Economics of Development (Seventh Edition)

by Perkins, Dwight H.; Radelet, Steven; Lindauer, David L.; Block, Steven A.

• ISBN13: 9780393123524
• ISBN10: 0393123529
• Edition: 7th
• Format: Paperback
• Copyright: 2012-11-02
• Publisher: W. W. Norton & Company

Summary

This classic text has been aggressively revised to incorporate the latest research defining the Development Economics field today.

Table of Contents

Preface	p. xv
International Development Resources on the Internet	p. xxiii
Development and Growth
Patterns of Development	p. 3
Three Vignettes	p. 3
Malaysia	p. 3
Ethiopia	p. 5
Ukraine	p. 6
Development and Globalization	p. 8
Rich and Poor Countries	p. 10
Growth and Development	p. 13
Diversity in Development Achievements	p. 15
Approaches to Development	p. 16
The Study of Development Economics	p. 18
Organization	p. 19
Summary	p. 20
Measuring Economic Growth and Development	p. 23
Measuring Economic Growth	p. 24
Measuring GDP: What Is Left Out?	p. 25
Exchange-Rate Conversion Problems	p. 27
Economic Growth around the World: A Brief Overview	p. 32
Jared Diamond: Guns, Germs, and Steel	p. 34
Economic Growth, 1970-2010	p. 36
What Do We Mean by Economic Development?	p. 38
Measuring Economic Development	p. 40
Human Development Defined	p. 41
Why Use Logarithms?	p. 43
What Can We Learn from the Human Development Index?	p. 44
Millennium Development Goals	p. 46
Targets of the Millennium Development Goals	p. 47
Is Economic Growth Desirable?	p. 50
Summary	p. 53
Economic Growth: Concepts and Patterns	p. 55
Divergent Patterns of Economic Growth since 1960	p. 56
Botswana's Remarkable Economic Development	p. 59
Factor Accumulation, Productivity, and Economic Growth	p. 60
Calculating Future Values, Growth Rates, and Doubling Times	p. 61
Saving, Investment, and Capital Accumulation	p. 64
Sources of Growth Analysis	p. 66
Characteristics of Rapidly Growing Countries	p. 74
Macroeconomic and Political Stability	p. 75
Investment in Health and Education	p. 77
Effective Governance and Institutions	p. 79
Institutions, Governance, and Growth	p. 80
Favorable Environment for Private Enterprise	p. 82
Trade, Openness, and Growth	p. 83
Favorable Geography	p. 84
Summary	p. 87
Theories of Economic Growth	p. 89
The Basic growth Model	p. 91
The Harrod-Domar Growth Model	p. 94
The Fixed-Coefficient Production Function	p. 94
The Capital-Output Ratio and the Harrod-Domar Framework	p. 96
Strengths and Weaknesses of the Harrod-Domar Framework	p. 98
Economic Growth in Thailand	p. 101
The Solow (Neoclassical) Growth Model	p. 103
The Neoclassical Production Function	p. 103
The Basic Equations of the Solow Model	p. 104
The Solow Diagram	p. 108
Changes in the Saving Rate and Population Growth Rate in the Solow Model	p. 109
Population Growth and Economic Growth	p. 112
Technological Change in the Solow Model	p. 113
Strengths and Weaknesses of the Solow Framework	p. 116
Diminishing Returns and the Production Function	p. 117
Explaining Differences in Growth Rates	p. 118
The Convergence Debate	p. 121
Beyond Solow: New Approaches to Growth	p. 125
Summary	p. 127
States and Markets	p. 129
Development Thinking after World War II	p. 130
Market Failure	p. 133
Fundamental Changes in the 1970s and 1980s	p. 137
Ghana after Independence	p. 139
The Declining Effectiveness of Government Intervention in the Market: Korea, 1960s-2010	p. 143
Structural Adjustment, the Washington Consensus, and the End of the Soviet Model	p. 144
Soviet Command Model to Market Economies: The Great Transition	p. 148
Was the Washington Consensus a Success or Failure?	p. 153
Summary	p. 159
Distribution and Human Resources
Inequality and Poverty	p. 165
Measuring Inequality	p. 166
Patterns of Inequality	p. 172
Growth and Inequality	p. 174
What Else Might Cause Inequality?	p. 177
Why Inequality Matters	p. 178
Measuring Poverty	p. 180
Poverty Lines	p. 181
