Economic Development

, by Todaro, Michael P.; Smith, Stephen C.

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ISBN: 9780201770513 | 0201770512
Cover: Hardcover
Copyright: 1/1/2003

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This best-selling text offers a unique policy-oriented approach that uses models and concepts to illustrate real-world development problems. Retaining its hallmark accessibility throughout, the Eighth Edition uses the most current data, offering full coverage of recent advances in the field, and featuring a balanced presentation of opposing viewpoints on today's major policy debates. The authors have streamlined this edition and have included coverage of new and critical topics. The text includes extensive country-specific examples, updated Country Case Studies, and Comparative Case Studies that allow students to apply concepts to specific developing nations.

List of Case Studies

vii

PART ONE PRINCIPLES AND CONCEPTS

Economics, Institutions, and Development: A Global Perspective

(30)

How the Other Three-Quarters Live

(5)

Economics and Development Studies

(6)

The Nature of Development Economics

(2)

Why Study Development Economics? Some Critical Questions

(2)

The Important Role of Values in Development Economics

(2)

Economies as Social Systems: The Need to Go Beyond Simple Economics

(1)

What Do We Mean by Development?

(8)

Traditional Economic Measures

(1)

The New Economic View of Development

(1)

Sen's ``Capabilities'' Approach

(3)

Three Core Values of Development

(2)

The Three Objectives of Development

(1)

Conclusions

(2)

Case Study: The Economy of Brazil

(8)

Concepts for Review

(4)

Questions for Discussion

Notes

Further Reading

Diverse Structures and Common Characteristics of Developing Nations

(45)

Defining the Developing World

(3)

The Structural Diversity of Developing Economies

(9)

Size and Income Level

(1)

Historical Background

(1)

Physical and Human Resources

(1)

Ethnic and Religious Composition

(1)

Relative Importance of the Public and Private Sectors

(1)

Industrial Structure

(1)

External Dependence: Economic, Political, and Cultural

(1)

Political Structure, Power, and interest Groups

(1)

Common Characteristics of Developing Nations

(25)

Low Levels of Living

(11)

A Holistic Measure of Living Levels: The Human Development Index

(6)

Low Levels of Productivity

(2)

High Rates of Population Growth and Dependency Burdens

(1)

Substantial Dependence on Agricultural Production and Primary-Product Exports

(3)

Prevalence of Imperfect Markets and incomplete Information

(1)

Dominance, Dependence, and Vulnerability in International Relations

(1)

Conclusion

(1)

Case Study: The Economy of Nigeria

(6)

Concepts for Review

(4)

Questions for Discussion

Notes

Further Reading

Historic Growth and Contemporary Development: Lessons and Controversies

(32)

The Growth Game

(1)

The Economics of Growth: Capital, Labor, and Technology

(6)

Capital Accumulation

(1)

Population and Labor Force Growth

(2)

Technological Progress

(2)

Conclusion

(1)

The Historical Record: Kuznets's Six Characteristics of Modern Economic Growth

(6)

High Rates of Per Capita Output and Population Growth

(1)

High Rates of Total Factor Productivity Increase

(2)

High Rates of Economic Structural Transformation

(1)

High Rates of Social and Ideological Transformation

(1)

International Economic Outreach

(1)

Limited international Spread of Economic Growth

(1)

Conclusions: The Interdependence of Growth Characteristics

(1)

The Limited Value of the Historical Growth Experience: Differing Initial Conditions

(12)

Physical and Human Resource Endowments

(1)

Relative Levels of Per Capita Income and GNP

(1)

Climatic Differences

(1)

Population Size, Distribution, and Growth

(1)

The Historical Role of International Migration

(3)

The Growth Stimulus of International Trade

(1)

Basic Scientific and Technological Research and Development Capabilities

(1)

Stability and Flexibility of Political and Social Institutions

(2)

Are Living Standards of Developing and Developed Countries Converging?

