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A.P. Thirlwall
Economics of Development
Economics of Development
Economics of Development
Interest revived in 1930s, with Harrods famous paper An Essay in Dynamic Theory (Economic Journal, 1939).
Development economics has attracted some of worlds most distinguished economists: Partha Dasgupta; Albert Hirschman; Nicholas Kaldor; Simon Kuznets; Harvey Leibenstein; Arthur Lewis; James Mirrlees; Gunnar Myrdal; Joan Robinson; Dani Rodrik; Amartya Sen; Hans Singer, and Joseph Stiglitz.
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Economics of Development
Development economics has pioneered such concepts as: Low-level equilibrium trap Theory of the big push
Dynamic externalities
Models of dualism Theory of circular and cumulative causation
Dependency theory
Growth pole analysis
Economics of Development
Since, there has been the Lima Declaration (1975); the Arusha Declaration (1980); the Copenhagen Declaration (1995), etc. all calling for more equal relations between rich and poor countries in fields of trade, finance and employment. The world is strong on rhetoric, but weak on action.
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Economics of Development
Achievement of some goals is on track, but others not. Progress differs from continent to continent; country to country. Most of Africa will not achieve any of the goals. 7
Economics of Development
Economics of Development
Economics of Development
Amartya Sen focuses on entitlements and capabilities of people, which depend not only on income but on power relations in society; spatial distribution of resources, and what individuals can extract from the State. Challenge of development economics is to understand, and meet, these core components of development to give individuals freedom.
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Economics of Development
Perpetuation of Underdevelopment
Many factors perpetuate poverty:
Backwardness of agriculture Risk-averse nature of poor people in agriculture Low saving because of low income, leading to low savings a classic vicious circle Rapid population growth, depressing per capita income, leading to larger families Structure of production: poor countries specialising in primary commodities Structure of trade: poor countries exporting primary commodities and importing manufactures Deterioration in terms of trade of poor countries Difficulty of poor countries competing in world markets
Divisions in world economy will persist without tackling these biases That is also the challenge of development economics.
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Economics of Development
Learning Objectives
You should now know:
Origins of development economics What the subject is all about Concepts that development economists/economics have invented Components of a new international economic order (NIEO) Millennium Development Goals Meaning of globalisation and interdependence of world economy Challenges of globalisation Meaning of economic development: ideas of Goulet and Sen Challenges of development economics Forces that perpetuate underdevelopment and divisions in world economy between rich and poor
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Economics of Development
Chapter Summary
Development economics originated after World War II, and has attracted many of worlds top economists Development economics concerned with why some countries are rich and others poor, and forces which perpetuate country divisions Poor countries need fairer deal in world economy to develop more rapidly Millennium Development Goals on track in some countries, but not Africa Globalisation presents opportunities for poor countries, but also challenges Development means more than rising per capita income, particularly expanding entitlements and capabilities of people to provide basic needs, self esteem and freedom. Many poor countries are caught in vicious circles of poverty. Great challenge of development policy is to break these vicious circles.
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