Overview

Question 1

Amartya Sen development theory

Answer 1

Development should be devoted to investigate the:

• “(S)ocial arrangements. in terms of their contribution to enhancing and guaranteeing the substantive freedoms of individuals seen as active agents of change, rather than passive recipients of dispenses benefits’’
• Freedom is both the primary end and the principal means of development.
• “The extent of the real freedom to live the kind of life that people have reason to value”
• “Development requires the removal of mayor sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or over activity of repressive states”

Question 2

Mainstream approach

Answer 2

Well-being = Wealth = Income, so an increase in well-being equals an increase in wealth of nations, which increases the income in GDP terms.
- Technological change is the way to achieve economic growth

Question 3

Unfreedoms

Answer 3

• Famines, little access to health care, to sanitary arrangements, to cleanwater (Unfreedom to survive).
• Undernutrition (Unfreedom to live well).
• Violation of political liberty and basic civil rights (Unfreedom to express the one own personality).

They are all constitutive (Grundlæggende) elements of development. They should be guaranteed in terms of themselves, and not in terms of their contribution to means of development, such as growth of income.

Question 4

Neoclassical Economic Theory

Answer 4

A theory that believes that individual decisions are the outcome of an optimization process in which the others’ wishes and impact are not taken into account. If a person has both option x and y available and he/her chooses y, it is because the person actually prefers option y over option x.

Question 5

Behavioral Economics

Answer 5

It is seen as a solution to the limits of neoclassical economic theory, since it is shown in reality that people have moral sentiments.

Behavioral economics is an approach to understand, explain and predict human behavior taking into account the human mind functioning, and the role played by social interaction.

Question 6

Automatic thinking (Kahneman)

Answer 6

System A +System B

Question 7

System A: Automatic thinking

Answer 7

• It is fast, effortless, associative and not subject to voluntary control.
• Humans engage in this system when they identify an emotion by a facial expression, or understand the point of a discussion in a second.
• It creates feelings and impressions.

Question 8

System B: Deliberative thinking

Answer 8

It is slow, effortful and reflective.

• Engaging in this system requires high concentration and cognitive capacities.
• Humans find it difficult to engage in this system for a continued period of time.

Ex. It works when we solve math or when we aim to self-control an impulse
It evaluates the feelings and expressions made in system A.

Question 9

Thinking socially

Answer 9

Here the consideration that human behavior has social micro-foundations, has been considered. People have social preferences rather than self-centered, self-interested preferences only, so most people fail to be self-interested at all times.

People value non-monetary regards such as status, recognition and friendly working environments.

Ex. The political in Columbia, who took a shower with his wife.

Question 10

Thinking mentally

Answer 10

• The mental models are the shared understandings in a community. It includes identities and stereotypes. It also includes discourses of causality.
• Mental models have an impact on integration, since the common belief is that immigrants make greater use of public services than the native population even though it might not be true. Mental models do NOT require to be true in order to exist and spread.

Question 11

Clark Doll test

Answer 11

It’s an experiment with two dolls, one black and one white.

• Black doll = Bad and ugly according to the kids
• White doll = Good

The young children prefer the white doll because it is white, has blue eyes and is apparently therefore more trustworthy and nice. They see the black doll as more ugly and less trustworthy.

Question 12

Poverty trap (Duflo and Benerjee)

Answer 12

A poverty trap means the impossibility to escape from poverty given the current societal and individual characteristics. It is at the level of individuals or countries.

Question 13

Nudging

Answer 13

The idea behind nodging is to affect the context so that people make decisions that increase their well-being.
- Nudge theory argues that if we wish to alter people’s behaviour in a particular direction, it is more effective to encourage positive choices rather than restricting unwanted behaviour with sanctions.

Question 14

Confirmation bias

Answer 14

It is the ability to understand the information that affects our decisions. It is the propensity of human beings to align the new information with their preconceptions of the world.

• The tendency to interpret the new information in line with one’s own perceptions of reality.
• The perception to focus on the details that help enforce your own opinion, and to overlook that information that fails to support your own understanding of the world.

“The probability to answer a question correctly depends on the alignment between the one’s own view of the world and the correct answer.

Question 15

Sunk cost bias

Answer 15

The propensity to continue with a project where you already invested energy, time and resources, although evidence strongly points to the failure of the full project.

Question 16

“Global learning crisis” Talk by Amel K.

Answer 16

Today many kids go to school, but they fail to learn. It needs to change so people learn as well and not just attend. You should learn from the best in your class, look at what they do and do the same.

