POLI 362 DEVELOPMENT ADMINISTRATION

Transcription

1 POLI 362 DEVELOPMENT ADMINISTRATION Session 1 Understanding Development I Lecturer: Prof. Emmanuel Debrah, Dept. of Political Science. Contact Information: edebrah@ug.edu.gh College of Education School of Continuing and Distance Education 2016/2017

2 Session Overview It has always been difficult to provide a simple definition for development administration. But to help you know what is development administration, I will explain the term development. I will bring out the different scholarly economic perspectives on the meaning of development. Slide 2

3 Session Outline The key topics to be covered in this session are: Topic One: Growth Argument Topic Two : Stages Approach Topic Three: Structural Approach Slide 3

4 Reading List Read Todaro, M. P. & Smith S. C. (2011). Economic Development: New York: Prentice Hall. Chapter One. Slide 4

5 Topic One GROWTH ARGUMENT Slide 5

6 Economic Perspective of Development The capacity of a nation s economy that had stagnated for a long time to sustain an annual increase in its Gross National Product (GNP) or Gross Domestic Product (GDP) at rates of between 5% and 7% or more. GNP is the total value of all final goods and services produced annually in a country, plus income earned by its citizens (locally and abroad), minus the income of non-residents located in that country. Slide 6

7 The Growth Approach Basically, GNP measures the value of goods and services that the country's citizens produce regardless of their location. GNP is one measure of economic condition of a country. It is used because of the assumption that a higher GNP leads to a higher quality of living. Slide 7

8 The Growth Approach (cont d) On the other hand, GDP is the total monetary value of all goods and services (those that are bought by the final user) produced in a country in a given period of time (say a quarter or a year) (IMF, 2012). GDP counts or measures all output generated within the borders of a country. GDP comprises goods and services produced for sale in the market, including some nonmarket production such as defense or education services provided by the government. Slide 8

9 Topic Two STAGES APPROACH Slide 9

10 The Stages Approach Walt. W. Rostow explains that development occurs in 5 stages First stage: Traditional society. It is an agricultural economy, mainly subsistence farming characterized by Little trade, limited size of capital stock, low labour productivity and little surplus output left to sell in domestic and overseas markets) Slide 10

11 The Stages Approach (cont d) Second Stage: Pre-conditions for take-off Agriculture becomes more mechanized and more output is traded. Savings and investment grow although they are still a small percentage of national income (GDP). External funding is required (overseas aid, remittance incomes from migrant workers living overseas). Slide 11

12 The Stages Approach (cont d) Third stage: Take-off Manufacturing industry assumes greater importance, albeit small. Political and social institutions start to develop. External finance may still be required. Savings and investment grow, perhaps to 15% of GDP Slide 12

13 The Stages Approach (cont d) Agriculture assumes lesser importance in relative terms although the majority of people may remain employed in the farming sector. There is often a dual economy (rising productivity and wealth in manufacturing and other industries contrasted as well as real incomes in rural agriculture Slide 13

14 The Stages Approach (cont d) Fourth Stage: Drive to Maturity Industry becomes more diverse. Growth spreads to different parts of the country as the state of technology improves The economy moves from being dependent on factor inputs for growth towards making better use of innovation to bring about increases in real per capita incomes Slide 14

15 The Stages Approach (cont d) Fifth Stage: Age of mass consumption Output levels grow, enabling increased consumer expenditure There is a shift towards tertiary sector activity The growth is sustained by the expansion of a middle class of consumers. Slide 15

16 Structural Approach It argues that Stages 2 and 3 of Rostow s model call for increased savings and investment However, households may not have the funds to save; Also, the banking channel between savers and firms may be inadequate The productivity of individual investment projects may depend upon complementary investment in infrastructure Slide 16

17 Structural Approach (cont d) Many countries including Ghana have received significant external finance but have been slow to generate growth. Many countries in Africa are stacked in Stages 1 or 2. The external funds have come in the shape of loans from developed countries with high interest charges thereby acting as a drag on economic growth. Slide 17

18 References Todaro, M. P. & Smith S. C. (2011). Economic Development: New York: Prentice Hall. Willis, K. (2011).Theories and Practices of Development. London: Routledge. Slide 18