Economic Development

by Todaro, Michael P.; Smith, Stephen C.

• ISBN13: 9780321278883
• ISBN10: 0321278887
• Edition: 10th
• Format: Hardcover
• Copyright: 2009-01-01
• Publisher: Addison Wesley

Summary

"What are the sources of economic development and long-term growth? Why are less developed countries poor, and what can they do about it? What is the role of foreign aid and fiscal policy in promoting development, and how might current systems be improved? Todaro and Smith pose these questions and then combine a problem-solving, policy-oriented approach with numerous case studies to teach students to evaluate current policies and issues."--BOOK JACKET.

Table of Contents

Preface	vii
Case Studies	xxvii
Part One Principles and Concepts
Economics, Institutions, and Development: A Global Perspective	3	(34)
How the Other Half Live	3	(5)
Economics and Development Studies	8	(6)
The Nature of Development Economics	9	(1)
Why Study Development Economics? Some Critical Questions	10	(3)
The Important Role of Values in Development Economics	13	(1)
Economies as Social Systems: The Need to Go Beyond Simple Economics	14	(1)
What Do We Mean by Development?	15	(10)
Traditional Economic Measures	15	(1)
The New Economic View of Development	16	(1)
Sen's ``Capabilities'' Approach	17	(3)
Three Core Values of Development	20	(2)
The Three Objectives of Development	22	(1)
The Millennium Development Goals	22	(3)
Conclusions	25	(2)
Case Study: Progress in the Struggle for More Meaningful Development: Brazil	27	(10)
Comparative Development: Differences and Commonalities among Developing Countries	37	(65)
Defining the Developing World	38	(3)
The Structural Diversity of Developing Economies	41	(8)
Size and Income Level	42	(2)
Historical Background	44	(1)
Physical and Human Resources	45	(1)
Ethnic and Religious Composition	45	(1)
Relative Importance of the Public and Private Sectors and Civil Society	46	(1)
Industrial Structure	47	(2)
Political Structure, Power, and Interest Groups	49	(1)
Common Characteristics of Developing Nations	49	(22)
Low Levels of Living	50	(9)
A Holistic Measure of Living Levels: The Human Development Index	59	(5)
Low Levels of Productivity	64	(1)
High Rates of Population Growth and Dependency Burdens	65	(2)
Substantial Dependence on Agricultural Production and Primary-Product Exports	67	(2)
Prevalence of Imperfect Markets and Incomplete Information	69	(1)
Dependence and Vulnerability in International Relations	70	(1)
How Developing Countries Today Differ from Developed Countries in Their Earlier Stages	71	(8)
Physical and Human Resource Endowments	72	(1)
Relative Levels of Per Capita Income and GDP	73	(1)
Climatic Differences	73	(1)
Population Size, Distribution, and Growth	74	(1)
The Historical Role of International Migration	74	(2)
The Growth Stimulus of International Trade	76	(1)
Basic Scientific and Technological Research and Development Capabilities	77	(1)
Stability and Flexibility of Political and Social Institutions	78	(1)
Efficacy of Domestic Economic Institutions	79	(1)
Are Living Standards of Developing and Developed Countries Converging?	79	(3)
Conclusion	82	(2)
Case Study: Divergent Development: Pakistan and Bangladesh	84	(13)
Appendix 2.1 Components of Economic Growth	97	(5)
Classic Theories of Economic Development	102	(38)
Classic Theories of Economic Development: Four Approaches	103	(1)
Development as Growth and the Linear-Stages Theories	104	(4)
Rostow's Stages of Growth	104	(1)
The Harrod-Domar Growth Model	105	(2)
Obstacles and Constraints	107	(1)
Necessary versus Sufficient Conditions: Some Criticisms of the Stages Model	107	(1)
Structural-Change Models	108	(7)
The Lewis Theory of Development	108	(5)
Structural Change and Patterns of Development	113	(1)
Conclusions and Implications	114	(1)
The International-Dependence Revolution	115	(4)
The Neocolonial Dependence Model	115	(2)
The False-Paradigm Model	117	(1)
The Dualistic-Development Thesis	117	(1)
Conclusions and Implications	118	(1)
