Development economics slides which were used for explaining

Contains slides

1. Development Economics GS F234 Leela Rani, PhD Associate Professor, Management Email: [email protected]

2. Development Economics Chap 9: The role of community in ED  

3. The role of community in economic development Problem of imperfect information  Contract violation  Legal procedures and legislative system  Law and order system:  police and judges  Ideologies prevalent  Traditional communities thought as yoke  Communities correct lot of failures Adam Smith focused on specialization from the community as a source of advantage Market generates competition State means command Community leads to cooperation and innovation  Community and state often overlap …. Example of Telangana farmers reducing their use of chemical pesticides and fertilizers 

4. Prisoner's dilemma   is a classic clay case is a classic case to illustrate the role of trust in community  let's understand prisoner's dilemma   Case illustrates how much loss the inability of people to be Cooperative can result in un-optimum outcomes Both suspects know the payoff table, they have a dilemma Do A and B have dominant strategies? YES, it is Betray-Betray cell. What is their dilemma here?.... They could each be better off by making a common sense (although possibly unethical) decision and be in Silent-Silent cell, but they are not sure they trust each other with staying in this Silent-Silent stance.

5. Trust as a social capital (LUBRICANT) Lack of trust, means more contractual terms and penalty Cost of administration rises mostly for unproductive reasons Solutions: contracts, third party mediation from courts, transparent infrastructure, real time information…… stock market, blockchain, multiple ledger, mutual trust means long-term cooperation and growth It removes moral hazards Promotes collaborative relationship within community Supported by social norms, moral code of conduct in society Since trust saves cost, and leads to more productivity, Therefore it is called social capital

6.   Supply of local public goods = all the local help or support people can provide each other    Positives : very timely, completed on critical time,  save cost,  saves  and improves outcomes,  generate further trust  as input into later conditions   Disadvantage is:  people can be free riders or eat into other people's wealth Solutions would be:  build community norms,  government supply as backup,  centralized screening facilities  => R ural organization in developing economies Characteristics are:  are dominance by farmers  Rural problems like those related to agriculture - input,  processes and outputs  Including,  animals and forest Critically including several developmental problems related to:  Poverty  Gender gap  Child health  Education  Fund for innovation  Bringing communities together for increasing income

7. Constraints are:  our initial poverty,  low income,  low knowledge and education,  poor means of communication,  lack of leadership or initiative Advantages:   low cost of labour,  community sharing norms,  treating the village like a family  Examples of breakthroughs:  Amul &  GCMMF, Pani   Foundation, Lapodia case, Ajmer case, Lijjat papad association, several co-operative societies in India & Self help groups.   support by NGO,  commercial organisations ( CSR),  government  commercial organizations   establish foundations  for CSR:  Piramal , Tata, Reliance, ABG Page 324: Landlord and tenants  Do they have a trustful, equitable relationship => fair treatment, justified distribution of resources and profits ?  Will depend on: Social norms and culture  Usually, isolated societies do it on their own  Intergarted or open societies have to rely on more formal contacts and systems of judiciary  Individual traits of egoism vs. altruism  Page 328: egoism vs. altruism  Concern for others vs. concern for self  2*2 matrix illustration 

8. Omit: Economic rationality: page 238 Thank You