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UNIT 4 DEVELOPMENT STUDENT SEMINAR OUTPUTS
1.
Summary
On
Economic theory of Development
Date: 22nd March, 011
Submitted by: Team I
Murvica Prasia
Rijana Malla
Krishna Hari GC
Submitted to: Dr. Amulya Ratna Tuladhar
Economic growth is an increase in the total output of goods and services. This term can refer to the percentage increase in an economy’s total output, usually measured by real Gross Domestic Production (GDP), or also can be defined as percentage increase in per capita real GDP. Economic growth can be caused by long run increase in aggregate supply (rise in an economy’s potential output) and also by short run changes in aggregate demand or aggregate supply. Economic growth occurs when there is an outward shift in the production possibilities curve. This shift occurs when the economy gives higher output. The factors behind this outward shift of the production possibilities frontier are technological changes and better efficiency of the labor force and better utilization of the resources. Labor and resources are limited. There is always limitation while increasing the volume of the economy. If we take an example of a country which has two option of producing consumer and capital goods than while it focus on producing consumer food than have to cut to produce capital goods. A high growth involves focusing production on capital goods at the expense of consumer goods in the short run. But in long run producing the capital goods leads to the high production of consumer goods too. The consumerism plays important role in economic growth. Higher consumption leads to higher investment and which leads to higher production. Consumption of one is investment for another. We need to see the economic growth as exponential growth. In economy there is a rule of 72. This rule says that the doubling time of any resources is same with the 72 quotient by the growth rate of those particular resources. For example if the exponential growth rate of the laser is 4% than the doubling time of the laser production will be 18 years. Due to these economic characteristic even small differences in percentage rates of growth make significant differences over time.
The world has been divided into three types from economic perspectives: they are
High income countries- Also called as industrially advanced countries, nation with per capita incomes substantial enough to provide their citizens with widespread prosperity or modern mixed economies based on capital-intensive production and the use of skilled labor.
Middle income countries- Also called as newly industrializing countries, countries in which sizeable minority of the population no longer lives in acute poverty and
Low income countries- Also called as less-developed countries, this includes 50 poorest countries in the world, as defined by per capita income. These countries tend to have low level of capital resources and use of labor intensive processes.
Sources of economic growth
The production possibilities model shows that the main cause of growth in an economy’s total real output are the stock of economic resources and how productively these resources are used. In case of Canada, One of the most important causes of growth is total output in accounting for an estimated 35% of growth in Real GDP between 1981 and 1989 is because of increase in quantity of labor, higher participation rate of women and population growth.
Growth depends on quantity of capital technological progress, the quality of labor, efficiency in production, the quantity of natural resources and social and political factors.
Quantity of capital- it has said that by saving and higher proportion of their disposable incomes, Canadians can increase investment and accelerate the accumulation of capital resources. As capital inputs have risen more quickly than labor inputs in Canadian economy, it helps to increase amount of capital.
Technological progress- it encompasses scientific discoveries and their application, advances in production method, and development of new type of products. It increases labor productivity by raising quality of capital resources with which labor is employed.
Quality of labor- the productivity of labor is not only related to investment in capital goods but also to investment in human capital through education and training which further helps in improving their standard of living.
Efficiency in production- economic growth is influenced by changes in the efficiency of production through economies of scale and reallocation or resources among different sectors.
Quantity of natural resources- Canada’s rich supplies of natural resources have doubtless contributed to its past economic growth.
Social and political factors-there is variety of social and political factors that can affect economic growth. Growth will be enhanced in a society that promotes competition, innovation and entrepreneurship and by social institution geared towards enterprise and profit making. Similarly, government regulation and taxes has also sometimes as inhibit economic growth.
There is different argument related to economic growth which has both positive and negative aspects.
Argument in the support of Economic growth
Living standards- the main benefit of economic growth is itself positive effect on living standard. With rising incomes and output, more wants can be satisfied. Because of tremendous material benefit that economic growth has provides Canadian today has more pleasant life.
