Development Economics

DEVELOPMENT ECONOMICS
(LESSON 1-I)
Remmy Kampamba, PhD
remmyk75@yahoo.co.uk
ECN 4235: DEVELOPMENT ECONOMICS
February 6, 2023
Remmy Kampamba, PhD (UNZA) ECN 4235: Development Economics February 6, 2023 1 / 26
OUTLINE OF THE LESSON
INTRODUCTION TO DEVELOPMENT THEORIES
1 COURSE OUTLINE
2 INTRODUCTION
3 MEANING OF DEVELOPMENT
4 THE CHALLENGE OF DEVELOPMENT ECONOMICS
5 MEASURING ECONOMIC GROWTH AND DEVELOPMENT
6 CHARACTERISTICS OF UNDERDEVELOPMENT
COURSE OUTLINE
OBJECTIVES OF THE COURSE:
By the end of the course, you should be able to:
• Demonstrate knowledge of the nature, scope and methodology of

development economics.
• Demonstrate understanding of the development and

underdevelopment, structural and dualistic theories of development,
growth theories, and structural adjustment; and
• Depict the basis for applied and advanced study of development

economics.
COURSE CONTENT
1 Introduction to Development Theories
2 Poverty, Inequality, and Development
3 Review of Growth Theories
4 Structural Adjustment
5 The Structural Transformation
6 Planning and Development
7 Foreign Resources, Debt and Development
8 Population and Development

Refer to the Detailed ECN 4235 Course Outline for the details of the
Course!
INTRODUCTION
• On September 11, 2001, the Twin Towers of the World Trade Center
in New York City collapsed after being struck by two commercial
airliners commandeered by suicide terrorists.
• All told, nearly 3,000 perished in the attacks.
• The world community responded to this aggression with outrage and

support, both material and moral.
• On December 26, 2004, the second-most powerful earthquake ever

recorded struck in the Indian Ocean, setting off a series of tsunamis
that struck coastal areas of Indonesia, Thailand, Sri Lanka, India,
Somalia, and other countries on the east coast of Africa.
• Some 187,000 died from these devastating walls of water and rising
tides, with another 43,000 listed as missing.
INTRODUCTION
• What do these two events have to do with economic development?
• Wasn’t 9/11 a tragic political attack, while the tsunami was an

unpredictable natural catastrophe? What does either have to do with
economics? The answer, in both cases, is: a lot.
INTRODUCTION
• Many of those killed by the tsunamis were the very poor who lived in
low-lying areas prone to flooding from the yearly monsoons.
• A tsunami of the size that stuck in 2004 is, thankfully, a very rare
occurrence, but low-quality housing construction and the absence of
man-made barriers to flooding contributed to the deadly outcome.
• With greater economic progress in the affected countries, human

devastation from future natural disasters could be reduced
dramatically.
INTRODUCTION
• What about the attack on the World Trade Center? Surely that
cannot be linked to issues of economic development? Read what
economist Jeffrey Sachs (2005: 215) had to say:
• terrorism has complex and varying causes . . . To fight terrorism, we
will need to fight poverty and deprivation as well . . . we need to
address the underlying weaknesses of the societies in which terrorism
lurks – extreme poverty; mass unmet needs for jobs, incomes, and
dignity; and the political and economic instability that results from
degrading human conditions.
• So, economic development is about life-and-death issues. Literally.
INTRODUCTION
• Now consider the following facts:
• some 35,000 children under the age of five die daily (12 million
annually) in the less-developed world.
• more than seven million adults die each year in less - developed world
from illnesses such as tuberculosis and malaria and other diseases that
could be prevented or cured.
• Further, since the 1980s the HIV/AIDS epidemic in many African
countries has decimated and even reversed what limited progress.
• Most of these deaths are rooted in extreme poverty and deprivation,

including famine and sometimes civil war.
• Need economic, political and social structural transformation/change
..... in less developed world.
MEANING OF DEVELOPMENT
What is Economics?
• Economics is often defined as the study of “how societies can best

allocate scarce resources among alternative uses” so as to maximize
satisfaction or utility.
• The allocation of society’s resources is assumed to take place within a
given institutional and organizational setting that is taken to be
exogenous to the analysis done by the economist.
• This operating framework of orthodox, or neoclassical, economics in
which the allocation of existing resources occurs within a given and
presumably immutable or slowly changing social and institutional
structure has been the key to the robust analysis and the predictive
capability of modern economic models.
• These are the theories
Remmy Kampamba, PhD (UNZA) studied
ECN 4235: in most
Development introductoryFebruary
Economics and intermediate
6, 2023 10 / 26
• The real-world process of a country becoming more developed, of
getting on the path to development, and shedding the ways of the
past that resulted in low growth rates and limited progress, is not,
however, simply about the efficient allocation of existing resources
within a given institutional regime.
• It is not simply about maximizing utility or profits within the
constraints of what is currently available to that society and inherited
from the past.
• Rather, development is fundamentally about regime change and about
the search for an optimal growth path, or at least one that is superior
to the existing allocation of resources and current efficiency levels.
• Further, fomenting development typically requires substantially new
institutional patterns and organizational structures necessary to
support such a dynamic process of change.
• For the less-developed nations, development compels them to
undertake substantial qualitative structural change.
• There are a number of major structural changes and patterns
identified by development economists and economic historians that are
believed to be characteristic of any successful development process:
• Increase in Industrialisation;
• A decrease in Agriculture;
• Changing Trade Patterns;
• Increased Application of Human Capital and Knowledge in Production;
and
• Undertaking Essential Institutional Change
INTRODUCTION TO DEVELOPMENT
THEORIES:MEANING OF DEVELOPMENT
WHAT IS DEVELOPMENT?
Traditional Economic Measures:
• In strictly economic terms, development has traditionally meant

