Chapter 1

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Transcript Chapter 1

Chapter 1
Economics,
Institutions, and
Development:
A Global
Perspective
Copyright © 2009 Pearson Addison-Wesley. All rights reserved.
Economic Development
• Development = Growth plus Change
• Growth: sustained improvement in the
level of per capita income
• Change: sustained improvement in
institutions and organizations that support
growth
Copyright © 2009 Pearson Addison-Wesley. All rights reserved.
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Growth
• Gross Domestic Product (GDP): Market value of
all final goods and services an economy produces
in one year
• Real GDP: GDP in constant prices
• GDP Per Capita = (Real GDP / Population) or
income per person
• Economic Growth = percentage change in Real
GDP per capita
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Institutions
• Family: respect the authority & share
resources
• Culture: propensity to save & invest
• Religion: ability to bring about change
• Law: protect property rights and civil liberties
and enforce contracts
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Organizations
• Government: produce public goods and
regulate economic activities
• Education: increase productivity and expand the
range of economic and social opportunities
• Health: enable proactive participation in economic and
social activities
• Business: provide incentive for profit making,
resulting in growth and expansion
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Happiness and Development
• There is not a perfect correlation between
happiness and per capita income: people
could be poor, but happy; rich, but and
unhappy
• Once per capita income increases above
$10,000 to $20,000, the percentage of
people who say they are happy tends to
increase
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Happiness and Development
Factors affecting happiness:
• Family relationships
• Financial conditions
• Work satisfaction
• Community and friends
• Health and health-care services
• Personal freedom
• Personal values
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Income and Happiness Across Countries
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Three Core Values of Development
• Sustenance: The ability to meet basic human
needs including shelter, food, health,
education, safety
• Self-Esteem: To be a person with a sense of
self-respect and self-worth. To live with dignity,
respect, and honor
• Freedom from Servitude: To be able to
choose the path to prosperity and have the
opportunity to improve
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Objectives of Development
• To increase the availability and
distribution of basic human necessities
• To improve the standard of living for
the majority of the people
• To expand the range of economic and
social choices and opportunities
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Millennium Development:
Goals and Targets for 2015
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Millennium Development
Goals and Targets for 2015
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Economic Development
• Inclusion of non-economic variables in
designing development strategies
• Achieving the Millennium Development
Goals
• “…One future-or none at all”
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