Social improvement- economic growth can be channeled not only in private sector but also into higher government spending, allowing for greater expenditures in such area health, education, promotion of income equity.
Psychological benefit- a growing economy helps to create a mood of optimism and a sense of expanding opportunities.
Argument against economic growth
Opportunity cost of growth- it devote more of its scarce resources to investment in capital goods rather that to current consumption.
Environmental costs- higher levels of economic activity lead to greater exploitation of the world’s limited supply of natural resources, also causing higher level of pollution and waste.
Social cost- the social cost of growth is related to insecurity and risks that come with technological progress.
Strategies for development
The little dragons show that it is possible to break the vicious circle of poverty. The breaking the cycle involves 3 domestic strategies.
Ensuring a stable political and economic system- frequent changes in the country’s laws discourage business activity as do quick fix scheme by government that involve public spending financial through persistent budget deficit or inflationary monetary policy. Economic development is enhanced if it is accompanied by political freedom and democracy.
Investing in resources- for all low income countries government investment in human capital through education, health and social programs is an important component of development.
Population control- government can use several approaches to limit population growth like, introducing voluntary birth control programs, as in China’s One child policy, providing basic n\services to poor involving health, nutrition and developing new market, enhance employment opportunity.
Similarly higher income countries can assist with two international strategies.
Trade liberalization
Foreign Aid
Conclusion
Historically, economic prospective has been much focused and Gross Domestic Production (GDP) and Gross National Income (GNI) are regarded as the indicator of the development. But these days such view is getting criticized. However everyone agrees that people need to produce more and sufficient consumption will keep them happy. The growing number of the population is giving pressure to produce more and comparatively cheaper so that poor can afford it.
Technological advancement and efficient use of the resources will help to give more output. In course of production there are always some limitations. While enhancing the economic development it has two choices either focus in producing the consumer good or capital goods. In short run, the choice of the producing the consumer good or capital goods may not give different output but in long run capital good production will again leads to the higher consumer good production.
Consumption is the key thing to increase the volume of the economy. Today consumption is the future investment. Higher consumption leads to the higher production and that eventually leads tot the higher production.
Today’s need of the economy is to have Pareto optimality. Pareto optimality is win win situation where many get and less loose. Economic theories are still relevant and they are for improvement of the people life. The need of the present economy is not just to increase the size of the economy but the pie is prime concern.
2.
Summary: Human Development Index & Nepal’s progress through time
504 Population and Development
Kathmandu University/School of Arts
Team VI: Bobby Ghimire, Jyotsna Kakshapati, Delon Bharati
It was the famous economist from Pakistan Mahbub ul Haq (Feb 22, 1931 – July 16, 1998) and another renowned economist from India Amartya Sen (Nov 3, 1933 - ) who came up with a notion of human development theory and derived the Human Development Indicator. Having the sole purpose of, ‘Shifting the focus of development economics from national income accounting to people centered policies’, [Haq Mahbub ul, Reflections on Human Development], the notion of Human Development Theory came into existence. The only method to judge the performance of a country until 1990 was the performance of the economy of the country or the rise and fall of the national income. How well the country and its people were doing was approximated by how well its economy was performing. Human Development Index commonly known as HDI was basically Mahbub ul Haq’s brainchild which was collaborated later by Amartya Sen with his theories of increasing capabilities and freedoms. Ranking countries by the level of human development and segregating them into developed, developing and underdeveloped countries is what the Human Development Index (HDI) does.
The three dimensions of Human Development Index (HDI) are life expectancy at birth, literacy rate and standard of living where a uniformly weighed sum with one third of life expectancy index, education index, adult literacy index, gross enrollment index and GDP is contributed for the index number. The number is a unit free index between 0 and 1. A HDI below 0.5 is considered to represent ‘low development’ where most of the nations falling under it are from Africa and a HDI of 0.8 or above is considered to represent ‘high development’ where most of the Scandinavian countries fall under it. A majority of world’s development agencies have been highly influenced and have slowly starting to shift from their basic capital and rights based approached to human development theory pioneered by Haq and Sen. The HDI is highly accredited by the United Nation Development Programme’s (UNDP) Human Development Reports (HDRs) which covers the report of almost all the UN member states and ranks it on the basis of it.
