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Challenges and Solutions in Economic Development: An In-depth Analysis

Explore structural issues and innovative solutions in economic development, focusing on inclusive growth, technology impact, and redistribution policies. Learn about the importance of ideas, gaps in development, and the role of individuals in shaping economies. Discover key insights from leading economists like Milton Friedman and Paul Romer.

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Challenges and Solutions in Economic Development: An In-depth Analysis

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  1. Econ 171 Economic Development Atanu Dey Thu 23rd June, 2011 2:00 PM – 3:30 PM 3 Le Conte

  2. The Problem with the US • "There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate.“ • POTUS said this last week Meeting 4 / N171 / Atanu Dey

  3. Confusing Means and Ends • Employment and jobs are means, not an end • The production of stuff is an end, and jobs are just means • Milton Friedman in Asia • Milton Friedman’s question: • “Why don’t they use spoons?” Meeting 4 / N171 / Atanu Dey

  4. Tomato Processing Factory • High technology • Agricultural Sector and Economic Growth Meeting 4 / N171 / Atanu Dey

  5. Economics • Economics is what economists do. They study the economy • What is the economy? • What’s the one indispensible thing required for you have an economy—any economy? • People!! Meeting 4 / N171 / Atanu Dey

  6. Why People? • Everything is an idea • People have ideas • Ideas matter – the good ones make life wonderful for all • Stupidity also matters: “Stupidity lies at the core of human misery.” • http://www.deeshaa.org/2010/12/08/stupidity-at-the-core-of-human-misery/ Meeting 4 / N171 / Atanu Dey

  7. Gaps – Paul Romer • Objects gap • due to a lack of objects such as factories, roads, and raw materials • Ideas gap • poor countries do not have access to ideas that are used to generate economic value Meeting 4 / N171 / Atanu Dey

  8. Ideas • Public Goods • Non-rival in consumption • “If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.” • George Bernard Shaw (1856-1950) Meeting 4 / N171 / Atanu Dey

  9. Ideas • Embodied ideas • Disembodied ideas • Free from any equipment Meeting 4 / N171 / Atanu Dey

  10. A Parable • You’re in a multi-lane tunnel, all lanes in the same direction, and you’re caught in a serious traffic jam.  After a while, the cars in the other lane begin to move. Do you feel better or worse? • Prof Debraj Ray of NYU Meeting 4 / N171 / Atanu Dey

  11. We dislike unevenness • At first, movement in the other lane may seem like a good sign: you hope that your turn to move will come soon, and indeed that might happen. You might contemplate an orderly move into the moving lane, looking for suitable gaps in the traffic. However, if the other lane keeps whizzing by, with no gaps to enter and with no change on your lane, your reactions may well become quite negative. Unevenness without corresponding redistribution can be tolerated or even welcomed if it raises expectations everywhere, but it will be tolerated for only so long.  Thus, uneven growth will set forces in motion to restore a greater degree of balance, even (in some cases) actions that may thwart the growth process itself. Meeting 4 / N171 / Atanu Dey

  12. Inclusive Growth • “Development is Uneven, Get Over It” – Bill Easterly • Watch this video of Prof Easterly’s 20 minute talk at UNICEF on “inclusive growth” http://aidwatchers.com/2010/12/development-is-uneven-get-over-it/ • Development and growth is intrinsically uneven • “. . . best thing of all you can do for “inclusive growth” is asserting the individual human rights of all, including women, gays, and religious, racial, and ethnic minorities. ” Meeting 4 / N171 / Atanu Dey

  13. Read • “Why Technology Doesn’t Destroy Jobs” Russell Roberts, George Mason University. WSJ • http://online.wsj.com/article/SB10001424052702304070104576399704275939640.html • “Return to Rent-Seeking” in LiveMint.com • http://www.livemint.com/2011/06/22213607/Return-to-rentseeking.html Meeting 4 / N171 / Atanu Dey

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