National Poverty Lines in Bangladesh, Mexico, and the United States	p. 183
Why $1.25 a Day?	p. 186
Dissenting Opinions on the Extent of Absolute Poverty	p. 191
Who is not Poor?	p. 192
Poverty Today	p. 192
Who Are the Poor?	p. 193
Living in Poverty	p. 195
Strategies to Reduce Poverty	p. 197
Growth is Good for the Poor	p. 198
Sometimes Growth May Not Be Enough	p. 200
Pro-Poor Growth	p. 201
Why Should Development Strategies have a Poverty Focus?	p. 202
Improving Opportunities for the Poor	p. 205
Income Transfers and Safety Nets	p. 206
Global Inequality and the End of Poverty	p. 208
Summary	p. 214
Population	p. 217
A Brief History of World Population	p. 218
The Demographic Transition	p. 220
The Demographic Situation Today	p. 224
Total Fertility Rates	p. 225
The Demographic Future	p. 227
Population Momentum	p. 229
The Causes of Population Growth	p. 231
Thomas Malthus, Population Pessimist	p. 232
Why Birth Rates Decline	p. 233
Population Growth and Economic Development	p. 236
Population and Accumulation	p. 237
Population Growth, Age Structure, and Dependency Ratios	p. 239
Population and Productivity	p. 241
Population and Market Failures	p. 243
Population Policy	p. 245
Family Planning	p. 246
Authoritarian Approaches	p. 249
Missing Girls, Missing Women	p. 251
Population Issues for the Twenty-First Century	p. 253
Summary	p. 254
Education	p. 257
Trends and Patterns	p. 258
Stocks and Flows	p. 259
Boys versus Girls	p. 263
Schooling versus Education	p. 264
Education as an Investment	p. 267
The Rate of Return to Schooling	p. 269
Estimated Rates of Return	p. 272
First-Generation Estimates	p. 273
Estimating Rates of Return from Wage Equations	p. 275
Second-Generation Estimates	p. 276
Puzzles	p. 278
Returns to Schooling and Income Opportunities	p. 279
Making Schooling More Productive	p. 281
Underinvestment	p. 282
Misallocation	p. 282
Improving Schools	p. 286
Reducing the Costs of Going to School	p. 287
Mexico's Progresa	p. 288
Inefficient Use of Resources	p. 290
It Is about More than the Money	p. 293
Combating Teacher Absence	p. 294
Summary	p. 298
Health	p. 299
What Is Health?	p. 302
Life Expectancy	p. 305
Transitions in Global Health	p. 307
The Epidemiologic Transition	p. 308
The Determinants of Improved Health	p. 310
Health, Income, and Growth	p. 313
Income and Health	p. 314
How Beneficent is the Market? A Look at the Modern History of Mortality	p. 318
Health and Productivity	p. 319
Health and Investment	p. 320
Three Critical Diseases	p. 321
Malaria, Yellow Fever, and the Panama Canal	p. 322
HIV/AIDS	p. 323
HIV/AIDS, Malaria, and Tuberculosis: Some Basics	p. 324
Malaria	p. 329
Making Markets for Vaccines	p. 330
Tuberculosis	p. 333
What Works? Some Successes in Global Health	p. 335
Preventing HIV/AIDS in Thailand	p. 336
Controlling Tuberculosis in China	p. 336
Eradicating Smallpox	p. 337
Eliminating Polio in Latin America	p. 338
Preventing Deaths from Diarrheal Disease	p. 340
Lessons Learned	p. 342
Health Challenges	p. 343
Summary	p. 344
Macroeconomic Policies for Development
Investment and Savings	p. 349
Using Investment Productively: Cost-Benefit Analysis	p. 351
Present Value	p. 351
Opportunity Costs	p. 355
Shadow Prices	p. 355
Welfare Weights	p. 356
Barriers to Productive Public and Private Investment	p. 357
Barriers to Doing Business	p. 359
Foreign Direct Investment	p. 363
FDI Patterns and Products	p. 364
Benefits and Drawbacks of FDI	p. 365
FDI and Growth	p. 369
Policies Toward Foreign Direct Investment	p. 370
Savings	p. 374
Household Saving and consumption	p. 376
Corporate Saving	p. 379
Government Saving	p. 380
Foreign Saving	p. 384
Summary	p. 388
Fiscal Policy	p. 391
Government Expenditures	p. 393
Categories of Government Expenditures	p. 394
Reining in Fiscal Decentralization in Brazil and China	p. 398
Government Revenue and Taxes	p. 399
Tax Rates and Smuggling: Colombia	p. 401
Taxes on International Trade	p. 401
