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ECONOMIC DEVELOPMENT Fifth Edition E. Wayne Nafziger analyzes the economic development of Asia, Africa, Latin America, and East-Central Europe. This book is suitable for those with a background in economics principles. Nafziger explains the reasons for the recent fast growth of India, Poland, Brazil, China, and other Pacific Rim countries and the slow, yet essential, growth for a turnaround of sub-Saharan Africa. The fifth edition of the text, written by a scholar of developing countries, is replete with realworld examples and up-to-date information. Nafziger discusses poverty, income inequality, hunger, unemployment, the environment and carbon-dioxide emissions, and the widening gap between rich (including middle-income) and poor countries. Other new components include the rise and fall of models based on Russia, Japan, China/Taiwan/Korea, and North America; randomized experiments to assess aid; an exploration of whether information technology and mobile phones can provide poor countries with a shortcut to prosperity; and a discussion of how worldwide financial crises, debt, and trade and capital markets affect developing countries. E. Wayne Nafziger is University Distinguished Professor of Economics at Kansas State University. He is the author and editor of nineteen books and numerous journal articles on development economics, income distribution, development theory, the economics of conflict, the Japanese economy, and entrepreneurship. His book Inequality in Africa: Political Elites, Proletariat, Peasants, and the Poor (Cambridge University Press) was cited by Choice as an Outstanding Academic Book for 1989–90. Professor Nafziger is also the author of The Debt Crisis in Africa (1993) and the editor (with Frances Stewart and Raimo Vayrynen) of the two-volume War, Hunger, and Displacement: The ¨ Origins of Humanitarian Emergencies (2000). He has held research positions at the United Nations University’s World Institute for Development Economics Research, Helsinki; the University of Cambridge (UK); the International University of Japan; the Institute for Social and Economic Change (Bangalore, India); the University of Nigeria; the Carter Center; the East–West Center, Honolulu; and the Center for Research in Economic Development at the University of Michigan; and received an Indo-American Foundation/National Science Foundation grant for research at Andhra University, India. Professor Nafziger edited the Journal of African Development from 2008 to 2010.
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Economic Development FIFTH EDITION
E. Wayne Nafziger Kansas State University
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University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9780521765480 C Wadsworth Pub. Co. 1984 First edition C Prentice-Hall, Inc. 1990 Second edition C Prentice-Hall, Inc. 1997 Third edition C E. Wayne Nafziger 2006 Fourth edition C E. Wayne Nafziger 2012 Fifth edition
This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published by Wadsworth Pub. Co. 1984 as The Economics of Developing Countries Second edition published by Prentice-Hall, Inc. 1990 Third edition published by Prentice-Hall, Inc. 1997 Fourth edition published by Cambridge University Press 2006 as Economic Development Fifth edition published by Cambridge University Press 2012 Reprinted 2015 Printed in the United States of America by Sheridan Books, Inc. A catalog record for this publication is available from the British Library. Library of Congress Cataloging in Publication data Nafziger, E. Wayne. Economic development / E. Wayne Nafziger. – 5th ed. p. cm. Includes bibliographical references and index. ISBN 978-0-521-76548-0 (hardback) 1. Developing countries – Economic conditions. 2. Income distribution – Developing countries. 3. Economic development. I. Title. HC59.7.N23 2012 330.9172 4–dc22 2011027730 ISBN 978-0-521-76548-0 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party Internet Web sites referred to in this publication and does not guarantee that any content on such Web sites is, or will remain, accurate or appropriate.
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To Elfrieda in memoriam
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Contents
Preface to the Fifth Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Abbreviations and Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii PART ONE. PRINCIPLES AND CONCEPTS OF DEVELOPMENT
1. How the Other Two-Thirds Live . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Nature and Scope of the Text, 1 / Organization of the Text, 3 / How the Poorest Two-Thirds Live, 4 / Globalization, Outsourcing, and Information Technology, 7 / India’s and Asia’s Golden Age of Development, 9 / Which Is the Major Motor of Global Economic Growth: America or Asia?, 10 / Critical Questions in Development Economics, 11 / Guide to Readings, 12 2. What Is Economic Development? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Scope of the Chapter, 14 / Guide to Readings, 47 3. Economic Development in Historical Perspective . . . . . . . . . . . . . . . . . . . . 49 Scope of the Chapter, 49 / An Evolutionary Biological Approach to Development, 49 / Ancient and Medieval Economic Growth, 50 / World Leaders in Gross Domestic Product Per Capita, 1500 to the Present, 51 / Beginnings of Sustained Economic Growth, 52 / The West and Afro–Asia: The Nineteenth Century and Today, 53 / Capitalism and Modern Western Economic Development, 53 / Economic Modernization in the Non-Western World, 57 / The Japanese Development Model, 57 / The Korean–Taiwanese Model, 60 / Lessons from Non-Western Models, 70 / Growth in the Last 100 to 150 Years, 71 / The Power of Exponential Growth – The United States and Canada: The Late Nineteenth and Twentieth Centuries, 73 / The Golden Age of Growth, 75 / Economic Growth in Europe and Japan after World War II, 76 / Recent Economic Growth in Developing Countries, 77 / Regions of the World, 82 / The Convergence Controversy, 84 / Conclusion, 87 / Guide to Readings, 89 4. Characteristics and Institutions of Developing Countries . . . . . . . . . . . . . . 92 Scope of the Chapter, 92 / Varying Income Inequality, 92 / Political Framework, 92 / A Large Proportion of the Labor Force in Agriculture,
