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
Perhaps, by becoming more
or donors to charitable organizations
or perhaps, more directly through
new career directions
involving work with governments,
or any of the many private enterprises
that are part of the international
development community today.
In this introductory talk,
I'll first briefly address
two motivation questions.
Why study the general subject of development?
And why study development economics
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
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,
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.
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.
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.
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.
Income statistics don't summarize
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.
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.