(2)

Conclusions

101

(2)

Case Study: The Economy of Malaysia

103

(7)

Concepts for Review

105

(5)

Questions for Discussion

Notes

Further Reading

Classic Theories of Development: A Comparative Analysis

110

(35)

Classic Theories of Economic Development: Four Approaches

111

(1)

Development as Growth, and the Linear-Stages Theories

112

(4)

Rostow's Stages of Growth

112

(1)

The Harrod-Domar Growth Model

113

(2)

Obstacles and Constraints

115

(1)

Necessary versus Sufficient Conditions: Some Criticisms of the Stages Model

116

(1)

Structural-Change Models

116

(7)

The Lewis Theory of Development

116

(5)

Structural Change and Patterns of Development

121

(1)

Conclusions and Implications

122

(1)

The International-Dependence Revolution

123

(5)

The Neocolonial Dependence Model

124

(1)

The False-Paradigm Model

125

(1)

The Dualistic-Development Thesis

126

(1)

Conclusions and Implications

126

(2)

The Neoclassical Counterrevolution: Market Fundamentalism

128

(4)

Challenging the Statist Model: Free Markets, Public Choice, and Market-Friendly Approaches

128

(2)

Traditional Neoclassical Growth Theory

130

(1)

Conclusions and Implications

131

(1)

Classic Theories of Development: Reconciling the Differences

132

(2)

Case Study: The Economy of Kenya

134

(7)

Concepts for Review

137

(4)

Questions for Discussion

Notes

Further Reading

Appendix 4.1 The Solow Neoclassical Growth Model

141

(4)

Contemporary Models of Development and Underdevelopment

145

(50)

The New Growth Theory: Endogenous Growth

146

(4)

Motivation for the New Growth Theory

146

(2)

The Romer Model

148

(2)

Criticisms of the New Growth Theory

150

(1)

Underdevelopment as a Coordination Failure

150

(3)

Multiple Equilibria: A Diagrammatic Approach

153

(4)

Starting Economic Development: The Big Push

157

(9)

The Big Push: A Graphical Model

159

(6)

Why the Problem Cannot Be Solved by a Super-entrepreneur

165

(1)

Further Problems of Multiple Equilibria

166

(4)

Kremer's O-Ring Theory of Economic Development

170

(5)

The O-Ring Model

170

(4)

Implications of the O-Ring Theory

174

(1)

Summary and Conclusions: Multiple Equilibria and Coordination Failures

175

(12)

Concepts for Review

178

(9)

Questions for Discussion

Notes

Further Reading

Comparative Case Study: South Korea and Argentina

Contributions of Alternative Approaches to Development

187

(5)

PART TWO PROBLEMS AND POLICIES: DOMESTIC

A Note to the Student

192

(3)

Poverty, Inequality, and Development

195

(64)

Measuring Inequality and Poverty

197

(12)

Measuring Inequality

197

(8)

Measuring Absolute Poverty

205

(4)

Poverty, Inequality, and Social Welfare

209

(12)

What's So Bad about Inequality?

209

(2)

Dualistic Development and Shifting Lorenz Curves: Some Stylized Typologies

211

(3)

Kuznets' Inverted-U Hypothesis

214

(5)

Growth and Inequality

219

(2)

Absolute Poverty: Extent and Magnitude

221

(8)

Growth and Poverty

224

(5)

Economic Characteristics of Poverty Groups

229

(6)

Rural Poverty

229

(1)

Women and Poverty

230

(4)

Ethnic Minorities, Indigenous Populations, and Poverty

234

(1)

The Range of Policy Options: Some Basic Considerations

235

(8)

Areas of Intervention

236

(1)

Policy Options

237

(5)

Summary and Conclusions: The Need for a Package of Policies

242

(1)

Case Study: The Economy of India

243

(9)

Concepts for Review

245

(7)

Questions for Discussion

Notes

Further Reading

Appendix 6.1 Appropriate Technology and Employment Generation: The Price-Incentive Model

