Professional Documents
Culture Documents
Chapter 13
Development Economics: The
Wealth and Poverty of Nations
Real Life Economics
December 10th, 2010
Hardworking Mr. Zimba, a 25-year-old
man in Malawi
Poor: $40 in 2000. Today, the Malawian
entire annual economic output is about
$12 billion; half the size of Vermont
Africa
United Republic of Tanzania,
Mozambique, Zimbabwe, Zambia,
Democratic Republic of the Congo,
Malawi
Malawi
Gross Domestic Product - GDP US$ 5.727 billion (2009
estimate)
GDP (Purchasing Power Parity) 14.68 billion of
International dollars (2010 estimate )
Real GDP growth
2000 2001 2002 2003 2004 2005 2006 2007
0.8% -4.1% 1.7% 5.5% 5.5% 2.6% 7.7% 5.8%
2008 2009 2010* 2011* 2012**
8.8% 9% 6.5% 5.5% 4.3%
*Estimate **Forecast
GDP per capita - current prices US$ 344 (2009 estimate)
GDP per capita - PPP $883 International Dollars (2009
estimate)
South Korea
Gross Domestic Product - GDP US$ 1.164 trillion (2010 estimate)
GDP(Purchasing Power Parity) 1.63 trillion of International
dollars (2010 estimate )
Real GDP growth
2000 2001 2002 2003 2004 2005 2006 2007
8.8% 4% 7.2% 2.8% 4.6% 4% 5.2% 5.1%
2008 2009 2010 2011 2012
2.3% 0.3% 6.3% 3.6% 3.5%
GDP per capita - current prices US$ 23,680 (2010 estimate)
GDP per capita - PPP $33,172International Dollars (2010 estimate)
Source:
http://www.gfmag.com/gdp-data-country-reports/241-south-korea-
gdp-country-report.html
In Malawi, 30% of the young children are
malnourished; 2/10 will die before their 5th
birthday
We can split the atom, land on the moon,
decode the human genome, yet 2B people live
on less than $2/day, 1B are hungry
Their economies have failed them
Creating wealth is a process of taking inputs,
including human talent, and producing
things of value
Poor countries are not organized to do that
Pakistan; busy, dynamic private economy,
yet most are illiterate, ill housed and ill fed
They can build nuclear weapons, but
cannot conduct an immunization program
against the measles
Wonderful people. Terrible government
writes World Bank economist William
Easterly
William Easterly
An economist at the New York University,
specializing in economic growth and foreign aid
Published books: The Elusive Quest for Growth,
and White Mans Burden
Distinguishes two types of foreign aid donors; the
Planners and the Searchers
Planners are top down approach; modern
incarnations of colonialism
Searchers look for bottom up solutions
Easterly believes Searchers are more likely to
succeed
Every country has resources
Bad news: Economists do not have a recipe for
making poor countries rich.
Some successes: the Asian tigers, China, India; yet
no proven formula
We know what makes rich countries rich; if we can
catalog those successful policies, maybe we can
have poor countries simply adopt them??
The following are kinds of policies, and
geographical endowments, that developmental
economists believe make the difference between
wealth and poverty
Effective Government Institutions