Economics of Development (Seventh Edition)

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  • Edition: 7th
  • Format: Textbook Paperback
  • Copyright: 2012-11-17
  • Publisher: W W NORTON

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

Table of Contents

Prefacep. xv
International Development Resources on the Internetp. xxiii
Development and Growth
Patterns of Developmentp. 3
Three Vignettesp. 3
Malaysiap. 3
Ethiopiap. 5
Ukrainep. 6
Development and Globalizationp. 8
Rich and Poor Countriesp. 10
Growth and Developmentp. 13
Diversity in Development Achievementsp. 15
Approaches to Developmentp. 16
The Study of Development Economicsp. 18
Organizationp. 19
Summaryp. 20
Measuring Economic Growth and Developmentp. 23
Measuring Economic Growthp. 24
Measuring GDP: What Is Left Out?p. 25
Exchange-Rate Conversion Problemsp. 27
Economic Growth around the World: A Brief Overviewp. 32
Jared Diamond: Guns, Germs, and Steelp. 34
Economic Growth, 1970-2010p. 36
What Do We Mean by Economic Development?p. 38
Measuring Economic Developmentp. 40
Human Development Definedp. 41
Why Use Logarithms?p. 43
What Can We Learn from the Human Development Index?p. 44
Millennium Development Goalsp. 46
Targets of the Millennium Development Goalsp. 47
Is Economic Growth Desirable?p. 50
Summaryp. 53
Economic Growth: Concepts and Patternsp. 55
Divergent Patterns of Economic Growth since 1960p. 56
Botswana's Remarkable Economic Developmentp. 59
Factor Accumulation, Productivity, and Economic Growthp. 60
Calculating Future Values, Growth Rates, and Doubling Timesp. 61
Saving, Investment, and Capital Accumulationp. 64
Sources of Growth Analysisp. 66
Characteristics of Rapidly Growing Countriesp. 74
Macroeconomic and Political Stabilityp. 75
Investment in Health and Educationp. 77
Effective Governance and Institutionsp. 79
Institutions, Governance, and Growthp. 80
Favorable Environment for Private Enterprisep. 82
Trade, Openness, and Growthp. 83
Favorable Geographyp. 84
Summaryp. 87
Theories of Economic Growthp. 89
The Basic growth Modelp. 91
The Harrod-Domar Growth Modelp. 94
The Fixed-Coefficient Production Functionp. 94
The Capital-Output Ratio and the Harrod-Domar Frameworkp. 96
Strengths and Weaknesses of the Harrod-Domar Frameworkp. 98
Economic Growth in Thailandp. 101
The Solow (Neoclassical) Growth Modelp. 103
The Neoclassical Production Functionp. 103
The Basic Equations of the Solow Modelp. 104
The Solow Diagramp. 108
Changes in the Saving Rate and Population Growth Rate in the Solow Modelp. 109
Population Growth and Economic Growthp. 112
Technological Change in the Solow Modelp. 113
Strengths and Weaknesses of the Solow Frameworkp. 116
Diminishing Returns and the Production Functionp. 117
Explaining Differences in Growth Ratesp. 118
The Convergence Debatep. 121
Beyond Solow: New Approaches to Growthp. 125
Summaryp. 127
States and Marketsp. 129
Development Thinking after World War IIp. 130
Market Failurep. 133
Fundamental Changes in the 1970s and 1980sp. 137
Ghana after Independencep. 139
The Declining Effectiveness of Government Intervention in the Market: Korea, 1960s-2010p. 143
Structural Adjustment, the Washington Consensus, and the End of the Soviet Modelp. 144
Soviet Command Model to Market Economies: The Great Transitionp. 148
Was the Washington Consensus a Success or Failure?p. 153
Summaryp. 159
Distribution and Human Resources
Inequality and Povertyp. 165
Measuring Inequalityp. 166
Patterns of Inequalityp. 172
Growth and Inequalityp. 174
What Else Might Cause Inequality?p. 177
Why Inequality Mattersp. 178
Measuring Povertyp. 180
Poverty Linesp. 181
National Poverty Lines in Bangladesh, Mexico, and the United Statesp. 183
Why $1.25 a Day?p. 186
