INTRODUCTION TO

DEVELOPMENT ECONOMICS
ECO 2117
ABEL BRODEUR
Week 1
 Syllabus

Prerequisite: (ECO 1102 or ECO 1302), (ECO 1104 or ECO 1304).

 Textbook:
• There is no required textbook for this course. Many of the
readings listed below are articles for which the University of
Ottawa has an online subscription. Others will be made
available on reserve

• Two good books which cover many of the concepts we will

discuss (and are thus good resources to consult) are:
1) Understanding Poverty, A. Banerjee, R. Benabou and D.
Mookherjee, Editeurs, Oxford University Press, March 2006.
2) The Great Escape: Health, Wealth, and the Origins of
Inequality, Angus Deaton, Princeton University Press, 2013.
 ECO 2117
Official Course Description:

An overview of our current understanding of the process of

economic development. Students are introduced to key facts
about developing economies. Theoretical arguments and models
that are intended to explain those facts are examined, as well as
empirical evidence regarding the success of specific
development policies. The objective is for students to gain a
better understanding of some of the main challenges faced by
developing countries today. Topics may include poverty,
inequality, education, institutions, financial markets, growth,
gender issues, trade, conflict, environment and natural
resources, and development aid.
 A little bit of democracy…

• You get to choose (almost) all the topics that will be

covered in class

• But I get to choose the evaluation!

1) Policy evaluation 16) Microfinance
2) Cash transfers 17) Natural resources
3) Child labor 18) Psychology of poverty
4) Corruption 19) Sex industry/human traffic
5) Drugs 20) Slavery
6) Education 21) Terrorism
7) Health: HIV and tropical diseases 22) Trafficking of weapons
8) Colonization 23) War and conflict
9) Immigration and remittances 24)
10) International trade 25)
11) Gender issues 26)
12) Global warming/natural disaster 27)
13) Growth models 28)
14) Inequality measurement 29)
15) International aid 30)
 Evaluation
• Midterm exam (October 2nd , 2019) 25 or 35%
• Midterm exam (November 4th, 2019) 25 or 35%
• Final Exam 40%

• Your midterm with the highest mark is worth 35% and the
midterm with the lowest mark is worth 25%.
• There will be no make-up midterm exams:
• In the event that a student miss a midterm, the weight of the
final exam will be increased by 20%. The final exam would
thus be worth 60% and the other midterm 40%.
 FAQs
• About 175 students are enrolled in this course. I
cannot answer all your emails
• Especially since the vast majority of the emails are
asking questions that were previously answered in
class
• Please find a list of FAQs in the syllabus and
Brightspace
• I will not answer emails asking one of the following
questions. Please read carefully the following
questions before sending me an email
Questions?
 Population 2002

Size of countries proportional to population size

 Population 2050

Size of countries proportional to population size

 Wealth 2002

Size of countries proportional to GDP (PPP)

 Maps
https://worldmapper.org/maps/

http://www.dailymail.co.uk/sciencetech/article-
2596783/Why-world-map-youre-looking-
WRONG-Africa-China-Mexico-distorted-despite-
access-accurate-satellite-data.html
 2030 Agenda for Sustainable
Development: 17 Goals
• End poverty in all its forms everywhere
• End hunger, achieve food security and
improved nutrition and promote sustainable
agriculture
• Ensure healthy lives and promote well-being
for all at all ages
• Ensure inclusive and equitable quality
education and promote lifelong learning
opportunities for all
14
 17 Goals
• Achieve gender equality and empower all
women and girls
• Ensure availability and sustainable
management of water and sanitation for all
• Ensure access to affordable, reliable,
sustainable and modern energy for all
• Promote sustained, inclusive and sustainable
economic growth
• Build resilient infrastructure
• Reduce inequality within and among countries
• Make cities and human settlements inclusive,
safe, resilient and sustainable 15
 17 Goals
• Ensure sustainable consumption and
production patterns
• Take urgent action to combat climate change
and its impacts
• Conserve and sustainably use the oceans,
seas and marine resources for sustainable
development
• Protect, restore and promote sustainable
use of terrestrial ecosystem, […]
• Promote peaceful and inclusive societies for
sustainable development
• Strengthen the means of implementation
and revitalize the Global Partnership for 16
Sustainable Development
 GDP
US$ PPP US$ GDP per capita Annual Growth Rate

Billion Billion US$ PPP US$ (%)