Now talking about HDI in terms of Nepal, since 1980 Nepal has made the greatest strides in improving human development is Nepal, according to the UN’s annual Human Development Index (HDI). Report states that Nepal is the fastest movers in the Human Development Index (HDI) since 1970 and is 3rd among the ‘Top Ten Movers' list in terms of progress in health and education. Between 1970 and 2010, Nepal’s HDI value increased from 0.210 to 0.428, an average increase of 104 percent, while Nepal’s Gross National income per capita increased by 94 percent during the same period.
The report says Nepal’s impressive progress in health and education can be traced to major public policy efforts such as the free primary education for all children, legislation as far as back 1971 and the extension of primary health care through community participation, local mobilization of resources and decentralization. It also points out gap between Nepal’s life expectancy and the global average has narrowed down by 87 percent over the past 40 years.
The continuing multifaceted inequality remains a major reason for Nepal’s low HDI position. According to the Human Development Report 2010, large disparities remain between boys and girls in school attendance as well as in the quality of education between urban and rural areas and across ethnic groups. Major health challenges remain, related to communicable diseases and malnutrition. Large disparities separate regions and communicable diseases and malnutrition. Large disparities separate regions and groups, with a quasi-feudal oligarchic system and caste based discriminations continuing to marginalize some. Nepal needs to learn from its own success in health and education and apply the same determination to tackle the areas in which it is still lagging behind.
Calculating HDI for Nepal
We know,
Life Expectancy Index = 67.5 -25
85-25
= 42.5
60
= 0.708
Adult Literacy Index = 57.9 -0 = 57.9 = 0.579
100-0 100
Gross Enrollment Index = 42.2 – 0
100 – 0
= 42.2
100
= 0.422
Income Index = log (1,201) – log (100)
log (40,000) – log (100)
= 3.09 – 2
4.60 – 2
= 1.09 = 0.419
2.60
Therefore,
HDI = 0.708 + 0.157 + 0.419
3
= 0.428
Which ranks Nepal at 138th out of 169 countries in HDI 2010
3.
POPULATION AND DEVELOPMENT
SUMMARY ON NEPAL’S ACHIEVEMENT
IN THE MILLENIUM DEVELOPMENT GOAL
SUBMITTED TO
PROF. AMULYA RATNA TULADHAR
KATHMANU UNIVERSITY
TEAM 3:
PRAKASH BUDHA MAGAR
NEESHA SHAKYA
MANISHA BHATTRAI
SUBMITTED DATE:
22ND MARCH 2011
Background
The Millennium Development Goals (MDGs) are eight goals to be achieved by 2015 that respond to the world's main development challenges. The MDGs are drawn from the actions and targets contained in the Millennium Declaration that was adopted by 189 nations-and signed by 147 heads of state and governments during the UN Millennium Summit in September 2000. The eight MDGs break down into 18 quantifiable targets that are measured by 48 indicators.
Aim of MDG
The aim of the Millennium Development Goals (MDGs) is to encourage development by improving social and economic conditions in the world's poorest countries. They derive from earlier international development targets, and were officially established following the Millennium Summit in 2000, where all world leaders present adopted the United Nations Millennium Declaration, from which the eight goals were derived by a group headed by Jeffrey Sachs.
Eight goals in points
• Goal 1: Eradicate extreme poverty and hunger
• Goal 2: Achieve universal primary education
• Goal 3: Promote gender equality and empower women
• Goal 4: Reduce child mortality
• Goal 5: Improve maternal health
• Goal 6: Combat HIV/AIDS, malaria and other diseases
• Goal 7: Ensure environmental sustainability
• Goal 8: Develop a global partnership for development
MDGs originated from the Millennium Declaration produced by the United Nations. The Declaration asserts that every individual has the right to dignity, freedom, equality, a basic standard of living that includes freedom from hunger and violence, and encourages tolerance and solidarity. The MDGs were made to operationalize these ideas by setting targets and indicators for poverty reduction in order to achieve the rights set forth in the Declaration on a set fifteen-year timeline.
