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Atanu DeyMTWTh 2:00 PM – 3:30 PM
3 Le Cont
Discussions of the assignment Questions
21-06-2011Meeting 2 / N171 / Atanu Dey 2
“Economic history is overwhelmingly a story of economies that failed to produce a set of economic rules of the game (with enforcement) that induce sustained economic growth.” -- Douglass North, Nobel Laureate
Policies matter Politics matter
21-06-2011Meeting 2 / N171 / Atanu Dey 3
Gunnar Myrdal Swedish Nobel Laureate economist said 50 years ago that Asia will be mired in poverty◦ Asia was already taking off.◦ 50 years of successes in East Asia
China is the A-class students of American economics◦ In just 15 years, more than 450 million Chinese got out
of poverty between 1990 and 2005
Africa population with less than $1.25 per day went from <300 to 388 million in 2005
MDG of poverty reduction will not be achieved
21-06-2011Meeting 2 / N171 / Atanu Dey 4
What accounts for the successful?◦ Botswana is very successful cases. Why?
Data exists in huge piles. But making right inferences is hard.
Growth is necessary but not sufficient for long term poverty reduction
US median income 2009 is lower than it was in 1997.◦ GDP has increased, GDP per capita has increased◦ People in the middle and bottom are not doing
well.
21-06-2011Meeting 2 / N171 / Atanu Dey 5
They are distinct Growth is necessary but not sufficient for
poverty reduction How to get growth How are the benefits of growth to be shared 50 years ago it was shortage of capital for
poor countries – The World Bank The WB failed to make the promised
difference The focus was to change to policies
21-06-2011Meeting 2 / N171 / Atanu Dey 6
Output per US worker 10 times that of a worker in India, and 50 times that of a worker in Congo
Real income per capita ◦ US: $48k, India: $3K, Congo: $280
World Bank defines◦ Low-income countries < $975 (2008 $)◦ Lower-middle > $976 < $3855◦ Upper-middle > $3856 < $11,906◦ High-income > $11,907
21-06-2011Meeting 2 / N171 / Atanu Dey 7
What is a developing country? Emerging markets? Newly industrialized countries
21-06-2011Meeting 2 / N171 / Atanu Dey 8
Real income: per capita adjusted for purchasing power (Measure of the standard of living)
Health: life expectancy at birth, child mortality and undernourishment
Education by literacy and years of schooling Human Development Index of the UNDP
◦ See the Human Development Reports◦ http://hdr.undp.org/en/statistics/◦ Play around here http://hdr.undp.org/en/data/trends/ to see the trends
21-06-2011Meeting 2 / N171 / Atanu Dey 9
Lower levels of productivity and living Lower levels of human capital (health,
education, skills) Higher levels of inequality and absolute
poverty◦ 20% of the poorest people globally receive on
1.5% of the world income (1.4 billion people)◦ Living on less than $1.25 income per day◦ What would it require to bring everyone above
this poverty line?
21-06-2011Meeting 2 / N171 / Atanu Dey 10
About 2% of the income of the richest 10%
Scale of global inequality is unfathomable
Even within countries, there are extremes of wealth
21-06-2011Meeting 2 / N171 / Atanu Dey 11
Higher population growth rates◦ 1800 CE: < 1 billion◦ 1900 CE: 1.65 billion◦ 2000 CE: 6 billion◦ Late 2011: 7 billion
Large rural populations and rapid rural-urban migration
Lower levels of industrialization and manufactured exports
Adverse geography◦ Tropical or semi-tropical
21-06-2011Meeting 2 / N171 / Atanu Dey 12
Underdeveloped markets Lingering colonial impacts
◦ Extractive and exploitative policies◦ Not development oriented
21-06-2011Meeting 2 / N171 / Atanu Dey 13
Physical and Human Resource Endowments Relative Levels of Per Capita Income and GDP Climatic differences Population size, distribution and growth The role of International Migration
◦ 60 million migrated to the Americas between 1850 and 1914 (world population was a fourth of today’s)
Brain drain? Free trade
21-06-2011Meeting 2 / N171 / Atanu Dey 14
Next time
21-06-2011Meeting 2 / N171 / Atanu Dey 15