252

(3)

Appendix 6.2 The Ahluwalia-Chenery Welfare Index

255

(4)

Population Growth and Economic Development: Causes, Consequences, and Controversies

259

(49)

The Basic Issue: Population Growth and the Quality of Life

260

(1)

A Review of Numbers: Population Growth-Past, Present, and Future

261

(11)

World Population Growth through History

261

(3)

Structure of the World's Population

264

(5)

The Hidden Momentum of Population Growth

269

(3)

The Demographic Transition

272

(3)

The Causes of High Fertility in Developing Countries: The Malthusian and Household Models

275

(10)

The Malthusian Population Trap

275

(2)

Criticisms of the Malthusian Model

277

(3)

The Microeconomic Household Theory of Fertility

280

(3)

The Demand for Children in Developing Countries

283

(1)

Some Empirical Evidence

284

(1)

Implications for Development and Fertility

284

(1)

The Consequences of High Fertility: Some Conflicting Opinions

285

(6)

Population Growth Is Not a Real Problem

285

(2)

A Deliberately Contrived False Issue

287

(1)

A Desirable Phenomenon

287

(1)

Population Growth Is a Real Problem

288

(2)

The Empirical Argument: Seven Negative Consequences of Population Growth

290

(1)

Goals and Objectives: Toward a Consensus

291

(2)

Some Policy Approaches

293

(7)

What Developing Countries Can Do

293

(4)

What the Developed Countries Can Do: Resources, Population, and the Global Environment

297

(1)

How Developed Countries Can Assist Developing Countries with Their Population Programs

298

(2)

Conclusion

300

(1)

Case Study: The Economy of China

300

(8)

Concepts for Review

303

(5)

Questions for Discussion

Notes

Further Reading

Urbanization and Rural-Urban Migration: Theory and Policy

308

(52)

The Migration and Urbanization Dilemma

308

(8)

Urbanization: Trends and Projections

309

(7)

The Role of Cities

316

(4)

Industrial Districts

317

(2)

Efficient Urban Scale

319

(1)

The Urban Giantism Problem

320

(4)

First City Bias

322

(1)

Causes of Urban Giantism

322

(2)

The Urban Informal Sector

324

(8)

Policies for the Urban Informal Sector

327

(4)

Women in the Informal Sector

331

(1)

Urban Unemployment

332

(2)

Migration and Development

334

(2)

Toward an Economic Theory of Rural-Urban Migration

336

(9)

A Verbal Description of the Todaro Model

337

(3)

A Diagrammatic Presentation

340

(2)

Five Policy Implications

342

(3)

Summary and Conclusions: The Shape of a Comprehensive Migration and Employment Strategy

345

(3)

Case Study: The Economy of Mexico

348

(9)

Concepts for Review

351

(6)

Questions for Discussion

Notes

Further Reading

Appendix 8.1 A Mathematical Formulation of the Todaro Migration Model

357

(3)

Human Capital: Education and Health in Economic Development

360

(58)

The Central Roles of Education and Health

360

(2)

Education and Health as Joint Investments for Development

362

(1)

International Trends and Convergence in Health and Education

363

(3)

Improving Health and Education: Why Increasing Income Is Not Sufficient

366

(3)

Investing in Education and Health: The Human Capital Approach

369

(3)

Child Labor

372

(4)

The Gender Gap: Women and Education

376

(3)

Consequences of Gender Bias in Health and Education

377

(2)

Educational Systems and Development

379

(13)

Educational Supply and Demand: The Relationship Between Employment Opportunities and Educational Demands

380

(2)

Social versus Private Benefits and Costs

382

(4)

Distribution of Education

386

(2)

Education, Inequality, and Poverty

388

(3)

Education, Internal Migration, and the Brain Drain

391

(1)

Health Systems and Development

392

(13)

Measurement and Distribution

392

(1)

