ECONOMİC DEVELOPMENT: OVERVİEW -2-

WORLD INCOME DİSTRİBUTİON

“LEAST LİVABLE COUNTRİES” BY HDI, 2004

“MOST LİVABLE COUNTRİES”BY HDI, 2004

DİFFERENCES İN RATE OF İNCOME GROWTH İN COUNTRİES

INCOME DİSTRİBUTİON İN DEVELOPİNG COUNTRİES -1- Enormous wealth coexisting with great

poverty within developing countries,

Poorest 40% of the population earn, on average, around 15% of overall income, whereas the richest 20% earn around half of total income,

Intra-country vs. inter-country disparities, The poor are twice cursed: (1) living in countries

that are poor on average, (2) receiving end of the high levels of inequality in those countries

INCOME DİSTRİBUTİON İN DEVELOPİNG COUNTRİES -2- Tendency for the share of the richest 20% to

fall as we cross the $8,000 p c income threshold,

Also there exists a tendency for the share of richest 20% to rise early on in income scale,

The share of poorest 40% at both extremes of the income scales is relatively high, and falls to a minimum in the middle

Conclusion: Inequality might rise and then fall as we move from lower to higher income levels (remember Kuznet’s inverted U hyppothesis).

SHARES OF POOREST 40% AND RİCHEST 20% FOR SELECTED COUNTRİES

Country P C Income (1993 PPP) Share of poorest 40% Share of Richest 20%

0 – 3000 PPPTanzaniaUgandaIndiaBangladeshSenegalNicaraguaPakisatan El SalvadorSri Lanka

5809001220129016501900217023502990

181721191112211222

454841465955405339

3000 – 9000 PPPPeruGuatemalaBrazilColombiaCosta RicaPanamaThailandMexicoMalaysiaVenezuela

3220335033705490552058406260681079308130

14871213811101311

50636554506059605459

9000 + PPPRep. KoreaPortugalMauritusSpainUKFranceJapanUS

963010710124201351017210190002085024740

2018182320191815

4240433541424244

ECONOMİC DEVELOPMENT PROCESS

At very low levels of income, average levels of living are very low, and so it is difficult to squeeze the income share of the poorest 40% below a certain minimum. Share of the richest 20%, on the other hand are high, but not as extraordinarily high as in middle income countries,

Richest group in the society, more than proportionately benefit from development process, and share of poor tend to fall (not in absolute terms),

At higher levels of p c income, economic gains tend to be distributed more equally.

HUMAN DEVELOPMENT

GNP p c : A reliable indicator of development?

Indicators of Development: Literacy, Access to Drinking Water, Low Rates of

Infant Mortality, Life Expectancy, etc.

A high GNP p c with poor indicators of Development: HOW? Income Inequality

HUMAN DEVELOPMENT INDEX

Puts various socio-economşc indicators together,

Three components: (1) Life expectancy at birth: indirectly

reflects infant mortality,(2) Educational attainment of the society:

2/3 weighted average of adult literacy + 1/3 weighted combination of enrollment rates in primary, secondary and tertiary education,

(3) P c income, adjusted after a threshold.

TURKEY’S HDI 2006 AND UNDERLYİNG INDİCATORS IN COMPARİSON WİTH SELECTED COUNTRİES

HDI Value (2006)

Life expectancy at birth (years)

Adult Literacy Rate (%, age 15 +)

Combined Primary, Secondary, Tertiary School Enrollment rato (%)

GDP p c (PPP US $)

1. Iceland (.968)

1. Japan (82.4) 1. Georgia (100.0)

1. Australia (114.2) 1. Luxembourg (77,089)

74. Mauritus (.802)

85. Dominican Rep. (71.8)

72. Peru (88.7)

104. Malaysia (71.5) 59. Mexico (12,176)

75. Bosnia H. (.802)

86. Lebanon (71.7)

73. Bahrain (88.3)

105. Maldives (71.3) 60. Argentina (11,985)

76. Turkey (.798)

87. Turkey (71.6)

74. Turkey (88.1)

106. Turkey (71.1) 61. Turkey (11535)

77. Dominica (.797)

88. El Salvador (71.5)

75. Sain Vincent (88.1)

107. Tajikistan (70.9)

62. Venezuela (11,115)

78. Lebanon (.796)

89. Paraguay (71.5)

76. Dominica (88.0)

108. Botswana (70.6)

63. Mauritus (10,571)

179. Sierra L. (0.329)

179. Swaziland (40.2)

147. Mali (22.9)

179. Dijbouti (25.5) 178. Congo (281)

INTERNATİONAL COMPARİSON

HDI of Industrial Countries = 0.916,

HDI of Developing Countries = 0.570,

HDI of Industrial Countries are 1.6 times higher than Developing Countries, eventhough their Real GDP p c (PPP$) is 6 times higher!=> Mean Anything??=> Ranking

INCOME P C & HUMAN DEVELOPMENT

GDP still acts as a fairly good proxy for most aspects of development.

Argument: Rising income levels ultimately translate into beter health, nutritional, and educational standards in a population.

Explanatory Power of p c GDP has over other basic indicators => Correlations among GDP pc and indicators of Human Development.

LİFE EXPECTANCY VS. GDP P C FOR DEVELOPİNG COUNTRİES

AVERAGE YEARS OF SCHOOLİNG VS. GDP P C FOR DEVELOPİNG COUNTRİES

INCOME P C VS. TOTAL FERTİLİTY RATE FOR DEVELOPİNG COUNTRİES

STRUCTURAL FEATURES

Demographic CharacteristicsOccupational and Production

StructureRapid Rural – Urban MigrationInternational Trade

DEMOGRAPHİC CHARACTERİSTİCS

Poor Countries are characterised with high birth / death rates.

As development proceeds, death rates decrease, often birth rates remain high

=> Gap opens between birth and death rates

=> High population growth

* Negative Population Effect vs. Positive Population Effect