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Explaining Economic Development A Survey

Explaining Economic Development A Survey. Saving  physical capital, k Population growth Human capital, h Nutrition/health Education Openness Government Rule of law Corruption Ethnic fractionalization Inequality Accumulation or instability?. Explaining Economic Development.

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Explaining Economic Development A Survey

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  1. Explaining Economic Development A Survey Saving  physical capital, k Population growth Human capital, h Nutrition/health Education Openness Government Rule of law Corruption Ethnic fractionalization Inequality Accumulation or instability?

  2. Explaining Economic Development • Geography • Latitude • Access to sea • Natural capital • Africa: a special case? • Disease environment • Ethnic fractionalization • Social capability • Population density • Terms – of – trade shocks

  3. Scatter Diagrams • Cause of high per capita income? • Effect of high per capita income? • Some of both?

  4. Latitude … and geographic features • Latitude helps • Seasons • Heat • Disease • Eurasia vs. the Americas • Propagating advances • Small states (Europe) vs. Large state (China) • Different strokes/competition vs. Uniformity/Complacency ? War  Progress ? • Neighbors  spillovers • Mexico has U.S./Poland has Germany (EU) • Brazil has Argentina/Zimbabwe has South Africa But … Reversals of Fortune

  5. Access to sea • Trade  specialization  productivity • Trade  technology transfer/idea transfer

  6. Natural Resources Endowments  Economic Organization  Income Distribution  Institutions  Growth • Mineral wealth: Mexico/Bolivia/Peru • Draft labor • Inequality • Ignorance is power • Staple crops for world market: sugar, cotton, coffee,… • Plantation agriculture • Slave labor • Ignorance is power • Diversified foodstuffs • Independent farmers/Homogeneous migrants/Equality • Institutions supportive of capitalism

  7. Embarrassments of Riches: The Resource Curse Natural Capital:Total Capital High  Lagging Development Resource boom  Capital Inflow  Bubble Debt Crisis • Dutch disease: • Real overvaluation  Protection in reverse Export Low Tech Raw Material – Import Manufactures/High Tech • Rent seeking Dysfunctional conflict • Sierra Leone • Congo

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