Chapter 1 : -subsistence economy : production is mainly for personal consumption and standard of living yields little more than

basic necessities of life (food, shelter, and clothing) -development: process of improving quality of all human lives/capabilities by raising peoples levels of living, self-esteem, and freedom -development economics: how econ transformed from stagnation to growth and from low to high income status, and overcome problems of absolute poverty -> deal with econ, social, political, and institutional mechanisms necessary for rapid and large-scale improvements in levels of living -TRAD meaning: emphasizes utility, profit maximization, market efficiency, and determination of equilibrium; achieve sustained growth of income per capita to enable nation to expand its output at a rate faster than growth rate of its population. GNI used to measure overall economic well-being of a population (how much real goods/services is available to avg citizen for consumption/investment). Strategies focused on rapid industrialization at expense of agriculture and rural development. Emphasis on increased output, measured by GDP. -NEW: reduction/elimination of poverty, inequality, and unemployment within growing economy. redistribution from growth as slogan. More broadly understood, leads to improvement in wellbeing not just income. -AMARTYA SENS CAPABILITY: capability to function is what really matters for status (ex being able to live long, being well-nourished, healthy, literate, mobile, take part of community, happy as state of being). Matters more what people is or can be and what he does or can do; functionings what a person does/can do with the commodities of given characteristics that they come to possess of control/achievement (ex. Freedom of choice/control of one life is central aspect of most understandings of well-beings). Five sources of disparity between real incomes/actual advantages- personal heterogeneities, environmental diversities, variations in social climate, distribution within the family, differences in relational perspectives. Capabilities freedoms that people have, given their personal features and their command over commodities (ex. More emphasis on health/education b/c needed to convert characteristics of commodities into functionings). -CORE VALUES: Sustenance (basic needs), self-esteem, freedom from servitude (able to choose) -OBJ: increase availability of life-sustaining goods, raise levels of living, and expand range of economic and social choices -MDGS: 1) eradicate extreme poverty/hunger. 2) achieve universal primary education. 3) promote gender equality and empower women. 4) reduce child mortality. 5) improve maternal health. 6) combat hiv/aids, malaria, other diseases. 7) ensure environmental sustainability. 8) develop global partnership for development BY 2015 reduce by half the proportion of ppl living on less than $1/day, who suffer from hunger CHAPTER 2 -DIFF: population, geographic size, natural resource endowments, language/religion, exp in colonial era, levels of educ, industrial structure, role of govt/degree of democracy, degree of dependency in intl econ and political affairs, -SIM: low levels of living/productivity, high pop growth and dependency burdens, dependence on agri and primary export, imperfect markets/incomplete information, intl relations

