1
CHAPTER 1
CHAPTER OUTLINE
I. The textbook opens with three vignettes: one of Rachmina Abdullah, a young
Malaysian woman; another of Getachew, a young Ethiopian man; and one of
Viktor and Yulia from Ukraine. These three contrasting stories re ect the
profound economic and social changes under way in developing countries,
affecting billions of poor people throughout the world. Starting from these
personalized examples, the textbook aims to help students understand the
economic forces underlying the historic changes in the world economy and
how economic policies in uence the changes for better or worse. This section
concludes by introducing the concept of globalization and broadly describing
its effect on developing countries.
II. The  rst step is to introduce terminology distinguishing different stages of
development. Some basic terms include developing versus developed coun-
tries; less- developed countries (LDCs); low- income, lower- middle- income,
upper- middle- income, and high- income countries; industrial or post- industrial/
service sector countries; transitional (postsocialist) economies; newly indus-
trializing countries; third world; and North versus South.
III. Economic development is not synonymous with economic growth. Beyond
rising income per capita, development also entails basic structural changes
and wide participation of the people of each country. A key ingredient in what
Simon Kuznets called the epoch of modern economic growth is the applica-
tion of science to achieve increased production.
IV. The label developing country covers a diverse group of economies spanning
a wide continuum of conditions. Income per capita remains the most useful
single indicator of development, although it is far from ideal. One limitation
Patterns of Development
2 | Chapter 1
is that international comparisons require the conversion of national statistics
into common currency units, usually U.S. dollars. A more accurate method
uses purchasing power parity (PPP) calculations. This method shows that
income differences between rich and poor countries are less acute than one
nds in statistics based on exchange rates. Other than income, an alternative
comparison method is to use physical mea sures of structural change. Exam-
ples in the text include energy consumption, rural population, life expectancy,
and female adult literacy.
V. Different historical experiences imply different trajectories for Asia, Latin
America, and Africa. Countries with the greatest potential for modern eco–
nomic growth share the following common features: an emphasis on educa-
tion, highly developed institutions, common culture, self– government, and
favorable geography.
VI. The textbook views development as a complex pro cess that can best be under-
stood by combining economic theory, empirical analysis, and consideration
of the institutional context. The authors view economic development  rst and
foremost as a pro cess involving people. Other themes include the role of gov–
ernment, the mobilization and allocation of capital, the role of international
trade, and sectoral development. These themes compose the outline for the
book.
Boxed Examples
There are no boxed examples in this chapter.
In the New Edition
All the statistics in the seventh edition have been updated generally from 2003
(sixth edition) to 2010 (from World Development Indicators Online 2010). The
updated vignettes in the opening chapter include a woman from an upper– middle-
income country (Malaysia), a man from a less- successful, developing country
(Ethiopia), and a couple from a transitional economy (Ukraine). The concept of
globalization is introduced immediately following the narratives. Next, diversity
in development achievements is elaborated upon from the previous edition. Each
chapter concludes with a summary of key points put forth within it.
Class Notes
Chapter 1 provides an essential overview of the concept of development. Instruc-
tors may use this chapter according to their own style. Some may wish to cover
the chapter broadly, stopping at the main concepts such as the difference between
growth and development. Others may wish to move slowly through the chapter
Patterns of Development | 3
the  rst week of classes, elucidating the  ner points and reviewing elementary
economics. (Point out to students that their website has an introductory chapter
that reviews the basic principles of economics.) Finally, others may wish to pro-
ceed directly to Chapter 2, assigning Chapter 1 for outside reading.
It is important to call attention to a few fundamental points about economic
development.
• Economic development is broader than economic growth in that it entails
fundamental structural changes and broad- based participation. Using two
countries such as Sri Lanka and Brazil reinforces this point. First, contrast
their GNP per capita and then slowly unveil other indicators (e.g., in e qual ity) to
illustrate how development also encompasses indicators other than just GNP.
• Doubling time is only mentioned in passing in the text. This is a powerful
concept that can help students to better understand the meaning of growth
rates. For more technically gifted students, the derivation can be fully shown.
• LDCs form a diverse group in virtually every respect. Provide a selection of
statistical examples to support the point. Even so, there are regularities to the
development pro cess, including general patterns of structural change and
socioeconomic progress.
