ECONOMIC DEVELOPMENT Development Economics is wider in scope, beside the efficiency use

of scarce resources and its allocation, economics is merged, with

WEEK 01: Prelim Lecture Notes 01 social, political, and institutional processes or system to achieve fast,
wider, and higher improvements in the levels of living of the people.
Living our way of life
Its concern is the utilization or use of economics, social, and political
Each of us live our life each day in different ways, circumtances, and
conditions. Some live with affluence, some with poverty, some with requirements necessary to effect structural and institutional
just enough to make both ends meet. Differences are noticeable in transformation or changes to efficiently bring economic progress to
our physical attributes, ownership and properties, society status, widest segments of the population as much as possible. It recognizes
consumption pattern, education, health, employment, and a lot the role of government and coordinated economic decision-making
more. All of these things speak of our standard of living. Going around and activities as essential components to transform the economy. It
places, you will see people living in beautiful and confortable homes, draws relevant concepts and theories from other branches of
with so much expensive foods on the table, dressed more than economics and combine them with models and wider
enough to be called decent, working in high rise building with all multidisciplinary approaches derived from historical and
amenities that goes with it, eating in flashy and expensive restaurant, contemporary development studies.
driving expensive cars, children and youth going to expensive school
and universities, then also you wil encounter people living in
makeshift and shanty dwellings located in a crowded places, with no
foods on the table, dressed just to cover their stomachs, dressed as Prelim Lecture Notes 02
to cover their physical feature, working in uncomfortable working
areas, eating just anywhere to fill their stomachs, childen and youth
playing in the streets because no school to go to, children and youth
What is Development
trying to earn a living, running after public utility vehicles to take a
ride back home or to work, somehow you will also encounter people Before Development, in economic sense, is a state of achieving
in less expensive houses, with less expensive and enough food on the
sustained growth rates of per capita income that enable a country to
table to be shared by the whole household members, eating in less
increase its output at a rate faster than the population rate of growth.
expensive restaurants, driving less expensives car usually acquired for
The overall economic well-being of a population which is the amount
family use, dressed enough to show decency, children going to less
expensive private and public schools and universities. The contrast of of real goods and service available to the average people for
how we live our lives is revealing and these contrasts are not just investment and consumption are measured through the levels and
within our community, our town, our province, our country but, rate of growth of real per capita Gross National Income (monetary
entire world, almost all parts of the world from south to north, from growth of per capita GNI less inflation rate). Development strategies
east to west. What makes it so? Is it not living is a shared experience are geared towards a planned alteration of the structure of
one way or another and as such will affect each others well-being? production and employment which saw a decline in agriculture and
the rise in manufacturing and services and emphasis is toward output
A closer and detailed examination will help us to recognize that a large measured by Gross Domestic Product (total amount of the final
part of world population are living in absolute poverty, a situation of output of goods and services produced within the economy, within
being unable to meet the minimum levels of income, food, clothing, the territorial area of the country usually measured annually).
health care, shelter, and other essentials, others are living in a
subsistence level, a situation in being able to meet mainly personal The experiences in 1950’s, 60’s, 70’s of different developing countries
consumption, basic necessities of life like food, clothing and shelter, led to view economic development in different perspective. The
and small sector of world population live a reasonably good life. But growth targets achieved by developing countries with no changes in
then, what makes it so? Is it not living is a shared experience one way
the level of living of the population shows that there is something
or another as such will affect each others well-being?
wrong on how economic development is defined. Economic
development then is redefined in terms of the reduction or
With such conditions of the well-being of world population, we are all
responsible to effect changes, to reverse what looks like irreversible elimination of poverty, inequality, and unemployment within the
conditions of the present world population well-being, a widening gap context of a growing economy. The phenomenon of development or
between affluence and poverty. We need development, a process of economic development is no longer a mere question of economics or
improving the quality of human lives and capabilities by raising quantitative measures of incomes, employment, and inequality.
people’s levels of living, self-esteem, and freedom. Development must be conceived of as a multidimensional process
