IDST 1001H Chapter Notes - Chapter 1: Gross National Income, Purchasing Power Parity, Gini Coefficient
14 Jun 2018
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From Textbook Chapter 1: Meaning, Measurement, and Morality in International Development
• “International development studies aims to explain both the diversity evident in the world
in relation to human well-being and the common patterns that emerge when comparing
people, social groups, nations, economic and political systems, and regions of the
world.”
• President Truman’s Point 4: we have the knowledge and the skills so that poverty no
longer needs to exist
• Labels reflect the evolution of thinking about poverty, wealth, and the relationship among
nations
• Labels work to make existing policies seem legitimate, and to shape future
policy-making
• Underdevelopment (Truman): inadequate food, disease, primitive economic life,
poverty
• Development (Truman): scientific advancement and industrial progress, skill and
technical knowledge
• Before the term underdeveloped was used, the term backwards was used. Both
imply the need for outside intervention by those who consider themselves
developed
• Alfred Sauvy in 1952 used tiers monde (Third World), referred to countries at
many different stages of development
• Newly Industrialized Countries (NICs) emerged in 1970s, criteria was to:
manufacture goods contributing 30% of GDP, manufactured goods as 50% of
total exports, a shift in employment from agriculture to industry, per capita
income of at least US $2,000
• Developing countries and developed countries became more acceptable terms
• Development used to be measured by just GDP, but since that can be
inaccurate, the World Bank groups countries by low, middle, and high income
groups, and measures gross national income (GNI)
• Fourth World refers to countries which are considered “failed states”
• The term South is used to refer to not countries just in the southern hemisphere,
but any that could be considered developing in any area of the world
• Different aspects of development include the need to: distinguish between different
segments of the industrialization, consider different segments of the population, and
consider development as an ideal
• Development is often compared to growth of the economy over a long period of time
• Purchasing power parity (PPPs) take into account the different value of a dollar in
different economies
• Developing countries tend to have higher growth rates that are very unstable
over years, whereas developed countries tend to have low growth rates that stay
stable
• Rapid GDP growth is normally related to increases in productivity in agriculture,
natural resource extraction, or industrialization
• GDP growth on its own does not indicate development, as it only looks at an
average, and also does not look at many other factors
• The distribution of income (income inequality) measures how the wealth of a country is
distributed among the population
• Can be measured through dividing the population into strata and comparing
average incomes of each strata
• Can also be measured using Gini coefficient which is a number between 0 and 1
where the higher the number, the more unequal the incomes are
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