Development vs growth (L9)

MDS 510-lecture 9

1. LECTURE:09
Development versus Growth
M. A. Kamal, Ph.D
Director General
National Academy for Planning and Development

2. Outline:
1. Introduction
2. Development means
3. Development Includes
4. Growth
5. Economic Growth
6. Types of Economic Growth
7. Measures of Economic Growth
8. National Income Accounting
9. Growth versus Development
10. Conditions for Development
11. Core values of Development:
12. Where Should be Developed?
13. Human Development
14. Other Measures of HD
15. Population growth & natural resources
16. Population impact on natural resource
17. Urbanization & sustainable development
18. Urban Growth
19. Urban Problems
20. Impact of Urbanization on Environment
21. Conclusion

3. 1.Introduction
1.1Growth and development has traditionally been
subject of economics since Adam Smith and it is still
focused by theoretical, methodological practical
experts as well.
1.2Mainstream theories of the 20th century often do
not distinguish ‘growth’ (the increase of the GDP) and
‘development’: the two words are used as synonyms.
1.3According to other authors (e.g. THIRLWALL
(2000)), economic development is more complex than
mere growth.

4. 2.Development means:
2.1Generally Development is the gradual growth of a
situation that becomes more advanced and strong
than previous one.
2.2Development more likely related with economic
growth
2.3Development is a process where by the entire social
system of a country more upward.
2.4Development incorporates the notion of a measure/
measures of human welfare

5. 2.5Development is a unfolding of human
potentials for meaningful participation in
economic, social, political and cultural
process and institutions, so that people can
improve their conditions .

2.Development:

6. 3.Development Includes

7. 4.Growth
4.1Generally growth refers to an increase in some quantity
over time. The quantity can be:
•Physical (e.g., growth in height, growth in an
amount of money)
•Abstract (e.g., a system becoming more
complex, an organism becoming more mature).

8. 4.2 Growth

9. 5.Economic Growth
5.1Economic growth is an increase (or
decrease) in the value of goods and services
that a geographic area produces and sells
compared to an earlier time.

10. 6.Types of Economic Growth
6.1Positive growth: If the value of an area's
goods and services is higher in one year than
the year before, it experiences positive growth,
usually simply called "economic growth."
6.2Negative economic growth: In a year when
less value than the year before is produced and
sold, it experiences "negative economic
growth," also called "recession" or "depression."

11. 7.Measures of Economic Growth
7.1Using measures of economic performance in terms
of the value of income, expenditure and output
GDP – Gross Domestic Product
The value of output produced within a country during a time
period
GNP – Gross National Product
The value of output produced within a country plus net
property income from abroad
GDP/GNP per head/per capita
Takes account of the size of the population
Real GDP/GNP
Accounts for differences in price levels in different countries

12. 7.2 Using measures
of economic growth
can give distorted
pictures of the level
of income in a
country – the income
distribution is not
taken into account.
7.3 A small
proportion of the
population can own a
large amount of the
wealth in a country.
The level of human
welfare for the
majority could
therefore be very
limited.
But this could be just around the
corner!
Copyright: chinagrove, http://www.sxc.hu
This might be a common
picture……
Copyright: unseenob, http://www.sxc.hu

13. Economic Growth
High economic growth fuelled through capital spending can hide a
number of underlying economic problems – how is the income and
wealth distributed? Who is doing the spending and will it ‘trickle down’
to the poor?
Shopping Mall in Saudi Arabia
Copyright : Christo Pacheco, http://www.sxc.hu
Dubai Skyline
Copyright: zchizzerz, http://www.sxc.hu

14. 8.National Income Accounting –
Problems with using GDP/GNP
8.1Reliability of data?
How accurate is the data that is collected?
8.2Distribution of income?
How is the income distributed – does a small proportion of
the population earn a high percentage of the income or is
income more evenly spread?

15. 8.National Income Accounting –
Problems with using GDP/GNP
8.3 Black/informal economy?
Some economic activity not
recorded – subsistence
farming and barter activity,
for example
Some economic activity is
carried out illegally –
building work ‘cash in
hand’, drug dealing, etc.
Work of the non-paid may
not be considered but may
contribute to welfare –
charity work, housework,
etc.
It might not be pleasant, but what he finds among the
refuse could be all he has.
Title: Sierra Leone Liberia. Copyright: Photolibrary Group

16. 9.Growth versus Development
9.1Economic growth may be one aspect of
economic development but is not the
same
9.2Economic growth:
A measure of the value of output of goods and services
within a time period
9.3Development:
A measure of the welfare of humans in a society

17. 10.Conditions for Development:
“ The concepts of freedom, participation in decision
making towards fulfilling one’s potentials and rights to
organize are all essential conditions for development
process.
---A. Sen (Development as freedom:1998)

18. 11.Core values of Development:
11.1There are three core values of Development
Sustenance- The Ability to meet basic needs
Self-esteem-To be a Person
Freedom of choice- To be able to Chose

19. 12.Where Should be Developed?
12.1The development process has multiple
interface and these are between
following issues:
a)Population and development
b)Poverty and development
c)Environment and development
d)Cultural values and development
e)Natural resources and development etc.