The Neoclassical Counterrevolution: Market Fundamentalism	119	(5)
Challenging the Statist Model: Free Markets, Public Choice, and Market-Friendly Approaches	119	(2)
Traditional Neoclassical Growth Theory	121	(2)
Conclusions and Implications	123	(1)
Classic Theories of Development: Reconciling the Differences	124	(2)
Case Study: Schools of Thought in Context: South Korea and Argentina	126	(10)
Appendix 3.1 The Solow Neoclassical Growth Model	136	(4)
Contemporary Models of Development and Underdevelopment	140	(53)
The New Growth Theory: Endogenous Growth	141	(4)
Motivation for the New Growth Theory	141	(2)
The Romer Model	143	(1)
Criticisms of the New Growth Theory	144	(1)
Underdevelopment as a Coordination Failure	145	(3)
Multiple Equilibria: A Diagrammatic Approach	148	(5)
Starting Economic Development: The Big Push	153	(9)
The Big Push: A Graphical Model	155	(6)
Why the Problem Cannot Be Solved by a Super-Entrepreneur	161	(1)
Further Problems of Multiple Equilibria	162	(4)
Kremer's O-Ring Theory of Economic Development	166	(5)
The O-Ring Model	166	(3)
Implications of the O-Ring Theory	169	(2)
Conclusions: Multiple Equilibria and Coordination Failures	171	(3)
Case Study: Understanding a Development Miracle: China	174	(19)
Part Two Problems and Policies: Domestic
Poverty, Inequality, and Development	193	(69)
Measuring Inequality and Poverty	195	(12)
Measuring Inequality	195	(7)
Measuring Absolute Poverty	202	(5)
Poverty, Inequality, and Social Welfare	207	(11)
What's So Bad about Inequality?	207	(2)
Dualistic Development and Shifting Lorenz Curves: Some Stylized Typologies	209	(3)
Kuznets's Inverted-U Hypothesis	212	(4)
Growth and Inequality	216	(2)
Absolute Poverty: Extent and Magnitude	218	(7)
Growth and Poverty	220	(5)
Economic Characteristics of Poverty Groups	225	(7)
Rural Poverty	225	(2)
Women and Poverty	227	(4)
Ethnic Minorities, Indigenous Populations, and Poverty	231	(1)
The Range of Policy Options: Some Basic Considerations	232	(7)
Areas of Intervention	232	(2)
Policy Options	234	(5)
Summary and Conclusions: The Need for a Package of Policies	239	(2)
Case Study: Making Microfinance Work for the Poor: The Grameen Bank of Bangladesh	241	(14)
Appendix 5.1 Appropriate Technology and Employment Generation: The Price-Incentive Model	255	(3)
Appendix 5.2 The Ahluwalia-Chenery Welfare Index	258	(4)
Population Growth and Economic Development: Causes, Consequences, and Controversies	262	(50)
The Basic Issue: Population Growth and the Quality of Life	263	(1)
A Review of Numbers: Population Growth---Past, Present, and Future	264	(11)
World Population Growth through History	264	(1)
Structure of the World's Population	265	(7)
The Hidden Momentum of Population Growth	272	(3)
The Demographic Transition	275	(2)
The Causes of High Fertility in Developing Countries: The Malthusian and Household Models	277	(10)
The Malthusian Population Trap	277	(3)
Criticisms of the Malthusian Model	280	(2)
The Microeconomic Household Theory of Fertility	282	(3)
The Demand for Children in Developing Countries	285	(1)
Some Empirical Evidence	286	(1)
Implications for Development and Fertility	286	(1)
The Consequences of High Fertility: Some Conflicting Opinions	287	(6)
Population Growth is Not a Real Problem	287	(2)
A Deliberately Contrived False Issue	289	(1)
A Desirable Phenomenon	289	(1)
Population Growth is a Real Problem	290	(2)
The Empirical Argument: Seven Negative Consequences of Population Growth	292	(1)
Goals and Objectives: Toward a Consensus	293	(2)
Some Policy Approaches	295	(5)
What Developing Countries Can Do	295	(3)
What the Developed Countries Can Do: Resources, Population, and the Global Environment	298	(2)
How Developed Countries Can Assist Developing Countries with Their Population Programs	300	(1)
Conclusion	300	(2)
Case Study: Population, Poverty, and Development: China and India	302	(10)
Urbanization and Rural-Urban Migration: Theory and Policy	312	(51)
The Migration and Urbanization Dilemma	312	(7)
Urbanization: Trends and Projections	313	(6)
The Role of Cities	319	(4)
