose of development is enhancing human capabilities
Measurement of developmentoThe narrow income based measure of GDP per capita and its limitationsMarket value of all final goods and services produced by citizens or non-citizens within the national boundaryLimitations: Average incomes may mask widespread disparityGrowth in income may not be accompanied by poverty reduction if benefits of economic growth are captured by the rich onlyIncome has an instrumental value: it is merely the meansand not the end of developmentoThe broader measure of Human Development IndexTheHDI(Human Development Index) is a way tomeasurewell-being within a country. This is mainly a socialmeasurementbecause it takes into consideration education, which is adult literacy rate and years of schooling, health care which is judged by life expectancy and finally the economic factor of GDPHealth measured by life expectancyEducation measured by average years of schooling and expected years of schooling for school aged childrenIncome measured by GDP per capita ($PPP)Section 2:

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture