Class Notes (921,913)
CA (542,705)
UTSC (32,886)
IDSB01H3 (31)
Lecture

IDSB01 - Lecture 2

10 Pages
130 Views

Department
International Development Studies
Course Code
IDSB01H3
Professor
Liang Chen

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IDSB01 Lecture 2: What is Development?
Intro Stuff
-Tutorial next week + next after
oEssay discussion
o2 weeks from today = 1st movie
What is Development?
-How can economic change be beneficial to a good society?
oWhen does increasing productive capacity contribute to a good society
ogood society subjective, hard to conclude
Theres general common views
-The way economists measure progress (development)
oAverage Income / Increase in national income (central scale)
Natural indicator; approximately the same as GDP (gross domestic
product)
Standard measure
Drawbacks: just gives average, doesnt account for money made
overseas, current price measures
Can take crisis into account; inflation, prices
divide nominal income (current) by increase in income (i.e. 1.05 if
5% increase) to find real increase in GDP
Always uses REAL GDP in class
oIncome Distribution
Average can get very misleading
i.e. Real income can increase when poverty increases
www.notesolution.com
Rich are getting richer, poor getting poorer
Not enough to measure economic performance, needs to have a measure
of income distribution
What is that average, how is that average being distributed (need
to know)
oFrequency distribution (of income)
Poverty Line
Numbers or
Frequencies
A B
0 100 200 500 1000
www.notesolution.com
3 Measures:
Mode
oMost common occurrence
Median
oThe occurrence in the middle of entire survey
Mean most misleading
oAlways above the mode/median
oAlways the highest (upper outliers always pull it up)
Poverty line
People to the left or under it, are in poverty
Most countries define poverty line by the cost of an adequately
nutritious diet for the family + 50%
oIf theres that much money and you spend wisely when you
buy food (2/3), you can use1/3 of the leftover to buy other
stuff
oStructured on the basis that people need a nutritious diet
Poverty Incidence = A / (A + B) number of people in poverty
within a population
Poverty is an economic curse that governments always try to lift
Reducing poverty:
oIf you give everybody X%+, the curve just shifts up, people
in poverty would be smaller though since not as many
people are under the poverty line now distribution
neutral growth
Everybody increases in the same amount of money
in income, relatively in the same position but
actually in a different place on distribution
www.notesolution.com

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Description
IDSB01 Lecture 2: What is Development? Intro Stuff - Tutorial next week + next after o Essay discussion o 2 weeks from today = 1 movie What is Development? - How can economic change be beneficial to a good society? o When does increasing productive capacity contribute to a good society o good society subjective, hard to conclude Theres general common views - The way economists measure progress (development) o Average Income Increase in national income (central scale) Natural indicator; approximately the same as GDP (gross domestic product) Standard measure Drawbacks: just gives average, doesnt account for money made overseas, current price measures Can take crisis into account; inflation, prices divide nominal income (current) by increase in income (i.e. 1.05 if 5% increase) to find real increase in GDP Always uses REAL GDP in class o Income Distribution Average can get very misleading i.e. Real income can increase when poverty increases www.notesolution.com
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