Economics of Development / Edition 7 available in Hardcover, Paperback
Economics of Development / Edition 7
Economics of Development / Edition 7
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Overview
Product Details
ISBN-13: | 2900393934358 |
---|---|
Publication date: | 11/16/2012 |
Pages: | 880 |
Product dimensions: | 7.20(w) x 10.30(h) x 1.30(d) |
About the Author
Steven Radelet joined Economics of Development for its fifth edition. At the time he was a fellow at Harvard’s Institute for International Development and taught in both Harvard’s economics department and the Kennedy School of Government. He subsequently was deputy assistant secretary of the U.S. Treasury for Africa, the Middle East, and South Asia; a Senior Fellow at the Center for Global Development; and Senior Advisor on Development for Secretary of State Hillary Clinton. He is an expert on foreign aid, developing country debt and financial crises, and economic growth, and he has extensive experience in West Africa and Southeast Asia. He currently serves as Chief Economist for the U.S. Agency for International Development (USAID).
David L. Lindauer is the Stanford Calderwood Professor of Economics at Wellesley College, where he has taught since 1981. He has frequently served as a consultant to the World Bank and was a faculty associate of the Harvard Institute for International Development. Professor Lindauer’s area of expertise is in labor economics. His research and policy advising has included work on industrial relations, labor costs and export potential, minimum wages, poverty and unemployment, public sector pay and employment, and racial affirmative action. He has worked on labor market issues in East and Southeast Asia, Sub-Saharan Africa, and elsewhere. Professor Lindauer, an award-winning teacher of economics, brings his considerable experience teaching undergraduates to this edition.
Steven A. Block is Professor of International Economics and head of the International Development Program at the Fletcher School of Law and Diplomacy, Tufts University. He joins Economics of Development beginning with the seventh edition and has been teaching development economics at the Fletcher School since 1995. Professor Block also holds a faculty appointment at the Friedman School of Nutrition Science and Policy at Tufts University, and has been a visiting scholar at the Harvard University Center for International Development and at Harvard’s Weatherhead Center for International Affairs. He has published numerous scholarly articles in the areas of agricultural development and political economy, and worked extensively on policy advisory teams across Sub-Saharan Africa and in Southeast Asia.
Table of Contents
Preface xv
International Development Resources on the Internet xxiii
Part 1 Development and Growth
1 Patterns of Development 3
Three Vignettes 3
Malaysia 3
Ethiopia 5
Ukraine 6
Development and Globalization 8
Rich and Poor Countries 10
Growth and Development 13
Diversity in Development Achievements 15
Approaches to Development 16
The Study of Development Economics 18
Organization 19
Summary 20
2 Measuring Economic Growth and Development 23
Measuring Economic Growth 24
Measuring GDP: What Is Left Out? 25
Exchange-Rate Conversion Problems 27
Economic Growth around the World: A Brief Overview 32
tared diamond: guns, germs, and steel 34
Economic Growth, 1970-2010 36
What Do We Mean by Economic Development? 38
Measuring Economic Development 40
Human Development Defined 41
Why Use Logarithms? 43
What Can We Learn from the Human Development Index? 44
Millennium Development Goals 46
Targets of the Millennium Development Goals 47
Is Economic Growth Desirable? 50
Summary 53
3 Economic Growth: Concepts and Patterns 55
Divergent Patterns of Economic Growth since 1960 56
Botswana's Remarkable Economic Development 59
Factor Accumulation, Productivity, and Economic Growth 60
Calculating, Future Values, Growth Rates, and Doubling Times 61
Saving, Investment, and Capital Accumulation 64
Sources of Growth Analysis 66
Characteristics of Rapidly Growing Countries 74
1 Macroeconomic and Political Stability 75
2 Investment in Health and Education 77