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94 / A Large Proportion of Output in Agriculture, 96 / Inadequate Technology and Capital, 99 / Low Saving Rates, 99 / A Dual Economy, 99 / Varying Dependence on International Trade, 100 / Rapid Population Growth, 102 / Low Literacy and School Enrollment Rates, 102 / An Unskilled Labor Force, 103 / Poorly Developed Economic and Political Institutions, 104 / Insufficient State Tax Collections and Provision of Basic Services, 107 / Conclusion, 115 / Guide to Readings, 116 5. Theories of Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Scope of the Chapter, 119 / The Classical Theory of Economic Stagnation, 120 / Marx’s Historical Materialism, 122 / Rostow’s Stages of Economic Growth, 124 / Vicious Circle Theory, 127 / Balanced versus Unbalanced Growth, 128 / Coordination Failure: The O-Ring Theory of Economic Development, 132 / The Lewis–Fei–Ranis Model, 133 / Baran’s Neo-Marxist Thesis, 138 / Dependency Theory, 140 / The Neoclassical Counterrevoluation, 144 / The Neoclassical Growth Theory, 149 / The New (Endogenous) Growth Theory, 151 / A Trial-by-Error Approach: Turning Research into Action, 153 / Conclusion, 153 / Guide to Readings, 157 / Appendix to Chapter 5: The Harrod–Domar Model, 158 PART TWO. POVERTY ALLEVIATION AND INCOME DISTRIBUTION
6. Poverty, Malnutrition, and Income Inequality . . . . . . . . . . . . . . . . . . . . . . 161 Information Sparsity, 161 / Scope of the Chapter, 163 / Poverty as Multidimensional, 163 / $1 or $1.25/Day and $2/Day Poverty, 166 / Regional Poverty, 169 / Concepts and Measures of Poverty: Sen’s Approach, 170 / Reddy and Pogge’s Critique of the World Bank’s Approach, 173 / The Lorenz Curve and Gini Index (G): Measures of the Distribution of Income, 173 / The World Bank, Milanovic, and Their Critics: Views of Poverty and Inequality, 175 / Early and Late Stages of Development, 180 / Low-, Middle-, and High-Income Countries, 182 / Slow and Fast Growers, 185 / Women, Poverty, Inequality, and Male Dominance, 185 / Accompaniments of Absolute Poverty, 188 / Identifying Poverty Groups, 189 / Case Studies of Countries, 190 / Policies to Reduce Poverty and Income Inequality, 195 / Integrated War on Poverty, 201 / Income Equality Versus Growth, 203 / Poverty, Inequality, and War, 205 / Conclusion, 207 / Guide to Readings, 210 7. Rural Poverty and Agricultural Transformation . . . . . . . . . . . . . . . . . . . . . 213 Scope of the Chapter, 213 / Agriculture’s Role in Transforming the Economy, 214 / Major Rural Groups in Poverty, 214 / Rural Poverty by World Region, 215 / Rural and Agricultural Development, 216 / Rural–Urban Differentials in Nineteenth-Century Europe and Contemporary Less-Developed Countries, 217 / Agricultural Productivity in Developed Countries and Less-Developed Countries, 217 / The Evolution of Agriculture in Less-Developed Countries,
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217 / Multinational Corporations and Contract Farming, 220 / Growth of Average Food Production in sub-Saharan Africa, Other Less-Developed Countries, and Developed Countries, 221 / Food in India and China, 225 / Less-Developed Countries’ Food Deficits, 227 / Food Output and Demand Growth, 229 / Fish, Meat, and Grains, 230 / Factors Contributing to Low Income and Poverty in Rural Areas, 231 / Policies to Increase Rural Income and Reduce Poverty, 236 / Agricultural Biotechnology, 253 / Conclusion, 255 / Guide to Readings, 257 PART THREE. FACTORS OF GROWTH
8. Population and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 The Production Function, 259 / Scope of the Chapter, 260 / World Population throughout History, 261 / Population Growth in Developed and Developing Countries, 261 / World Population: Rapid but Decelerating Growth, 262 / The Demographic Transition, 265 / Stage 1: High Fertility and Mortality, 265 / Stage 2: Declining Mortality, 267 / Stage 3: Declining Fertility, 270 / Beyond Stage 4: A Stationary Population, 272 / Is Population Growth an Obstacle to Economic Development? 272 / Population and Food, 273 / Urbanization and Congestion, 279 / Rapid Labor Force Growth and Increasing Unemployment, 279 / The Dependency Ratio, 280 / Strategies for Reducing Fertility, 284 / Birth Control Programs, 284 / Socioeconomic Development, 288 / Development or Family Planning? 291 / Conclusion, 292 / Guide to Readings, 294 9. Employment, Migration, and Urbanization . . . . . . . . . . . . . . . . . . . . . . . . 296 Employment Problems in Less-Developed Countries, 296 / Scope of the Chapter, 297 / Dimensions of Unemployment and Underemployment, 297 / Underutilized Labor, 298 / Labor Force Growth, Urbanization, and Industrial Expansion, 298 / Disguised Unemployment, 301 / Rural–Urban Migration, 303 / The Harris–Todaro Model, 304 / Criticisms of the Harris–Todaro Model, 305 / The Effect of Other Amenities, 306 / Western Approaches to Unemployment, 307 / Causes of Unemployment in Developing Countries, 308 / Unemployment among the Educated, 311 / Policies for Reducing Unemployment, 312 / Conclusion, 318 / Guide to Readings, 320 10. Education, Health, and Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Scope of the Chapter, 321 / Investment in Human Capital, 321 / Economic Returns to Education, 322 / Noneconomic Benefits of Education, 324 / Education as Screening, 324 / Education and Equality, 326 / Education and Political Discontent, 327 / Secondary and Higher Education, 328 / Education via Electronic Media, 330 / Planning for Specialized Education and Training, 331 / Achieving Consistency in Planning Educated People, 333 / Vocational and Technical Skills,
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333 / Reducing the Brain Drain, 334 / Socialization and Motivation, 337 / Mortality and Disability, 340 / AIDS, 341 / Conclusion, 343 / Guide to Readings, 346 11. Capital Formation, Investment Choice, Information Technology, and Technical Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 Scope of the Chapter, 348 / Capital Formation and Technical Progress as Sources of Growth, 349 / Components of the Residual, 351 / Learning by Doing, 352 / Growth as a Process of Increase in Inputs, 353 / The Cost of Technical Knowledge, 354 / Research, Invention, Development, and Innovation, 355 / Computers, Electronics, and Information Technology, 357 / Investment Criteria, 368 / Monopoly, 375 / Saving and Reinvestment, 376 / Factor Price Distortions, 376 / Conclusion, 378 / Guide to Readings, 381 12. Entrepreneurship, Organization, and Innovation . . . . . . . . . . . . . . . . . . . 383 Scope of the Chapter, 384 / Entrepreneur as Innovator, 384 / Schumpeter’s Theory, 384 / The Schumpeterian Entrepreneur in Developing Countries, 385 / Stages in Innovation, 386 / Family as Entrepreneur, 388 / Achievement Motivation, Self-Assessment, and Entrepreneurship, 390 / Theory of Technological Creativity, 390 / Occupational Background, 391 / Religious and Ethnic Origin, 393 / Social Origins and Mobility, 395 / Education, 396 / Gender, 397 / Technological Mobilization and Entrepreneurship in Socialist and Transitional Economies, 398 / Long-Term Property Rights, 399 / Conclusion, 400 / Guide to Readings, 402 13. Is Economic Growth Sustainable? Natural Resources and the Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 Sustainable Development, 404 / Natural and Environmental Resources and Resource Flows, 404 / Crude Oil, 405 / Dutch Disease, 407 / Resource Curse, 409 / Poverty and Environmental Stress, 410 / Grassroots Environmental Action, 411 / Market Imperfections and Policy Failures as Determinants of Environmental Degradation, 412 / Pollution, 417 / Arid and Semiarid Lands, 420 / Tropical Climates, 421 / Global Public Goods: Climate and Biodiversity, 422 / Limits to Growth, 438 / Natural Asset Deterioration and the Measurement of National Income, 442 / Conclusion, 445 / Guide to Readings, 448 PART FOUR. THE MACROECONOMICS AND INTERNATIONAL ECONOMICS OF DEVELOPMENT