Sales and Excise Taxes	p. 402
Personal and Corporate Income Taxes	p. 404
New Sources of Tax Revenues	p. 404
Changes in Tax Administration	p. 405
Fundamental Tax Reform	p. 405
Tax Administration in India and Bolivia in the 1980s	p. 406
Indonesian Tax Reform	p. 407
Taxes and Income Distribution	p. 411
Personal Income Taxes	p. 412
Taxes on Luxury Consumption	p. 413
Corporate Income and Property Taxes: The Incidence Problem	p. 414
Economic Efficiency and the Budget	p. 417
Sources of Inefficiency	p. 417
Neutrality and Efficiency: Lessons from Experience	p. 418
Summary	p. 420
Financial Development and Inflation	p. 421
The Functions of a Financial System	p. 423
Money and the Money Supply	p. 423
Financial Intermediation	p. 426
Transformation and Distribution of Risk	p. 426
Stabilization	p. 427
Inflation	p. 427
Inflation Episodes	p. 428
Hyperinflation in Peru, 1988-90	p. 431
Monetary Policy and Price Stability	p. 432
Monetary Policy and Exchange-Rate Regimes	p. 433
Sources of Inflation	p. 435
Controlling Inflation through Monetary Policy	p. 438
Reserve Requirements	p. 439
Credit Ceilings	p. 439
Interest-Rate Regulation and Moral Suasion	p. 440
International Debt and Combating Recessions	p. 441
Financial Development	p. 442
Shallow Finance and Deep Finance	p. 443
Shallow Financial Strategy	p. 444
Deep Financial Strategy	p. 447
Informal Credit Markets and Micro Credit	p. 449
Does Micro Credit Reduce Poverty?	p. 451
Summary	p. 453
Foreign Debt and Financial Crises	p. 455
Advantages and Disadvantages of Foreign Borrowing	p. 458
Debt Sustainability	p. 459
Debt Indicators	p. 460
From Distress to Default	p. 463
A Short History of Sovereign Lending Default	p. 465
The 1980s Debt Crisis	p. 466
Causes of the Crisis	p. 467
Impact on the Borrowers	p. 469
Escape from the Crisis, for Some Countries	p. 470
The Debt Crisis in Low-Income Countries	p. 473
Debt Reduction in Low-Income Countries	p. 474
The Heavily Indebted Poor Country Initiative	p. 475
Odious Debt	p. 476
Debt Relief in Uganda	p. 479
Emerging Market Financial Crises	p. 480
Domestic Economic Weaknesses	p. 482
Short-Term Capital Flows	p. 484
Creditor Panic	p. 486
Model of Self-Fulfilling Creditor Panics	p. 486
Stopping Panics	p. 489
Lessons from the Crises	p. 494
Summary	p. 496
Foreign Aid	p. 499
Donors and Recipients	p. 501
What Is Foreign Aid?	p. 501
Who Gives Aid?	p. 503
The Marshall Plan	p. 503
The Commitment to Development Index	p. 507
Who Receives Foreign Aid?	p. 512
The Motivations for Aid	p. 514
China's Foreign Aid	p. 515
Aid, Growth, and Development	p. 518
Although Not Always Successful, on Average, Aid Has a Positive Impact on Economic Growth and Development	p. 520
Controlling River Blindness in Sub-Saharan Africa	p. 524
Aid Has Little or No Effect on Growth and Actually May Undermine Growth	p. 526
Food Aid and Food Production	p. 528
Aid Has a Conditional Relationship with Growth, Stimulating Growth Only Under Certain Circumstances, Such as in Countries with Good Policies or Institutions	p. 533
Donor Relationships with Recipient Countries	p. 535
The Principal-Agent Problem	p. 536
Conditionality	p. 537
Improving Aid Effectiveness	p. 540
Summary	p. 543
Managing Short-Run Crises in an Open Economy	p. 545
Equilibrium in a Small, Open Economy	p. 546
Internal and External Balances	p. 547
Real Versus Nominal Exchange Rates	p. 550
The Phase Diagram	p. 553
Equilibrium and Disequilibrium	p. 556
Pioneering Stabilization: Chile, 1973-84	p. 559
Stabilization Policies	p. 560
Applications of the Australian Model	p. 564
Dutch Disease	p. 564
Recovering from Mismanagement: Ghana, 1983-91	p. 566
Debt Repayment Crisis	p. 567
Stabilization Package: Inflation and a Deficit	p. 569
The Greek Debt Crisis of 2010-12	p. 571
Drought, Hurricanes, and Earthquakes	p. 574
Summary	p. 575
Appendix to Chapter 15: National Income and the Balance of Payments	p. 576
Agriculture, Trade, and Sustainability
