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32 Cards in this Set
- Front
- Back
Main features and assumptions of neoclassical economics Four ways development economics differ |
Neoclassical: utility, profit maximization, market efficiency, equilibrium, auto price adjustments, rationalism Development: imperfect markets, limited info, structural changes, multiple equilibrium |
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Three differences between GDP and GNI/Capita (PPP) |
GDP: total value, all goods and services in a country GNI/Capita(PPP): all domestic and foreign value added by residents, includes citizens abroad and remittances, subtracts interest and dividends going abroad |
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Gaps larger with GNI/Capita(PPP) or exchange rate GNI/Capita? |
Larger gaps with exchange rates since income is understated |
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Role of traded and non-traded goods in difference between exchange rate and PPP |
Traded goods accounted for in exchange rates (to avoid arbitrage) Non-traded goods is more accurate with PPP |
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Three components of HDI measured in old index |
Life expectancy, literacy, and income HDI=1/3 life + 1/3 education + 1/3 income |
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Why HDI uses logs for income What it implies Agree? |
Maximum happiness at $40,000/year Mostly agree; money doesn't equal happiness but it can help with debts |
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Major differences between new HDI and old HDI Explain improvements |
GNI/capita (was GDP/cap): more accurate with citizens abroad and money leaving country Average yrs schooling (was literacy): more accurate Upper income goalposts is what is actually observed (was set at 40,000): more accurate |
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Greater improvement: increase of $400 to $500 or $1000 to $1100? |
$400 to $500, $100 has a greater impact on someone with an initially lower salary |
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Greater improvement: in one category of old HDI or one in the new? |
Old, can equally make up for poor performance in another category |
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Greater improvement: 50 to 51 years in life or 80 to 81? |
Equal impact, cannot put diminishing return on life |
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GNI per capita rank minus HDI of 11 |
11 spots higher on GNI than HDI, doing (relatively) well with money |
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According to Sen, main goal of development Define capabilities and functionings |
Capability to function regarding human welfare and freedom capabilities: freedoms given command over commodities functionings: what people do or can do with commodities (being healthy, well-clothed, well-nourished, mobile) |
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How many households in Udaipur report adults went without a meal for an entire day |
37 percent |
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Meaning of: "Many of these businesses are probably operating at too small a scale for efficiency" |
Not taking advantage of economies of scale Each buying own supplies and equipment Only employing family members |
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Rates of infant mortality |
Indonesia: 3.4 percent Pakistan: 16.7 percent |
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Who poor households borrow money from Interest rates |
Relatives, friends, neighbors, moneylenders 3.13-3.94 percent/month |
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Why such high interest rates |
Moneylenders pay high interest rates themselves High costs of enforcement Lack of collateral |
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Why the poor don't save more |
No bank accounts of safe place to save money High vulnerability to temptation |
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Features of the lives of the poor that are unacceptable on humanitarian terms |
No education, nutrition, representation, equality Dirt floors, disease, servitude |
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How features of the lives of the poor lead to low levels of economic growth |
Poor health w/ no health insurance ->working while sick or not working->decreased income or worsening condition |
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Convergence and divergence |
Convergence: developing grow faster to catch up with developed Divergence: developing don't catch up, spurts of decreased growth |
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Why a researcher can't definitely show convergence or divergence since 1870 |
impossible to get an accurate measure of growth in countries in 1870 |
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Where Pritchett finds convergence |
Rich/developed countries |
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Why Pritchett claims that choosing a set of rich countries guarantees convergence |
Rich historically -> rich now, or Poor historically -> rich now Had to converge |
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Why Pritchett can't use historical data to measure convergence |
No data for developing countries especially before 1870 |
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Pritchett's implied lower bound |
$250 |
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What Figure 1 shows, why Chad is parallel to USA before 1960 |
Divergence Assumed data |
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What does 8.7 mean What does 45.2 mean |
8.7: in 1870, assumed ratio of GDP/cap of richest to poorest country 45.2: in 1990, ratio of GDP/cap of richest to poorest country |
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What does 2.4 mean What does 4.5 mean |
2.4: in 1870, assumed average "advanced capitalist" to average of all other countries 4.5: in 1990, average "advanced capitalist" to average of all other coutries |
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According to Pritchett, why countries in an "implosive" state are ignored |
Fail to gather plausible economic statistics or drop out altogether (no data) |
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What "modern economists" mean when they claim there is an "advantage to backwardness" |
countries behind the technological frontier can experience episodes of rapid growth driven by rapid productivity catch-up |
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Does Pritchett think a single "growth theory" is plausible? |
No, no one size fits all Different countries, different factors |