14. Monetary, Fiscal, and Incomes Policies and Inflation . . . . . . . . . . . . . . . . . 451 Scope of the Chapter, 452 / Limitations of Monetary Policy, 452 / Tax Ratios and Gross National Product per Capita, 453 / Goals of Tax Policy, 454 / Political Constraints to Tax Policy, 462 / Expenditure Policy,
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463 / Inflation, 465 / Financial Repression and Liberalization, 475 / A Capital Market and Financial System, 478 / Financial Instability, 479 / Islamic Banking, 480 / Conclusion, 481 / Guide to Readings, 484 15. Balance of Payments, Aid, and Foreign Investment . . . . . . . . . . . . . . . . . 486 Globalization and Its Contented and Discontented, 486 / North–South Interdependence, 488 / Capital Inflows, 489 / Massive Capital Inflows to the United States, 527 / Conclusion, 528 / Guide to Readings, 530 16. The External Debt and Financial Crises . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 Scope of the Chapter, 532 / Sovereign Wealth Funds, 533 / Definitions of External Debt and Debt Service, 533 / Origins of Debt Crises, 534 / Capital Flight, 537 / The Crisis from the U.S. Banking Perspective, 540 / Spreads and Risk Premiums, 541 / The Crisis from the Less-Developed Countries’ Perspective, 542 / Debt Indicators, 544 / Net Transfers, 545 / Major Less-Developed Countries’ Debtors, 546 / Financial and Currency Crises, 548 / World Bank and International Monetary Fund Lending and Adjustment Programs, 550 / Fundamentalists versus the Columbia School (Stiglitz-Sachs), 551 / Changing the International Monetary Fund and the International Financial Architecture, 552 / International Monetary Fund Failed Proposals to Reduce Financial Crises, 555 / Debt Cancellation, 555 / Concerted Action, 557 / The International Monetary Fund’s Sovereign Debt Restructuring Mechanism, 558 / Resolving the Debt Crises, 559 / Brady Plan, 560 / The Policy Cartel, 567 / Conclusion, 567 / Guide to Readings, 569 17. International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571 Scope of the Chapter, 571 / Does Trade Cause Growth?, 571 / Arguments for Trade: Comparative Advantage, 572 / Arguments for Tariffs, 576 / Path Dependence of Comparative Advantage, 583 / The Application of Arguments for and against Free Trade to Developed Countries, 583 / Shifts in the Terms of Trade, 587 / Import Substitution and Export Expansion in Industry, 591 / Global Production Sharing and Borderless Economies, 593 / Developed Countries’ Import Policies, 600 / Expanding Primary Export Earnings, 604 / Agricultural Protection, 606 / Trade in Services, 608 / The Mankiw Debate, 609 / Intellectual Property Rights, 610 / Foreign-Exchange Rates, 611 / Domestic Currency Overvaluation, 611 / Avoiding Bias against Exports, 612 / Domestic Currency Devaluation, 613 / The Real Exchange Rate, 613 / Dual Exchange Rates, 615 / Exchange-Rate Adjustment and Other Prices, 615 / The Impossible Trinity: Exchange-Rate Stability, Free Capital Movement, and Monetary Autonomy, 616 / Currency Crises, 617 / Managed Floating Plus, 618 / Regional Integration, 620 / Promotion and Protection of Infant Entrepreneurship, 623 / Black Markets and Illegal Transactions, 625 / Conclusion, 625 / Guide to Readings, 628
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Contents PART FIVE. DEVELOPMENT STRATEGIES
18. The Transition to Liberalization and Economic Reform: Eastern Europe, the Former Soviet Union, and China . . . . . . . . . . . . . . . . . . . . . . 631 The Collapse of State Socialism and Problems with Subsequent Economic Reform in Russia, 635 / Enterprise Monopolies, 641 / The Transition to a Market Economy in China, 650 / Banking Reform, 661 / Lessons for LDCs from the Russian, Polish, and Chinese Transitions to the Market, 663 / Guide to Readings, 666 / Appendix, 666 / State Planning as Ideology for New States, 668 / Afro-Asian Socialism, 668 / Dirigiste Debate, 669 / Scope of the Appendix, 670 / Soviet Planning, 670 / Indian Planning, 671 / The Market versus Detailed Centralized Planning, 673 / Indicative Plans, 677 / Planning Goals and Instruments, 677 / The Duration of Plans, 678 / Planning Models and Their Limitations, 678 / Input–Output Tables and Other Economic Data, 680 / Public Policies toward the Private Sector, 684 / Public Expenditures, 685 / Performance of Private and Public Enterprises, 685 / Conclusion, 693 / Guide to Readings, 696 19. Stabilization, Adjustment, and Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . 698 Internal and External Balance, 698 / The Universality of Adjustment in Developing and Transitional Economies, 700 / The World Bank, 700 / International Monetary Fund, 701 / Critique of the World Bank and International Monetary Fund Adjustment Programs, 702 / A Political Economy of Stabilization and Adjustment, 704 / Empirical Evidence, 706 / The Sequence of Trade, Exchange Rate, and Capital Market Reform, 709 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807
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Preface to the Fifth Edition
I wrote this text to increase readers’ understanding of the economics of the developing world of Asia, Africa, Latin America, and East-Central Europe, where about 85 percent of the world’s population lives. The book is suitable for students who have taken a course in principles of economics. The growth in real income per person in the Third World nations of Latin America, Asia, and Africa, about threefold since 1950, is a mixed record. For some economies, the growth warrants optimism, particularly in Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia, China, other fast-growing Pacific Rim countries, Brazil, and, more recently, India. The tragedy, however, is that sub-Saharan Africa, encountering growing misery and degradation from 1965 to 2010, has not shared in these gains. The sub-Sahara is not only vulnerable to the external price shocks and debt crises that destabilized the global economy in the late twentieth century but also is plagued by increasing food deficits, growing rural poverty, urban congestion, and falling real wages; difficulties that