Discussion
Nepal is one of the 189 countries committed to the MDGs, a pledge renewed in its Three-Year Plan 2010-2013. The data from MDG Progress Report for Nepal 2010, prepared in partnership between the Government of Nepal and the UN Country Team, indicates that potentially Nepal will be able to achieve most of its MDG target by 2015, except for the full employment and climate change.
The 2010 report suggests that despite the decade-long conflict and political instability, Nepal's progress has been remarkable in a number of areas, for example, people living below the national poverty line has gone down to 25%, net enrollment rate has increased to 93.7%, gender parity has achieved in enrolment for primary education, under five mortality reduced to 50 per 1000 live births and maternal mortality has reduced to 229 per 100,000 live births which is almost reduction by half in 10 years time. Moreover, Nepal has succeeded to halt the spread of HIV/AIDS.
While the progress has not been sufficient to meet the targets on hunger, achieving universal primary education, eliminating gender disparity in secondary education and tertiary level of education, achieving universal access to treatment for HIV/AIDS for all those who need it and with additional efforts Nepal is likely to achieve 2015 targets. However, the progress has not been fairly distributed from the perspective of social, economic and geographical dimension. Income inequality is continuously increasing.
Conclusion
The 2010 Report recommends to address the issue of disparity and inequality, a greater focus on reviving agriculture with investments in rural infrastructure addressing the issue of food security, create a better environment for private-sector investment, reduce trade imbalances with major trading partners, and better utilization of foreign aid.
UNDP and the other UN agencies in Nepal are actively supporting the Government in fulfilling its commitment to the MDGs. Large-scale joint programming on effective service delivery at the local level is being developed. In addition, the UN is supporting the capacity of the Government in mainstreaming the MDGs in its planning and monitoring since 2002 with the introduction of the Poverty Reduction Strategy Paper. Together with the Regional Offices of UNDP, UNICEF, and UNFPA, the agencies helped to conduct training on MDGs needs assessment and costing to the relevant government staff who are involved in preparing Three Year Plan. The MDG needs assessment exercise that took place under the National Planning Commission and with the involvement of all development ministries together with preparation of the MDG progress report 2010 and training on MDG consistent macro economic framework has contributed to integrate MDGs into the Government's Three-Year Interim Plan 2008-2010. UNDP is also supporting the NPC to operationalize poverty monitoring and analysis system (PMAS) and district poverty monitoring and analysis system (DPMAS).
The 2010 MDGs progress report provided a comprehensive picture towards achieving the goals and served as the baseline for this National Plan. Also, the MDGs needs assessment exercise that took place under the leadership of the National Planning Commission with the involvement of all the Ministries helped to identify concrete strategies and resource garps to the MDGs by the year 2015.
As a result, the Government Approach Paper for the next 3 years has a dedicated chapter on MDGs. The Nepal Government has included MDGs as one of the criteria for prioritization of the development projects in Nepal. Nepal received a Millennium Development Goal (MDG) award for its outstanding national leadership, commitment and progress toward achievement of improved maternity health goal under the MDG-5.
Under MDG Goal – 5 entitled “Improve Maternal Health”, Nepal reduced the maternal mortality ratio (MMR) from 415 deaths in 2000 to 229 deaths in 2010 per 100,000 live births. As the targeted in MDG Goal-5 ‘reduce the maternal mortality ratio (MMR) by three quarters’ by 2015, the MDG report of Nepal shows that it will likely meet the target.
Reference:
1) Meeting the Millennium Development in Nepal – UNDP in Nepal.
Retrieved from www.undp.org.np/mdg/
2) Asian Development Bank, Nepal’s Progress towards Millennium Development Goals
3) Nepal Millennium Development Goals, Progress Report 2005.
4.
Development Indexes: Global/ Nepal
Presented by team 2:
Babu Ram Devkota
Prem K.C
Salpa Shrestha
World bank’s Country Classification
The Bank's analytical income categories (low, middle, high income) are based on the Bank's operational lending categories (civil works preferences, IDA eligibility, etc.). These operational guidelines were established based on the view that since poorer countries deserve better conditions from the Bank, comparative estimates of economic capacity needed to be established. GNI, a broad measure, was considered to be the best single indicator of economic capacity and progress; at the same time it was recognized that GNI does not, by itself, constitute or measure welfare or success in development. GNI per capita is therefore the Bank's main criterion of classifying countries.
Classifications:-
Geographic region: Classifications and data reported for geographic regions are for low-income and middle-income economies only. Low-income and middle-income economies are sometimes referred to as developing economies. The use of the term is convenient; it is not intended to imply that all economies in the group are experiencing similar development or that other economies have reached a preferred or final stage of development. Classification by income does not necessarily reflect development status.
Income group: Economies are divided according to 2008 GNI per capita, calculated using the World Bank Atlas method. The groups are: low income, $975 or less; lower middle income, $976 - $3,855; upper middle income, $3,856 - $11,905; and high income, $11,906 or more.
Lending category: IDA countries are those that had a per capita income in 2008 of less than $1,135 and lack the financial ability to borrow from IBRD. IDA loans are deeply concessional—interest-free loans and grants for programs aimed at boosting economic growth and improving living conditions. IBRD loans are non concessional. Blend countries are eligible for IDA loans because of their low per capita incomes but are also eligible for IBRD loans because they are financially creditworthy.
The economies whose per capita GNI falls below the Bank's operational cutoff for "Civil Works Preference" are classified as low-income economies; economies whose per capita GNI is higher than the Bank's operational threshold for "Civil Works Preference" and lower than the threshold for 17-year IBRD loans are classified as lower-middle income economies; and those economies whose per capita GNI is higher than the Bank's operational threshold for 17-year IBRD loans and lower than the threshold for high-income economies are classified as upper-middle income economies.
Nepal’s classification:
Economy Code Region Income group Lending category Other
Nepal NPL south- Asia LOW- INCOME IDA
District of Nepal indicators of development:
In 1997, the International Centre for Integrated Mountain Development (ICIMOD) carried out an assessment of the development status of Nepal’s districts in collaboration with SNV-Nepal to aid the selection of priority districts for development assistance. The results were published as ‘Districts of Nepal – Indicators of Development’.
The indicators were divided into three main groups: (i) poverty and deprivation, (ii) socioeconomic and infrastructural development, and (iii) women’s empowerment.
The present study used 29 indicators divided into three main groups to develop composite indices of development. The 29 indicators employed in this study capture various dimensions of socioeconomic conditions and the level of development, including major constraints to development in each district, and portray the current scenarios for poverty and deprivation; socioeconomic and infrastructural development; and women’s empowerment.
Poverty and Deprivation
8 indicators were selected to measure aspects of poverty and deprivation: three to measure child deprivation, two to measure gender discrimination, one to measure the concentration of disadvantaged groups, one to measure marginal farm households, and one to measure food production.
Socioeconomic and Infrastructural Development
Seventeen indicators were used to show aspects of socioeconomic and infrastructural development: nine were social and health related, and eight were for infrastructure.
Women’s Empowerment
Four indicators were used to capture aspects of women’s empowerment in terms of their participation in economic activity and education.
Major findings
25 least developed districts identified. Six of the 20 Terai districts (30%), 9 of the 40 hill districts (23%), and 10 of the 15 mountain districts (62%) were among the ‘least developed’.
The districts common to all four combinations or configurations:poverty and deprivation; socio-economic and infrastructural development; and women’s empowerment) were identified. Eight districts – Achham, Bajura, Dadeldhura, Darchula, Jajarkot, Jumla, Rolpa, and Rukum – were among the least developed in all configurations. Most of these are mountain and hill districts in the Mid-Western and Far Western Development Regions.