Disease Burden

393

(3)

Malaria and Parasitic Worms

396

(1)

HIV and AIDS

397

(3)

Health and Productivity

400

(3)

Health Systems Policy

403

(2)

Policies for Health, Education, and Income Generation

405

(2)

Case Study: The Economy of Egypt

407

(11)

Concepts for Review

410

(8)

Questions for Discussion

Notes

Further Reading

Agricultural Transformation and Rural Development

418

(45)

The Imperative of Agricultural Progress and Rural Development

418

(2)

Agricultural Stagnation and Growth Since 1950

420

(4)

The Structure of Agrarian Systems in the Developing World

424

(13)

Two Kinds of World Agriculture

424

(2)

Peasant Agriculture in Latin America, Asia, and Africa

426

(11)

Conclusions

437

(1)

The Important Role of Women

437

(3)

The Economics of Agricultural Development: Transition from Peasant Subsistence to Specialized Commercial Farming

440

(9)

Subsistence Farming: Risk Aversion, Uncertainty, and Survival

441

(6)

The Transition to Mixed and Diversified Farming

447

(1)

From Divergence to Specialization: Modern Commercial Farming

448

(1)

Conclusions

449

(1)

Toward a Strategy of Agricultural and Rural Development: Some Main Requirements

449

(6)

Improving Small-Scale Agriculture

450

(2)

Conditions for Rural Development

452

(3)

Case Study: The Economy of Bangladesh

455

(8)

Concepts for Review

457

(6)

Questions for Discussion

Notes

Further Reading

The Environment and Development

463

(52)

Economics and the Environment

463

(1)

Environment and Development: The Basic Issues

464

(4)

Sustainable Development and Environmental Accounting

464

(2)

Population, Resources, and the Environment

466

(1)

Poverty and the Environment

466

(1)

Growth versus the Environment

466

(1)

Rural Development and the Environment

467

(1)

Urban Development and the Environment

467

(1)

The Global Environment

468

(1)

The Scope of Environmental Degradation: An Overview

468

(3)

Rural Development and the Environment: A Tale of Two Villages

471

(3)

Traditional Economic Models of the Environment

474

(6)

Privately Owned Resources

474

(2)

Common Property Resources

476

(2)

Public Goods and Bads: Regional Environmental Degradation and the Free-Rider Problem

478

(2)

Limitations of the Public-Good Framework

480

(1)

Urban Development and the Environment

480

(7)

The Ecology of Urban Slums

480

(2)

Industrialization and Urban Air Pollution

482

(3)

Problems of Congestion and the Availability of Clean Water and Sanitation

485

(2)

The Need for Policy Reform

487

(1)

The Global Environment: Rain Forest Destruction and Greenhouse Gases

488

(2)

Policy Options in Developing and Developed Countries

490

(7)

What Less Developed Countries Can Do

490

(2)

How Developed Countries Can Help LDCs

492

(2)

What Developed Countries Can Do for the Global Environment

494

(3)

Case Study: The Economy of Pakistan

497

(6)

Concepts for Review

499

(4)

Questions for Discussion

Notes

Further Reading

Comparative Case Study: Bangladesh and Nigeria

Poverty Policy

503

(7)

PART THREE PROBLEMS AND POLICIES: INTERNATIONAL

Globalization: An Introduction to Part Three

510

(5)

Trade Theory and Development Experience

515

(40)

International Trade and Finance: Some Key Issues

515

(3)

Five Basic Questions about Trade and Development

518

(4)

Importance of Exports to Different Developing Nations

520

(1)

Demand Elasticities and Export Earnings Instability

520

(2)

The Terms of Trade and the Prebisch-Singer Thesis

522

(3)

The Traditional Theory of International Trade

525

(7)

Comparative Advantage

526

(1)

Relative Factor Endowments and International Specialization: The Neoclassical Model

527

(4)

Trade Theory and Development: The Traditional Arguments

531

(1)