represent an inadequate response to adjustment, reform, and liberalization, often imposed by the International Monetary Fund (IMF) or World Bank as a last resort. The problems of Nepal, Afghanistan, Myanmar (Burma), Cambodia, and Haiti are as severe as those of Africa. This edition expands on previous material analyzing China and other countries that were socialist during most of the post–World War II period. The major upheaval in the field since early 1989 has been the collapse of state socialism in East-Central Europe and the former Soviet Union and economists’ downward revision of estimates of their average economic welfare. Since the late 1980s and early 1990s, postsocialist European countries, like other low- and middle-income countries, have undertaken structural adjustment and market reforms, generally under IMF or World Bank auspices. Yet a substantial proportion of these liberalizing postsocialist economies did not attain their pre-1989 peak in economic welfare by the end of the century. This edition reflects this reality by examples from such countries as Russia, low or lower middle-income Ukraine, and upper middle-income Poland, Hungary, and the Czech Republic and by drawing lessons from their adjustment, stabilization, and liberalization for other middle-income and low-income countries. Yet I have not allowed the problems of East-Central Europe and the former Soviet Union, important as they are, to overshadow the primary emphasis of the book on Asia, Africa, and Latin America. The major focus is on their real-world problems – from those of newly industrializing countries, such as Taiwan, South xiii
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Preface to the Fifth Edition
Korea, Singapore, Malaysia, and Indonesia, to those of the slow-growing subSahara – rather than abstract growth models. I am gratified by the response of reviewers, instructors, students, and practitioners in the United States, Canada, Europe, Japan, Australia, New Zealand, and the developing world to the emphases in the book’s fourth edition. This revision continues previous themes – such as the origins of modern growth, problems measuring growth, and the origin and resolution of the debt crisis – and integrates social, political, and economic issues and emphasizes poverty, inequality, and unemployment in the discussion of economic policies throughout the book. As in the fourth edition, this edition takes advantage of the explosion of Internet resources in development economics. For each chapter, I provide an Internet assignment that instructors can use for students to analyze data or write reaction papers by accessing Nafziger, Internet Assignments, at http://www.kstate.edu/economics/nafwayne/. The same Web site lists development journals and Internet sites. Moreover, a college’s library may provide access to online journals, expanding the options for assignments accessible at the students’ desktops. The text incorporates substantial new material to reflect the rapidly changing field of development economics. I have updated tables, figures, and chapters with the most recent data and have revised chapter-end questions to discuss and guides to readings. Finally, the text, which is more user friendly, includes a bibliography and glossary at the end. The book’s other major features reflect recent literature or readers’ suggestions. Chapter 1, “How the Other Two-Thirds Live,” reminds students of the extent to which only a fraction of the world’s population enjoys the material levels of living of North Americans, Europeans, Japanese, South Koreans, Australians, New Zealanders, and the few affluent in the developing world. Chapter 1 includes sections on globalization, outsourcing, and information technology and Asia’s and India’s recent golden age of development, with its expansion of the middle class, to the comparison of living standards between rich and poor countries. I pose the question: “Which is the major motor of global economic growth: America or Asia?,” with emphasis on highly populated and fast growing China. Chapter 2, on the meaning and measurement of development, examines whether United Nations (UN) Millenium Development Goals for 2015 on “targets for reducing poverty, hunger, disease, illiteracy, environmental degradation, and discrimination against women” are likely to be met. Chapter 3’s historical perspective includes Jared Diamond’s evolutionary biological approach to development, a sketch of economic development in ancient and medieval times, world leaders in gross domestic product (GDP) per capita during the modern period, why growth was largely confined to the West before the twentieth century, non-Western growth models in the last 100 to 150 years, and whether income levels between rich and poor countries (or between rich and poor individuals) are converging or diverging. Included are sections explaining China’s market socialism and the end of Japan’s economic miracle and the inadequacy of the United States as a development model. The same chapter assesses Ha-Joon Chang’s argument that
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rich countries used protection and state intervention in their early industrialization but “kicked away the ladder” for poor countries. The chapter is enriched by material from the late Angus Maddison and others about economic growth since the ancient period, the transfer in GDP per capita world leadership from one nation to another during the modern period, the dates when China surrendered the world’s lead in GDP and when it is projected to gain it back, and identification of the golden age of capitalist development. Chapter 4’s profile analyzes the high proportion of output and the labor force in services in rich countries, the role of institutions in economic development, and the controversy about social capital and growth. In Chapter 5, on development theories, the Murphy–Shleifer–Vishny model helps in understanding the balanced and unbalanced growth discussion and Michael Kremer’s O-ring theory aids in explaining coordination failure. Chapter 6 expands the discussion of weaknesses of poverty and hunger data, points out the multidimensional nature of poverty, provides data for global and regional poverty rates, looks at how poverty and inequality affect war and political violence, and explains the concepts of $1/day and $2/day poverty. The chapter also critiques the contrasting views of the World Bank, Institute for International Economics, and Sala-i-Martin on how to measure poverty and Sanjay Reddy and Thomas Pogge’s critique of the standard approach to estimating poverty. Chapter 7 on rural poverty and agricultural transformation, discusses how agriculture affects overall economic growth; examines off-farm sources of rural income; looks at multinational