CONCEPT AND THEORIES OF DEVELOPMENT (ECN814)

PREPARED BY:
OKETOBO ADEKUNLE SAMUEL

MATRIC NO;
219081007

DEPARTMENT OF ECONOMICS.

UNIVERSITY OF LAGOS
1) Create a one-statement definition of Economic Developm

2) Read and Review Chapter 1 and 2.

CHAPTER 1

1: Introducing Economic Development: A Global Perspective

Perspectives on the meaning of development:

Traditional Economic Measures (1)

Development has traditionally meant achieving sustained rates of growth of
income per capita. Focused on increasing output (GDP).
→Seen as a purely economic phenomenon.
Countries managed to reach higher GNI levels, but the majority of people was still living in
poverty.

Income per capita = Total gross national income of a country divided by

total population.

Gross national income (GNI) = The total domestic and foreign output claimed by residents of a
country. It comprises gross domestic product (GDP) plus factor incomes accruing to residents from
abroad, less the income earned in the domestic economy accruing to persons abroad.

Gross domestic product (GDP) = The total final output of goods and services produced by the
country’s economy, within the country’s territory, by residents and nonresidents, regardless of its
allocation between domestic and foreign claims.

The New Economic View of Development (2)

With economic growth targets reached but with the levels of living of the masses remaining
unchanged a new view developed. Economic development was redefined: The reduction or
elimination of poverty, inequality, and unemployment within the context of a growing economy.
→ “redistribution form growth” became the new slogan.

Amartya Sen’s ‘Capability” Approach

Amartya Sen:
• Nobel price winner economics 1998
• Leading thinker on the meaning of development
• Main publication: Development as Freedom
 How dos Amartya Sen define development?

Amartya Sen defines development as the “capability to function” from a poor to a

non- poor person. Sen argues that poverty cannot be properly measured by
income, but should be measured by what a person is, or can be, and does, or can
do. This also means looking not only at the characteristics of the commodities
consumed, but also how they are consumed. (Called = Functionings)

Book: Development as Freedom

• Development is the process of expanding freedoms that people enjoy;
• Growth of GNI can be very important as a means to expanding freedoms enjoyed;
• But freedom also depends on other determinants, such as social and economic
arrangements (e.g., facilities for education and health care) as well as political and
civil rights.
• Development requires the removal of major sources of unfreedom (tyranny, poverty,
social deprivation, neglect of public facilities etc.).
• Despite unprecedented increases in overall wealth, the modern world denies
elementary freedoms to vast numbers, perhaps even the majority, of people.

Three Core Values of Development

• Sustenance: The Ability to Meet Basic Needs
• Self-Esteem: To Be a Person
• Freedom from Servitude: To Be Able to Choose

The Three Objectives of Development

1. Increase availability of life-sustaining goods
• Food
• Shelter
• Health
• Protection
2. Raise levels of living
• Higher incomes
• More jobs
• Better education
• Greater attention to cultural and human values
3. Expand range of economic and social choices
• By freeing individuals and nations from servitude and dependence

The Millennium Development Goals

Millennium Development Goals (MDGs) A set of eight goals adopted by the United
Nations in 2000: to eradicate extreme poverty and hunger; achieve universal primary
education; promote gender equality and empower women; reduce child mortality; improve
maternal health; combat HIV/AIDS, malaria, and other diseases; ensure environmental
sustainability; and develop a global partnership for development. The goals are assigned
specific targets to be achieved by 2015.

The millennium development goals for 2015:

1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower woman
4. Reduce chill mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

Critique, Evaluation and Conclusions

Michael P. Todaro's definition of development has been widely accepted in the field of
economics and international development. According to Todaro, "development is the
multifaceted process of economic transformation and social progress." While this definition
is incredibly broad and allows for a variety of interpretations, it fails to address certain key
aspects of development.

While Todaro's definition of development is comprehensive and allows for a variety of

interpretations, it fails to address certain key aspects of development, such as varying levels
of development among countries and regions, the role of institutions in development, and
the need for sustainability.

Todaro's Chapter 1 of Developmental Economics fails to provide an in-depth overview of the

important topics and challenges related to development economics and how it relates to
other areas of economic study, such as health and poverty. The focus on economic growth,
which forms the basis for the Chapter, does not sufficiently address the social and political
aspects, which are necessary for the development of a country. In addition, the chapter does
not provide an adequate explanation of the various concepts and theories related to
development economics; there is a lack of detail and examples necessary to truly
comprehend the topics raised. The chapter also fails to provide a comprehensive overview
of the external environmental factors that affect the economic policies of a country and its
development. Furthermore, there is also a scarcity of references and resources necessary to
continue exploring the different facets of development economics. All in all, this chapter does
not provide a comprehensive exploration of the numerous topics and issues related to
development economics.

Despites these weakness from the chapter one of Economics Development text book by
Todaro and Smith I would still recommend the book to anybody who has an interest in
economics development.
 CHAPTER TWO

2: Comparative Economic Development

10 common features of developing countries:

1. Lower levels of living and productivity
2. Lower levels of human capital
3. Higher levels of inequality and absolute poverty
4. Higher population growth rates
5. Greater social fractionalization
6. Larger rural population - rapid migration to cities
7. Lower levels of industrialization and manufactured exports
8. Adverse geography
9. Underdeveloped financial and other markets
10. Colonial Legacies

How Low income Countries Today differ from Developed Counties in their
Early Stages

8 Differences:
1. Physical and human resource endowments
2. Per capita incomes and levels of GDP in relation to the rest of the world
3. Climate
4. Population size, distribution, and growth
5. Historic role of international migration
6. International trade benefits
7. Basic scientific/technological research and development capabilities
8. Efficacy of domestic institutions

Historic role of international migration

migration is a topical issue in many countries all over the world (illegal migration, asylum seekers
etc.)

What is meant by the phenomenon “brain drain”?

Answer:
The emigration of highly educated and skilled professionals and technicians from
the developing countries to the developed world.

Why is this often called a “perverse” development?

Answer:
The people who migrate from poor to richer countries are the very ones that developing countries
can least afford to lose: the highly educated and skilled
Are Living Standards of Developing and Developed Nations Converging?

Evidence of unconditional union is hard to find But there is increasing evidence of “per capita
income convergence,” weighting changes in per capita income by population size

Long-Run Causes of Comparative Development

• Geography
• Institutional quality- colonial and post-colonial
• Colonial legacy precolonial comparativeadvantage
• Evolution and timing of European development
• Inequality- human capital
• Type of colonial regime

Nature and Role of Economic Institutions

• Institutions provide “rules of the game” of economic life
• Provide underpinning of a market economy
• Include property rights; contract enforcement
• Can work for improving coordination,
• Restricting coercive, fraudulent and anti-competitive behavior
• Providing access to opportunities for the broad population-
• Constraining the power of elites, and managing conflict
• Provision of social insurance
• Provision of predictable macroeconomic stability

Evaluation and Conclusions

Todaro and Smith's textbook, Chapter Two on economic development, has several pertinent
criticisms that can be made. Firstly, it pays little attention to the role of informal and
subsistence economies in developing countries, understating the importance of these sectors
and their contribution to the overall economy. Secondly, the authors fail to emphasize the
importance of infrastructure and how it can support sustainable economic growth. Finally,
the authors do not provide enough detail on how specific policies such as taxation, subsidies
and labor market reforms can be used to implement economic development strategies.
These omissions weaken the overall argument and reduce the usefulness of the text as a
reference resource.