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Economic Development, 11th Edition.pdf
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Preface xix
Part One Principles and Concepts 1
1 Introducing Economic Development:
A Global Perspective 2
1.1 How the Other Half Live 2
1.2 Economics and Development Studies 7
The Nature of Development Economics 7
Why Study Development Economics? Some Critical Questions 9
The Important Role of Values in Development Economics 12
Economies as Social Systems: The Need to Go Beyond Simple Economics 13
1.3 What Do We Mean by Development? 14
Traditional Economic Measures 14
The New Economic View of Development 14
Amartya Sen’s “Capability” Approach 16
Development and Happiness 19
Three Core Values of Development 20
The Central Role of Women 22
The Three Objectives of Development 22
1.4 The Millennium Development Goals 23
1.5 Conclusions 25
■ Case Study 1:Progress in the Struggle for More Meaningful Development: Brazil 28
2 Comparative Economic Development 37
Lower Levels of Living and Productivity 57
Lower Levels of Human Capital 59
Higher Levels of Inequality and Absolute Poverty 61
Higher Population Growth Rates 62
Greater Social Fractionalization 64
Larger Rural Populations but Rapid Rural-to-Urban Migration 65
Lower Levels of Industrialization and Manufactured Exports 66
Adverse Geography 67
Underdeveloped Markets 68
Lingering Colonial Impacts and Unequal International Relations 69
2.5 How Low-Income Countries Today Differ from Developed Countries in Their
Earlier Stages 71
Physical and Human Resource Endowments 71
Relative Levels of Per Capita Income and GDP 72
Climatic Differences 72
Population Size, Distribution, and Growth 73
The Historical Role of International Migration 73
The Growth Stimulus of International Trade 76
Basic Scientific and Technological Research and Development Capabilities 76
Efficacy of Domestic Institutions 77
2.6 Are Living Standards of Developing and Developed Nations Converging? 78
2.7 Long-Run Causes of Comparative Development 83
2.8 Concluding Observations 91
■ Case Study 2: Comparative Economic Development: Pakistan and Bangladesh 94
3 Classic Theories of Economic Growth and Development 109
3.1 Classic Theories of Economic Development: Four Approaches 110
3.2 Development as Growth and the Linear-Stages Theories 110
Rostow’s Stages of Growth 111
The Harrod-Domar Growth Model 112
Obstacles and Constraints 114
Necessary versus Sufficient Conditions: Some Criticisms of the Stages Model 114
3.3 Structural-Change Models 115
The Lewis Theory of Development 115
Structural Change and Patterns of Development 120
Conclusions and Implications 121
Appendix 3.1 Components of Economic Growth 140
Appendix 3.2 The Solow Neoclassical Growth Model 146
Appendix 3.3 Endogenous Growth Theory 150
4 Contemporary Models of Development and Underdevelopment 155
4.1 Underdevelopment as a Coordination Failure 156
4.2 Multiple Equilibria: A Diagrammatic Approach 159
4.3 Starting Economic Development: The Big Push 163
The Big Push: A Graphical Model 165
Other Cases in Which a Big Push May Be Necessary 170
Why the Problem Cannot Be Solved by a Super-Entrepreneur 171
4.4 Further Problems of Multiple Equilibria 172
4.5 Michael Kremer’s O-Ring Theory of Economic Development 176
The O-Ring Model 176
Implications of the O-Ring Theory 179
4.6 Economic Development as Self-Discovery 180
4.7 The Hausmann-Rodrik-Velasco Growth Diagnostics Framework 182
4.8 Conclusions 185
■ Case Study 4: Understanding a Development Miracle: China 189
Part Two Problems and Policies: Domestic 201
5 Poverty, Inequality, and Development 202
5.1 Measuring Inequality and Poverty 204
Measuring Inequality 204
Measuring Absolute Poverty 211
5.2 Poverty, Inequality, and Social Welfare 219
What’s So Bad about Extreme Inequality? 219
Dualistic Development and Shifting Lorenz Curves: Some Stylized Typologies 221
Kuznets’s Inverted-U Hypothesis 224
Growth and Inequality 228
5.3 Absolute Poverty: Extent and Magnitude 229
Growth and Poverty 232
5.4 Economic Characteristics of High-Poverty Groups 235
ix Contents
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