20. 13.Human Development:
13.1The concept of HD first introduced publicly in
1990 by the UNDP’s global Human Development
Report (HDR).
13.2HD is a process of enlarging peoples choice.
13.3Wide ranging choice are—
a. to live a long and healthy life.
b. to be educated
13.4To have access to resources needed for a decent
standard living.
13.5Political freedom
13.6Guaranteed human rights and
13.7Personal self respect

21. Human Development Index

22. Development
Iraqis have supposedly
been given their
freedom following the
American led ‘Operation
freedom’ but has it
improved welfare?
Copyright: Photolibrary Group

23. 14. Other Measures

24. 15.Population growth & natural resources
15.1In demography, population growth is used
informally for the more specific term
population growth rate, and is often used to
refer specifically to the growth of the human
population of the world.

25. 15.2There are about 6.6 billion people in the world and
over 95 million babies are born per year – that is an
average of three babies per second!

27. 16.Population impact on natural resource
How does human activity affect the environment?
Reduce the Reduce the
land land
available for available for
plants and plants and
animalsanimals
Raw Raw
materials materials
(inc. non-(inc. non-
renewable) renewable)
resources resources
are being are being
used upused up
More waste is More waste is
produced which produced which
(if not handled (if not handled
properly) may properly) may
pollute air, water pollute air, water
& land& land

28. 17.Urbanization & sustainable development
17.1“Urban” varies widely from country to
country. Some countries distinguish between
rural and urban based on:
Size or density of localities
Administrative considerations (only major cities are classed as
urban)
The percentage of persons not dependent on agriculture
Some nations define all of their population as living in
urban areas (e.g. Singapore). Some nations define none
of their population as urban (e.g. Polynesia (South
Pacific Islands))
17.2An urban (or metropolitan) area = a town or a city
plus its adjacent suburbs with a population of >2,500
people
17.2A rural area = an area with < 2,500 people

29. 18.Urban Growth
18.1Urban areas grow in 2 ways:
ØNatural increase of its population (births)
ØImmigration (mostly from rural areas)
18.2 Proportion of the global population living in urban
areas: 2% (pre-industrial period)  46% (2001)
(~160,000 people added to world’s urban areas each day)
18.3UN projections: by 2050, ~63% of world’s people will be
living in urban areas, with 90% of this urban growth in
developing countries
18.4Number of large cities (>1 million people) increasing
rapidly throughout the 20
th
century. In 1900: 19 cities had
>1 million people (95% of the population then were
rural) and in 2001: more than 400 cities have >1
million people.
18.5Urban growth is much slower in developed countries
than in developing countries (still, projection: 79%
(current)  84% (2025) in developed countries)

30. 19.Urban Problems
19.1Urban area suffers from:
Very high unemployment
 A soaring crime rate (robbery, assault, murder)
Severe noise pollution
Bad traffic congestion
Inadequate housing (>1/3 of the people living in
slums with no running water or electricity)
Inadequate sanitation ( widespread infectious
diseases such as hepatitis)

31. 20.Impact of Urbanization on Environment
20.1Survive only by importing food, water, energy,
minerals, and other resources from
somewhere else
20.2Produce vast quantities of wastes
20.3Affect the health of their inhabitants but also
the environmental health of rural areas and the
health of the planet
20.4Often, agriculture and cities develop in
similar areas  expanding urban areas = using
up agricultural land

32. Water
Fuel
Food
Daily Inputs
U.S. city
of 1
million
people
Daily Outputs
Air
pollutants
Rubbish
Sewage
Urbanization

33. 21.Conclusion
21.1Population control is fundamental and essential as
to avoid long term damage to the environment as a
consequence of acid rain, green house effect and
possible Global Warming, and the threat to the ozone
layer.
21.2 ‘Development is not purely an economic
phenomenon but rather a multi – dimensional
process involving reorganization and re
orientation of the entire economic and social
system.