Some Criticisms of Traditional Free-Trade Theory in the Context of Developing-Country Experience

532

(11)

Fixed Resources, Full Employment, and the International Immobility of Capital and Skilled Labor

533

(4)

Fixed, Freely Available Technology and Consumer Sovereignty

537

(1)

Internal Factor Mobility and Perfect Competition: Increasing Returns, Imperfect Competition, and Controlled Markets

538

(2)

The Absence of National Governments in Trading Relations

540

(2)

Balanced Trade and International Price Adjustments

542

(1)

Trade Gains Accruing to Nationals

542

(1)

Some Conclusions on Trade and Economic Development: The Limits of Theory

543

(5)

Case Study: The Economy of Taiwan

548

(7)

Concepts for Review

550

(5)

Questions for Discussion

Notes

Further Reading

The Trade Policy Debate: Export Promotion, Import Substitution, and Economic Integration

555

(42)

Trade Strategies for Development: Export Promotion versus Import Substitution

556

(19)

Export Promotion: Looking Outward and Seeing Trade Barriers

557

(5)

Import Substitution: Looking Inward but Still Paying Outward

562

(2)

The IS Industrialization Strategy and Results

564

(7)

Foreign-Exchange Rates, Exchange Controls, and the Devaluation Decision

571

(4)

Summary and Conclusions: Trade Optimists and Trade Pessimists

575

(2)

Trade Pessimist Arguments

575

(1)

Trade Optimist Arguments

576

(1)

Reconciling the Arguments: The Data and the Consensus

577

(1)

South-South Trade and Economic Integration: Looking Outward and Inward

578

(5)

The Growth of Trade among Developing Countries

578

(1)

Economic Integration: Theory and Practice

579

(2)

Regional Trading Blocs and the Globalization of Trade

581

(2)

Trade Policies of Developed Countries: The Need for Reform

583

(6)

Rich-Nation Tariff and Nontariff Trade Barriers and the 1995 Uruguay Round GATT Agreement

584

(3)

The Problem of Adjustment Assistance

587

(1)

Domestic Economic Policies

588

(1)

Case Study: The Economy of South Korea

589

(8)

Concepts for Review

592

(5)

Questions for Discussion

Notes

Further Reading

Balance of Payments, Developing-Country Debt, and the Macroeconomic Stabilization Controversy

597

(37)

The Balance of Payments Account

598

(4)

General Considerations

598

(2)

A Hypothetical Illustration: Deficits and Debts

600

(2)

Financing and Reducing Payments Deficits

602

(3)

Some Initial Policy Issues

602

(2)

Recent Trends in LDC Balance of Payments

604

(1)

The 1980s' Debt Crisis

605

(8)

Background and Analysis

604

(4)

Origins of the Debt Crisis

608

(5)

Attempts at Alleviation: Macroeconomic Instability, IMF Stabilization Policies, and Their Critics

613

(5)

The IMF Stabilization Program

613

(2)

Tactics for Debt Relief

615

(2)

Has the Debt Problem Disappeared? Winners and Losers

617

(1)

Conclusions

618

(2)

Case Study: The Economy of Venezuela

620

(6)

Concepts for Review

622

(4)

Questions for Discussion

Notes

Further Reading

Appendix 14.1 A Brief History and Analysis of the International Monetary Fund and the World Bank

626

(8)

Foreign Finance, Investment, and Aid: Controversies and Opportunities

634

(45)

The International Flow of Financial Resources

634

(1)

Private Foreign Direct Investment and the Multinational Corporation

635

(9)

Multinational Corporations: Size, Patterns, and Trends

636

(2)

Private Foreign Investment: Some Pros and Cons for Development

638

(6)

Private Portfolio Investment: Boon or Bane for LDCs?