Correlation
Literacy
◦ Issues of child deprivation, gender discrimination, and women’s empowerment are more serious in those districts where the overall literacy rate is lower than in those districts where the overall literacy rate is higher.
◦ Specifically, there are relatively high correlations between the overall literacy rate and the child illiteracy rate, child economic activity rate, proportion of child marriage, gender imbalance ratio among the literate adult population, gender imbalance ratio among the non-agricultural adult labour force, percentage share of females in the literate population, percentage share of females in non-agricultural occupations, percentage share of females in primary level teaching, and percentage share of girls enrolled at primary level.
◦ Higher literacy seems to be associated with higher contraceptive prevalence.
Roads
◦ Play an important role in the development of infrastructure.
◦ Correlation analysis showed that the density of both banks and cooperatives, and per capita public expenditure are higher in those districts where the road density is higher.
5.
Development Trap: Vicious Cycle of Poverty
Team IV
Binu Thapa, Prerana Shakya and Sambida Regmi
The cycle of poverty has been defined as a phenomenon where poor families become trapped in poverty for at least three generations. These families have either limited or no resources. It is also known as a inhuman cycle of not being able to come out of poverty. The poverty cycle is usually called "development trap" when it is applied to countries. Once in the cycle of low incomes, savings, and investment the inhabitants of LDCs, the barriers to development are strong. There are many cultural, social, economic and political factors preventing people from being free from the burden of poverty such as the burden of debt, and the increasing demands of the growing population. This results when poor people do not have the necessary resources to get out of poverty, such as financial capital, education, or connections. In other words, poverty-stricken individuals experience disadvantages as a result of their poverty, which in turn increases their poverty.
According to Walter W. Rostow, It is possible to identify all societies, in their economic dimensions, as lying within one of five categories: the traditional society, the preconditions for take-off, the take-off, the drive to maturity, and the age of high mass-consumption. This shows in what condition the country, First, a traditional society is one whose structure is developed within limited production functions. The second stage of growth embraces societies in the process of transition; the period when the preconditions for take-off are developed; for it takes time to transform a traditional society in the ways necessary for it to exploit the fruits of modern science, to fend off diminishing returns, and thus to enjoy the blessings and choices opened up by the march of compound interest. Then the third stage, the take-off. It is the interval when the old blocks and resistances to steady growth are finally overcome. The forces making for economic progress, which yielded limited bursts and enclaves of modern activity, expand and come to dominate the society. Growth becomes its normal condition. Compound interest becomes built, as it were, into its habits and institutional structure. After take-off there follows a long interval of sustained if fluctuating progress, as the now regularly growing economy drives to extend modern technology over the whole front of its economic activity. Some 10-20% of the national income is steadily invested, permitting output regularly to outstrip the increase in population. The make-up of the economy changes unceasingly as technique improves, new industries accelerate, older industries level off. The economy finds its place in the international economy: goods formerly imported are produced at home; new import requirements develop, and new export commodities to match them. The society makes such terms as it will with the requirements of modern efficient production, balancing off the new against the older values and institutions, or revising the latter in such ways as to support rather than to retard the growth process. We come now to the age of high mass-consumption, where, in time, the leading sectors shift towards durable consumers' goods and services: a phase from which Americans are beginning to emerge; whose not unequivocal joys Western Europe and Japan are beginning energetically to probe; and with which Soviet society is engaged in an uneasy flirtation.
In case of Nepal
First Stage: Traditional society (Nepal most)
Second Stage: Preconditions for take-off (Nepal urban enclaves)
Third Stage: Take-Off (Nepal--- Not yet)
Fourth Stage: Maturing (Nepal~aankha tari mara)
Fifth Stage: Mass Consumption Society
(Amrika, Nepal~ sapana ma pani chaina)
Nepal’s condition is very poor. As the population is increasing the demand of the people are increasing simultaneously so is the poverty. Low productivity, low income, low investment, low saving is the condition of Nepal and the vicious cycle of poverty trap is getting bigger with the timeframe.
