1. Why is economics central to the understanding problems of economic development?

To simply define economics, it is the analysis of the production, distribution, and

consumption of finished goods and services to satisfy people needs and wants. The
economy of a country visibly exhibit how well the people live and how well they make use of
scarce resources. Basically, economics is invaluable to understand the problems of
economic development as these problems couldn't be found, analyzed, and mitigated if
there is little to no understanding about how economics work. Limited understanding how
economics move could lead a county to stagnation causing it to have continuously
increasing number of unresolved economic problems.

2. Why is an understanding of development crucial to policy formulation in developing nations?

There are various means on understanding what development pertains to. Hence, when
talking about economics, development could mean as the process of expanding the real
freedom that people enjoys. This freedom could pertain to the ability of the people to choose
from different alternatives according to their preferences. Thorough understanding about
development is crucial for policy formulation as it will assist in determining what aspects of
the economy should be prioritized first. Recognizing development provides insight into the
overall trajectory of the economy and is critical to policy formation in developing countries
since a deeper understanding enables the creation of a wide variety of plans and efficient
management of economics. Developing nations could experience and face more problems
and difficulties in this process so they must examine well how to minimize its deteriorating or
disturbing effects for the planned development. Policy formulation must focus on how to turn
unsatisfactory situation into a much better experience. When people understand how to
develop a nation, they would be able to establish an action plan that would enhance the
chances of having a well-developed country.

3. Why is a strictly economic definition of development inadequate?

To summarize, the strictly economic definition of development focuses on achieving

sustained rates of growth of income per capita. This means that there are steps that must be
followed to compute for the development of economy of a country. This definition is
inadequate as the performance of the economy couldn't be really measured mathematically
but more on the situation experiencing by the people. Using this definition and mathematical
way of computing for the said development, the economic situation in a country could mean
that it is growing hence the situation of the people stays in stagnation and is not improving.
A well-developed economy does not only depend on some mathematical processes but also
to the freedom that people could enjoy such us unleashing their potentials, quality
education, access to job, and social services welfare.
4. How does the concept of capabilities to function help us gain insight into development goals
and achievements?

The capability of humans to function has a significant impact on the economy because it
allows people to freely choose on how and what can he make out of the commodities he
possesses. This freedom allows consumer to maximize the output of given commodities for
the betterment of their selves and the economy. With the help of it, communities could gain
benefits in order to attain the objectives or goals that further improve advancement of such
communities. People will not be bounded by the walls that could prevent them to move and
decide with this capability to function. With a freedom like this, workers would have a wider
range of insight and variety of action-plans that they could provide.

5. What critical issues are raised from the examination of development, problems, and
prospects facing Brazil? Read Case Study 1 Progress at the end of Chapter 1.

Brazil is a country that had gone through rigorous progresses and struggles to obtain a
more meaningful development. For the past decades or years, their economy had been
growing inconsistently due to different reasons and situations. There was uneven pace of
development in the country that resulted for them to experience “growth without
development.” In Brazil, the years 1980s and 1990s had been described as their “lost
decades” for the development of the country since there was an ongoing debt crisis, years
of stagnant incomes, and an extremely high inflation. Despite some improvement, the
country has continued to see a higher percentage of its population in poverty and high crime
remains a problem, especially in the favelas (slums). Brazil also remains as one of the
countries with the highest levels of inequality in the world. As of 2007, the country ranked
just 85th on the United Nations Development Programme’s (UNDP) 2013 Human
Development Index. For the year 2011, 7% of all children under the age of 5 still suffer from
malnutrition and the country also suffers from a high incidence of child labor for its income
level despite the country’s having officially made the eradication of child labor a priority. The
UNDP therefore created a conclusion that the unequal distribution of social spending is a
major factor for the continuous inequality and poverty of the country. Bulk of the benefits
goes to the middle classes and the rich. For example, four-fifths of the money from
scholarships goes to the richest fifth of the population. Public universities offer free tuition to
mostly high-income undergrads as well as grad students. Moreover, the quality of primary
schools in poor areas remains low. The highly concentrated distributions of income were
worsened by inequitable social spending which extremely contributed to the persistence of
poverty in Brazil. Their prolonged status as a highly indebted country was a substantial drag
on their growth performance. A slower improvement in health, education, and community
development can feed back to a slower rate of growth. High and growing taxes may have
also slowed formal-sector employment growth. Honestly speaking, people will avoid higher
and growing taxes especially if they look at it as a burden to them. Brazil’s labor force now
works in the informal sector where taxes may be avoided. 10.8% of the population of Brazil
lived on less than $2 per day, 6.1% lived in extreme poverty with incomes below $1.25 per
day, 15% of Brazilians have incomes of less than $1 a day, and lastly, many local
government workers receive the minimum wage. Aside from the unequal social spending
and income distribution, land is also unequally distributed in the country. Land reform has
been repeatedly blocked in Brazil by the political power of large plantation owners
(fazenderos), therefore the farmers have also settled in fragile rain forest areas, finding
themselves unable to acquire land in areas that are more agriculturally suitable and less
ecologically sensitive. Speaking of land, Brazilians across the political spectrum did not
acknowledge the destruction of forests as a genuine or pressing problem on the earlier
years. And now, a lot of the subsidies from the economic activities in the Amazon have now
been withdrawn and some protections and “extractive reserves” have been put in place, but
rain forest destruction is hard to reverse. The last critical issue of Brazil that was mentioned
in the case study is the racial discrimination towards the mulatto heritage. Although racial
discrimination is a crime in Brazil, no one has ever been sent to jail for it. The average black
worker receives only 41% of the salary of the average white worker. Most of the millions of
Brazilians living in the worst favelas, or shantytown slums, are black. Black representation in
government is shockingly rare, even in the states where nonwhites make up a majority of
the population.