NationMaster - Encyclopedia: Development economics

Development economics is a branch of economics which largely deals with the economic aspects of the development process in developing countries with a focus on methods of promoting economic growth while also dealing “with the economic, social, political and institutional mechanisms, both public and private, necessary to bring about rapid…and large-scale improvemenents in levels of living for the peoples” living in developing countries. Moreover, development economics is a study which attempts to coordinate the yearnings and aspirations of the masses.^[1] Thus, development economics involves the creation of theories which explain and aid in the determination of types of policies and practices, which can be implemented at either the domestic or international level, that will improve the standard of living for the general population of developing countries.^[2] This may involve using mathematical methods from dynamical systems like differential equations and inter-temporal optimization, or it may involve a mixture of quantitative and qualitative methods. Unlike many other fields of economics, many theories of development economics incorporate social and political strategies to devise particular plans for development in developing countries. ^[1] A developing country is a country with low average income compared to the world average. ... This article needs additional references or sources to facilitate its verification. ... In engineering and mathematics, a dynamical system is a deterministic process in which a functions value changes over time according to a rule that is defined in terms of the functions current value. ... In mathematics, a differential equation is an equation in which the derivatives of a function appear as variables. ... In mathematics, the term optimization, or mathematical programming, refers to the study of problems in which one seeks to minimize or maximize a real function by systematically choosing the values of real or integer variables from within an allowed set. ...

Theories of Development Economics

Linear-stages-of-growth model

The earliest theory of development economics, the linear-stages-of-growth model was first formulated in the 1950s by W. W. Rostow in The Stages of Growth. This theory focuses on the accelerated accumulation of capital, through the utilization of both domestic and international savings as a means of spurring investment, as the primary means of promoting economic growth and, thus, development.^[1] The linear-stages-of-growth model posits that there are a series of five consecutive stages of development which all countries must go through during the process of development. These stages are “the traditional society, the pre-conditions for take-off, the take-off, the drive to maturity, and the age of high mass-consumption”^[3] This theory gave further rise to the Harrod-Domar Model which serves to explain through mathematics the basic assumption that improved capital investment leads to greater economic growth.^[1] The Harrod-Domar model is used in development economics to explain an economys growth rate in terms of the level of saving and productivity of capital. ...

This theory has been criticized for not recognizing that, while necessary, capital accumulation is not a sufficient condition for development. That is to say that this early and simplistic theory failed to account for political, social and institutional obstacles to development. Furthermore, this theory was developed in the early years of the Cold War and was largely derived from the successes of the Marshall Plan. This has led to the major criticism that the theory assumes that the conditions found in developing countries are the same as those found in post-WWII Europe.^[1] For other uses, see Cold War (disambiguation). ... Map of Cold-War era Europe and the Near East showing countries that received Marshall Plan aid. ...

Structural-change theory

Structural-change theory deals with policies focused on changing the economic structures of developing countries from being primarily comprised of subsistence agricultural practices to being a “more modern, more urbanized, and more industrially diverse manufacturing and service economy.” There are two major forms of structural-change theory; W. Lewis’ two-sector surplus model, which views agrarian societies as consisting of large amounts of surplus labor which can be utilized to spur the development of an urbanized industrial sector, and Hollis Chenery’s patterns of development approach, which is the empirical analysis of the “sequential process through which the economic, industrial and institutional structure of an underdeveloped economy is transformed over time to permit new industries to replace traditional agriculture as the engine of economic growth.” ^[1]

Structural-change approaches to development economics have faced criticism for their emphasis on urban development at the expense of rural development which can lead to a substantial rise in inequality between internal regions of a country. The two-sector surplus model, which was developed in the 1950s, has been further criticized for its underlying assumption that predominantly agrarian societies suffer from a surplus of labor. Actual empirical studies have shown that such labor surpluses are only seasonal and drawing such labor to urban areas can result in a collapse of the agricultural sector. The patterns of development approach has been criticized for lacking a theoretical framework.^[1]

International dependence theory

International dependence theories gained prominence in the 1970s as a reaction to the failure of earlier theories to lead to widespread successes in international development. Unlike earlier theories, international dependence theories have their origins in developing countries and view obstacles to development as being primarily external in nature, rather than internal. These theories view developing countries as being economically and politically dependent on more powerful, developed countries which have an interest in maintaining their dominant position. There are three different, major formulations of international dependence theory; neocolonial dependence theory, the false-paradigm model and the dualistic-dependence model. The first formulation of international dependence theory, neocolonial dependence theory has its origins in Marxism and views the failure of many developing nations to undergo successful development as being the result of the historical development of the international capitalist system.^[1] This article is about International Development. ... Marxism takes its name from the praxis (the synthesis of philosophy and political action) of Karl Marx and Friedrich Engels. ...

