Development economics: introduction and overview

Published on September 29, 2016   31 min
0:00
Welcome to this first Henry Stewart Talk on Development Economics. I'm Julie Schaffner. I'm a Development Economist in the Fletcher School of Law and Diplomacy at Tufts University. In these talks we'll be using the term development to refer to a process of economic and social change that makes life better, raises well-being for many people. And especially for people around the world who are poor, meaning that they are living with less than a minimally acceptable level of comfort, security and opportunity. This series is designed for viewers who want not only to learn about development but also to become more engaged with development. Perhaps, by becoming more knowledgeable voters or donors to charitable organizations or perhaps, more directly through new career directions involving work with governments, non-governmental organizations, or any of the many private enterprises that are part of the international development community today.
0:50
In this introductory talk, I'll first briefly address two motivation questions. Why study the general subject of development? And why study development economics more specifically? I'll then offer an overview of the structure that development economists bring to their study of development, describing how they approach three important tasks which I'll call, defining the development objective, understanding the development process, and designing and analyzing development policies. We'll be using the term policy very broadly by the way, to encompass any sort of policy, project or program introduced with the aim of encouraging development. Polices can be introduced by governments, non-governmental organizations or private sector enterprises alone or in creative partnerships. Development policies in this sense could include anything from programs distributing cash, food or insecticide treated bed nets, to programs of road and school construction, to offers of loans or insurance contracts to poor households that are unreached by formal financial systems, to the development of legal and law enforcement systems that protect property rights, to macro-policies toward international trade. So the term policy is really just a short hand expression for almost any kind of action development actors might take to encourage development.
2:01
So, why study development? I think many people are motivated to study development by some pretty basic observations about the world we live in. First, global differences in living standards are vast. Some people live with much, much lower levels of comfort, security and opportunity than others. For people raised in suburbs of a rich country like the United States, I think it can be hard even to fully imagine what daily life is like for people who have grown up in say, rural Ethiopia. If you grew up in Ethiopia, there's a good chance you and your family of five or six would live in a one room hut with thatched roof and dirt floor. You'd have no electricity, so when night falls, it falls heavily. You'd have no running water, so you or your daughter might have to spend hours per day in the back-breaking work of carrying water from a stream or pond. Your toilets, so to speak, would be the open field.
2:51
The nearest primary school might be several kilometers away along a rutted track that is impassable when it rains. The facilities there are pretty rudimentary and often the teachers don't even show up. Health clinics too would be difficult to get to and of questionable quality.
3:05
In rural Ethiopia, you'd probably earn your living by cultivating a small plot of land. If you were relatively well off, you might have the help of oxen, otherwise it's manual labor. Even in the best of times, you'd get most of your calories from just one or two staple grains that you grow, in two meals per day. Your agricultural yields and how much you have to eat would be highly dependent on the rain. And every few years your community would experience drought. You'd send your children to bed hungry often. It's all too likely that at least one of your children would die very young, probably from a disease that in a richer place would be easily prevented.
3:40
Income statistics don't summarize such differences in living conditions perfectly but they can be useful for giving us a feel for orders of magnitude. Many people in rural Ethiopia live on less than the equivalent of $1.90 per person per day, which is the World Bank's most recent global extreme poverty line. By comparison, the U.S. poverty line for a family of three works out to about $18.40 per person per day, which is around nine times as much. And that's just the U.S. poverty line and by the way, that's after adjusting as carefully as possible for differences in purchasing power. An average income in a prosperous Boston suburb works out to about $192 per person per day, which is another 10 times greater. This means that the ability for the typical person in rural Ethiopia to obtain goods and services that meet important needs and wants. Its orders of magnitude more restricted than for the average person living in a suburb in the United States.
4:36
The second observation is that the prosperity that may seem normal to the residents of the world's rich countries is the exception in the world, while poverty is the rule. Over the last 15 years or so, the world has seen a tremendous reduction in the fraction of people globally living on less than $1.90 per person per day. That fraction is down to around 14%, which may seem like a small number but I'd like to challenge the idea that global poverty is a small problem. First, notice that even this small 14% means that about one billion human beings continue to live in that kind of extreme poverty. And each one of them has a name and a life and hopes and aspirations for themselves and their families.
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Development economics: introduction and overview

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