Dissenting Opinions on the Extent of Absolute Povertyp. 191
Who is not Poor?p. 192
Poverty Todayp. 192
Who Are the Poor?p. 193
Living in Povertyp. 195
Strategies to Reduce Povertyp. 197
Growth is Good for the Poorp. 198
Sometimes Growth May Not Be Enoughp. 200
Pro-Poor Growthp. 201
Why Should Development Strategies have a Poverty Focus?p. 202
Improving Opportunities for the Poorp. 205
Income Transfers and Safety Netsp. 206
Global Inequality and the End of Povertyp. 208
Summaryp. 214
Populationp. 217
A Brief History of World Populationp. 218
The Demographic Transitionp. 220
The Demographic Situation Todayp. 224
Total Fertility Ratesp. 225
The Demographic Futurep. 227
Population Momentump. 229
The Causes of Population Growthp. 231
Thomas Malthus, Population Pessimistp. 232
Why Birth Rates Declinep. 233
Population Growth and Economic Developmentp. 236
Population and Accumulationp. 237
Population Growth, Age Structure, and Dependency Ratiosp. 239
Population and Productivityp. 241
Population and Market Failuresp. 243
Population Policyp. 245
Family Planningp. 246
Authoritarian Approachesp. 249
Missing Girls, Missing Womenp. 251
Population Issues for the Twenty-First Centuryp. 253
Summaryp. 254
Educationp. 257
Trends and Patternsp. 258
Stocks and Flowsp. 259
Boys versus Girlsp. 263
Schooling versus Educationp. 264
Education as an Investmentp. 267
The Rate of Return to Schoolingp. 269
Estimated Rates of Returnp. 272
First-Generation Estimatesp. 273
Estimating Rates of Return from Wage Equationsp. 275
Second-Generation Estimatesp. 276
Puzzlesp. 278
Returns to Schooling and Income Opportunitiesp. 279
Making Schooling More Productivep. 281
Underinvestmentp. 282
Misallocationp. 282
Improving Schoolsp. 286
Reducing the Costs of Going to Schoolp. 287
Mexico's Progresap. 288
Inefficient Use of Resourcesp. 290
It Is about More than the Moneyp. 293
Combating Teacher Absencep. 294
Summaryp. 298
Healthp. 299
What Is Health?p. 302
Life Expectancyp. 305
Transitions in Global Healthp. 307
The Epidemiologic Transitionp. 308
The Determinants of Improved Healthp. 310
Health, Income, and Growthp. 313
Income and Healthp. 314
How Beneficent is the Market? A Look at the Modern History of Mortalityp. 318
Health and Productivityp. 319
Health and Investmentp. 320
Three Critical Diseasesp. 321
Malaria, Yellow Fever, and the Panama Canalp. 322
HIV/AIDSp. 323
HIV/AIDS, Malaria, and Tuberculosis: Some Basicsp. 324
Malariap. 329
Making Markets for Vaccinesp. 330
Tuberculosisp. 333
What Works? Some Successes in Global Healthp. 335
Preventing HIV/AIDS in Thailandp. 336
Controlling Tuberculosis in Chinap. 336
Eradicating Smallpoxp. 337
Eliminating Polio in Latin Americap. 338
Preventing Deaths from Diarrheal Diseasep. 340
Lessons Learnedp. 342
Health Challengesp. 343
Summaryp. 344
Macroeconomic Policies for Development
Investment and Savingsp. 349
Using Investment Productively: Cost-Benefit Analysisp. 351
Present Valuep. 351
Opportunity Costsp. 355
Shadow Pricesp. 355
Welfare Weightsp. 356
Barriers to Productive Public and Private Investmentp. 357
Barriers to Doing Businessp. 359
Foreign Direct Investmentp. 363
FDI Patterns and Productsp. 364
Benefits and Drawbacks of FDIp. 365
FDI and Growthp. 369
Policies Toward Foreign Direct Investmentp. 370
Savingsp. 374
Household Saving and consumptionp. 376
Corporate Savingp. 379
Government Savingp. 380
Foreign Savingp. 384
Summaryp. 388
Fiscal Policyp. 391
Government Expendituresp. 393
Categories of Government Expendituresp. 394
Reining in Fiscal Decentralization in Brazil and Chinap. 398
Government Revenue and Taxesp. 399
Tax Rates and Smuggling: Colombiap. 401
Taxes on International Tradep. 401
Sales and Excise Taxesp. 402