Question 17

Neoclassical economics
(Education in the literature)

Answer 17

• Education, and schooling, is seen as a label.
• Schooling is seen as an investment that turns into money for children when they become adults.
• Schooling is seen as a personal development for skill attainment.

Question 18

Marxists economics

Education in the literature

Answer 18

• Schooling is seen as an institution that helps to “Institutionalize” individuals and, therefore, to reproduce capitalist labor structure.
• If critical thinking vanishes, critical thinking fails to be productive.

Question 19

“Being healthy”

Answer 19

• To be able to do what you want to (Freedom)
• To be happy and physically well → Said by one who already fulfilled the basic needs.
• To be mentally healthy → Nurse, who experienced horrible things
• To be able to do basic chores
• To have good living conditions
• To be able to go to work → Poor person in India, because she sees it as survival.

Question 20

Health

Answer 20

Health is a multifaceted concept and not easy to measure. WHO definition: “Health is a state of complete physical and mental well-being and not merely the absence of disease or infirmity”
- Health is an important part of human capital.

Question 21

Health care

Answer 21

The prevention, treatment and management of illness and the prevention of mental and physical well-being through the services offered by the medical and allied health professions.

Question 22

The difference between heath and health care

Answer 22

The difference between health and health care is that health care can be traded on the market, but health cannot. Also, we demand and use health services, but are worried about our health.

Question 23

Preventive care

Answer 23

• Preventive care is a combination of medical practices that are designed to avoid disease and illness.
• Preventive care is highly effective and a cheap health investment to prevent diseases and promote good health.

Question 24

Malnutrition

Answer 24

A condition that happens when your diet does not contain the right amount of nutrients. It refers to undernutrition or overnutrition. It can cause:
Undernutrition, Growth delay, Global denutrition, Wasting, Chronic malnutrition, Stunting, Low weight

Question 25

The causes of malnutrition

Answer 25

Basic: Poverty, type of public policies and institutions.

Intermediate causes: Food insecurity, inadequate social environment, care and health services.

Immediate causes: Inadequate feeding practices and infections.

Question 26

Chronic hunger

Nutrition related concepts

Answer 26

Undernourishment caused by not ingesting enough energy to lead a normal, active life. It is linked to constant lack of food security.

Question 27

Undernutrition

Nutrition related concepts

Answer 27

The lack of energy, due to deficits in calories, proteins and some nutrients. It includes low weight for age and low height for age.

Question 28

Food security

Nutrition related concepts

Answer 28

People are considered food secure when they have availability and adequate access at all times to sufficient, safe nutritious food to maintain a healthy and active life. It includes food availability, access and utilization.

Question 29

Wasting (Acute undernutrition)

Answer 29

• Rapid deterioration in nutritional status over a short period of time
• Non compatible with life
• Indicator: Weight for height (Low weight compared to the height)

Question 30

Chronic malnutrition (stunting)

Answer 30

• Exposed during a long period of time to lack of adequate food and recurrent infections.
• Availability of food but lack of essential nutrients.
• Compatible with life (Hidden hunger: Often not visible, but can have big bellies))
• Indicator: Height for age (Low height compared to age)

Question 31

Moderate malnutrition

Answer 31

It is in between a healthy child who lives in an adequate environment and the child who is severely malnourished and lives in a hostile and polluted environment.

Question 32

Millennium development goals: 1990-2015

Answer 32

• Reducing to half the proportion of people with hunger.
• Reducing to half the prevalence of children under 5 years old with low weight.
• Reducing the proportion of the population with consumption of calories under the minimum level.

Question 33

Sustainable development goals: 2015-2030

Answer 33

• End poverty
• End hunger, achieve food security, improve nutrition, and sustainable agriculture.
• Ensure healthy lives.
• Ensure quality education and learning
• Achieve gender equality and empowerment
• Ensure sustainable water and sanitation
• Ensure sustainable consumption and production patterns
• Revitalize global partnerships

Question 34

Income gini coefficient

Measures of inequality

Answer 34

This is a measure of the deviation of the distribution of income among individuals or households within a country from perfectly equal distribution. A value of 0 represents absolute equality, a value of 100 means absolute inequality.

Question 35

Income quintile ratio

Measures of inequality

Answer 35

This is the ratio of the average income of the richest 20% of the population to the average income of the poorest 20% of the population.

Question 36

Inherited inequality

Answer 36

Children of high-income parents obtain bequests that include wealth, but children of low-income parents do not.