-INDICATORS OF DVPT: real income, health, education - GNI, GDP, PPP (calc of gni using common set of international prices for all goods/services; # of units of foreign countrys currency required to purchase identical quantity of goods/services in local developing country market as $1 would buy in US); health/education life expectancy, rate of undernourishment, under-5 mortality, crude birth rate, adult literacy) -HDI: health, life expectancy, education - > holistic measure of living levels. -TRAD HDI: 1/3 (income index) + 1/3 (life expectancy index) + 1/3 (education index) Income index log(PPP GDP/capita) log(100)/log(40,000:maxPPP) log(100) LE index - pop LE 25/max pop LE (85)-25 ED index -> adult literacy index 2/3(%) + gross enrollment 1/3 (%) -varies among groups within countries, regions in country, rural and urban areas. Drawback: gross enrollment overstates amt of schooling (doesnt consider drop outs), equal 1/3 weight for all, different types of units so hard to know what equal weight is, no sttention to role of quality. ADV: show countrys potential for improvement, show that development is more than just income, also about human capital -NEW HDI 2010: takes cube root of product of 3 component indexes (TRAD assumed one component traded off against another as perfect substitutes), reformulation allows for imperfect substitutability -GNI replaces GDP, education index revamped: average actual education attainment of whole pop and expected attainment of todays kids (ambigious), max values of each part has been increased, lower goalpost for income, most consequential change is that now computer with geometric mean -EXAMPLE: Indicators: life expectancy at birth (yrs) 73.5, mean years of schooling 7.5, exp years of schooling 11.4, GNI per capita (PPP US $) 7,263 LE Index: (73.5-20)/(83.2-20)=0.847 Mean years: 7.5-0/13.2-0=0.568 Exp years: 11.4-0/20.6-0=0.553 ED index: 0.568x0.553)-0/0.951-0=0.589 INC index: ln(7263)-ln(163)/ln(108211)-ln(163)=0.584 HDI: (o.847x0.589x0.584)^(1/3)=0.663 -CHARACTERISTICS: lower levels of living and productivity, lower levels of human capital (health, educ, skills), higher levels of inequality and absolute poverty (contribute to world poverty), higher population growth rates (crude birth rate: number of kids born alive/year per 1000pop), greater social fractionalization (sign ethnic, linguistic, and other social divisions within country), larger rural pop but rapid rural-urban migration, lower levels of industrialization and manufactured exports (higher dependence on primary exports, lower income dep on small number of agri and mineral exports), adverse geography (resource endowment: nations supply of usuable factors of prod like mineral deposits, raw materials, labor -> low), underdeveloped financial and other markets (legal/indstitutional foundations for markets are weak -> lack legal system that enforces contracts and validates property rights, no stable and trustworth currency, infrastructure of roads/utilities lacking resulting in low transport and communication costs to have interregional trade, lack well-developed and efficien regulate system of banking/indurance with access and formal credit markets that give out loans and enforce repayment, lack market info for consumers and produces abour prices, quan/qual of prod and resources, lack social norms for long-term biz relationships. Imperfect market (small #of buyers/sellers,

barriers to entry and incomplete info: absence of info that produ/consumers need to make efficient decisions resulting in underperforming markets), colonial legacy and external dependence (institutions, private property, personal taxation, taxes in case rather than in kind -RICHvPOOR: physical and human resource endowments (less now), per capita incomes and levels of GDP in relation to the rest of the world (lower), climate differences (most successful in temperate zone, poor in less temperate and unfavorable geo conditions), pop size/distribution/growth (pop increasing and growth rate), historic role of international migration (larger brain drain now, emigration of highly edu/skilled pros and techs moving to developed world, fewer migration possibilities), international trade benefits (free trade-goods be import/export without any barriers in forms of tariffs, quotas, other restrictions, terms of trade declined, developing countries good at being lower-cost producers, dev countries use tariff/nontariff barriers to trade, import quotas, etc, fewer benefits from intl trade), basic scientific/tech r&d capabilities (devping at a disadvantage, no financial resources or this to know what their best long-term econ interests are, limited), efficacy of domestic institutions (developed countries have stronger political stability and more flexible social institusions with broader access to mobility; poor less stable/flexible), greater cultural heterogeneity -CONV/DIV: evidence of unconditional convergence is hard to find, but increasing evidence of per capita income converagence (weighting changes in per capita income by population size). Relative country convergence (examine whether poorer countries are growing faster, catch up to rich, evidence for this is weak, dff in growth conditions). Absolute country convergence, population-weighted relative country convergence. World-as-one country convergence CHAPTER 5: -MEASURE INEQ&POV: size distributions (divide pop in quintiles 5ths or deciles 10ths according to ascending income levels and determine what proportion of total national income is received by each income group, see disproportionate distribution of total natl income among households), Lorenz curves (depicts variance of size distribution of income from perfect equality, the closer curve is to line, the more equal. %of income (y) by % of pop (x), shows actual quantitative relationship between , greater degree of inequality represented as farther away. Cannot be above line because no one has perfect equality or inequality.), Gini coefficients (aggregate measure of inequality ranging from 0 eq to 1 ineq. Measured by area between line and Lorenz curve/total area of everything after line (triangle).