To generate discussion, invite students to think about and verbalize how day–
to– day living conditions for various types of house holds and workers differ
between rich and poor countries. Amenities and aspirations that students take for
granted are unavailable to most citizens in developing countries. Also encourage
students to look carefully at data tables in the text and ponder the meaning of the
numbers. Gaining an awareness of the empirical record is part of the course.
Finally, point out that LDCs make up most of the world’s population. The eco-
nomics of development is not a sideshow in the study of the human condition but
a central, dramatic theme. On this score, be aware that many students have weak
geography backgrounds. To check their knowledge of the world, ask what they
know about Malaysia. Then insist on the importance of looking up basic facts
about countries discussed in the text or in class. It is very helpful to introduce
students right away to the data set provided by the World Bank in its annual World
Development Report. An equally valuable data source is the annual Human
Development Report from the Development Programme.
QUESTION BANK
Concept Map
Malaysia
Ethiopia
Ukraine
Development and Globalization
4 | Chapter 1
Rich and Poor Countries
Growth and Development
Diversity in Development Achievements
Approaches to Development
The Study of Development Economics
Multiple- Choice Questions
1. While working in the Japa nese electronics factory in Penang, Rachmina
Abdullah:
a. saved money to provide herself with a better future.
b. became a wealthy urbanite who sought after the better amenities of life.
c. decided to permanently settle in Japan and become a citizen of that
country.
d. grew accustomed to spending most of her wages on cosmetics and luxury
items.
2. Which of the following empirical statements about low– income countries is
NOT a valid generalization about changes since 1990?
a. Infant mortality rates have fallen substantially.
b. Rapid population growth has more than offset GNP growth.
c. Manufacturing has increased as a share of total output.
d. Primary school enrollment rates have risen sharply.
3. has experienced unpre ce dented rates of economic growth,
which has dramatically changed the lives of its population.
a. Paraguay
b. Malaysia
c. Mongolia
d. North Korea
4. The primary economic activities for three– quarters of Ethiopians are:
a. tending livestock and building computer chips.
b. growing crops and tending livestock.
c. telemarketing and trade.
d. none of the above.
5. Which indicator is inversely related (meaning that it falls as per capita income
rises) to per capita income?
a. adult illiteracy rate
b. infant mortality rate
c. share of the population living in rural areas
d. all of the above
6. Viktor and Yulia’s country comes from which of the following groups
ofcountries?
a. South
b. sub– Saharan Africa
c. transitional
d. third world
7. Which of the following statements is true about globalization?
a. It is a term used by different people to mean different things.
b. It covers more than just economics.
c. It is not a new phenomenon.
d. All of the above.
8. Among the nations of the developing world, new technologies have primarily
been responsible for:
a. eliminating the need for travel.
b. an obesity epidemic among children under 18.
c. increased electrical and energy problems.
d. creating jobs.
9. All of the following reasons have contributed to the enhancement of economic
development among the developing nations of the world EXCEPT for:
a. the information revolution.
b. the globalization of culture.
c. lower transport costs.
d. the spread of democracy.
10. The poorest nations in the world, representing 12 percent of humanity, are
primarily located in:
a. Southeast Asia.
b. Eastern Eu rope.
c. sub- Saharan Africa.
d. Latin America.
11. By the World Bank’s classi cation system, Malaysia, Iran, and Brazil are:
a. low- income countries.
b. upper– middle- income countries.
c. industrial economies.
d. backward economies.
12. According to Simon Kuznets, the key characteristic of the epoch of modern
economic growth is:
a. expansion of heavy industry.
b. a rapid decline in population growth rates.
c. high rates of saving and investment.
d. the application of science to problems of economic production.
13. For a country where income per capita is growing by 2 percent per year, how
many years will it take for average incomes to double?
a. 35 years
b. 96 years
c. 14 years
d. 180 years
14. What method in the 1970s failed to gain popularity as a key to development?
a. income redistribution
b. labor– intensive techniques
c. providing basic human needs to the poor
d. decreased sales tax
15. If a country achieves a rapid increase in per capita income by discovering
new oil reserves, it is experiencing:
a. growth but not development.
b. development but not growth.
c. both growth and development.
d. neither growth nor development.
IDs and Paired- Concept Questions
These terms can be used individually as short– answer identi cation questions, or
they can be used in pairs. In the latter case, ask students to explain (1) the mean-
ing and signi cance of each of the two terms and (2) the relationship between
them.
2. Modern economic growth, modernization
4. North, South
6. GDP, per capita income
8. Import substitution, export promotion
10. Institutions, economic development