Question 37

Job segregation

Answer 37

It is the distribution of workers across and within occupations, based on demographic characteristics ex. gender. Woman and men differ in their choices of studies and job

• Women choose: Secretaries, elementary school teachers and nurses. Women choose jobs that are paid worse.
• Men choose: Carpenters, mechanical engineers and airplane pilots.

Question 38

Neoclassical decision theory

Answer 38

This theory is following the fundamentals of neoclassical paradigm, which support that the allocation of family duties is guided by:

• The comparative advantage of an individual
• The bargaining power of an individual

Question 39

Preference for sons

Answer 39

A couple is likely to develop preference for sons due to a historical background of female disadvantage.

Question 40

Microcredits

Answer 40

The lending of small amounts of money at low interest to new businesses in the developing world

Question 41

Microsavings

Answer 41

Microsavings is a form of microfinance where organizations and financial institutions encourage individuals to save money. Microsavings accounts are similar to traditional savings accounts, but are designed for small deposits.

Question 42

“A world of 3 0´s (0 poverty, 0 emission, 0 unemployment) by Mohamad Yunus

Answer 42

According to Mohamad, people are selfless. He thinks that people should be a business, a social business. Kids should be taught to work for profit business or for social business or little of both. It should be a choice, which they dont have today. Also, people should not be working for others, they should be their own entrepreneur. He provides financial support to those who want to become entrepreneurs, especially women. He believes that poor people become alive when they get the right resources to grow and be creative.

Question 43

Governance

Answer 43

Governance is the process and institutions by which authority in a country is exercised:

1. The process by which governments are selected, held accountable, monitored and replaced.
2. The capacity of governments to manage resources efficiently, and to formulate, implement and norce sound policies and regulations; and
3. The respect for the institutions that govern economic and social interactions among them

Question 44

Misgovernance

Answer 44

Misgovernance is a bad or corrupt government.

Misgovernance results in poverty through various channels – reduced growth being a key one

Question 45

Acemoglu and Daron (Robinson)

Why Nations fail

Answer 45

• Until political institutions are fixed, countries can not really develop.
• Good economic institutions will encourage citizens to invest, accumulate, and develop new technologies, making societies more prosperous.
• Bad institutions tend to perpetuate bad institutions: the vicious circle, sometimes called “the iron law of oligarchy”
• How to break the vicious circle? Through Social/Economic/Policital revolution or a big outbreak

Question 46

Jeffrey Sachs (Why nations fail)

Answer 46

Corruption and poverty trap: more aid to implement basic programs in order to reduce poverty and improve living standards, what in turn will empower civil society and governments to mantain the rule of law

Question 47

Paul Romer

Answer 47

If you cannot run your country subcontract it to someone that can.

Question 48

William Easterly

Answer 48

• The real problem of development is not one of figuring out good policies, but to sort out the political process.
• If the politics are right, good policies will emerge. Leave the countries alone to solve their problems, example: Iraq and US.
• Give freedom to a country to develop democracy, and emanate their own institutions from the bottom up.

Question 49

Paul Collier

Answer 49

Countries stuck in a vicious circle of bad economic and bad political institutions: it is the duty of western countries to rescue them, if necessary through military interventions.

Question 50

Duflo

Answer 50

• Like Acemoglu they do not support the imposition of institutions from outside.
• Differently to Acemoglu they see a lot of significant institutional changes happening, at the margin, in the absence of an outside invasion or a full-scale social revolution.

Question 51

Geographic theories by Jared Diamond

The reason for the differences between countries in poverty and the patterns of growth

Answer 51

Differences come from different endowments of plant and animal species, which influenced agricultural productivity.

Question 52

Cultural reasons

The reason for the differences between countries in poverty and the patterns of growth

Answer 52

Prosperity and culture ( beliefs, ethics, values, religion etc…)
Example:
- Africans are poor because they lack good work ethic
- Latin Americans are poor because they are intrinsically profligate and impecunious, and have the iberian culture of “manaña” (meaning tomorrow*).

The culture hypothesis can be right. Social norms are difficult to change and may support institutional differences

Question 53

The ignorance hypothesis

The reason for the differences between countries in poverty and the patterns of growth

Answer 53

• Our rulers do not know how to make poor countries rich.
• There were no differences between Cortes and John Smith in terms of ignorance. There were differences in the institutional constraints that the countries´s presidents and elites were facing.

