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Development Studies Class 3. Theories of Development - Coggle Diagram
Development Studies
Class 3. Theories of Development
Chapter 3: Understanding and Measuring Development
Development as Economic Growth
Mainstream policy still treats economic growth as the main route to poverty reduction (Collier, 2008; Sachs, 2005)
Collier (2008): the amount of growth matters more than its type
Sachs (2005): Differential diagnosis; the six capitals of human, business, infrastructure, natural, public institutional, and knowledge must outgrow population growth.
Gross Domestic Product & Gross National Product
GDP = the total value of goods/service produced within a country
GNP = the total value claimed as produced by residents
GDP & GNP / population = per capita
Gross Domestic Product per capita
Used to classify countries as low/lower/middle/upper/high income
It is criticised as crude, because it ignores the other markers of development and masks internal inequality while ignoring the local cost of living
GDP Purchasing Power Parity (PPP)
It adjusts the GDP per capita for the local cost of goods.
Still not able to capture inequality within a country
Limits of GDP-based measures
Growth is an unequally distributed benefit. One economy can grow more than another and still experience poverty
It cannot measure well-being, the quality of life, education, or life expectancy
It ignores negative externalities
Development and Poverty Reduction