Measuring_Development-full_lecture

Measuring_Development-full_lecture - Measuring Development...

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Measuring Development Spring Term 2011
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Lecture Goals q To understand why development is more than economic growth. To understand why development is considered as multi- dimensional phenomenon. To understand the measures that better capture the multi- dimensional aspects of development. To identify the major scholars associated with this approach
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Development and Growth Development has most commonly been equated with growth of the economy. This approach was most common during the 1950 and 1960 but still prevailing. q The World Bank compares the level of development by- GDP per capita .
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The Gross Domestic Product (GDP) The gross domestic product (GDP) or gross domestic income (GDI) is a measure of national income and output for a given country’s economy. It is the dollar value of all goods and services produced within a country’s borders in a given year. GDP per capita is a measure of the average income in a country.
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Development and Growth GDP per capita is adjusted by purchasing power parity (ppp), which takes into account the different buying power of a dollar in different economies. This gives an average income per person that allows us to compare the annual income of, For example, an average American who earns $40,000 is equal to the average Nigerian who earns $1, 100.
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GDP per Capita GDP per capita gives us an idea of how countries are improving or deteriorating. Growth rates in developing countries are very unstable and may be high one year and low the next. Developed countries generally have slower GDP
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GDP per Capita Rapid growth in GDP is usually caused by: 1. rapid increases in productivity in agriculture 2. natural resources extraction 3. industrialization. . GDP per capita reaches the level of a middle- income in a developing country: a certain level of industrialization has been reached.
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Problems with GDP (Cont.) Ø Is it possible for countries to grow rapidly in GDP per capita but for only the richest segments of society to benefit? Ø Development cannot be as simple as GDP growth, because growth does not necessarily reduce poverty.
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GDP per Capita Problems with GDP per capita as a measure for “development”: Ø It is an estimate that depends on the quality of information collected by government statistical agencies Ø It fails to count the ‘value’ of non-market
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Income Inequality (Distribution of Income) We need to know the distribution of income (also known income inequality) Income inequality is a measure of how the wealth of a country is distributed among its population: Ø what share of that wealth is owned by the rich Ø how much the poorest earn in comparison to the wealthiest.
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Ways of Measuring Income Inequality There are two ways of measuring income inequality: Ø A comparison of the income earned by different
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This note was uploaded on 12/18/2011 for the course ENVS 200 taught by Professor Annegrant during the Fall '11 term at Waterloo.

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Measuring_Development-full_lecture - Measuring Development...

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