Personal and Corporate Income Taxesp. 404
New Sources of Tax Revenuesp. 404
Changes in Tax Administrationp. 405
Fundamental Tax Reformp. 405
Tax Administration in India and Bolivia in the 1980sp. 406
Indonesian Tax Reformp. 407
Taxes and Income Distributionp. 411
Personal Income Taxesp. 412
Taxes on Luxury Consumptionp. 413
Corporate Income and Property Taxes: The Incidence Problemp. 414
Economic Efficiency and the Budgetp. 417
Sources of Inefficiencyp. 417
Neutrality and Efficiency: Lessons from Experiencep. 418
Summaryp. 420
Financial Development and Inflationp. 421
The Functions of a Financial Systemp. 423
Money and the Money Supplyp. 423
Financial Intermediationp. 426
Transformation and Distribution of Riskp. 426
Stabilizationp. 427
Inflationp. 427
Inflation Episodesp. 428
Hyperinflation in Peru, 1988-90p. 431
Monetary Policy and Price Stabilityp. 432
Monetary Policy and Exchange-Rate Regimesp. 433
Sources of Inflationp. 435
Controlling Inflation through Monetary Policyp. 438
Reserve Requirementsp. 439
Credit Ceilingsp. 439
Interest-Rate Regulation and Moral Suasionp. 440
International Debt and Combating Recessionsp. 441
Financial Developmentp. 442
Shallow Finance and Deep Financep. 443
Shallow Financial Strategyp. 444
Deep Financial Strategyp. 447
Informal Credit Markets and Micro Creditp. 449
Does Micro Credit Reduce Poverty?p. 451
Summaryp. 453
Foreign Debt and Financial Crisesp. 455
Advantages and Disadvantages of Foreign Borrowingp. 458
Debt Sustainabilityp. 459
Debt Indicatorsp. 460
From Distress to Defaultp. 463
A Short History of Sovereign Lending Defaultp. 465
The 1980s Debt Crisisp. 466
Causes of the Crisisp. 467
Impact on the Borrowersp. 469
Escape from the Crisis, for Some Countriesp. 470
The Debt Crisis in Low-Income Countriesp. 473
Debt Reduction in Low-Income Countriesp. 474
The Heavily Indebted Poor Country Initiativep. 475
Odious Debtp. 476
Debt Relief in Ugandap. 479
Emerging Market Financial Crisesp. 480
Domestic Economic Weaknessesp. 482
Short-Term Capital Flowsp. 484
Creditor Panicp. 486
Model of Self-Fulfilling Creditor Panicsp. 486
Stopping Panicsp. 489
Lessons from the Crisesp. 494
Summaryp. 496
Foreign Aidp. 499
Donors and Recipientsp. 501
What Is Foreign Aid?p. 501
Who Gives Aid?p. 503
The Marshall Planp. 503
The Commitment to Development Indexp. 507
Who Receives Foreign Aid?p. 512
The Motivations for Aidp. 514
China's Foreign Aidp. 515
Aid, Growth, and Developmentp. 518
Although Not Always Successful, on Average, Aid Has a Positive Impact on Economic Growth and Developmentp. 520
Controlling River Blindness in Sub-Saharan Africap. 524
Aid Has Little or No Effect on Growth and Actually May Undermine Growthp. 526
Food Aid and Food Productionp. 528
Aid Has a Conditional Relationship with Growth, Stimulating Growth Only Under Certain Circumstances, Such as in Countries with Good Policies or Institutionsp. 533
Donor Relationships with Recipient Countriesp. 535
The Principal-Agent Problemp. 536
Conditionalityp. 537
Improving Aid Effectivenessp. 540
Summaryp. 543
Managing Short-Run Crises in an Open Economyp. 545
Equilibrium in a Small, Open Economyp. 546
Internal and External Balancesp. 547
Real Versus Nominal Exchange Ratesp. 550
The Phase Diagramp. 553
Equilibrium and Disequilibriump. 556
Pioneering Stabilization: Chile, 1973-84p. 559
Stabilization Policiesp. 560
Applications of the Australian Modelp. 564
Dutch Diseasep. 564
Recovering from Mismanagement: Ghana, 1983-91p. 566
Debt Repayment Crisisp. 567
Stabilization Package: Inflation and a Deficitp. 569
The Greek Debt Crisis of 2010-12p. 571
Drought, Hurricanes, and Earthquakesp. 574
Summaryp. 575
Appendix to Chapter 15: National Income and the Balance of Paymentsp. 576
