Chapter Economics, Institutions, and Development: A Global Perspective Copyright © 2009 Pearson Addison-Wesley All rights reserved Economic Development • Development = Growth plus Change • Growth: sustained improvement in the level of per capita income • Change: sustained improvement in institutions and organizations that support growth Copyright © 2009 Pearson AddisonWesley All rights reserved 1-2 Growth • Gross Domestic Product (GDP): Market value of all final goods and services an economy produces in one year • Real GDP: GDP in constant prices • GDP Per Capita = (Real GDP / Population) or income per person • Economic Growth = percentage change in Real GDP per capita Copyright © 2009 Pearson AddisonWesley All rights reserved 1-3 Institutions • Family: respect the authority & share resources • Culture: propensity to save & invest • Religion: ability to bring about change • Law: protect property rights and civil liberties and enforce contracts Copyright © 2009 Pearson AddisonWesley All rights reserved 1-4 Organizations • Government: produce public goods and regulate economic activities • Education: increase productivity and expand the range of economic and social opportunities • Health: enable proactive participation in economic and social activities • Business: provide incentive for profit making, resulting in growth and expansion Copyright © 2009 Pearson AddisonWesley All rights reserved 1-5 Happiness and Development • There is not a perfect correlation between happiness and per capita income: people could be poor, but happy; rich, but and unhappy • Once per capita income increases above $10,000 to $20,000, the percentage of people who say they are happy tends to increase Copyright © 2009 Pearson AddisonWesley All rights reserved 1-6 Happiness and Development Factors affecting happiness: • Family relationships • Financial conditions • Work satisfaction • Community and friends • Health and health-care services • Personal freedom • Personal Copyright © 2009 Pearson Addisonvalues Wesley All rights reserved 1-7 Income and Happiness Across Countries Copyright © 2009 Pearson AddisonWesley All rights reserved 1-8 Three Core Values of Development • Sustenance: The ability to meet basic human needs including shelter, food, health, education, safety • Self-Esteem: To be a person with a sense of self-respect and self-worth To live with dignity, respect, and honor • Freedom from Servitude: To be able to choose the path to prosperity and have the opportunity to improve Copyright © 2009 Pearson AddisonWesley All rights reserved 1-9 Objectives of Development • To increase the availability and distribution of basic human necessities • To improve the standard of living for the majority of the people • To expand the range of economic and social choices and opportunities Copyright © 2009 Pearson AddisonWesley All rights reserved 1-10 Millennium Development: Goals and Targets for 2015 Copyright © 2009 Pearson AddisonWesley All rights reserved 1-11 Millennium Development Goals and Targets for 2015 Copyright © 2009 Pearson AddisonWesley All rights reserved 1-12 Economic Development • Inclusion of non-economic variables in designing development strategies • Achieving the Millennium Development Goals • “…One future-or none at all” Copyright © 2009 Pearson AddisonWesley All rights reserved 1-13 ... Development: Goals and Targets for 2015 Copyright © 2009 Pearson AddisonWesley All rights reserved 1-11 Millennium Development Goals and Targets for 2015 Copyright © 2009 Pearson AddisonWesley... path to prosperity and have the opportunity to improve Copyright © 2009 Pearson AddisonWesley All rights reserved 1-9 Objectives of Development • To increase the availability and distribution... happy; rich, but and unhappy • Once per capita income increases above $10,000 to $20,000, the percentage of people who say they are happy tends to increase Copyright © 2009 Pearson AddisonWesley