Industrial Districts	320	(2)
Efficient Urban Scale	322	(1)
The Urban Giantism Problem	323	(5)
First City Bias	325	(1)
Causes of Urban Giantism	325	(3)
The Urban Informal Sector	328	(6)
Policies for the Urban Informal Sector	330	(3)
Women in the Informal Sector	333	(1)
Urban Unemployment	334	(1)
Migration and Development	335	(2)
Toward an Economic Theory of Rural-Urban Migration	337	(9)
A Verbal Description of the Todaro Model	339	(2)
A Diagrammatic Presentation	341	(2)
Five Policy Implications	343	(3)
Summary and Conclusions: The Shape of a Comprehensive Migration and Employment Strategy	346	(3)
Case Study: Rural-Urban Migration and Urbanization in Developing Countries: India and Botswana	349	(11)
Appendix 7.1 A Mathematical Formulation of the Todaro Migration Model	360	(3)
Human Capital: Education and Health in Economic Development	363	(59)
The Central Roles of Education and Health	363	(3)
Education and Health as Joint Investments for Development	366	(1)
Improving Health and Education: Why Increasing Income is Not Sufficient	367	(2)
Investing in Education and Health: The Human Capital Approach	369	(3)
Child Labor	372	(4)
The Gender Gap: Women and Education	376	(4)
Consequences of Gender Bias in Health and Education	377	(3)
Educational Systems and Development	380	(12)
Educational Supply and Demand: The Relationship between Employment Opportunities and Educational Demands	380	(3)
Social versus Private Benefits and Costs	383	(3)
Distribution of Education	386	(2)
Education, Inequality, and Poverty	388	(2)
Education, Internal Migration, and the Brain Drain	390	(2)
Health Systems and Development	392	(13)
Measurement and Distribution	392	(2)
Disease Burden	394	(2)
Malaria and Parasitic Worms	396	(2)
HIV and AIDS	398	(1)
Health and Productivity	399	(3)
Health Systems Policy	402	(3)
Policies for Health, Education, and Income Generation	405	(2)
Case Study: AIDS---Economic Development Impact and the Needed Response: Uganda and South Africa	407	(15)
Agricultural Transformation and Rural Development	422	(48)
The Imperative of Agricultural Progress and Rural Development	422	(2)
Agricultural Growth: Past Progress and Current Challenges	424	(3)
The Structure of Agrarian Systems in the Developing World	427	(13)
Two Kinds of World Agriculture	427	(1)
Peasant Agriculture in Latin America, Asia, and Africa	428	(11)
Conclusions	439	(1)
The Important Role of Women	440	(2)
The Economics of Agricultural Development: Transition from Peasant Subsistence to Specialized Commercial Farming	442	(10)
Subsistence Farming: Risk Aversion, Uncertainty, and Survival	443	(6)
The Transition to Mixed and Diversified Farming	449	(1)
From Divergence to Specialization: Modern Commercial Farming	450	(1)
Conclusions	451	(1)
Toward a Strategy of Agricultural and Rural Development: Some Main Requirements	452	(5)
Improving Small-Scale Agriculture	452	(2)
Conditions for Rural Development	454	(3)
Case Study: Improving Agricultural Extension for Women Farmers: Kenya	457	(13)
The Environment and Development	470	(46)
Economics and the Environment	470	(1)
Environment and Development: The Basic Issues	471	(4)
Sustainable Development and Environmental Accounting	471	(1)
Population, Resources, and the Environment	472	(1)
Poverty and the Environment	473	(1)
Growth versus the Environment	473	(1)
Rural Development and the Environment	474	(1)
Urban Development and the Environment	474	(1)
The Global Environment	474	(1)
The Scope of Environmental Degradation: An Overview	475	(3)
Rural Development and the Environment: A Tale of Two Villages	478	(2)
Traditional Economic Models of the Environment	480	(7)
Privately Owned Resources	480	(2)
Common Property Resources	482	(2)
Public Goods and Bads: Regional Environmental Degradation and the Free-Rider Problem	484	(2)
Limitations of the Public-Good Framework	486	(1)
Urban Development and the Environment	487	(6)
The Ecology of Urban Slums	487	(1)
Industrialization and Urban Air Pollution	488	(3)
Problems of Congestion and the Availability of Clean Water and Sanitation	491	(2)
