Development Economics

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Development Economics

• Introduction
• http//www.inra.fr/internet/Departements/ESR/UR/le
  a/ressourc/

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• Emerged as a field in the 50s and 60s
• To study the development process, i.e. growth.
  (Rostow)
• Inducing growth necessitates structural changes
  to pass from a traditional/backward/rural/subsist
  ence economy to a modern/technology-based/market
  oriented/urban one.
• Hence the question was how to induce structural
  changes?
• Industrialisation and investment
  (Rosenstein-Rodan, Nurkse)
• Labour market issues how to move workers from
  the rural sector to factories and service
  industries? (Lewis, Harris Todaro)

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What is development economics?(2)

• New issues emerged population control, income
  redistribution, institutions and contracts, good
  governance, social capital, welfare women
  children, environment
• Today, development economics deals with the
  economics of non-occidental societies, mainly
  poor and changing.
• Mostly using a micro-approach, notably since the
  mid-80s when household level data for developing
  countries became available.
• Role of poverty and inequality in shaping the
  conditions under which people take their
  decisions.
• Emphasis on field work (notably with the recent
  and strong turn towards impact evaluation).
• Intersection with other social sciences.

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• Reduction of absolute poverty
• Monetary
• Human rights (liberties, health, education)
• And
•  Modernisation  of non-occidental societies
• Change in preferences
• Change in institutions

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Outline

• Introduction - Descriptive elements
• Poverty, Inequality
• Population, Gender,Health,Nutrition
• Intra-household resources allocation
• Rural Households Models
• Risk and Insurance
• Saving and Credit markets

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Outline (2)

• Education
• Labor markets, dualism, child labour
• Migrations, remittances
• Land markets, Property rights
• Technology Adoption

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Descriptive elements

• Development gap
• Millenium Development Goals
• Rural sector

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Development gaps
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Mobility 1962-1984
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Mobility 1980-2002
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Schooling and Literacy
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Health and Mortality
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Millenium development goals

• Goal 1 Eradicate extreme poverty and hunger
• Target 1Halve, between 1990 and 2015, the
  proportion of people whose income is less than 1
  a day
• Goal 2 Achieve universal primary education
• Goal 3 Promote gender equality and empower women
• Target 4 Eliminate gender disparity in primary
  and secondary education, preferably by 2005, and
  in all levels of education no later than 2015
• Goal 4 Reduce child mortality
• Target 5 Reduce by two-thirds, between 1990 and
  2015, the under-five mortality rate
• Goal 5 Improve maternal health
• Target 6 Reduce by three-quarters, between 1990
  and 2015, the maternal mortality ratio
• Goal 6 Combat HIV/AIDS, malaria, and other
  diseases
• Target 7 Have halted by 2015 and begun to
  reverse the spreadof HIV/AIDS

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MDG (2)

• Goal 7 Ensure environmental sustainability
• Target 10 Halve, by 2015, the proportion of
  people without sustainable access to safe
  drinking water and basic sanitation
• Goal 8 Develop a global partnership for
  development
• Target 13 Address the special needs of the
  least developed countriesIncludes tariff and
  quota free access for the least developed
  countries exports enhanced programme of debt
  relief for heavily indebted poor countries (HIPC)
  and cancellation of official bilateral debt and
  more generous ODA for countries committed to
  poverty reduction

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Goal 1 Reducing poverty Share of people living
on less than 1 or 2 a day ()
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While accelerating growth in India has put South
Asia on track to meet the goal, Sub-Saharan
Africa lags behind. In some countries poverty
rates exceed 70 percent. East Asia has
experienced a sustained period of economic
growth, led by China, while Latin America and the
Caribbean has stagnated, with little poverty
reduction. The transition economies of Europe and
Central Asia saw poverty rates rise in the 1990s
and then fall. There and in the Middle East and
North Africa consumption of 2 a day may be a
more realistic limit of extreme poverty.
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Goal 2 Educating all children.Primary
completion rate ()
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Neither Sub-Saharan Africa nor South Asia are on
track to achieve the goal, but in both regions
some countries have shown it can be done. East
Asia and Pacific and Latin America and the
Caribbean are close to universal primary
education. Slow progress in Europe and Central
Asia reflects the dislocations of the transition
period. In the Middle East and North Africa there
has been a decline in completion rates for boys.
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Goal 4 Saving children. Under-five
mortality rate (deaths per 1,000)
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The gap between goal and reality is greatest in
Sub-Saharan Africa, but millions of children are
also at risk in populous South Asia. The pace of
mortality reduction in East Asia and Pacific is
slowing. The regional average in Latin America
and the Caribbean disguises wide
variations. Although Europe and Central Asia
appears to be on track, questions remain about
the quality and comparability of data over time.
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Goal 6Combating disease. Adult (ages
1549) HIV prevalence rate ()
HIV has infected more than 60 million people
worldwide. Each day 14,000 people are newly
infected, more than half of them under age 25. At
the end of 2004, 37 million adults and 2 million
children were living with HIV/AIDSmore than
95 percent of them in developing countries and
70 percent in Sub-Saharan Africa.The proportion
of adults living with HIV/AIDS in Sub-Saharan
Africa has stabilizednot because the epidemic
has been halted, but because the death rate now
equals the rate of new cases. While prevalence
rates are lower in other regions, the numbers are
growing. There were almost a million new cases in
South and East Asia, where more than 7 million
people now live with HIV/AIDS.
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Incidence of tuberculosis (per 100,000 people)
Each year there are 8 million new cases of
tuberculosis3 million in South and East Asia, 2
million in Sub-Saharan Africa, and more than a
quarter million in countries of the former Soviet
Union.      The disease has spread fastest in
poor countries with ineffective health systems.
Poorly managed tuberculosis programs allow
drug-resistant strains to spread. The World
Health Organization has developed a treatment
strategyDOTSthat emphasizes positive diagnosis
followed by a course of treatment and follow-up
care. DOTS has proven successful, but many cases
of tuberculosis still go undetected or untreated.
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Malaria deaths by age and location, 2000 (per
100,000)
Malaria is a disease of poverty and a cause of
poverty. About 90 percent of malaria deaths occur
in Sub-Saharan Africa, where a million people die
each year, most of them children under five and
most poor. In Zambia malaria prevalence is almost
three times higher among the poorest 20 percent
as among the wealthiest. Malaria has slowed
economic growth in Africa by an estimated
1.3 percent a year (World Bank 2001).
Insecticide-treated bed nets are effective in
preventing new infections but are not widely
available. With the emergence of drug-resistant
strains, new means of treatment and prevention
are urgently needed.
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Goal 7 Access to waterPopulation without access
to an improved water source ()
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In Sub-Saharan Africa 300 million people lack
access to improved water sources. South Asia has
made excellent progress, but contamination of
water sources poses new risks. In East Asia rapid
urbanization is posing a challenge for the
provision of water and other public utilities.
With faster progress here and in other regions,
the world as a whole will achieve the target.
Data are lacking for Europe and Central Asia in
the early 1990s. In the Middle East and North
Africa, Egypt, Tunisia, and Morocco have made the
fastest progress. 
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The rule of law is associated with better overall
economic performance (figure 6.3), and in this
sense it also promotes poverty reduction. It does
this by creating a predictable and secure
environment for economic agents to engage in
production, trade, and investment, thereby
expanding poor peoples employment opportunities
and incomes.15 Market mechanisms depend on
credible threats of punishment for breaking
contractual obligations, backed by prompt methods
for resolving disputes and enforcing contracts.
Without these deterrents, the transactions costs
of doing business can be very high.
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Rural population