Agriculture, Trade, and Sustainability
Agriculture and Developmentp. 583
Unique Characteristics of the Agricultural Sectorp. 584
Structural Transformationp. 587
Two-Sector Models of Developmentp. 590
The Labor Surplus Modelp. 591
Surplus Labor in Chinap. 598
The Neoclassical Two-Sector Modelp. 599
Debates over Surplus Laborp. 602
Evolving Perspectives on the Role of Agriculture in Economic Growth and Poverty Alleviationp. 604
Agriculture and Economic Growthp. 604
The Nutrition Linkage to Economic Growthp. 608
Agriculture and Poverty Alleviationp. 610
Agricultural Growth as a Pathway out of Povertyp. 613
Summaryp. 617
Agricultural Development: Technology, Policies, and Institutionsp. 619
Characteristics of Traditional Agriculture and Agricultural Systemsp. 620
Agricultural Systemsp. 621
Diagnosing the Constraints to Agricultural Developmentp. 622
Raising the Technical Ceilingp. 627
The Green Revolutionp. 628
Recent Trends in Agricultural Productivityp. 632
A Model of Induced Technical Change in Agriculturep. 635
Raising the Economic Ceilingp. 637
Food Production Analysisp. 638
What to Produce? The Product-Product Decisionp. 638
How to Produce It? The Factor-Factor Decisionp. 641
How Much to Produce? The Factor-Product Decisionp. 643
Fertilizer Subsidies in Malawip. 645
Market Accessp. 651
Cell Phones and Agricultural Developmentp. 651
Institutions for Agricultural Developmentp. 653
Land Reformp. 656
The World Food Crisis of 2005-08p. 658
Causes of the Crisisp. 659
Consequences of the Crisisp. 661
Summaryp. 663
Trade and Developmentp. 665
Trade Trends and Patternsp. 667
Who Traders?p. 671
Comparative Advantagep. 674
The Benefits of Tradep. 677
Winners and Losersp. 681
Trading Primary Productsp. 683
Empirical Evidence on Primary Export-Led Growthp. 687
Export Pessimismp. 688
Declining Terms of Trade?p. 690
Dutch Diseasep. 693
Dutch Disease: A Geometric Presentationp. 697
Nigeria: A Bad Case of Dutch Diseasep. 700
Indonesia: Finding a Curep. 702
The Resource Trapp. 703
Breaking the Resource Cursep. 705
Summaryp. 707
Trade Policyp. 709
Import Substitutionp. 711
Protective Tariffsp. 713
Import Quotasp. 714
Effective Rates of Protectionp. 715
Trade Protection and Politicsp. 718
The Two-Country Model with a Tariffp. 719
Production Subsidiesp. 720
Exchange-Rate Managementp. 722
Outcomes of Import Substitutionp. 724
Export Orientationp. 725
Removing the Bias against Exportsp. 727
Favoring Exportsp. 728
Building Export Platformsp. 730
Is China's Exchange-Rate Policy Unfair?p. 731
Trade Strategy and Industrial Policyp. 734
Trade, Growth, and Poverty Alleviationp. 736
Trade Reforms and Poverty Alleviationp. 739
Key Issues on the Global Trade Agendap. 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 Indonesiap. 746
Expanding Market Accessp. 747
Multilateral Trade Negotiations and the WTOp. 750
Temporary Migration: Another Dimension of International Tradep. 753
Summaryp. 755
Sustainable Developmentp. 757
Will Economic Growth Save or Destroy the Environment?p. 759
Concept and Measurement of Sustainable Developmentp. 761
Saving for a Sustainable Futurep. 765
The Malthusian Effect of Population Growth on Adjusted Net Savings in Ghanap. 768
Market Failuresp. 769
Externalities and the Commonsp. 770
Policy Solutionsp. 773
Property Rightsp. 773
Government Regulationp. 774
Taxes, Subsidies, and Payments for Environmental Servicesp. 776
Taxes Water Pollution in Colombiap. 777
Marketable Permitsp. 779
Informed Regulationp. 781
Policy Failuresp. 782
Policy Failures and Deforestation in Indonesiap. 783
Poverty-Environment Linkagesp. 785
Global Climates Changep. 792
Summaryp. 800
Indexp. 803
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