3 Effective Governance and Institutions 79
Institutions, Governance, and Growth 80
4 Favorable Environment for Private Enterprise 82
5 Trade, Openness, and Growth 83
6 Favorable Geography 84
Summary 87
4 Theories of Economic Growth 89
The Basic Growth Model 91
The Harrod-Domar Growth Model 94
The Fixed-Coefficient Production Function 94
The Capital-Output Ratio and the Harrod-Domar Framework 96
Strengths and Weaknesses of the Harrod-Domar Framework 98
Economic Growth in Thailand 101
The Solow (Neoclassical) Growth Model 103
The Neoclassical Production Function 103
The Basic Equations of the Solow Model 104
The Solow Diagram 108
Changes in the Saving Rate and Population Growth Rate in the Solow Model 109
Population Growth and Economic Growth 112
Technological Change in the Solow Model 113
Strengths and Weaknesses of the Solow Framework 116
Diminishing Returns and the Production Function 117
Explaining Differences in Growth Rates 118
The Convergence Debate 121
Beyond Solow: New Approaches to Growth 125
Summary 127
5 States and Markets 129
Development Thinking after World War II 130
Market Failure 133
Fundamental Changes in the 1970s and 1980s 137
Ghana After Independence 139
The Declining Effectiveness of Government Intervention in the Market: Korea, 1960s-2010 143
Structural Adjustment, the Washington Consensus, and the End of the Soviet Model 144
Soviet Command Model to Market Economies: The Great Transition 148
Was the Washington Consensus a Success or Failure? 153
Summary 159
Part 2 Distribution and Human Resources
6 Inequality and Poverty 165
Measuring Inequality 166
Patterns of Inequality 172
Growth and Inequality 174
What Else Might Cause Inequality? 177
Why Inequality Matters 178
Measuring Poverty 180
Poverty Lines 181
National Poverty Lines in Bangladesh, Mexico, and the United States 183
Wily $1.25 a Day? 186
Dissenting Opinions on the Extent of Absolute Poverty 191
Who is Not Poor? 192
Poverty Today 192
Who Are the Poor? 193
Living in Poverty 195
Strategies to Reduce Poverty 197
Growth is Good for the Poor 198
Sometimes Growth May Not Be Enough 200
Pro-Poor Growth 201
Why Should Development Strategies Have a Poverty Focus? 202
Improving Opportunities for the Poor 205
Income Transfers and Safety Nets 206
Global Inequality and the End of Poverty 208
Summary 214
7 Population 217
A Brief History of World Population 218
The Demographic Transition 220
The Demographic Situation Today 224
Total Fertility Rates 225
The Demographic Future 227
Population Momentum 229
The Causes of Population Growth 231
Thomas Malthus, Population Pessimist 232
Why Birth Rates Decline 233
Population Growth and Economic Development 236
Population and Accumulation 237
Population Growth, Age Structure, and Dependency Ratios 239
Population and Productivity 241
Population and Market Failures 243
Population Policy 245
Family Planning 246
Authoritarian Approaches 249
Missing Girls, Missing Women 251
Population Issues for the Twenty-First Century 253
Summary 254
8 Education 257
Trends and Patterns 258
Stocks and Flows 259
Boys versus Girls 263
Schooling versus Education 264
Education as an Investment 267
The Rate of Return to Schooling 269
Estimated Rates of Return 272
First-Generation Estimates 273
Estimating Rates of Return from Wage Equations 275
Second-Generation Estimates 276
Puzzles 278
Returns to Schooling and Income Opportunities 279
Making Schooling More Productive 281
Underinvestment 282
Misallocation 282
Improving Schools 286
Reducing the Costs of Going to School 287
Mexico's Progresa 288
Inefficient Use of Resources 290
It Is about More than the Money 293
Combating Teacher Absence 294
Summary 298
9 Health 299
What Is Health? 302
Life Expectancy 305
Transitions in Global Health 307
The Epidemiologic Transition 308
The Determinants of Improved Health 310
Health, Income, and Growth 313
Income and Health 314
How Beneficent is the Market? A Look at the Modern History of Mortality 318
Health and Productivity 319
Health and Investment 320
Three Critical Diseases 321
Malaria, Yellow Fever, and the Panama Canal 322
HPV/AIDS 323
HIV/AIDS, Malaria, and Tuberculosis: Some Basics 324
Malaria 329