Agriculture and Development	p. 583
Unique Characteristics of the Agricultural Sector	p. 584
Structural Transformation	p. 587
Two-Sector Models of Development	p. 590
The Labor Surplus Model	p. 591
Surplus Labor in China	p. 598
The Neoclassical Two-Sector Model	p. 599
Debates over Surplus Labor	p. 602
Evolving Perspectives on the Role of Agriculture in Economic Growth and Poverty Alleviation	p. 604
Agriculture and Economic Growth	p. 604
The Nutrition Linkage to Economic Growth	p. 608
Agriculture and Poverty Alleviation	p. 610
Agricultural Growth as a Pathway out of Poverty	p. 613
Summary	p. 617
Agricultural Development: Technology, Policies, and Institutions	p. 619
Characteristics of Traditional Agriculture and Agricultural Systems	p. 620
Agricultural Systems	p. 621
Diagnosing the Constraints to Agricultural Development	p. 622
Raising the Technical Ceiling	p. 627
The Green Revolution	p. 628
Recent Trends in Agricultural Productivity	p. 632
A Model of Induced Technical Change in Agriculture	p. 635
Raising the Economic Ceiling	p. 637
Food Production Analysis	p. 638
What to Produce? The Product-Product Decision	p. 638
How to Produce It? The Factor-Factor Decision	p. 641
How Much to Produce? The Factor-Product Decision	p. 643
Fertilizer Subsidies in Malawi	p. 645
Market Access	p. 651
Cell Phones and Agricultural Development	p. 651
Institutions for Agricultural Development	p. 653
Land Reform	p. 656
The World Food Crisis of 2005-08	p. 658
Causes of the Crisis	p. 659
Consequences of the Crisis	p. 661
Summary	p. 663
Trade and Development	p. 665
Trade Trends and Patterns	p. 667
Who Traders?	p. 671
Comparative Advantage	p. 674
The Benefits of Trade	p. 677
Winners and Losers	p. 681
Trading Primary Products	p. 683
Empirical Evidence on Primary Export-Led Growth	p. 687
Export Pessimism	p. 688
Declining Terms of Trade?	p. 690
Dutch Disease	p. 693
Dutch Disease: A Geometric Presentation	p. 697
Nigeria: A Bad Case of Dutch Disease	p. 700
Indonesia: Finding a Cure	p. 702
The Resource Trap	p. 703
Breaking the Resource Curse	p. 705
Summary	p. 707
Trade Policy	p. 709
Import Substitution	p. 711
Protective Tariffs	p. 713
Import Quotas	p. 714
Effective Rates of Protection	p. 715
Trade Protection and Politics	p. 718
The Two-Country Model with a Tariff	p. 719
Production Subsidies	p. 720
Exchange-Rate Management	p. 722
Outcomes of Import Substitution	p. 724
Export Orientation	p. 725
Removing the Bias against Exports	p. 727
Favoring Exports	p. 728
Building Export Platforms	p. 730
Is China's Exchange-Rate Policy Unfair?	p. 731
Trade Strategy and Industrial Policy	p. 734
Trade, Growth, and Poverty Alleviation	p. 736
Trade Reforms and Poverty Alleviation	p. 739
Key Issues on the Global Trade Agenda	p. 741
Increased Global Competition and the Rise of China (and India)	p. 741
Does Outward Orientation Create Sweatshops?	p. 743
Labor Activists and Labor Outcomes in Indonesia	p. 746
Expanding Market Access	p. 747
Multilateral Trade Negotiations and the WTO	p. 750
Temporary Migration: Another Dimension of International Trade	p. 753
Summary	p. 755
Sustainable Development	p. 757
Will Economic Growth Save or Destroy the Environment?	p. 759
Concept and Measurement of Sustainable Development	p. 761
Saving for a Sustainable Future	p. 765
The Malthusian Effect of Population Growth on Adjusted Net Savings in Ghana	p. 768
Market Failures	p. 769
Externalities and the Commons	p. 770
Policy Solutions	p. 773
Property Rights	p. 773
Government Regulation	p. 774
Taxes, Subsidies, and Payments for Environmental Services	p. 776
Taxes Water Pollution in Colombia	p. 777
Marketable Permits	p. 779
Informed Regulation	p. 781
Policy Failures	p. 782
Policy Failures and Deforestation in Indonesia	p. 783
Poverty-Environment Linkages	p. 785
Global Climates Change	p. 792
Summary	p. 800
Index	p. 803
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