corporations and contract farming in developing countries; provides time-series data on the growth of average food production in rich and poor countries; provides new data on food deficits and food insecurity in developing countries; and scrutinizes the relative importance of fish, meat, and grains in developing countries. The same chapter reworks the section on how poor agricultural policies and institutional failures hamper sub-Saharan African agriculture and compares India and China’s growth in average food output. Other sections include the Hayami–Ruttan induced-innovation model of agricultural development, the benefits and costs of agricultural biotechnology, and the role of multinational corporations and contract farming in developing countries. Chapters 8 through 13 discuss factors of growth. Chapter 8 on population, includes several new tables and figures and also adds population growth deceleration since 1960 to the emphasis on rapid population growth from 1950 to the present. Chapter 9 updates material on employment and labor-force growth, women in the labor force, and urbanization. Chapter 10 on human capital, expands analyses of how health affects economic development; updates the section on the economic impact of human immunodeficiency virus (HIV)/acquired immunodeficiency syndrome (AIDS), tuberculosis, and malaria on developing countries; and includes a section on mortality and disability, including comparative data on disability-adjusted life years. Chapter 11 on capital formation, investment choice, information technology, and technical progress includes a substantial section on computers, electronics, and
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information technology, with a critical analysis of the productivity paradox stating that computers do not show up in measures of total factor productivity. The section’s microeconomic and macroeconomic data give examples of the impact of information technology and growth and compare the lag between computer innovation and growth with those of previous major innovations. Figures and tables show the decomposition of GDP growth, the growth effects of information and communications technology, and the number of mobile phones, Internet users, and personal computers by country or world region. Chapter 12 on entrepreneurship and organization examines the relationship between long-term property rights and entrepreneurship, the alternative cost of education for entrepreneurs, how liberalization affects returns to entrepreneurship, and the relative income of entrepreneurship and paid employment. Chapter 13 on natural resources analyzes the literature on resource curse and includes discussion of a revised Nordhaus–Boyer model and its implications for global climate change. Chapters 14 through 17 integrate macroeconomics and the international economics of development. Chapter 14 on monetary, fiscal, and incomes policy, has sections on how international and domestic capital markets affect the financial system and how adverse selection, moral hazard, and external shocks contributed to financial crises such as those in Mexico (1994), Asia (1997–9), Russia (1998), Argentina (2001–3), and the world’s 2008–9 great recession. Chapter 15 on balance of payments, aid, and foreign investment, has a section on the perverse capital flow from poor to rich countries, including an explanation of massive capital inflows to the United States. Chapter 16 on external debt and financial crises, has a section on spreads and risk premiums and a detailed analysis of financial and currency crises. These crises relate to sections on World Bank and IMF lending and adjustment programs, the fundamentalists and their critics, reasons for the IMF’s failure to reduce financial crises, the IMF’s sovereign debt restructuring proposal, and new approaches to resolving the debt crises. Chapter 17 on international trade, has sections on path dependence and comparative advantage and arguments for rich-country tariffs based on income distribution, Third World child labor, and the environment. The discussion of global production networks examines how low-income countries with reduced protection moved up the value-added ladder to expand their low-technology exports. Other topics include trade in services, offshore outsourcing, current intellectual property rights’ rules, currency crises, managed floating exchange rates in countries open to international capital flows, the proliferation of free trade areas, and the euro versus the U.S. dollar as reserve currencies for developing economies. Chapter 18 analyzes the collapse of state socialism and the transition to liberalization and economic reform in East-Central Europe and the former Soviet Union and the transition to a market economy in China. Their policies contributing to collapse and transition have parallels in the low- and middle-income countries of Africa, Asia, and Latin America. The last section discusses lessons for developing countries from
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the Russian, Polish, and Chinese transitions. The appendix analyzes state planning and the role of the market. Chapter 19 on stabilization, adjustment, and reform, investigates attaining both internal and external balances, the universality of adjustment in developing and transitional countries, the roles of the World Bank and IMF in balance-of-payments and domestic macroeconomic adjustment, sequencing trade, exchange rate, and capital market reforms. I am indebted to numerous colleagues and students in both the developed and developing world for helping shape my ideas about development economics, including comments and criticisms of John Adams, Edgar S. Bagley, Maurice Ballabon, Thomas W. Bonsor, Antonio Bos, Martin Bronfenbrenner, Robert L. Curry, Jr., Wayne Davis, Lloyd Dumas, David Edmonds, Patrick J. Gormely, Roy Grohs, Margaret Grosh, Ichirou Inukai, Philip G. King, Paul Koch, Bertram Levin, L. Naiken, Elliott Parker, Harvey Paul, James Ragan, James Rhodes, Alan Richards, Gordon Smith, Howard Stein, Shanti Tangri, Roger Trenary, Rodney Wilson, and Mahmood Yousefi; and Scott Parris, Simina Calin, Peggy Rote, and the editorial staff at Cambridge University Press. Fjorentina Angjellari, Gregory Dressman, Jared Dressman, Akram Esanov, Ramesh Mohan, Boaz Nandwa, Abhinav Alakshendra, Mercy Palamuleni, Narayan Chapagain, and Jessica Boulware assisted in graphing, computer work, and critical analysis. Although I am grateful to all, I am solely responsible for any errors. I am also grateful to the following for permission to reproduce copyrighted materials: Elizabeth Asiedu and Mohamed El-Hodiri, for Figure 3-3, material from the World Development Indicators, first published in Nafziger, “African Economic Development: An