Neoclassical theory

First gaining prominency with the rise of several conservative governments in the West during the 1980s, neoclassical theories represents a radical shift away from International Dependence Theories. Neoclassical theories argue that governments should not intervene in the economy; in other words, these theories are claiming that an unobstructed free market is the best means of inducing rapid and successful development. Competitive free markets unrestrained by excessive government regulation are seen as being able to naturally ensure that the allocation of resources occurs with ergdgthe greatest efficiency possible and the economic growth is raised and stabilized.^[1] A compass rose with west highlighted This article refers to the cardinal direction; for other uses see West (disambiguation). ... A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy...

It is important to note that there are several different approaches within the realm of neoclassical theory, each with subtle, but important, differences in their views regarding the extent to which the market should be left unregulated. These different takes on neoclassical theory are the free market approach, public-choice theory, and the market-friendly approach. Of the three, both the free-market approach and public-choice theory contend that the market should be totally free, meaning that any intervention by the government is necessarily bad. Public-choice theory is arguably the more radical of the two with its view, closely associated with libertarianism, that governments themselves are rarely good and therefore should be as minimal as possible.^[1] This article does not adequately cite its references. ...

The market-friendly approach, unlike the other two, is a more recent development and is often associated with the World Bank. This approach still advocates free markets but recognizes that there are many imperfections in the markets of many developing nations and thus argues that some government intervention is an effective means of fixing such imperfections^[1] Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means...

Topics of Research

Development economics also includes topics such as Third World debt, and the functions of such organisations as the International Monetary Fund and World Bank. Many economists in this field are interested in ways of promoting stable and sustainable growth in poor countries and areas, by promoting self reliance and education in some of the lowest income countries in the world. Where economic issues merge with social and political ones, it is referred to as development studies. For the Jamaican reggae band, see Third World (band). ... This article needs additional references or sources to facilitate its verification. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means... Development studies is the multi-disciplinary branch of social science which addresses issues of concern to developing nations. ...

Criticisms

Per capita Gross Domestic Product (GDP per head) is used by many developmental economists as an approximation of general national well-being. However, these measures are criticized as not measuring economic growth well enough, especially in countries where there is much economic activity that is not part of measured financial transactions (such as housekeeping and self-homebuilding), or where funding is not available for accurate measurements to be made publicly available for other economists to use in their studies (including private and institutional fraud, in some countries). Even though per-capita GDP as measured can make economic well-being appear smaller than it really is in some developing countries, the discrepancy could be still bigger in a developed country where people may perform outside of financial transactions an even higher-value service than housekeeping or homebuilding as gifts or in their own households, such as counseling, lifestyle coaching, a more valuable home décor service, and time management. Even free choice can be considered to add value to lifestyles without necessarily increasing the financial transaction amounts. More recent theories of Human Development have begun to see beyond purely financial measures of development, for example with measures such as medical care available, education, equality, and political freedom. One measure used is the Genuine Progress Indicator, which relates strongly to theories of distributive justice. Actual knowledge about what creates growth is largely unproven; however recent advances in econometrics and more accurate measurements in many countries is creating new knowledge by compensating for the effects of variables to determine probable causes out of merely correlational statistics. The Genuine Progress Indicator (GPI) is a concept in green economics and welfare economics that has been suggested as a replacement metric for gross domestic product (GDP) as a metric of economic growth. ... Distributive justice - Wikipedia, the free encyclopedia /**/ @import /skins-1. ... Econometrics literally means economic measurement. It is a combination of mathematical economics and statistics. ...

Recent developments

The most prominent contemporary development economist is perhaps the Nobel laureate Amartya Sen. Recent theories revolve around questions about what variables or inputs correlate or affect economic growth the most: elementary, secondary, or higher education, government policy stability, low tariffs, fair court systems, available infrastructure, availability of medical care, prenatal care and clean water, ease of entry and exit into trade, and equality of income distribution (for example, as indicated by the Gini coefficient), and how to advise governments about macroeconomic policies, which include all policies that affect the economy. Education enables countries to adapt the latest technology and creates an environment for new innovations. The cause of limited growth and divergence in economic growth lies in the high rate of acceleration of technological change by a small number of developed countries. These countries’ acceleration of technology was due to increased incentive structures for mass education which in turn created a framework for the population to create and adapt new innovations and methods. Furthermore, the content of their education was composed of secular schooling that resulted in higher productivity levels and modern economic growth. The Nobel Prizes (pronounced no-BELL or no-bell) are awarded annually to people who have done outstanding research, invented groundbreaking techniques or equipment, or made outstanding contributions to society. ... This article does not cite any references or sources. ... Graphical representation of the Gini coefficient The Gini coefficient is a measure of inequality of a distribution. ...

