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Summary Introduction to the Economics of Development
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Summary Course : Introduction to the Economics of Development
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ECONOMICS OF DEVELOPMENTC1 : FACTS AND FIGURES..................................................................................................................................... 3
C2 : INDICATORS AND ISSUES OF DEVELOPMENT............................................................................................... 6
C3 : ANALYSING DEVELOPMENT QUESTIONS ................................................................................................... 14
C4 : INSTITUTIONS AND ECONOMIC DEVELOPMENT ........................................................................................ 17
C6 : INSTITUTIONS AND LIBERALIZATION.......................................................................................................... 24
C7 : GEOGRAPHY AND HISTORY ........................................................................................................................ 28
C8 : THEORIES OF ECONOMIC GROWTH AND DEVELOPMENT ......................................................................... 36
C9 : POPULATION AND HUMAN CAPITAL.......................................................................................................... 41
C10 : MIGRATION .............................................................................................................................................. 46
C11 : HISTORY OF AID AND THE AID DEBATE .................................................................................................... 51
C12 : CREDIT MARKETS, MICROFINANCE AND FINANCING FOR DEVELOPMENT ............................................. 57
C13 : NATURAL RESOURCE CURSE .................................................................................................................... 62
C14 : AGRICULTURE & DEVELOPMENT ............................................................................................................. 70
C15 : FOOD AND HUNGER ................................................................................................................................. 76
C16 : ENVIRONMENT AND DEVELOPMENT ....................................................................................................... 81
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, C1 : FACTS AND FIGURES
GLOBAL INEQUALITIES
four facts on global inequalities
I. large differences worldwide in quality of life
< indicators : life expectancy, child mortality, adult literacy, happiness, income (GDP per capita) …
II. differences are strongly linked to income
≈ correlation income and indicators life expectancy (+), literacy (decreasing marginal return) …
!! link ≠ necessarily linear
> economist often focus on income (proxy development)
III. everyone used to be poor
= converging world (convergence theory) : countries with lower levels of GDP per capita catch up to
countries with higher levels of GDP per capita
+ industrial revolution : increase knowledge and scale leading to exponential growth in income
IV. it’s getting better
= countries can become healthier, richer and happier
< economic growth is important!
HISTORY OF ECONOMIC DEVOLPMENT
Europe and North America constant economic growth
Latin America setback during 1980s (lost decade)
Japan and Four Tigers growth miracle in 1960s-1980s
Africa stagnation between independence and 1990s
stagnation/decline post-COVID
China strong growth since 1978; India: since 1990
result : millions lifted out of poverty
Former Soviet Union crash after end of communism
, economic growth started in the "west"
= W-EU first to experience continuous economic growth
< industrial revolution : more production of goods and services
+ political power (colonies as a result!)
Japan catches up
< 19th CE : JA imitating West (Meiji period)
< 20th CE : strong industrialization
< WWI : extremely strong economic growth after WWII
East Asia’s growth miracle
< Four Asian Tigers : spectacular growth during 1960s-1980s
(Hong Kong, Singapore, Taiwan, South Korea now high-income countries)
< others growing strongly as well (middle-income countries)
!! Asia was comparable to Africa until 1960s
China and India (Asia’s large economies)
< reforms with spectacular results in CH (1978 after death of Mao)
< big populations (1.4 billion and 1.3 billion)
< increasing amount of people being lifted out of poverty
Africa’s Growth Tragedy
- slow and negative growth since 1960s
- SSA hosts many of poorest countries (large differences and exceptions)
Latin America’s Difficult Growth
+ income growth acceptable rate until 1980
- lost decade (1980s) : debt crisis
- fundamental problems : high inequality > political struggle (elite / populists)
Great Experiments : Former Communist Countries
= former communists countries / strong government control
- communism did not work as expected :
incentive and information problems + economic problems
- mixed effects free market reforms : CH ⟷ SU and EA-EU
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