Week 1: Lecture 1: Economic development

Question 1

1: Who Supports Policies That Foster Economic Growth? 1: and why ?

* Who generally advocates for strong economic growth policies?

Answer 1

1: Political and economic leaders (also judged for it)
2: it is associated with job creation, income, and economic stability.

Question 2

1: How is GDP defined
2: and calculated?

Answer 2

1: Gross domestic product, the monetary value of all services and goods produced within a country within a year.
2: 3 ways:
 Income: Wages, profits, mixed income, and net taxes.
 Output: Total sales minus intermediate inputs, plus taxes minus subsidies.
 Expenditure: Consumption, investment, government purchases, and net exports.

Question 3

What kinds of activities are included or excluded in GDP?

Answer 3

included: : Medical services, weapons, tobacco, timber, oil production, and even cleanup costs for environmental damage.
excluded: Illness-related costs if untreated, lives lost, destruction of nature, air pollution, loss of biodiversity, unpaid/voluntary work, and leisure time, care and housework.

Question 4

What are the limitations of GDP as an indicator of well-being? (Kuznet even warned of it)

Answer 4

GDP does not measure
- household income distribution
- environmental sustainability
- quality of life, or social indicators like governance and social relationships.

Question 5

What did the Sarkozy report note about GDP?

Answer 5

• highlights GDP’s **lack of insight into individual or household welfare, **
• as well as its exclusion of non-material aspects like education, health, and social capital.

Question 6

What arguments (by whom) support the possibility of endless growth?

Answer 6

1: Technological innovation and efficiency gains: as argued by Paul Romer, have historically allowed each generation to overcome perceived resource limits.

**2: Kuznet curve: ** economic growth could lead to environmental improvement at high development levels through innovation and better resource management.

Question 7

What arguments suggest that continuous growth is impossible?

Answer 7

• the planet’s finite resources make indefinite growth unfeasible.
• even if we recycle better: Issues with recycling efficiency (e.g., a maximum of 73% recyclability for materials like paper) imply limits to sustainable growth.

Question 8

What Is the Difference Between Economic Growth and Economic development?

Answer 8

Economic growth:focuses on increasing the size of the economy (GDP).
Economic development: increasing: wellbeing (meaningful jobs, healthy ecosystems, happy lives)