Economic Development

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• Economic Development
• Read Chapter 19 pages 394- 412
• I The Nature and Challenge of Economic
  Development
• Much of the worlds population live in very poor
  countries with very poor medical care.
• B) Rich and Poor Nations
• 1) A developing country is a country that is
  not among the high-income nations of the world.

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• 2) Two techniques for classification
• a) World Banks International Comparison
  Program (ICP) ranks countries based on purchasing
  power of income.
• b) Simple conversion of per capita GDP based
  on exchange rate.

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• C) Characteristics of Low-Income Countries
• 1) Income Inequality is more extreme as
  indicated by the Lorenz curves.
• 2) Health and Education levels are low.
• 3) Unemployment rates are very high.
• 4) Economies rely on Agriculture.

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• D) Economic Development is a process that
  produces sustained and widely shared gains in per
  capita real GDP.
• United Nations Indexes.
• 1) Human Development Index (HDI)
• 2) Gender Development Index (GDI)
• 3) Human Poverty Index (HPI)

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• II Population Growth and Economic Development
• Population Growth is relatively rapid in
  developing countries.
• B) Per capita income growth Aggregate income
  growth population growth.
• C) High rates of population growth do not
  necessarily imply low rates of growth in per
  capita income.

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• D) The Malthusian Trap and Demographic
  Transition.
• 1) The Malthusian trap is a point at which
  the world is no longer able to meet the food
  requirements of the population and starvation
  becomes the primary check to population growth.
• 2) Thankfully the Malthusian trap has not come
  to pass.
• 3) Furthermore, demographers have identified a
  process of demographic transition in which
  population growth rises with a fall in death rtes
  and then falls with a reduction in birth rates.

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• III Keys to Economic Development
• Domestic Policy and Economic Development
• 1) Market Economies and Development
• 2) The Rule of Law and Development
• 3) Investment and Saving

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• B) International Economic Issues in Development
• 1) Dependency Theory and Trade Policy.
• a) Dependency theory concludes that poverty
  in developing countries is the result of their
  dependence on high-income nations.
• b) Suggests curtailing free trade and
  forcing economic independence.

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• 2) Import Substitution Strategies and
  Export-Led Development
• a) Import substitution is a strategy of
  blocking most imports and substituting domestic
  production of those goods.
• b) Has not been a successful strategy.
• 3) Development and International Financial
  Markets.

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• C) Development Successes Asia and parts of
  Latin America
• 1) Embraced market economies.
• 2) Low levels of government intervention.