Making Markets for Vaccines 330
Tuberculosis 333
What Works? Some Successes in Global Health 335
Preventing HIV/AIDS in Thailand 336
Controlling Tuberculosis in China 336
Eradicating Smallpox 337
Eliminating Polio in Latin America 338
Preventing Deatlis from Diarrheal Disease 340
Lessons Learned 342
Health Challenges 343
Summary 344
Part 3 Macroeconomic Policies for Development
10 Investment and Savings 349
Using Investment Productively: Cost-Benefit Analysis 351
Present Value 351
Opportunity Costs 355
Shadow Prices 355
Welfare Weights 356
Barriers to Productive Public and Private Investment 357
Barriers to Doing Business 359
Foreign Direct Investment 363
FDI Patterns and Products 364
Benefits and Drawbacks of FDI 365
FDI and Growth 369
Policies Toward Foreign Direct Investment 370
Savings 374
Household Saving and Consumption 376
Corporate Saving 379
Government Saving 380
Foreign Saving 384
Summary 388
11 Fiscal Policy 391
Government Expenditures 393
Categories of Government Expenditures 394
Reining in Fiscal Decentralization in Brazil and China 398
Government Revenue and Taxes 399
Tax Rates and Smuggling: Colombia 401
Taxes on International Trade 401
Sales and Excise Taxes 402
Personal and Corporate Income Taxes 404
New Sources of Tax Revenues 404
Changes in Tax Administration 405
Fundamental Tax Reform 405
Tax Administration in India and Bolivia in the 1980s 406
Indonesian Tax Reform 407
Taxes and Income Distribution 411
Personal Income Taxes 412
Taxes on Luxury Consumption 413
Corporate Income and Property Taxes: The Incidence Problem 414
Economic Efficiency and the Budget 417
Sources of Inefficiency 417
Neutrality and Efficiency: Lessons from Experience 418
Summary 420
12 Financial Development and Inflation 421
The Functions of a Financial System 423
Money and the Money Supply 423
Financial Intermediation 426
Transformation and Distribution of Risk 426
Stabilization 427
Inflation 427
Inflation Episodes 428
Hyperinflation in Peru, 1988-90 431
Monetary Policy and Price Stability 432
Monetary Policy and Exchange-Rate Regimes 433
Sources of Inflation 435
Controlling Inflation through Monetary Policy 438
Reserve Requirements 439
Credit Ceilings 439
Interest-Rate Regulation and Moral Suasion 440
International Debt and Combating Recessions 441
Financial Development 442
Shallow Finance and Deep Finance 443
Shallow Financial Strategy 444
Deep Financial Strategy 447
Informal Credit Markets and Micro Credits Does Micro Credit Reduce Poverty? 451
Summary 453
13 Foreign Debt and Financial Crises 455
Advantages and Disadvantages of Foreign Borrowing 458
Debt Sustainability 459
Debt Indicators 460
From Distress to Default 463
A Short History of Sovereign Lending Default 465
The 1980s Debt Crisis 466
Causes of the Crisis 467
Impact on the Borrowers 469
Escape from the Crisis, for Some Countries 470
The Debt Crisis in Low-Income Countries 473
Debt Reduction in Low-Income Countries 474
The Heavily Indebted Poor Country Initiative 475
Odious Debt 476
Debt Relief in Uganda 479
Emerging Market Financial Crises 480
Domestic Economic Weaknesses 482
Short-Term Capital Flows 484
Creditor Panic 486
Model of Self-Fulfilling Creditor Panics 486
Stopping Panics 489
Lessons from the Crises 494
Summary 496
14 Foreign Aid 499
Donors and Recipients 501
What Is Foreign Aid? 501
Who Gives Aid? 503
The Marshall Plan 503
The Commitment to Development Index 507
Who Receives Foreign Aid? 512
The Motivations for Aid 514
China's Foreign Aid 515
Aid, Growth, and Development 518
View 1. Although Not Always Successful, on Average, Aid Has a Positive Impact on Economic Growth and Development 520
Controlling River Blindness in Sub-Saharan Africa 524
View 2. Aid Has Little or No Effect on Growth and Actually May Undermine Growth 526
Food Aid and Food Production 528
View 3. Aid Has a Conditional Relationship with Growth, Stimulating Growth Only Under Certain Circumstances, Such as in Countries with Good Policies or Institutions 533
Donor Relationships with Recipient Countries 535
The Principal-Agent Problem 536
Conditionality 537
Improving Aid Effectiveness 540
Summary 543
15 Managing Short-Run Crises in an Open Economy 545
