DEVELOPMENT ECONOMICS
2021-2022
Universiteit Gent - Handelswetenschappen
Ontwikkelingseconomie
prof. Marijke D’Haese
Samenvatting van alle te kennen dia’s (met een ‘bulb’ aangeduid)
1
, DEVELOPMENT ECONOMICS
Chapter 1
1.5 THE MEANING OF DEVELOPMENT
Amartya Sen’s ’’Capability” Approach
A person’s capability to function is what really matters
-> what a person is, or can be, and does or can do
-> what matters for wellbeing is what use someone can and does make of
commodities
Functionings are “Beings and Doings”
-Being able to live long
-Being well-nourished
-Being healthy
-Being literate
-Being well-clothed
-Being mobile
-Being able to take part in the life of the community
-Being happy – as a state of being - may be valued as a
functioning
Conversion of commodity-characteristics into personal achievements of functioning
will depend on:
1. Personal heterogeneities: disability, illness, age, gender
2. Environmental diversities: heating, clothing requirements, impact of pollution
3. Variations in social climate: prevalence of crime and violence, social capital
4. Distribution within the family
5. Differences in relational perspectives: some goods are essential because of
local customs and conventions
Capabilities as freedoms enjoyed, in terms of functionings, given his personal
features and command over commodities
Well-being in terms of being well and having freedoms of choice
CORE VALUES OF DEVELOPMENT
Sustenance: ability to meet basic needs – increase availability
and widening the distribution of life-sustaining goods (food,
shelter, health, protection)
Raising levels of living – enhance material well-being and
generating greater self-esteem: higher income, provision of
jobs, education, cultural and human values
Freedom from servitude: to be able to choose – range of
economic and social choices
2
,1.7 THE SUSTAINABLE DEVELOPMENT GOALS:
A SHARED DEVELOPMENT MISSION
SHARED Goals & Targets – UNIFIED FOCUS
-> Millennium Development Goals (MDGs) 2000-2015
adopted in 2000, eight goals towards the eradication of
poverty and achieving human development, targets set
comparing the level of 1990 to 2015
-> Sustainable Development Goals (SDGs) since 2015
17 goals – commiting to substantial achievements in ending
multidimensional povery and improving quality of life
164 target to achieve by 2030, 304 indices
Ambition and critique
+ Ambitious and responsibilisation of the world
- Critique: not ambitious, not prioritized, stand-alone objectives, no structural
changes, poverty – arbitrary goals – fails to account for intensity of poverty
Chapter 2
1. INTRODUCTION
Huge challenges for 84% percent of the population living in developing countries!
Developing countries are often characterized as a “group”
Yet! the variation among developing countries is sometimes as great as the
differences between the developed and developing worlds – North - South
A large majority of countries have made substantial economic development progress
Yet! the global economy continues to present extreme contrasts – enormous gaps
persist! Between and within countries
3
, 2.2.2 ADJUSTING FOR PURCHASING POWER PARITY
Official exchange rates do not give an adequate picture of the
purchasing power of developing countries
-> Purchasing Power Parities (PPP)
= quantity of a local currency necessary to buy the same
quantity of goods and services on the local market that can be
bought in the US with 1$ in the reference year
Prices of nontraded services are much lower in developing countries as
wages are lower
Use of the PPP-method, the income gap declines and income becomes
less volatile
2.3 COMPARING COUNTRIES BY HEALTH AND EDUCATION AND
HUMAN DEVELOPMENT LEVELS
Basic indicator of average health:
- Life expectancy at birth
Basic indicators of education:
- Gross enrollment of primary/secondary education
- Expected years of schooling
Basic indicator for levels of living:
- GNI/capita
Calculation of the HDI
- Health: index for Life Expectancy at birth
- Education: index for mean years of schooling + Expected years of schooling
- Index for GNI per capita
NHDI = H1/3 E1/3 I1/3
HDI as a holistic measure of living levels
Use of HDI
Advantage:
- Countries can be ranked based on one number
- Be compared by much more than income alone (useful tool for policy makers)
- Disaggregation possible based on gender, region, ethnic group
Disadvantage:
- Weights given are arbitrary
- What is the factual unit
- Approaches for the measurement of health and education are not accurate
(chosen because of limited data sets)
- Measuring the expected educational attainment is difficult
