Development Economics: the International Perspective Why are some countries rich while others are poor?
* Objective: Given Theory of Development 4 Types of Economic Systems the student will distinguish these systems by writing a short essay discussing how the Three (3) Key Economic questions are addressed by one economic model, with 90% accuracy. Pineda
Development is The sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area. The scope of economic development includes the process and policies by which a nation improves the economic, political, and social well-being of its people Standard of Living A level of material comfort as measured by the goods, services, and luxuries available to an individual, group, or nation.
Specifically, DEVELOPMENT is concerned with 3 Key Questions: 1. What Should Be Produced? 2. How Should It Be Produced? 3. For Whom Should It Be Produced? Why not just live naturally? live off the earth, as Adam and Eve did!
PowerPoint Conclusion Address the 3 Key Economic Questions: 1. What Should Be Produced? 2. How Should It Be Produced? 3. For Whom Should It Be Produced?
The Four Types of Economic Systems or Models of Development Four very different types of Economic Systems have evolved as different societies have placed different emphasis on different goals and priorities in their efforts to answer the Three Key Economic Questions. How do you go from here to here?
I. Traditional Economy Family or community based economic system that relies on custom and ritual to make its choices. Examples: Aborigines (Australia) Yanomami (Amazon) Tribes (Africa/Asia) Any Subsistence Economy
I. Traditional Economy Advantages: Very cultural Very close with family and friends Roles are defined in their tribe/group They look out for each other Disadvantages: It is not very revolutionary Have to hunt at a young age No technology Not much access to goods and services Limited progress
II. Market Economy Individual or consumer based economic system that relies on the consumption choices of consumers. Examples: The U.S.A. (Remember this during Food, Inc. & Cowspiracy) Japan Most of Latin America
II. Market Economy Advantages: Disadvantages: Large variety of goods and services Inequality Individual rights Crime because people can't afford things Not sustainable
III. Command Economy Centrally controlled economy where the government makes all decisions. Examples: Cuba North Korea, China to a degree Any Communist Country or Dictatorship
III. Command Economy Advantages: Disadvantages: Things distributed equally Not much freedom Less crime Less satisfaction of Goods and Services Less poverty No say
IV. Mixed Economy Command & Free Market Economic system that incorporates some governmental involvement into a market based economy. Examples: Germany Japan Mexico China
Theory of DEVELOPMENT To achieve development countries MUST: -allocate resources effectively, -ensure the optimal growth (+) of resources, -create markets, -educate its people, -ensure the flow of economic benefits (employment; income; retirement)
1. Developed A nation where the average income is higher than in developing nations, where the economy relies on many export goods, and where farming is conducted by advance methods. -High GDP, Exports, Diversification, Education 2. Developing - A nation where the average income is lower than in industrial nations, where the economy relies on a few export crops, and where farming is conducted by primitive methods. -Low GDP, Exports, Diversification, Education
GDP - total dollar value of all final goods and services produced in a nation in a single year. Exports goods sold to other countries. Diversification spreading of investments among several different types of accounts to lower overall risk. Education- the act or process if imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing one self or others intellectually for mature life. Crop the cultivated produced of the ground; i.e. wheat crop. Primitive being the first or earliest in existence
Development: Assessment 1 Please discuss how the Three Key Economic Questions are addressed by one of the following economic models. 1. 2. 3. 4. Traditional Economy Free Market (Capitalism) Economy Mixed Economy Command Economy
Objective: Given Relate development to our society & the 3rd World Define 1st and 3rd World Explain poverty the student will compare and contrast development in our society and the 3rd World by creating a comparison chart listing characteristics for each, with 100% accuracy. Pineda *
Objective: Given Definitions of 1st and 3rd World Free market solutions Barriers of Development Marx s class struggle TSWBAT write a three paragraph essay on 1st and 3rd world, barriers of development, free market vs. command, or Marx s class struggle, with 90% accuracy. Pineda *
Defining the 1st and 3rd World Sao Paolo, Brazil
The World Divided 1. First World refers to developed or industrialized nations such as US; most of Europe; & some of Asia 2. Third World developing nations such as some LatAm; most Africa; parts of Asia Pineda *
rd Characteristics of the 3 World 1. Low standard of living: low incomes, inequality, poor health and inadequate education 2. Low level of productivity: low education standards, low levels of health care, lack of investment 3. High rates of population growth and high dependency ratios i.e. proportion of the popular under 15 and over 64 who are supported by people between 15 and 64 4. Calcutta, India High unemployment and underemployment Pineda *
Four Barriers to Growth 1. Institutional and Political Factors 2. International Financial Barriers 3. International Trade Barriers 4. Social and Political Factors Pineda *
I. Institutional & Political Factors (reasons) a. Ineffective Tax Systems b. Political Corruption / Instability c. Unequal Distribution of Income d. Informal Market e. Lack of Infrastructure
Political Instability * USA GB France Germany Japan Italy Canada Russia Pineda
II. International Financial Barriers a. Debt b. Non-Convertible Currency c. Capital Flight
* Pineda
III. International Trade Barriers a. Single Crop Economy b. Minimal Exports c. Maximum Imports
IV. Social & Cultural Barriers a. Religion b. Culture c. Tradition
Market Economics, Ways out of poverty: I. Natural Factors: abundance of natural resources especially land. II. Human Factors and Human Capital: skills, experience, education and health of the population III. Physical Capital: Accumulation of factors of production especially infrastructure IV. Institutional Factors: banking and finance Pineda *
The Communist Manifesto (1848) Marx & Engels argued that human history is the story of social classes and their struggles with each other: bourgeoisie (have) and the proletariat (have not). * Karl Marx & Frederick Communism: a system in which all Engels on property and wealth is owned in a Society & Its classless society by all the Problems members of that society. As long as poor and rich exist, equality = dream. Pineda
Society s problems stem from class struggle owners of production vs. workers. Businesses seek to monopolize resources to maximize profit. Workers are doomed under Capitalism. Solution to society s problems: workers take hold of the means of production. How: proletarian revolution to establish new Gov t with a Command Economy Under CE: production is commanded to serve the interests of the people. Pineda * Karl Marx on Society & its Problems
Models of Development Short Essay Exam Directions: on a blank sheet of paper, in the best writing possible, answer one of the following questions in 1-3 paragraphs. Define the first and third world. Provide and explain at least three characteristics of each. Explain the four barriers of development or growth. Explain the Market Economy or Free Market Economic model AND how this model offers to move nations out of poverty or towards development. Explain Karl Marx s class struggle. Of the four models of development, explain his model and how it will bring an end to the class struggle.