2003 2003 2003 2003 1975-2003 1990-2003
Developing Countries 6981.9 21525.4 1414.0 4359.0 2.3 2.9
Least Developed Countries 221.4 895.1 329.0 1328.0 0.7 2.0
Arab World 773.4 1683.6 2611.0 5685.0 0.2 1.0
East Asia and Pacific 2893.6 9762.2 1512.0 5100.0 6.0 5.6
Latin America and Caribbean 1745.9 3947.0 3275.0 7404.0 0.6 1.1
South Asia 902.2 4235.9 617.0 2897.0 2.6 3.5
Sub-Saharan Africa 418.5 1227.4 633.0 1856.0 -0.7 0.1
Central and Eastern Europe 1189.9 3203.5 2949.0 7939.0 0.3
OECD 29650.5 29840.6 25750.0 25915.0 2.0 1.8
OECD Countries High Income 28369.5 27601.9 31020.0 30181.0 2.2 1.9

17
 GDP
US$ PPP US$ GDP per capita Annual Growth Rate

Billion Billion US$ PPP US$ (%)

2003 2003 2003 2003 1975-2003 1990-2003
Developing Countries 6981.9 21525.4 1414.0 4359.0 2.3 2.9
Least Developed Countries 221.4 895.1 329.0 1328.0 0.7 2.0
Arab World 773.4 1683.6 2611.0 5685.0 0.2 1.0
East Asia and Pacific 2893.6 9762.2 1512.0 5100.0 6.0 5.6
Latin America and Caribbean 1745.9 3947.0 3275.0 7404.0 0.6 1.1
South Asia 902.2 4235.9 617.0 2897.0 2.6 3.5
Sub-Saharan Africa 418.5 1227.4 633.0 1856.0 -0.7 0.1
Central and Eastern Europe 1189.9 3203.5 2949.0 7939.0 0.3
OECD 29650.5 29840.6 25750.0 25915.0 2.0 1.8
OECD Countries High Income 28369.5 27601.9 31020.0 30181.0 2.2 1.9

Compound annual growth rate (28 years) = -0.7% compound =

Total growth of 511% Total growth of -18% 18
 Measuring Inequality
• Personal distribution
– Quintiles, deciles
– Lorenz curves
– Gini coefficient

19
 (Personal) income distribution
Income distribution: ranks all persons in a country
from poorest to richest person

Three measures of inequality:

1. Quintiles (5) or deciles (10)
(divide persons in income distribution in 5 or 10 equally sized
groups and compare the joint income of groups)
2. Lorenz curve
(reflects income contribution of each percentile of the population
as a percentage of total income)
3. Gini coefficient
(summarizes the degree of income inequality in one number)

20
Quintiles & deciles

21
Lorenz Curve (1)

22
 Lorenz Curve (2)
100
90
80
70
% of income

60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
% of population

% of total income % of total income with f ull equality

23
Lorenz Curves: which situation is equal/unequal?

24
25
Gini Coefficient

26
 Measuring Inequality
• Gini index:
https://www.cia.gov/library/publications/the-
world-factbook/rankorder/2172rank.html

27
 Long-Term Economic
Development 1950-1975
• Growth of GDP per capita in Sub-saharan
Africa from 1950 to 1975 (2.4% per year on
average). This rate was similar to countries in
South Asia from 1975 to 2003
• Rapid growth in manufacturing 1960-1980
(about 7% per year)
– Mines, textiles, etc.
– But physical investment (roads/railways) was
lagging (e.g. roads in Kenya)

28
 Long-Term Economic
Development 1975-2000

• GDP growth in sub-Saharan Africa was

negative from 1975 to 2000
• Why negative growth?
– Oil price and world recession (1970s)
– Drought during 1970s and early 1980s
– Unpaid debts when growth stopped
– Other factors? Corruption? AIDS/TB/Malaria?

29
 Human Capital
• Education was a priority in Africa following
independence
– Enrollment in primary school in 1960 was 43%,
77% in 1997 and almost universal nowadays
– Quality of education: absent teachers, class size,
etc.
• Decreasing infant mortality
– 149 deaths (per 1,000 births) in 1960 against 101
deaths in 2005
– Not the case for all countries (e.g. Sierra Leone and
civil war)
Jamison DT, Feachem RG, Makgoba MW, et al., editors. Washington (DC): World Bank; 2006.
30
 Long-Term Economic
Development 2000-2015
• GDP growth per capita in Sub-Saharan Africa
from 2000 to 2012 was 3% per year
– Growth in South Africa and Nigeria

• Asia:
– At the end of 1970s, China and India were as
developed as Africa
– Important growth since 1980
– Factors? Dictatorship? Growth of many Asian
countries? Ethnicity (Han 92%)?
31
 Questions?
• Growth in Asia and Africa
– Divergence

• Africa:
– Growth 1950-1975 and since 2000

• Factors :
– Macroeconomics: Aid, climate, international trade,
institutions, sickness, etc.
– Microeconomics: Corruption, education, ethnicity,
microfinance, etc.
32
 Conclusion
• Next Week:

– Program Evaluation

– Angrist, Joshua D., and Jörn-Steffen Pischke.

Mastering’ Metrics: The Path from Cause to Effect.
Princeton University Press, 2014