4
2021-2022
Universiteit Gent - Handelswetenschappen
Ontwikkelingseconomie
prof. Marijke D’Haese
Samenvatting van alle te kennen dia’s (met een ‘bulb’ aangeduid)
1
, DEVELOPMENT ECONOMICS
Chapter 1
1.5 THE MEANING OF DEVELOPMENT
Amartya Sen’s ’’Capability” Approach
A person’s capability to function is what really matters
-> what a person is, or can be, and does or can do
-> what matters for wellbeing is what use someone can and does make of
commodities
Functionings are “Beings and Doings”
-Being able to live long
-Being well-nourished
-Being healthy
-Being literate
-Being well-clothed
-Being mobile
-Being able to take part in the life of the community
-Being happy – as a state of being - may be valued as a
functioning
Conversion of commodity-characteristics into personal achievements of functioning
will depend on:
1. Personal heterogeneities: disability, illness, age, gender
2. Environmental diversities: heating, clothing requirements, impact of pollution
3. Variations in social climate: prevalence of crime and violence, social capital
4. Distribution within the family
5. Differences in relational perspectives: some goods are essential because of
local customs and conventions
Capabilities as freedoms enjoyed, in terms of functionings, given his personal
features and command over commodities
Well-being in terms of being well and having freedoms of choice
CORE VALUES OF DEVELOPMENT
Sustenance: ability to meet basic needs – increase availability
and widening the distribution of life-sustaining goods (food,
shelter, health, protection)
Raising levels of living – enhance material well-being and
generating greater self-esteem: higher income, provision of
jobs, education, cultural and human values
Freedom from servitude: to be able to choose – range of
economic and social choices
2
,1.7 THE SUSTAINABLE DEVELOPMENT GOALS:
A SHARED DEVELOPMENT MISSION
SHARED Goals & Targets – UNIFIED FOCUS
-> Millennium Development Goals (MDGs) 2000-2015
adopted in 2000, eight goals towards the eradication of
poverty and achieving human development, targets set
comparing the level of 1990 to 2015
-> Sustainable Development Goals (SDGs) since 2015
17 goals – commiting to substantial achievements in ending
multidimensional povery and improving quality of life
164 target to achieve by 2030, 304 indices
Ambition and critique
+ Ambitious and responsibilisation of the world
- Critique: not ambitious, not prioritized, stand-alone objectives, no structural
changes, poverty – arbitrary goals – fails to account for intensity of poverty
Chapter 2
1. INTRODUCTION
Huge challenges for 84% percent of the population living in developing countries!
Developing countries are often characterized as a “group”
Yet! the variation among developing countries is sometimes as great as the
differences between the developed and developing worlds – North - South
A large majority of countries have made substantial economic development progress
Yet! the global economy continues to present extreme contrasts – enormous gaps
persist! Between and within countries
3
, 2.2.2 ADJUSTING FOR PURCHASING POWER PARITY
Official exchange rates do not give an adequate picture of the
purchasing power of developing countries
-> Purchasing Power Parities (PPP)
= quantity of a local currency necessary to buy the same
quantity of goods and services on the local market that can be
bought in the US with 1$ in the reference year
Prices of nontraded services are much lower in developing countries as
wages are lower
Use of the PPP-method, the income gap declines and income becomes
less volatile
2.3 COMPARING COUNTRIES BY HEALTH AND EDUCATION AND
HUMAN DEVELOPMENT LEVELS
Basic indicator of average health:
- Life expectancy at birth
Basic indicators of education:
- Gross enrollment of primary/secondary education
- Expected years of schooling
Basic indicator for levels of living:
- GNI/capita
Calculation of the HDI
- Health: index for Life Expectancy at birth
- Education: index for mean years of schooling + Expected years of schooling
- Index for GNI per capita
NHDI = H1/3 E1/3 I1/3
HDI as a holistic measure of living levels
Use of HDI
Advantage:
- Countries can be ranked based on one number
- Be compared by much more than income alone (useful tool for policy makers)
- Disaggregation possible based on gender, region, ethnic group
Disadvantage:
- Weights given are arbitrary
- What is the factual unit
- Approaches for the measurement of health and education are not accurate
(chosen because of limited data sets)
- Measuring the expected educational attainment is difficult
4