Overview,” Journal of African Development, Fall 2010, volume 12, no. 2; Boydell and Brewer for materials from Peter D. Little, Somalia: Economy without State, Oxford: James Currey; the Peterson Institute for International Economics; for Figure 1-1 from Surjit S. Bhalla, 2002, Imagine There’s No Country: Poverty, Inequality, and Growth in the Era of Globalization, Washington, D.C., p. 192; Figure 6-8 indicating the share of each region in the world’s middle class from ibid., p. 188; and Figure 17-12 indicating Western Hemisphere trade agreements from Jeffrey A. Frankel, 1997, Regional Trading Blocs in the World System, Washington, D.C., p. 10; the Organisation for Economic Co-operation and Development (OECD), 2010, Development Co-operation Report 2010, Report by Eckhard Deutscher, Chair of the Development Assistance Committee, Paris, for Figure 15-3, indicating gross bilateral official development assistance (ODA), 2007–8 average, p. 101; Figure 15-4, from ibid., p. 130; Figure 15-5, from ibid., p. 175; the IMF for 2003c, World Economic Outlook April 2003, Washington, D.C., p. 97; Vito Tanzi and Howell H. Zee, 2000, Tax Policy for Emerging Markets – Developing Countries, IMF Working Paper 00/35, Washington, D.C. March, at www.imf.org/external/pubs/cat/longres.cfm?sk&sk=3471.0; for Table 14-1 indicating comparative levels of tax revenue, 1985–97, from p. 8, and Table 14-2 indicating comparative composition of tax revenue, 1985–7, from ibid., p. 13, and a quote in Chapter 14 from ibid., pp. 14–15; the opening extract for Chapter 12, from Maurice Dobb, 1926, Capitalist Enterprise and Social Progress, London: George
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Routledge and Sons, p. 3; the U.S. Census Bureau for Table 8-3 from Joginder S. Uppal, in Economic Development in South Asia, St. Martin’s Press; the Population Reference Bureau, Inc., for Figure 8-10, indicating population distribution by age and sex, 2005, Austria, the United States, Bolivia, Botswana, and Nigeria; for Figure 8-5 from Merrick, Thomas W., 1986, “World Population in Transition,” Population Bulletin 41 (April): 9, for Figure 8-11, indicating population age profile and service requirements: Bangladesh, 1975, from McHale, Magda, and John McHale, 1979, “World of Children,” Population Bulletin 33(6) (January):14; the United Nations, for words in Figure 15-1, Table 15-4, and Figure 15-10; the American Economic Association for Figure 3-4 indicating simulation of divergence of per capita 1870–1995, from Pritchett, Lant, H., 1997. “Divergence, Big Time,” Journal of Economic Perspectives 11(3) (Summer):10; Figure 3-5 indicating average annual growth (1980–2000) on initial level of real GDP per capita, from Fischer, Stanley, 2003, “Globalization and Its Challenges,” American Economic Review 93(2) (May):11; Figure 3-6 indicating population-weighted average annual growth (1980– 2000) on initial level of real GDP per capita, from ibid., p. 12; Figure 4-4 indicating real GDP per capita by political regime from Ndulu, Benno J., and O’Connell, Stephen A., 1999, “Governance and Growth in Sub-Saharan Africa,” Journal of Economic Perspective 13(1) (Summer):51; Figure 6-11 from Bourguignon, Francois, and Christian Morrisson, 2002, “Inequality among World Citizens: 1820– 1992,” American Economic Review 92(4) (September):741; Figure 16-2 indicating the effect of the financial crises on Asian, Latino, Russian, and Turkish real GDP growth from Fischer, Stanley, 2003, “Globalization and Its Challenges,” American Economic Review 93(2) (May):16; Figure 18-2 on real GDP percentage change (1989 = 100) from Svejnar, January 2002, “Transition Economies: Performance and Challenges,” Journal of Economic Perspectives 16(1) (Winter):9; and a quote in Chapter 6 on Poverty and Inequality from Pritchett, Lant H., 1997, “Divergence, Big Time,” Journal of Economic Perspectives 11(3) (Summer):8–9; Simon & Schuster for Chapter 12 on “The Function of the Entrepreneur” from Peter Kilby, ed., 1971, Entrepreneurship and Economic Development, New York: Free Press; the International Bank for Reconstruction and Development/The World Bank, for a quotation from World Bank, 1998, Assessing Aid: What Works, What Doesn’t, and Why, New York: Oxford University Press, p. 29, for Chapter 1, p. 1; for Table 2-1 indicating income equality and growth, from Hollis Chenery, Montek S. Ahluwalia, C. L. G. Bell, John H. Duloy, and Richard Jolly, eds., 1974, Redistribution with Growth, London: Oxford University Press, p. 42; for Table 4-2 indicating normal variation in economic development with level of development from Chenery, Hollis, and Moises Syrqin, 1975, Patterns of Development, 1950–1970, New York: Oxford University Press, pp. 20–1; for Figure 4-1 indicating economic development and structural change from World Bank. 1979, World Development Report 1979, Washington, D.C.: World Bank, p. 44; for Figure 4-2 indicating adjusted net savings tend to be small in low- and middle-income countries from World Bank, 2003, World Development Indicators 2003, Washington, D.C.: World Bank, pp. 119, 174–6; for Figure 6-6 indicating that child mortality is substantially higher in
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poor households from World Bank, 2004, World Development Report 2004, New York: Oxford University Press, p. 6, for Figure 6-11 indicating different initial conditions: the impact on poverty reduction from World Bank, 1990d, World Development Report 1990, New York: Oxford University Press, pp. 47–8; for Figure 8-11 indicating dependency ratios on the decline – for a while from World Bank, 2003, World Development Report 2003, New York: Oxford University Press, p. 6; for Figure 10-1 indicating that the poor are less likely to start school, more likely to drop out from World Bank, 2004, World Development Report 2004, New York: Oxford University Press, p. 21; for Table 10-2 indicating public expenditures on elementary and higher education per student, 1976, from World Bank, 1980, World Development Report 1980, New York: Oxford University Press, p. 46; for Table 10-3 indicating public education spending per household from World Bank, 1980, World Development Report 1980, New York: Oxford University Press, p. 50; for Figure 10-2 indicating that richer people often benefit more from public spending on health and education from World Bank, 2004, World Development Report 2004, New York: Oxford University Press, p. 39; for Figure 11A indicating that productivity will contribute more to GDP growth through 2015 than will capital or labor from World Bank, 2004b, Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda, Washington, D.C.: World Bank, p. 44; for Figure 15-6 indicating workers’ remittances and other inflows from World Bank, 2003, Global Development Finance 2003, Washington, D.C.: World Bank, p. 158; for Figure 15-7 indicating top twenty developing-country recipients of workers’ remittances 2001 from World Bank, 2003, Global Development Finance 2003, Washington, D.C.: World Bank, p. 159; for Figure 15-8 indicating exports of U.S. affiliates as a share of total exports from World Bank, 2003b, Global Economic Prospects and the Developing Countries 2003, Washington, D.C.: World Bank, p. 58; for Figure 15-9 indicating share of South-South FDI in total FDI from World Bank, 2003b, Global Economic Prospects and the Developing Countries 2003, Washington, D.C.: World Bank, p. 124; for Figure 16-1 indicating secondary-market spreads on emerging markets, 1990–2002, from World Bank, 2003, Global Development Finance 2003, Washington, D.C.: World Bank, p. 45, for Figure 17-3 indicating developing countries have become important exporters of manufactured products, from World Bank, 2004, Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda, Washington, D.C.: World Bank, p. 65; for Figure 17-4 indicating manufactures account for a growing share of exports in all developing country regions from World Bank, 2004, Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda, Washington, D.C.: World Bank, p. 67; for Figure 17-5 indicating that U.S. cars are produced in many countries from World Bank, 2003b, Global Economic Prospects and the Developing Countries 2003, Washington, D.C.: World Bank; p. 55, for Figure 17-6 indicating that cross-border networks capture increasing shares of production and trade from World Bank, 2003, Global Economic Prospects and the Developing Countries 2003, Washington, D.C.: World Bank, p. 56; for Figure 17-7 indicating an increase of intrafirm exports in total exports from World Bank, 2003, Global Economic Prospects and the Developing Countries 2003,
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Washington, D.C.: World Bank, p. 59; for Figure 17-9 indicating that high protection of sugar and wheat has increased domestic production and reduced net imports from World Bank, 2003, Global Economic Prospects and the Developing Countries 2003, Washington, D.C.: World Bank, p. 128; for Table 17-4 indicating tariffs hurt exports – but less so in the 1990s than in the 1980s from World Bank, 2004, Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda, Washington, D.C.: World Bank, p. 77; for Table 17-3 indicating total producer support of farm prices from World Bank, 2004, Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda. Washington, D.C.: World Bank, p. 121; to Harvard University Press for Figure 6-8 indicating ratio of betweennation to within-nation income inequality for 199 nations, 1820–1992, from Firebaugh, Glenn, 2003, The New Geography of Global Income Inequality. Cambridge, MA; to the American Economic Association for material from Abramovitz, Moses, 1956, “Resources and Output Trends in the United States since 1870,” American Economic Review (AER) 44(2):5–23; Acemoglu, Daron, 2010a, “Institutions, Factor Prices, and Taxation: Virtues of Strong States?" AER 100:115–19; Acemoglu, Daron and Melissa Dell, 2010, “Productivity Differences between and within Countries.” AER: Macroeconomics 2:169–88; Acemoglu, Daron, Simon Johnson, and James A. Robinson, 2001, “The Colonial Origins of Comparative Development: An Empirical Investigation,” AER 91(5):1369–401; Acemoglu, Daron, Simon Johnson, and James Robinson, 2002, “An African Success Story: Botswana,” Centre for Economic Policy Research Discussion Paper 3219. London, Acemoglu, Daron, 2010a, “Institutions, Factor Prices, and Taxation: Virtues of Strong States?” AER 100:115–19; Acemoglu, Daron, 2010b, “Theory, General Equilibrium, and Political Economy in Development Economics,” Journal of Economic Perspectives (JEP) 24:3; Antweiler, Werner, Brian R. Copeland, and M. Scott Taylor 2001, “Is Free Trade Good for the Environment?” AER 91(4):877–908; Arrow, Kenneth and Robert C. Lind, 1970, “Uncertainty and the Evaluation of Public Investment Decisions.” AER 60(3):364– 78; Aturupane, Harsha, Paul Glewwe, and Paul Isenman, 1994, “Poverty, Human Development, and Growth: An Emerging Consensus,” AER 84(2):244–54; Barro, Robert J., N. Gregory Mankiw, and Xavier Sala-i-Martin, 1995, “Capital Mobility in Neoclassical Models of Growth,” AER 85(1):103–15; Baumol, William J., 1986, “Productivity Growth, Convergence, and Welfare: What the Long-Run Data Show,” AER 76(5):1072–85; Bloom, Nicholas, Aprajit Mahajan, David McKenzie, and John Roberts, 2010, “Why Do Firms in Developing Countries Have Low Productivity?” AER 100(2):619–23; Blum, Bernard S., Sebastian Clark, and Ignatius Horstman, 2010, “Facts and Figures on International Trade,” AER 100:410–23; Boissiere, M., J. B. Knight, and R. H. Sabot, 1985, “Earnings, Schooling, Ability, and Cognitive Skills,” AER 75(5):1016–30; Bourguignon, Francois, and Christian Morrisson 2002, “Inequality among World Citizens: 1820–1992,” AER 92(4):727–44; Broda, Christian, and David E. Weinstein, 2004, “Variety Growth and World Welfare,” AER 94(2):139–44; Bruhn, Miriam, Dean Karlan, and Antoinette Schoar, 2010, “What Capital Is Missing in Developing Countries?” AER 100(2):629-33; Caselli, Francesco, 1999, “Technological Revolutions,” AER 89(1):78–102; Chenery, Hollis
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B., and Alan Strout, 1966, “Foreign Assistance and Economic Development,” AER 56(4):679–733; Cobb, Charles, and Paul Dougla, 1928, “A Theory of Production,” AER (supplement) 18(1):139–65; Cole, William E., and Sanders, Richard D., 1985, “Internal Migration and Urban Employment in the Third World,” AER 75(3):481– 94; David, Paul A., 1995, “Clio and the Economics of QWERTY,” AER 75(2):332– 7; De Mel, Suresh, David McKenzie, and Christopher Woodruf, 2010, “Wage Subsidies for Microenterprises,” AER 100 (2):614–18; De Long, J. Bradford, 1988, “Productivity Growth, Convergence, and Welfare: Comment,” AER 78(5):1138–54; Demsetz, Harold, 1967, “Toward a Theory of Property Rights,” AER 57(2):347–59; Domar, Evsey D., 1947, “The Problem of Capital Accumulation,” AER 37(1):34– 55; Eckhaus, R. S., 1955, “The Factor-Proportions Problem in Underdeveloped Areas,” AER 45(4):539–65; Edwards, Sebastian, 2004, “Financial Openness, Sudden Stops, and Current-Account Reversals,” AER 94(2):59–64; Fischer, Stanley, 2003, “Globalization and Its Challenges,” AER 93(2):1–30; Frankel, Jeffrey A., and David Romer, 1999, “Does Trade Cause Growth?” AER 89(3):379–99; Goodfriend, Marvin, and John McDermott, 1995, “Early Development,” AER 85 (March):116–33; Griliches, Zvi, 1994, “Productivity, R&D, and the Data Constraint,” AER 84(1):1– 23; Grubel, Herbert B., and Anthony D. Scott, 1966, “The International Flow of Human Capital,” AER 56(2):268–74; Hansen, Bent, 1969, “Employment and Wages in Rural