lecture_4_f09w10 - Lecture 4 Slide 1 of 51 Economics 324...

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Unformatted text preview: Lecture 4 Slide 1 of 51 Economics 324 Economic Development Professor Gustavo J. Bobonis Department of Economics University of Toronto Lecture 4 Slide 2 of 51 Economics 324 Economic Development Lecture 4 October 5 th , 2009 Lecture 4 Slide 3 of 51 Lecture 4 : Economics 324 Lecturer: Prof. Gustavo J. Bobonis Email: gustavo.bobonis@utoronto.ca Office hours: 150 Saint George Street, Room 304 Tuesdays 3:00p 4:00p (by appointment) 4:00p 5:00p (drop-in) TA: Mr. Eik Leong Swee Email: eik.swee@utoronto.ca Office hours: Thursdays 10:00a 12:00p (drop-in) Table 1 : International Patterns of Economic Development Measure Sub-Saharan South East Asia Middle East Latin Am. United Africa Asia & Pacific & N. Africa & Caribbean Canada States GNI per capita, in current US$, 2007 a 951 880 2182 2820 5801 39650 46040 [PPP-adjusted, 2007] b 1869 2532 4969 7402 9678 35500 45840 Average annual income growth per capita (%), 1970-99- 3 5 not av. 2 2 2 2000-07 2.3 5.1 8.0 2.5 2.2 2.0 1.6 Data sources: World Bank (www.worldbank.org). Region or Country Notes: a = Gross National Income: GDP, together with its income received from other countries (notably interest and dividends), less similar payments made to other countries; b = Purchasing Power Parity-adjusted. Lecture 4 Slide 5 of 51 Long-term economic development patterns Per capita GDP growth in Sub-Saharan Africa and Latin America was positive and reasonably high from 1950-1975, at an average of: o 2.4% per year for Sub-Saharan Africa o 2.5% per year for Latin America Similar to South & East Asian countries during 1975-2003 There was considerable variation across countries Lecture 4 Slide 6 of 51 Long-term economic development patterns But overall per capita GDP growth in Sub-Saharan Africa became negative after around 1975, and has remained negative ever since (until the past five years, approximately) In Latin America & the Caribbean, growth became negative throughout the 1980s, but has improved since (with heterogeneity across countries) Questions: Why focus so much attention on economic growth? Why did African & Latin American economic performance deteriorate so sharply in the 1970s or 1980s? Lecture 4 Slide 7 of 51 Appreciating the Power of Economic Growth A percentage point added to the growth rate can make the difference between stagnation and prosperity over the period of a generation. Rates of growth of real per-capita income are diverse, even over sustained periods Indian incomes will double over 50 years; Korean every 10. An Indian will, on average, be twice as well off as his grandfather; A Korean 32 times I do not see how one can look at figures like these without seeing them as representing possibilities Is there some action a government of India could take that would lead the Indian economy to grow like Indonesias or Egypts? If so, what , exactly? If not, what is it about the nature of India that makes it so? Once one starts to think about [these questions], it is hard to think about anything else. Robert Lucas (Journal of Monetary Economics, 1988) Lecture 4...
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lecture_4_f09w10 - Lecture 4 Slide 1 of 51 Economics 324...

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