Transcript Development Economics

Development Economics:
the International Perspective
Why are some countries rich while
others are poor?
Objective: Given
 Theory of Development
 4 Types of Economic Systems
the student will
distinguish these systems
by discussing, writing,
and presenting a response
to the 3 economic
questions, with 100%
accuracy.
Pineda
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Development is…
The sustained, concerted actions of policymakers and
communities that promote the standard of living and
economic health of a specific area.
The scope of economic development includes the
process and policies by which a nation improves the
economic, political, and social well-being of its people
Standard of Living
A level of material comfort as measured by the
goods, services, and luxuries available to an
individual, group, or nation.
Specifically, DEVELOPMENT
is concerned with
3 Key Questions:
1. What Should Be Produced?
2. How Should It Be Produced?
3. For Whom Should It Be
Produced?

Why not just live “naturally?”
– live off the earth, as Adam
and Eve did!
PowerPoint Conclusion

Address the 3 Key Economic
Questions:
1. What Should Be Produced?
2. How Should It Be Produced?
3. For Whom Should It Be
Produced?
The Four Types of
Economic Systems or
Models of Development
Four very different types
of Economic Systems
have evolved as
different societies have
placed different
emphasis on different
goals and priorities in
their efforts to answer
the Three Key Economic
Questions.
How do you go from here
to here?
I. Traditional
Economy
Family or
community
based economic
system that
relies on custom
and ritual to
make its
choices.
Examples:
Aborigines (Australia)
Yanomami (Amazon)
Tribes (Africa/Asia)
Any Subsistence Economy
II. Market
Economy
Individual or consumer based
economic system that relies on the
consumption choices of consumers.
 Examples:
 The U.S.A. (Remember this during Food, Inc.)
 Japan
 Most of Latin America
III. Command
Economy
Centrally controlled
economy where the
government makes all
decisions.
 Examples:
 Cuba
 North Korea, China
 Any Communist Country or Dictatorship
IV. Mixed Economy
Command & Free Market
Economic system that incorporates some
governmental involvement into a market
based economy.
 Examples:
 Germany
 Japan
 Mexico
 China
Theory of DEVELOPMENT
 To achieve development countries MUST:
-allocate resources effectively,
-ensure the optimal growth of resources,
-create markets,
-educate its people,
-ensure the flow of economic benefits
(employment; income; retirement)
1. Developed – A nation where the average
income is higher than in developing nations,
where the economy relies on many export goods,
and where farming is conducted by advance
methods.
-High GDP, Exports, Diversification, Education
2. Developing - A nation where the average
income is lower than in industrial nations, where
the economy relies on a few export crops, and
where farming is conducted by primitive
methods.
-Low GDP, Exports, Diversification, Education
GDP - total dollar value of all final goods and services
produced in a nation in a single year.
Exports – goods sold to other countries.
Diversification – spreading of investments among
several different types of accounts to lower overall
risk.
Education- the act or process if imparting or acquiring
general knowledge, developing the powers of
reasoning and judgment, and generally of preparing
one self or others intellectually for mature life.
Crop – the cultivated produced of the ground; i.e.
wheat crop
Primitive – being the first or earliest in existence
Objective: Given
 Relate development to our society
& the 3rd World
 Define 1st and 3rd World
 Explain poverty
the student will compare
and contrast development
in our society and the 3rd
World by creating a
comparison chart listing
characteristics for each,
with 100% accuracy.
Pineda
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Objective: Given
 Definitions of 1st and 3rd World
 Free market solutions
 Barriers of Development
 Marx’s class struggle
TSWBAT write a three
paragraph essay on 1st
and 3rd world, barriers of
development, free market
vs. command, or Marx’s
class struggle, with 90%
accuracy.
Pineda
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UN, Human Development Index, 2009
Defining the 1st and 3rd World
Sao Paolo, Brazil
The World Divided
1. First World –
refers to developed
or industrialized
nations such as
US; most of
Europe; & some of
Asia
2. Third World –
developing nations
such as some
LatAm; most Africa;
parts of Asia
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Characteristics of
rd
the 3 World
1.
Low standard of living: low
incomes, inequality, poor health
and inadequate education
2.
Low level of productivity: low
education standards, low levels
of health care, lack of investment
3.
High rates of population growth
and high dependency ratios i.e.
proportion of the popular under
15 and over 64 who are
supported by people between 15
and 64
4.
High unemployment and
underemployment
Pineda
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Calcutta, India
Four Barriers to Growth
1. Institutional and Political Factors
2. International Financial Barriers
3. International Trade Barriers
4. Social and Political Factors
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I. Institutional & Political Factors
(reasons)
a. Ineffective Tax Systems
b. Political Corruption / Instability
c. Unequal Distribution of Income
d. Informal Market
e. Lack of Infrastructure
Political Instability
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USA
GB
France
Germany
Japan
Italy
Canada
Pineda
Russia
II. International Financial Barriers
a. Debt
b. Non-Convertible Currency
c. Capital Flight
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Pineda
III. International Trade Barriers
a. Single Crop Economy
b. Minimal Exports
c. Maximum Imports
IV. Social & Cultural Barriers
a. Religion
b. Culture
c. Tradition
Market Economics
Ways out of poverty:
I.
Natural Factors: abundance
or natural resources
especially land.
II. Human Factors and Human
Capital: skills, experience,
education and health of the
population
III.Physical Capital:
Accumulation of factors of
production especially
infrastructure
IV.Institutional Factors: banking
and finance
Pineda
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☻The Communist Manifesto
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(1848) Marx & Engels argued
that human history…is the story
of social classes and their
struggles with each other:
bourgeoisie (have) and the
Karl Marx &
proletariat (have not).
Frederick
☻As long as poor and rich exist, Engels on
equality = dream.
Society &
☻Communism: a system in which Its
all property and wealth is owned Problems
in a classless society by all the
members of that society.
Pineda
☻Society’s problems stem from class
struggle – owners of production vs.
workers.
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☻Businesses seek to monopolize
resources to maximize profit.
☻Workers are doomed under Capitalism.
☻Solution to society’s problems: workers
take hold of the means of production.
☻How: proletarian revolution to establish
new Gov’t with a Command Economy
☻Under CE: production is commanded to
serve the interests of the people.
☻Free-Market or Command Economy???
Pineda
Karl Marx
on Society
& its
Problems
Models of Development Short Essay Exam
Directions: on a blank sheet of paper, in the
best writing possible, answer one of the
following questions in 1-3 paragraphs.
 Define the first
and third world.
Provide and
explain at least
three
characteristics of
each.
 Explain the four
barriers of
development or
growth.
 Explain the
“Market Economy”
or “Free Market
Economic” model
AND how this
model offers to
move nations out
of poverty or
towards
development.
 Explain Karl
Marx’s “class
struggle.” Of the
four models of
development,
explain his model
and how it will
bring an end to
the class
struggle.