Topic 1 - Intro Flashcards
what is development
the process of expanding the real freedoms that people enjoy (includes social & economic arrangements, as well as political & civil rights)
neoclassical economics includes:
perfect markets, consumer sovereignty, automatic price adjustment, equilibrium, rationality, decisions based on marginal/private/profit/utility calculations
traditional economics
efficient, least-cost, allocation of scarce productive resources - is focused on optimal growth
development economics
the efficient allocation of existing scarce resources
frictions of development economics
sustained growth, social, political, institutional, cultural factors, historical factors, religious factors
“poor but efficient”
they do the best they can given their circumstances/constraints
“poor but neo-classsical”
not necessarily efficient, agents are rational but there are market inefficiencies
current development policy approach
fix deficiencies
current development research agenda
rigorous evaluations of interventions to fix these deficiencies
Gross Domestic Product (GDP)
market value of all goods and services produced within a country in a given period of time
Gross National Product (GNP)
market value of all goods and services produced by permanent residents of a nation within a given period of time
Human Development Index (HDI)
weighted average of life expectancy, education index (based on mean years of schooling and expected years of schooling, GNI/Cap)
0 = lowest value (low HDI)
1 = highest value (high HDI)
problems with using aggregate measures (such as HDI)
inequality, sensitivity to measure, regional/gender differences, gross not net, missing important sectors of economy (ie household, informal, etc)
Purchasing Power Parity (PPP)
computes exchange rates between currencies of different countries so that the same basket of goods in any two different countries has the same dollar value (helps make cross country comparisons)