Egypt,” AER 59(3):298–313; Harris, John R., and Michael P. Todaro, 1970, “Migration, Unemployment, and Development: A Two-sector Analysis,” AER 60(1):126–42; Heathcote, Jonathan, and Fabrizio Perri, 2003, “Why Has the U.S. Economy Become Less Correlated with the Rest of the World,” AER 93(2):63– 9; Javorcik, Beata Smarzynska, 2004, “Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages,” AER 94(3):605–27; Johnston, Bruce F., and John W. Mellor, 1961, “The Role of Agriculture in Economic Development,” AER 51(4):571–81; Jones, Benjamin F. and Benjamin A. Olken, 2010, “Climate Shocks and Exports,” AER 100(2):454–9; Krueger, Anne O., 1974, “The Political Economy of the Rent-seeking Society,” AER 64(3):291–302; Krueger, Anne O., 2003, “Sovereign Debt Restructuring: Messy or Messier?” AER 93(2):70–9; Kuznets, Simon S., 1955a, “Economic Growth and Income Inequality,” AER 45(1):1–28; Lazear, Edward P., 2004, “Balanced Skills and Entrepreneurship,” AER 94(2):2082–111; Leibenstein, Harvey, 1966, “Allocative Efficiency vs. “X-Efficiency’,” AER 56(3):392–415; 1968, “Entrepreneurship and Development,” AER 58(2):72–83; Lucas, Robert E., Jr., 1990, “Why Doesn’t Capital Flow from Rich to Poor Countries?” AER 80(2):92–6; Manne, Alan S., and Richard G. Richels, 1993, “International Trade in Carbon Emission Rights: A Decomposition Procedure,” AER 81(2):135–9; Marcet, Albert, and Juan P. Nicolini, 2003, “Recurrent Hyperinflations and Learning,” AER 93(5):1476–98; Mendelsohn, Robert, William D. Nordhaus, and Daigee Shaw, 1994, “The Impact of Global Warming on Agriculture: A Ricardian Analysis,” AER 84(4):753–71; Morgenstern, Richard D., 1993, “Towards a Comprehensive Approach to Global Climate Change Mitigation,” AER 81(2):140–5; North, Douglass C., 1994. “Economic Performance Through Time,” AER 84(3):359–68; Papanek, Gustav F., 1962, “The Development
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of Entrepreneurship,” AER 52(2):46–58; Persson, Torsten and Guido Tabellini, 1994, “Is Inequality Harmful for Growth,” AER 84(3):600–21; Ranis, Gustav, and John C. H. Fei, 1961, “A Theory of Economic Development,” AER 51(4):533– 65; Reinhart, Carmen M., and Kenneth S. Rogoff, 2004, “Capital-account Liberalization, Debt Financing, and Financial Crises,” AER 94(2):53–8; Rosenzweig, M. R., and T. P. Schultz, 1982, “Market Opportunities, Genetic Endowments and the Intrafamily Allocation of Resources: Child Survival in Rural India,” AER 72(4):803– 15; Schultz, Theodore W., 1961, “Investment in Human Capital,” AER 51(1):1–17; Singer, Hans W., 1950, “The Distribution of Gains between Investing and Borrowing Countries,” AER 40(2):473–85; Srinivasan, T. N., 1994c, “Human Development: A New Paradigm or Reinvention of the Wheel,” AER 84(2):238–43; Stewart, Francis, 1990, “Are Adjustment Policies in Africa Consistent with Long-run Development Needs?” Paper presented to the AEA, Washington, DC, December 30; and Stiglitz, Joseph E., 1989, “Markets, Market Failures, and Development,” AER 79(1):197–210; to the East-West Center for Table 12-1 from Nafziger, Class, Caste, and Entrepreneurship: A Study of Indian Industrialists 1978; to the Economic Record for Table 19-3 from M. L. Parker, “An Interindustry Approach to Planning in Papua New Guinea,” September 1974; to the International Fund for Agricultural Development for Table 7-4 from Idriss Jazairy et al., The State of World Rural Poverty, 1992; to Kluwer Academic Publishers and the authors for a Figure from David Dollar and Aart Kraay, “Growth Is Good for the Poor,” Journal of Economic Growth; and Harry Anthony Patrinos for Table 10-1 from “Returns to Education: A Further Update,” 2002. I have made every effort to trace copyright owners, but in a few cases this was impossible. I apologize to any author or publisher on whose rights I may have unwittingly infringed. The book is dedicated to my late wife, Elfrieda, a Canadian volunteer whom I met in Nigeria in 1965 and with whom I shared forty-two years of concern for Third World development. I also wish to thank my sons, Brian and Kevin, and daughter-in-law, Piadad, for their continuing help.
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Abbreviations and Measures
Abbreviations ASEAN DCs EU FAO FDI G7
G8 G20
GATT GDP GNI GNP HDI HIPCs ILO IMF LDCs LICs LLDCs MDGs MICs MNCs
Association of Southeast Asian Nations Developed (high-income) countries European Union Food and Agriculture Organization of the United Nations Foreign direct investment Group of Seven, meeting of the seven major DCs: the United States, Canada, Japan, the United Kingdom, Germany, France, and Italy (European Union representative also attends) Group of Eight, meeting of G7 plus Russia Group of twenty, which comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union. These countries work with the International Monetary Fund (IMF), World Bank, and chairs of their designated committees. G20 countries represent about 90 percent of global GNP and two-thirds of the world’s population. Source: IMF Survey, 10.26.2010. General Agreements on Tariffs and Trade, the predecessor to the World Trade Organization Gross domestic product Gross national income (same as GNP) Gross national product Human Development Index, UNDP’s measure of development Highly indebted poor countries International Labour Organization International Monetary Fund Less-developed (developing) countries, including LICs and MICs Low-income countries Least-developed countries Millennium Development Goals (United Nations, 2000) Middle-income countries Multinational (transnational) corporations xxiii
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Abbreviations and Measures
NGOs NICs NNP OECD
Nongovernmental (nonprofit) organizations Newly industrializing countries Net national product Organisation for Economic Co-operation and Development, comprising high-income countries (including Republic of Korea) plus Czech Republic, Hungary, Mexico, Poland, Slovak Republic, and Turkey PQLI Physical quality of life index PRI Partido Revolucionario Institucional (Institutional Revolutionary Party), Mexico SARS Severe acute respiratory syndrome SOEs State owned enterprises UNICEF United Nations Children’s Emergency Fund UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Program URL Uniform Resource Locator, the address of documents and other resources on the World Wide Web WTO World Trade Organization, established in 1995, to administer rules of conduct in international trade
Measures 1 hectare = 2.47 acres 1.61 kilometer = 1 mile 2.59 square kilometers = 1 square mile 1 meter = 1.09 yards = 3.3 feet 1 kilogram = 2.2 pounds 2.54 centimeters = 1 inch 28.3 grams = 1 ounce 0.028 cubic meters = 1 cubic feet The World Gross National Product per Capita, 2008
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