Economic

Development
Todaro and Smith
Chapter 1: Principles and Context

Reported by:
Reyes, Selene
Urbano, Anna
OVERVIEW

1.1 Context
1.2 Development Economics
1.3 What do we mean by development?
1.4 The Future of the MDGs
1.5 Conclusions
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1.1
Context
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While some people experience economic
development through financial freedom,
two-fifths of the worlds population suffer from
absolute poverty.
Absolute poverty: living on less than
$2/day; a condition where minimum
income, health, education, etc. levels are
not met
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In other parts of the world, many also live in a
subsistence economy
Subsistence Economy: production outputs
(e.g. crops) are consumed by the producer
themselves

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 Development: The process of
improving the quality of all
human lives and capabilities by
raising peoples levels of living,
self-esteem, and freedom.

Todaro and Smith (2015)

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In addition to increasing their
income, the poor want their
capabilities and freedoms to be
enriched which is possible through
the attainment of the Millennium
Development Goals and
Sustainable Development Goals. 7
Todaro and Smith emphasizes the importance of developed
countries in the task of the forward or backward movement of
development in less developed countries.
We are becoming more and more interdependent as
technological advancements bridge us closer to one
another.
Ergo, all countries are affected by the rise or fall of one
nation.
Economic Development must thus be studied with the
knowledge of sharing one future with all the other
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nations in the world.
1.2
Understanding
Development Economics

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Development economics
A study that deals with the economic, political, social,
cultural and institutional aspects of society to
determine how and why societies progress and
overcome the problems of absolute poverty or
stagnate even further.
Emphasizes the importance of structural and
institutional changes so that macro-level development
and progress can reach the micro-level
Purpose: Study and help developing economies so that
the material lives of the rest of the population may
improve 10
Why study Development Economics?

The concepts of traditional economics may be

inadequate in terms of explaining the diverse
problems around the world, hence, development
economics aim to aid students in thinking
systematically through the use of analytical
principles and statistical data to create factual
judgements about these issues.

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Development economics also puts a premium on
values, attitudes and institutions that bind
individuals and societies together in the
development process.
Unlike conventional approaches, it recognizes non
quantifiable variables (e.g. influence of religion
on certain issues) in the analysis of the movement
of development .
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1.3
What Do We Mean by
Development?

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Traditional Economics Measures

Development, traditionally meant

achieving sustainable rates of growth of
income per capita, Gross national
income (GNI), and Gross domestic
Product (GDP)

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The New Economic View of Development

Development, as a multidimensional
process that involves major changes in
social structures, national institutions,
economic growth, as well as the
eradication of inequality and poverty.

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Amartya Sen

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Amartya Sens Capability Approach

The expansion of commodity

productions...are valued, ultimately, not
for their own sake, but as a means to
human welfare and freedom.

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 Amartya Sens Capability Approach

We need to think beyond the availability of commodities and

consider their use: to address what Sen calls functionings.
View of people: commodities as an end in itself instead of
a means to an end
Capabilities as having the freedom of choice, or control of
ones own life, is itself a central aspect of well-being.
Well-being means being well (being healthy, nourished,
well-clothed, literate, etc.)
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Amartya Sens Capability Approach

Development as expanding the real

freedoms that people enjoy

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Development as Happiness

Happiness Science
The importance of happiness in
development
Bangladesh, Tanzania, Singapore and
Sweden
Income per capita: $10,000-$20,000 =
high inequality rate

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Development as Happiness

Seven factors that affects the average national

happiness:
Family
Relationships
Financial situation
Work
Community and friends
Health
Personal freedoms and personal values 21
Three Core Values of Development

These core values represent the common goals

sought by all individuals and societies:
1. Sustenance: the ability to meet basic needs
Absolute underdevelopment- absences or
have a short supply of basic needs
2. Self-esteem: Living a life they value
3. Freedom from Servitude: being able to
choose
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Three Objectives of Development

1. To increase the availability & widen the distribution of basic

goods (ex. Food, shelter , security and health)
2. To raise level of living
3. To expand the range of choices (economic and social)

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1.4
The Future of the Millennium
Development Goals
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 September 2000
MDGs addresses the most pressing problems of
developing countries
Halving the global poverty was achieved in 2012
Some argued that the goals of the MDGs were not
ambitious enough
Formulation of the SDGs in 2013
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1.5
Conclusion

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Development Economics concerns itself with
various societal mechanisms to achieve
transformations in society.
Development, however, may have various
meanings which can affect how we pursue it.
Development economics also poses the
questions of who should exercise the power to
make economic decisions and for whom
should they be directed to.
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Mitigating the problems of underdevelopment require
solutions that will allow the interdependent and
interconnected societal forces to work in harmony.
Development is not merely a problem of the less developed
countries but a global concern that entails the combined
efforts of all nations. The fulfillment of the Millennium
Development Goals and the Sustainable Development Goals
through international efforts will constitute a good future for
everyone.
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Reference

Todaro, M. P., & Smith, S. C. (2015). Economic

Development (12th ed.). Upper Saddle River, New
Jersey: Pearson.

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