that involves major changes in social structures, attitudes, and
Economics and Studies on Development national institutions coupled with acceleration of economic growth,
reduction of inequality, and eradication of poverty. Development in
Economics - emphasizes profit maximization and marginal based
essence must represent the whole gamut of change by which the
production and consumption, rational decision-making, market
whole social system moves away from unsatisfactory condition of life
mechanism and efficiency, utility measurements, and determination
toward the better one.
of equilibrium. It has a self-interest, individualistic, and materialistic
orientation. It is about the use of scarce resources, efficiency in Economies and Social Systems
production, and allocations to satisfy human needs and wants.
Economic system should be analyzed within the context of entire
Political Economy is a merging of politics with economics, it includes social system of a country or even in global context. Social system
social and institutional processes in the use of scarce resources and means interdependent relationships of economic and non-economic
its allocation. It is an economic activity with political context that factors and about the structure of the organizations and institutions
includes role of power in economic decision making.
of a society that includes their values, attitudes, power arrangements ⎯ To expand the range of economic and social choices available to
or structure, and traditions. individuals and nations by freeing them from servitude and
dependence, not only in relation to other people and nation-
Values means principles, standards, or qualities that a society states, but also to the forces of ignorance and human misery.
considers worthwhile.
Amartya Sen’s capability approach
Attitudes means the frame of mind or feelings taken by an individual,
group, or society toward material gain, wealth sharing, work, and Sen argues that poverty cannot be measure or utility as
others. conventionally understood; what matters for well-being is not just the
characteristic of goods and services but what use consumer can and
Institutions means rules of conduct or generally accepted ways or does make of commodities. As in Sen’s functioning, which is what a
norms of doing things, it can be construed as constraints to human person does with the commodities of given characteristics that they
interactions. come to possess or control. Sen noted that functioning depends on 1.
Role of Values in Development Economics Social conventions in force in the society in which the person live, 2.
The position of the person in the family and in the society, 3. The
Since economics is a social science, we must recognize the ethical and presence or absence of festivities such as marriages, seasonal
normative premises about what is or what ought to be? Objectives festivities, 4. Physical distance from the homes of friends and
like poverty elimination, universal education, social and income relatives. Sen defines Capabilities as “the freedom that a person has
equality, rule of law and due process, self-reliance, democracy, in terms of the choice of functioning, given his personal features and
property rights and others are derived from value judgement about his command over commodities.” Sen’s perspective helps explain why
what is and what ought to be. The validity of economic analysis and there are now emphasis on health and education, social inclusion and
positive economic prescriptions should be evaluated from underlying empowerment in development issues. For Sen, human “well-being”
value premises. The value premises agreed upon by those responsible means being well as in basic sense of being healthy, well nourished…
for national decision-making in which the economic development and others.
goals and corresponding public policies are derived from can be
pursued based on theoretical and quantitative analysis. Development and Happiness: Happiness is part of human well-being,
and greater happiness may in itself expanse an individual’s capability
to function. Empirical findings show that average level of happiness
or satisfaction increases with country’s average income.
Prelim Lecture Notes 03

Three Core Values of Development

The core values represent common goals sought by all individuals and
societies and may be also use as a conceptual basis and guidelines for
understanding the meaning of development.

1. Sustenance: The ability to meet basic needs. Sustenance means

the basic goods and services, food clothing and shelter, that are
necessary to sustain an average human being at the bare
minimum level of living.

2. Self-esteem: To be a person. Self-esteem means the feeling of

worthiness that a society enjoys when social, political, and
economic system promote human values such as respect,
dignity, integrity, and self-determination.

3. Freedom from Servitude: To be able to choose. Freedom means

a situation in which society has at its disposal variety of
alternatives from which to satisfy its wants and individuals enjoy
real choices according to their preferences.

Three Objectives of Development

⎯ To increase the availability and widen the distribution of basic

life-sustaining goods such food, clothing, shelter, health and
protection.
⎯ To raise levels of living that includes higher income, provision of
more jobs, better education, and greater attention to cultural
and human values which enhance material wellbeing and
generate greater individual and national self-esteem.