Equilibrium in a Small, Open Economy 546
Internal and External Balance 547
Real Versus Nominal Exchange Rates 550
The Phase Diagram 553
Equilibrium and Disequilibrium 556
Pioneering Stabilization: Chile, 1973-84 559
Stabilization Policies 560
Applications of the Australian Model 564
Dutch Disease 564
Recovering from Mismanagement: Ghana, 1983-91 566
Debt Repayment Crisis 567
Stabilization Package: Inflation and a Deficit 569
The Greek Debt Crisis of 2010-12 571
Drought, Hurricanes, and Earthquakes 574
Summary 575
Appendix to Chapter 15: National Income and the Balance of Payments 576
Part 4 Agriculture, Trade, and Sustainability
16 Agriculture and Development 583
Unique Characteristics of the Agricultural Sector 584
Structural Transformation 587
Two-Sector Models of Development 590
The Labor Surplus Model 591
Surplus Labor in China 598
The Neoclassical Two-Sector Model 599
Debates Over Surplus Labor 602
Evolving Perspectives on the Role of Agriculture in Economic Growth and Poverty Alleviation 604
Agriculture and Economic Growth 604
The Nutrition Linkage to Economic Growth 608
Agriculture and Poverty Alleviation 610
Agricultural Growth as a Pathway out of Poverty 613
Summary 617
17 Agricultural Development: Technology, Policies, and Institutions 619
Characteristics of Traditional Agriculture and Agricultural Systems 620
Agricultural Systems 621
Diagnosing the Constraints to Agricultural Development 622
Raising the Technical Ceiling 627
The Green Revolution 628
Recent Trends in Agricultural Productivity 632
A Model of Induced Technical Change in Agriculture 635
Raising the Economic Ceiling 637
Food Production Analysis 638
What to Produce? The Product-Product Decision 638
How to Produce It? The Factor-Factor Decision 641
How Much to Produce? The Factor-Product Decision 643
Fertilizer Subsidies in Malawi 645
Market Access 651
Cell Phones and Agricultural Development 651
Institutions for Agricultural Development 653
Land Reform 656
The World Food Crisis of 2005-08 658
Causes of the Crisis 659
Consequences of the Crisis 661
Summary 663
18 Trade and Development 665
Trade Trends and Patterns 667
Who Trades? 671
Comparative Advantage 674
The Benefits of Trade 677
Winners and Losers 681
Trading Primary Products 683
Empirical Evidence on Primary Export-Led Growth 687
Export Pessimism 688
Declining Terms of Trade? 690
Dutch Disease 693
Dutch Disease: A Geometric Presentation 697
Nigeria: A Bad Case of Dutch Disease 700
Indonesia: Finding a Cure 702
The Resource Trap 703
Breaking the Resource Curse 705
Summary 707
19 Trade Policy 709
Import Substitution 711
Protective Tariffs 713
Import Quotas 714
Effective Rates of Protection 715
Trade Protection and Politics 718
The Two-Country Model with a Tariff 719
Production Subsidies 720
Exchange-Rate Management 722
Outcomes of Import Substitution 724
Export Orientation 725
Removing the Bias against Exports 727
Favoring Exports 728
Building Export Platforms 730
Is China's Exchange-Rate Policy Unfair? 731
Trade Strategy and Industrial Policy 734
Trade, Growth, and Poverty Alleviation 736
Trade Reforms and Poverty Alleviation 739
Key Issues on the Global Trade Agenda 741
Increased Global Competition and the Rise of China (and India) 741
Does Outward Orientation Create Sweatshops? 743
Labor Activists and Labor Outcomes in Indonesia 746
Expanding Market Access 747
Multilateral Trade Negotiations and the WTO 750
Temporary Migration: Another Dimension of International Trade 753
Summary 755
20 Sustainable Development 757
Will Economic Growth Save or Destroy the Environment? 759
Concept and Measurement of Sustainable Development 761
Saving for a Sustainable Future 765
The Malthusian Effect of Population Growth on Adjusted Net Savings in Ghana 768
Market Failures 769
Externalities and the Commons 770
Policy Solutions 773
Property Rights 773
Government Regulation 774
Taxes, Subsidies, and Payments for Environmental Services 776
Taxing Water Pollution in Colombia 777
Marketable Permits 779
Informal Regulation 781
Policy Failures 782
Policy Failures and Deforestation in Indonesia783
Poverty-Environment Linkages 785
Global Climate Change 792
Summary 800
Index 803