Economic Development : Overview -2-

1. EconomicDevelopment: Overview -2-

2. WorldIncomeDistribution

3. “LeastLivableCountries” by HDI, 2004

4. “MostLivableCountries”by HDI, 2004

5. Differences in rate of incomegrowth in countries

6. IncomeDistribution in DevelopingCountries -1- • Enormous wealth coexisting with great poverty within developing countries, • Poorest 40% of the population earn, on average, around 15% of overall income, whereas the richest 20% earn around half of total income, • Intra-country vs. inter-country disparities, • The poor are twice cursed: (1) living in countries that are poor on average, (2) receiving end of the high levels of inequality in those countries

7. IncomeDistribution in DevelopingCountries -2- • Tendencyfortheshare of therichest 20% tofall as wecrossthe $8,000 p c incomethreshold, • Alsothereexists a tendencyfortheshare of richest 20% toriseearly on in incomescale, • Theshare of poorest 40% at bothextremes of theincomescales is relativelyhigh, andfallsto a minimum in themiddle • Conclusion: Inequalitymightriseandthenfall as wemovefromlowertohigherincomelevels (rememberKuznet’sinverted U hyppothesis).

8. Shares of Poorest 40% andRichest 20% forselectedcountries

9. EconomicDevelopmentProcess • At verylowlevels of income, averagelevels of livingareverylow, andso it is difficulttosqueezetheincomeshare of thepoorest 40% below a certain minimum. Share of therichest 20%, on theotherhandarehigh, but not as extraordinarilyhigh as in middleincomecountries, • Richestgroup in thesociety, morethanproportionatelybenefitfromdevelopmentprocess, andshare of poortendtofall (not in absoluteterms), • At higherlevels of p c income, economicgainstendto be distributedmoreequally.

10. HumanDevelopment • GNP p c : A reliable indicator of development? • Indicators of Development: • Literacy, Access to Drinking Water, Low Rates of Infant Mortality, Life Expectancy, etc. • A high GNP p c with poor indicators of Development: HOW? • Income Inequality

11. HumanDevelopmentIndex • Puts various socio-economşc indicators together, • Three components: (1) Life expectancy at birth: indirectly reflects infant mortality, (2) Educational attainment of the society: 2/3 weighted average of adult literacy + 1/3 weighted combination of enrollment rates in primary, secondary and tertiary education, (3) P c income, adjusted after a threshold.

12. Turkey’s HDI 2006 andUnderlyingIndicatorsInComparisonwithSelectedCountries

13. InternationalComparison • HDI of Industrial Countries = 0.916, • HDI of Developing Countries = 0.570, • HDI of Industrial Countries are 1.6 times higher than Developing Countries, eventhough their Real GDP p c (PPP$) is 6 times higher! => Mean Anything?? => Ranking

14. Income P C & HumanDevelopment • GDP still acts as a fairly good proxy for most aspects of development. • Argument: Rising income levels ultimately translate into beter health, nutritional, and educational standards in a population. • Explanatory Power of p c GDP has over other basic indicators => Correlations among GDP pc and indicators of Human Development.

15. Life Expectancy Vs. GDP p c forDevelopingCountries

16. Averageyears of Schooling vs. GDP p c forDevelopingCountries

17. Income p c vs. Total Fertility Rate forDevelopingCountries

18. StructuralFeatures • Demographic Characteristics • Occupational and Production Structure • Rapid Rural – Urban Migration • International Trade

19. DemographicCharacteristics • Poor Countries are characterised with high birth / death rates. • As development proceeds, death rates decrease, often birth rates remain high => Gap opens between birth and death rates => High population growth * Negative Population Effect vs. Positive Population Effect