References

See also

Development studies is the multi-disciplinary branch of social science which addresses issues of concern to developing nations. ... Alvin Toffler Alvin Toffler (born October 3, 1928) is an American writer and futurist, known for his works discussing the digital revolution, communications revolution, corporate revolution and technological singularity. ... For other meanings of development used in and outside social sciences, see development. ... This is a list of important publications in economics, organized by field. ... Sustainable development is defined by its proponents as balancing the fulfillment of human needs with the protection of the natural environment so that these needs can be met not only in the present, but in the indefinite future. ... Economic development is a sustainable increase in living standards that implies increased per capita income, better education and health as well as environmental protection. ... The concept of right-financing was coined by English Political Economist Dr. Peter Middlebrook to highlight the importance of adopting the appropriate policy, institutional and financial support mechanisms to maximize sustainable returns on both public and private investments over time. ... This article is about International Development. ... The UN Human Development Index (HDI) measures poverty, literacy, education, life expectancy, and other factors. ... Graphical representation of the Gini coefficient The Gini coefficient is a measure of inequality of a distribution. ... The Lorenz curve is a graphical representation of the cumulative distribution function of a probability distribution; it is a graph showing the proportion of the distribution assumed by the bottom y% of the values. ... The Harrod-Domar model is used in development economics to explain an economys growth rate in terms of the level of saving and productivity of capital. ... Debt relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. ... Sir William Arthur Lewis (January 23, 1915 â€“ June 15, 1991) was a British economist well known for his contributions in the field of economic development. ... Walt Whitman Rostow showing President Lyndon B. Johnson a model of the Khe Sanh area, 1968 Walt Whitman Rostow, October 7th, 1968 Walt Whitman Rostow (also known as Walt Rostow or W.W. Rostow) (October 7, 1916 â€“ February 13, 2003) was an American economist and political theorist who served as...

External links

Categories: Articles lacking sources from January 2007 | All articles lacking sources | Development | Development studies | Economic development Wikimedia Commons has media related to: Waste For the company, see Waste Management, Inc. ... The living machine at Oberlin College with a settlement tank in the foreground and filtering tanks in the background Living Machines are a form of biological wastewater treatment designed to mimic the cleansing functions of wetlands. ... Mycoremediation is a form of bioremediation, the process of using microbes to return an environment (usually soil) contaminated by pollutants to a less contaminated state. ... Sustainable development is defined by its proponents as balancing the fulfillment of human needs with the protection of the natural environment so that these needs can be met not only in the present, but in the indefinite future. ... Contents // Categories: Stub | United Nations specialized agencies | Sustainability | Development ... Human development theory is an economic theory that merges older ideas from ecological economics, sustainable development, welfare economics, and feminist economics. ... Practical Action - the working name of Intermediate Technology Development Group (ITDG) – is a charity registered in the United Kingdom which works directly in four regions of the developing world – Latin America, East Africa, Southern Africa and South Asia, with particular concentration on Peru, Kenya, Sudan, Zimbabwe, Sri Lanka... Maldevelopment is the state of an organism or an organisation that did not develop in the normal way (used in medicine, e. ... The precautionary principle is a moral and political principle which states that if an action or policy might cause severe or irreversible harm to the public, in the absence of a scientific consensus that harm would not ensue, the burden of proof falls on those who would advocate taking the... The Rio Declaration on Environment and Development, often shortened to Rio Declaration, was a short document produced at the 1992 United Nations Conference on Environment and Development (UNCED), informally known as the Earth Summit. ... According to its web site, Rocky Mountain Institute is an entrepreneurial nonprofit organization that fosters the efficient and restorative use of natural, human and other capital to make the world more secure, just, prosperous, and life-sustaining. ... Sim Van der Ryn is acknowledged as a leader in sustainable architecture. ... Underdevelopment is the state of an organism or of an organisation (e. ... The World Business Council for Sustainable Development (WBCSD) bis a CEO-led, global association of some 190 companies dealing exclusively with business and sustainable development. ... It has been suggested that this article or section be merged with Earth Summit 2002. ...

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