The Need for Policy Reform	493	(1)
The Global Environment: Rain Forest Destruction and Greenhouse Gases	494	(2)
Policy Options in Developing and Developed Countries	496	(7)
What Less Developed Countries Can Do	496	(2)
How Developed Countries Can Help LDCs	498	(2)
What Developed Countries Can Do for the Global Environment	500	(3)
Case Study: Economic Growth and Environmental Sustainability: The Philippines	503	(13)
Elizabeth M. Remedio
Development Policymaking and the Roles of Market, State, and Civil Society	516	(61)
The Planning Mystique	517	(1)
The Nature of Development Planning	518	(1)
Basic Concepts	518	(1)
Planning in Mixed Developing Economies	518	(1)
The Rationale for Development Planning	519	(2)
The Planning Process: Some Basic Models	521	(1)
Aggregate Growth Models: Projecting Macro Variables	522	(2)
Multisector Models and Sectoral Projections	524	(1)
Project Appraisal and Social Cost-Benefit Analysis	525	(4)
Conclusions: Planning Models and Plan Consistency	528	(1)
Problems of Plan Implementation and Plan Failure	529	(2)
Theory versus Practice	529	(1)
Reasons for Plan Failure	530	(1)
Government Failure and the Resurgent Preference for Markets over Planning	531	(3)
The Market Economy	534	(3)
Sociocultural Preconditions and Economic Requirements	534	(1)
Role and Limitations of the Market in LDCs	535	(2)
The ``Washington Consensus'' on the State in Development and Its Limitations	537	(4)
Toward a New Consensus	539	(2)
Development Political Economy: Theories of Policy Formulation and Reform	541	(11)
Understanding Voting Patterns on Policy Reform	542	(2)
Institutions and Path Dependency	544	(1)
Democracy versus Autocracy: Which Facilitates Faster Growth?	545	(1)
Development Roles of NGOs and the Broader Citizen Sector	546	(6)
Trends in Governance and Reform	552	(7)
Tackling the Problem of Corruption	552	(2)
Decentralization	554	(2)
Development Participation	556	(3)
Development Policy and the State: Concluding Observations	559	(2)
Case Study: A National Development NGO: The BRAC Model	561	(16)
Part Three Problems and Policies: International and Macro
Trade Theory and Development Experience	577	(43)
Globalization: An Introduction	577	(3)
International Trade and Finance: Some Key Issues	580	(2)
Five Basic Questions about Trade and Development	582	(4)
Importance of Exports to Different Developing Nations	584	(1)
Demand Elasticities and Export Earnings Instability	585	(1)
The Terms of Trade and the Prebisch-Singer Thesis	586	(1)
The Traditional Theory of International Trade	587	(7)
Comparative Advantage	588	(1)
Relative Factor Endowments and International Specialization: The Neoclassical Model	589	(4)
Trade Theory and Development: The Traditional Arguments	593	(1)
Some Criticisms of Traditional Free-Trade Theory in the Context of Developing-Country Experience	594	(9)
Fixed Resources, Full Employment, and the International Immobility of Capital and Skilled Labor	595	(3)
Fixed, Freely Available Technology and Consumer Sovereignty	598	(1)
Internal Factor Mobility and Perfect Competition: Increasing Returns, Imperfect Competition, and Controlled Markets	599	(2)
The Absence of National Governments in Trading Relations	601	(1)
Balanced Trade and International Price Adjustments	602	(1)
Trade Gains Accruing to Nationals	602	(1)
Some Conclusions on Trade Theory and Economic Development Strategy	603	(4)
Case Study: Taiwan: A Development Success Story	607	(13)
The Trade Policy Debate: Export Promotion, Import Substitution, and Economic Integration	620	(46)
Trade Strategies for Development: Export Promotion versus Import Substitution	621	(18)
Export Promotion: Looking Outward and Seeing Trade Barriers	622	(4)
Import Substitution: Looking Inward but Still Paying Outward	626	(3)
The is Industrialization Strategy and Results	629	(6)
Foreign-Exchange Rates, Exchange Controls, and the Devaluation Decision	635	(4)
Summary and Conclusions: Trade Optimists and Trade Pessimists	639	(2)
Trade Pessimist Arguments	639	(1)