644

(3)

Foreign Aid: The Development Assistance Debate

647

(13)

Conceptual and Measurement Problems

647

(1)

Amounts and Allocations: Public Aid

648

(5)

Why Donors Give Aid

653

(4)

Why LDC Recipients Accept Aid

657

(1)

The Growing Role of Nongovernmental Organizations (NGOs)

658

(1)

The Effects of Aid

659

(1)

Conclusions: Toward a New View of Foreign Aid

660

(2)

Case Study: The Economy of Indonesia

662

(8)

Concepts for Review

665

(5)

Questions for Discussion

Notes

Further Reading

Comparative Case Study: Thailand and the Philippines

Trade Strategy

670

(9)

PART FOUR POSSIBILITIES AND PROSPECTS

Development Policymaking and the Role of the State

679

(53)

The Planning Mystique

680

(1)

The Nature of Development Planning

681

(1)

Basic Concepts

681

(1)

Planning in Mixed Developing Economies

681

(1)

The Rationale for Development Planning

682

(2)

The Planning Process: Some Basic Models

684

(8)

Aggregate Growth Models: Projecting Macro Variables

685

(2)

Multi-Sector Models and Sectoral Projections

687

(1)

Project Appraisal and Social Cost-Benefit Analysis

688

(4)

Conclusions: Planning Models and Plan Consistency

692

(1)

The Crisis in Planning: Problems of Implementation and Plan Failures

692

(4)

Theory versus Practice

693

(1)

Reasons for Plan Failures

694

(2)

Government Failure and the Resurgent Preference for Markets over Planning

696

(2)

The Market Economy

698

(4)

Sociocultural Preconditions and Economic Requirements

698

(2)

Role and Limitations of the Market in LDCs

700

(2)

The ``Washington Consensus'' on the State in Development and Its Limitations

702

(4)

Toward a New Consensus

704

(2)

Development Political Economy: Theories of Policy Formulation and Reform

706

(5)

Understanding Voting Patterns on Policy Reform

707

(2)

Institutions and Path Dependency

709

(1)

Democracy versus Autocracy: Which Facilitates Faster Growth?

710

(1)

Trends in Governance and Reform

711

(6)

Tackling the Problem of Corruption

711

(3)

Decentralization

714

(1)

Development Participation

715

(2)

Development Policy and the State: Concluding Observations

717

(3)

Case Study: The Economy of Ghana

720

(4)

Case Study: The Economy of the Philippines

724

(8)

Concepts for Review

726

(6)

Questions for Discussion

Notes

Further Reading

Finance and Fiscal Policy for Development

732

(55)

The Role of the Financial System

733

(1)

The Painful Road to Macroeconomic Stability

734

(11)

Differences between MDC and LDC Financial Systems

735

(3)

The Role of Central Banks

738

(3)

The Emergence of Development Banking

741

(1)

The Role of Informal Finance and Group Lending for Small-Scale Enterprise

742

(3)

Reforming Financial Systems

745

(6)

Financial Liberalization, Real Interest Rates, Savings, and Investment

745

(2)

Financial Policy and the Role of the State

747

(2)

Debate on the Role of the Stock Markets

749

(2)

Fiscal Policy for Development

751

(5)

Macrostability and Resource Mobilization

751

(1)

Taxation: Direct and Indirect

751

(5)

Public Administration: The Scarcest Resource

756

(2)

State-Owned Enterprises

758

(5)

Improving the Performance of SOEs

760

(1)

Privatization: Theory and Experience

761

(2)

Military Expenditures and Economic Development

763

(5)

Significance and Economic Impact

763

(3)

The End of the Cold War: Disarmament, Conflict Resolution, and Human Development

766

(2)

Case Study: The Economy of South Africa

768

(11)

Concepts for Review

772

(7)

Questions for Discussion

Notes

Further Reading

Comparative Case Study: Chile and Poland

Privatization: What, When, and to Whom?

779

(8)

Glossary

787

(28)

Name Index

815

(10)

Subject Index

825

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Economic Development

Summary

Table of Contents

Supplemental Materials