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Development of Low income Countries

Course Code
Jack Carr

of 3
March 18, 2009
Big 3 auto have increased labor productivity to about that of the Japanese auto makers
-Lipskey-EU and US have agreement, proposition, emerging nations will lead the global recovery if
they are not starved for capital, funding
-President of the IMF predicted that in 2009, there will be a decline in GDP in the world, fiscal
stimulus is needed for the advanced economies, the financial system has to be working in order for
recovery, IMF asked for a doubling of its financial ability-250-500B
-If IMF has 500B, then it will be able to meet most short term emergencies, will have more
confidence in restoring growth and success
Krugman-food price spikes, food crisis in 2008 was not dependent upon speculation, it was
dependent on real world forces, will have more spikes in future years for food prices, should create
some mechanism to deal with food spike, should prevent food spikes in developing countries,
develop foreign aid packages to deal with food price spikes, invest in R&D
-drive for biofuel is hurtful for food availability for food products
-much of the land is being converted from agriculture to non-agriculture sector
-unpolluted fresh water, the scarcest resource, demand for water is increasing strongly in the world,
changing diets, higher standard of living, population growth
-this brings security risks for the availability for water, security risks may emerge in Sri lanka,
Columbia, middle east, Haiti
-In some areas, lack of water restricts economic growth, 70% of water use goes to agriculture
-polluted water accounts for 10% of all disease and suffering in the world
-China-Feb trade data-sharpest fall in export levels, last October was 40B, February is 5B
-this should reduce the world pressure for countries to resist import tariffs on Chinese i
-very low trade, some outflows, foreign exchange reserves will b stable, China will not be able to buy
as many US securities as before
-Opec decreased its production by 4.8 million barrels a day, as price falls, in 2009 it is predicted that
there will be a decrease in world demand for oil, 1.4 million a day or 1.6% decrease
-OPEC supplies 40% of world oil
production levels by reducing as a equivalent amount of Nigera and Vene
-Business sector productivity (private not government)-in Canada labor productivity fell by 1.1%, US-
Collier-poverty reduction
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public companies, regulations were reduced in many countries, improved the market performance
of the countries, the prices were right,
-should encourage entrepreneurship, limit government harassment, lower corruption, uphold law
-market must work for the poor, poor must be allowed to participate in the markets
-poor people need to have a political voice, the triad for poverty reduction is: opportunity, security,
and empowerment(participation in political process)
-to achieve this, the poor need: education, health, basic democratic rights
-improving governments and providing public services are the most important goals
-In the developing countries, 1960-2000, GDP increased, GDP per capita increased, rate for under
age of 5 mortality was reduced, life expectancy increased, literacy improved
-poverty numbers have rose for 200 years, except for the last 20 years when poverty numbers fell
-1980-poverty level was at 1.4 billion earning less than $1 a day, in 2000, poverty at 1.2 billion
-benefits are in China and India
-economic growth and poverty reduction are positively correlated
-poverty reduction needs more than growth, economic growth is a precondition only! Have to do
-china and India opened their markets, poverty reduction is greatest
-growth can spur poverty reduction
-macro stability, open trade regimes and a vibrant private sector can facilitate growth, but reducing
poverty requires more
-It requires improving government services, education and health, empowering people(letting them
in political positions), reducing the vulnerabilities of the poverty group
-encourage macro stability in international trade, will bring foreign direct investment in developing
-delivery of public services, infrastructure, health, education, improve financial sector, transparency,
efficiency is important for growth
-changes in development thinking
-import substitution strategies, attention to the two economic gaps, savings gap and the foreign
Stage 1-Intervention stage
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agriculture vs. industry with support for agriculture, increasing awareness for poverty
The world bank has shifted to the importance of institutions, transparency and financial systems
The international community-industry, foreign government should provide finance to low income
countries who have undertaken macro and trade reforms
-International community should provide support for public goods-infrastructure, health,edu to
developing countries
World bank can assist the developing countries with analysis, suggestions for poverty reduction
-can do more research, diagrams for feedback
-missing Productivity
-important message is economic growth is necessary for poverty reduction, but not everything
-takes time to adjust