Question 54

The institutional hypothesis (Acemoglus & Robinson + Douglas North)
(The reason for the differences between countries in poverty and the patterns of growth)

Answer 54

Nations sometimes manage to adopt efficient institutions and achieve prosperity but most do not. This is the study of politics and political process, which is crucial to understand world inequality.

Question 55

The role of institutions according to Douglass North

Answer 55

• Douglass North: role of institutions as “to reduce uncertainty by establishing a stable (but not necessarily efficient) structure to human interaction”.
• “Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction”. Douglas North

Question 56

Institutions

Answer 56

Institutions are: Humanly devised; sets constraints; shapes incentives.

• Political institutions: Political rules of the game (democracy versus dictatorship, electoral law)
• Economic institutions: Economic rules of the game (property rights, contracting institutions)

Question 57

How to model institutions:

4 views

Answer 57

Efficiency institutions view
Society or the economic agents will choose whichever set of institutions and regulations will maximize the size of the “pie”.
**this is not that realistic

The social conflict view
Institutions emerge as a result of economic agents´ conflicting preferences. They are not necessarily efficient.
North: there is: “persistent tension between the ownership structure which maximizes the rents to the ruler (and his group) and an efficient system that reduces transaction costs and encourages economic growth”.
Major barrier to efficiency: commitment problems

The ideology/beliefs view
Different institutions chosen as a result of different beliefs. But where do beliefs come from?

The incidental institutions view
Institutions emerge as a byproduct of other interactions: Historical accidents

Question 58

Two types of political power.

Answer 58

Formal institutions - De jure power
De jure political power is allocated by political institutions (such as constitutions or electoral system)
For example, whether a country has a Supreme Court, Separation of power, Parliamentary system etc.…
*this is the rules, ideally what should happen

Informal institutions - De facto power
De facto political power emerges from the ability to engage in collective action, use brute force, paramilitaries, armies, or other channels such as lobbying and bribery.
For example, may Latin American countries have a presidential system similar to the U.S, but in practice, they have very different “political institutions”
*this is what happens in real practice

Question 59

Aid

w. conditionalities and without

Answer 59

With conditionalities: COnditions on the way the money is spens and government recipient policies

Without conditionalities: For example, budget support from bilateral donors.

Question 60

Multilateral institutions/organizations

Answer 60

• These are organizations formed between three or more nations to work on issues that relate to all of the countries in the organization.
• These institutions can play a variety of goals, such as: increase trade, improve infrastructure, peacekeeping, promote good governance, develop technology, provide health and education etc.
• Ex. United Nations Development Program (UNDP), World Bank Super-national bodies that have been created with representatives from the governments of many member states. These may be closed groups, e.g. NATO or theoretically open organizations, e.g. the United Nations.

Question 61

Big Push theory (1970)

Answer 61

The Big Push Theory is a concept that emphasizes that a firm’s decision whether to industrialize or not, depends on its expectation of what other firms will do. It assumes economies of scale and oligopolistic market structure and explains when industrialization would happen.

Question 62

Bilateral organizations

Type of organisation

Answer 62

​​A bilateral organization is a government agency or nonprofit organization that receives funding from its home country’s government to then be used toward a developing country. This aid is more specifically targeted than multilateral aid, which may go through an international organization such as the United Nations.

Question 63

Civil society organizations

Type of organisation

Answer 63

Also known as Non-Governmental Organizations (NGOs), Non-Profits & Not-for-Profits.
Civil society is an umbrella term for an extremely diverse and numerous group, including charities, religious and private foundations. There are both international and national civil society groups.

Civil society groups are started and owned by private individuals or organizations. They are independent of governments, but may receive (in some cases substantial) funding from governments.

Question 64

Private sector

Type of organisation

Answer 64

This is a term that describes any privately owned group or person involved in profitable activities. Of course this is a huge group, and distinct from the other categories as organizations within the private sector are all for-profit.

Question 65

Research institutions

Type of organisation

Answer 65

Defined as any group involved in investigative study for scientific or educational purposes. They may be privately owned or funded by the state.

Question 66

Conditionality

Answer 66

• Conditionality is when donors offer aid or money buy only under certain conditions.
• When countries put conditions with their aid, it is commonly assumed that the sole objective of conditionality is to induce policy change.

Question 67

The 5 objectives of conditionality

Answer 67

1. Induce change in policies
2. Selectivity
3. Paternalism
4. Restraint
5. Signalling

Question 68

How to achieve sustainability and inclusive green growth?

Answer 68

• Civil society
• Private firms
• Factors of change for the firms
• Government
• New financing methods
• New macroeconomic indicators