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8/9/2019 8 the Bottom Billion 2003 Version
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The Bottom BillionThe Bottom Billion
Mama, Why are tayo so Poor?
Development Economics 3rd World Econ
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Its Adam and Eves FaultIts Adam and Eves Fault
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BASIC Econ PrinciplesBASIC Econ Principles
y Scarcity
There is enough to satisfy everyones needsbut not everyones greed
y Opportunity CostTo gain something you must sacrifice
something else.
Ex: to gain immortal life you must sacrifice
virgins
Err better example: To go to debate camp youhad to sacrifice your weekend
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Supply and Demand
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Supply and DemandSupply and Demand
y When price is high,
demand falls
y When price is high,
supply increases
y In a normal market,
they meet in an
equilibrium point
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Inflation and HyperinflationInflation and Hyperinflation
y When government
prints too much
money there is
inflationy When Money Supply
is too high, its value
decreasesy When Inflation is
Hyper, it is
Hyperinflation
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Other PrinciplesOther Principles
y Trade makes people better off
y Incentives work
y
There is a trade off between inflation andfull employment
y Many at least of every Econ class flunk
Econometrics
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Some Roles of GovernmentSome Roles of Government
y Let the market be Invisible Hand
y Intervene in market failure
y
Provide public goodsy Basic Services
y Infrastructure
y
Pump prime the economy in times ofcrisis C+I+G+(x-m) = GNP
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That was traditional EconomicsThat was traditional Economics
y Development Economics deals with the
challenges of development (particularly
the developing [not 3rd world])
y Assumptions of Perfect Market and even
supply curves are questioned
y New measures of development are added
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Some realitiesSome realities
y Supply curve in third world is not infinite
y Low investment in human capital
y History of colonialism
y Feudal Systems
y Dictators, corruption and instability
y
Massive Poverty
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Contentious Issues 1: Measures ofContentious Issues 1: Measures of
SuccessSuccessy GNP Gross National Product
y GDP Gross Domestic Product
y GNH Gross National Happiness
(Bhutan)
y Lorenz Curve and Gini Coefficient
Measures ofInequality
y Human Development Index
y Green GDP
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Issue 2: Population ControlIssue 2: Population Control
y Marginal Benefit vs Marginal Cost of
having a child
y Child Labor as offshoot
y Is population so bad?
y Aging Europe Labor Market analysis
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Issue 3: Migration (of humans)Issue 3: Migration (of humans)
y Broader than economics ideally will also
talk about identity, nationalism, etc.
However, for purely pragmatic purposes
Economic Analysis
y Push and Pull
y Risks Trafficking,Congestion,
Asymmetric Informationy Balances out labor problems
y Will wages equalize over time?
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Issue 4: The Food CrisisIssue 4: The Food Crisis
y Malthusian Population Trap
y Green Revolution
y Will discuss the environment issue later
y Agriculture (as export) vs Industry or
Service
y Biofuel production and S/D analysis
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Issue 5: Widespread Poverty (akaIssue 5: Widespread Poverty (aka
Penury)Penury)
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Poverty Alleviation ModelsPoverty Alleviation Models
y Aid or Trade?
y Microfinance
y Social Entrepreneurship
y Fair Trade
y CSR
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Issue 6: Raw Material UtilizationIssue 6: Raw Material Utilization
y Should our miners mine for a mine that is
being mined by a foreign mining company?
y Types of resources: Renewable and Non-
Renewable (Depletion)
y Social License to Operate
y Privatization,Corporatization and
Nationalization
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Issue 7: TaxIssue 7: Tax ngng inaina momo
y Should there be global taxes? Tobin tax
for currency? Carbon tax?
y Should there be exit taxes on currency?
y Flat, Progressive, Regressive Tax
y Should we remove the tax on oil?
y What are subsidies and how do they
work?
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Issue 8: GlobalizationIssue 8: Globalization
y Good or bad for third world?
y WTO, ILO, IMF and World Bank
y Globalization of everything trade, ideas,
media, communication, people, persons
and humans
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New Strategies for the BottomNew Strategies for the Bottom
BillionBilliony Make production more efficient by
specialization
y Make education relevant (though natural
market forces tend to do this)y Invest in human capital
y Interventions must be GROUNDED!!!(Flying cats, Nestle,Child labor in Davaoand Golden Kuhol)
y The poor is a viable market, borrower,lender and entrepreneur
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Thanks I hope for your own goodThanks I hope for your own good
you took down notes :Dyou took down notes :D