Trade Optimist Arguments	640	(1)
The Industrialization Strategy Approach to Export Policy	641	(2)
Reconciling the Arguments: The Data and the Consensus	643	(2)
South-South Trade and Economic Integration: Looking Outward and Inward	645	(5)
The Growth of Trade among Developing Countries	645	(1)
Economic Integration: Theory and Practice	645	(2)
Regional Trading Blocs and the Globalization of Trade	647	(3)
Trade Policies of Developed Countries: The Need for Reform	650	(4)
Rich-Nation Tariff and Nontariff Trade Barriers and the 1995 Uruguay Round GATT Agreement	650	(4)
Case Study: Industrial and Export Policy: South Korea	654	(12)
Balance of Payments, Developing-Country Debt, and the Macroeconomic Stabilization Controversy	666	(40)
The Balance of Payments Account	667	(3)
General Considerations	667	(2)
A Hypothetical Illustration: Deficits and Debts	669	(1)
Financing and Reducing Payments Deficits	670	(3)
Some Initial Policy Issues	670	(2)
Trends in LDC Balance of Payments	672	(1)
The Debt Crisis of the 1980s	673	(7)
Background and Analysis	673	(2)
Origins of the Debt Crisis	675	(5)
Attempts at Alleviation: Macroeconomic Instability, IMF Stabilization Policies, and Their Critics	680	(5)
The IMF Stabilization Program	680	(2)
Tactics for Debt Relief	682	(2)
Has the Debt Problem Disappeared? Winners and Losers	684	(1)
Conclusions	685	(2)
Case Study: Mexico: Crisis, Debt Reduction, and the Struggle for Renewed Growth	687	(9)
Appendix 14.1 A Brief History and Analysis of the International Monetary Fund and the World Bank	696	(10)
Foreign Finance, Investment, and Aid: Controversies and Opportunities	706	(35)
The International Flow of Financial Resources	706	(1)
Private Foreign Direct Investment and the Multinational Corporation	707	(9)
Multinational Corporations: Size, Patterns, and Trends	708	(2)
Private Foreign Investment: Some Pros and Cons for Development	710	(6)
Private Portfolio Investment: Boon or Bane for LDCs?	716	(2)
Foreign Aid: The Development Assistance Debate	718	(13)
Conceptual and Measurement Problems	718	(1)
Amounts and Allocations: Public Aid	719	(2)
Why Donors Give Aid	721	(6)
Why LDC Recipients Accept Aid	727	(1)
The Growing Role of Nongovernmental Organizations in International Aid	728	(1)
The Effects of Aid	729	(2)
Case Study: Botswana: African Success Story at Risk	731	(10)
Finance and Fiscal Policy for Development	741	(48)
The Role of the Financial System	742	(2)
The Painful Road to Macroeconomic Stability	744	(10)
Differences between MDC and LDC Financial Systems	744	(3)
The Role of Central Banks	747	(3)
The Emergence of Development Banking	750	(1)
Informal Finance, Group Lending, and Microfinance institutions for Small-Scale Enterprise	751	(3)
Reforming Financial Systems	754	(5)
Financial Liberalization, Real Interest Rates, Savings, and Investment	754	(2)
Financial Policy and the Role of the State	756	(2)
Debate on the Role of Stock Markets	758	(1)
Fiscal Policy for Development	759	(6)
Macrostability and Resource Mobilization	759	(1)
Taxation: Direct and Indirect	760	(5)
Public Administration: The Scarcest Resource	765	(2)
State-Owned Enterprises	767	(3)
Improving the Performance of SOEs	768	(1)
Privatization: Theory and Experience	769	(1)
Military Expenditures and Economic Development	770	(5)
Significance and Economic Impact	770	(5)
Case Study: Chile and Poland: Privatization: What, When, and to Whom?	775	(14)
Some Critical Issues for the Twenty-First Century	789	(16)
Global Independence and the Growth of Developing-World Markets	789	(1)
The Global Environment and the Developing World	790	(6)
Pollutants and Their Consequences for the Global Environment	790	(1)
MDC and LDC Contributions to Greenhouse Gases	790	(2)
Rain Forest Preservation as a Public Good: Who Should Pay?	792	(2)
Searching for Solutions: The 1992, 1997, and 2002 Summits	794	(2)
The Crisis in Sub-Saharan Africa	796	(2)
Globalization and International Financial Reform	798	(2)
Concluding Remarks	800	(5)
Glossary	805	(28)
Name Index	833	(12)
Subject Index	845