achieving sustained rates of growth of income per capita to enable a
nation to expand its output at a rate faster than the growth rate of its
population.
• Levels and rates of growth of “real” per capita gross national income
(GNI) (monetary growth of GNI per capita minus the rate of inflation)
are then used to measure the overall economic well-being of a
population—how much of real goods and services is available to the
average citizen for consumption and investment.
• Economic development in the past has also been typically seen in
terms of the planned alteration of the structure of production and
employment so that agriculture’s share of both declines and that of
the manufacturing and service industries increases.
• Development strategies focused on rapid industrialization, often at the
expense of agriculture and rural development.
• Until recently, development then was always seen as an economic
phenomenon in which rapid gains in overall and per capita GNI growth
would either “trickle down” to the masses in form of jobs and other
economic opportunities or create the necessary conditions for the
wider distribution of growth.
• Problems of poverty, discrimination, unemployment, and income

distribution were of secondary importance to “getting the growth job
done.”
• Indeed, the emphasis is often on increased output, measured by gross
domestic product (GDP).
• In summary, during the 1970s and until recently, economic
development came to be redefined in terms of the reduction or
elimination of poverty, inequality, and unemployment within the
context of a growing economy.
• Therefore, begged for basic questions about the meaning of
development:
• What has been happening to poverty?
• What has been happening to unemployment?
• What has been happening to inequality?
• If all three of these have declined from high levels, then beyond doubt
this has been a period of development for the country concerned.
• If one or two or three of these central problems have been growing
worse, it would be strange to call the result “development” even if per
capita income doubled.
WHAT IS DEVELOPMENT? (DEFINITION)

• Development implies change, and this is one sense in which the term
development is used; to describe the process of economic and social
transformation within countries.
• This process often follows a well-ordered sequence and exhibits
common characteristics across countries.
• Societies are not indifferent, however, to the distributional
consequences of economic policy; to the type of output that is
produced, or to the economic environment in which it is produced.
WHAT IS DEVELOPMENT? (DEFINITION)
• A concept of development is required which embraces the major

economic and social objectives and values that societies strive for.
• Goulet (1971) distinguishes three basic components or core
values in this wider meaning of development as follows:
• life-sustenance - concerned with the provision of basic needs such as
housing, clothing, food and minimal education;
• self-esteem- concerned with the feeling of self-respect and
independence; and
• freedom - refers to freedom from the three evils of ’want, ignorance and
squalor’ so that people are more able to determine their own destiny.
• All the three core components of development are inter-related.
• Lack of self-esteem and freedom result from low levels of life

sustenance, and both a lack of self-esteem and economic imprisonment
become links in a circular, self-perpetuating chain of poverty by
producing a sense of fatalism and acceptance of the established order -
the ’accommodation to poverty’ as called by Galbraith (1980).
• Using Goulet’s concept of development, therefore, and to answer the
question ’development for what?’. We can say that development
has occurred:
• when there has been an improvement in basic needs,
• when economic progress has contributed to a greater sense of
self-esteem for the country and individuals within it, and
• when material advancement has expanded the range of choice for
individuals.
THE CHALLENGES OF DEVELOPMENT ECONOMICS

• Lies in the formulation of economic theory and in the application of
policy in order to understand better and to meet the three core
components of development.
• Clearly the range of issues that development economics is concerned
with is quite distinctive and because of this, the subject has developed
its own modus vivendi (ways of doing things), although drawing
liberally on economic theory as do other branches of economics.

• If it is to be useful, however, a great deal of conventional economic
theory must be adapted to suit the conditions prevailing in developing
countries, and many of the assumptions that underly conventional
economic models have to be abandoned if they are to yield fruitful
insights into the development process.
• Static equilibrium theory, for example, is ill-suited for the analysis of
growth and change and of growing inequalities in the distribution of
income between individuals and countries.

• It is probably also true, as Todaro (1989) strongly argues, that
economics needs to be viewed in the much broader perspective of the
overall social system of a country, which includes values, beliefs,
attitudes to effort and risk taking, religion and the class system, if
development mistakes are to be avoided which stem from
implementing policy based on economic theory alone.
CONCLUSION
Any Questions?
THANK YOU FOR YOUR
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DEVELOPMENT ECONOMICS

Remmy Kampamba, PhD

INTRODUCTION TO DEVELOPMENT THEORIES

OBJECTIVES OF THE COURSE:

By the end of the course, you should be able to:

• Demonstrate knowledge of the nature, scope and methodology of

• Demonstrate understanding of the development and

• Depict the basis for applied and advanced study of development

2 Poverty, Inequality, and Development

3 Review of Growth Theories

5 The Structural Transformation

6 Planning and Development

7 Foreign Resources, Debt and Development

8 Population and Development

• The world community responded to this aggression with outrage and

• On December 26, 2004, the second-most powerful earthquake ever

• What do these two events have to do with economic development?

• Wasn’t 9/11 a tragic political attack, while the tsunami was an

• With greater economic progress in the affected countries, human

• So, economic development is about life-and-death issues. Literally.

• Most of these deaths are rooted in extreme poverty and deprivation,

• Economics is often defined as the study of “how societies can best

• In strictly economic terms, development has traditionally meant

• Problems of poverty, discrimination, unemployment, and income

WHAT IS DEVELOPMENT? (DEFINITION)

WHAT IS DEVELOPMENT? (DEFINITION)

• A concept of development is required which embraces the major

• Lack of self-esteem and freedom result from low levels of life

THE CHALLENGES OF DEVELOPMENT ECONOMICS

THE CHALLENGES OF DEVELOPMENT ECONOMICS

THE CHALLENGES OF DEVELOPMENT ECONOMICS

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