Economic Development California State University, 经济发展加利福尼亚州立大学.pptVIP

Swaminathan S. Anklesaria Aiyar estimates that if economic reforms had taken place 10 years earlier, 14.5 million infant deaths could have been avoided In addition there would have bee 261 million fewer illiterates, and 109 million fewer poor people. Growth vs Development Growth rate of GDP may rise without development Discovery of oil or other natural resources Development measured by increases in literacy, health care etc. Most of the time they are correlated but not always Example Ghana How much difference does it make? For Ghana in 2009 GDP in official exchange rate was 14.76 billion dollars GDP in PPP was 36.58 billion dollars Growth Calculations Growth rate for a year is calculated by (GDPt+1 –GDPt )/GDPt Growth rate over N years is calculated by GDPt+N=GDPt(1+g)N Examples Nominal GDP for Ghana was 16.7 billion dollars in 2008 and 14.9 billion in 2007. What was the rate of growth? (16.7-14.9) /14.9 = .12 or 12% Do you think these numbers are using exchange rates or PPP? Real GDP growth in Ghana was 7.3%, what was happening to prices? Prices were Rising Examples If the GDP of Ghana is 16.7 billion dollars in 2008 and growth rate of GDP is 5% for 10 years, how much will GDP be in 2018? GDP 2018=16.7(1+.05)10=27.2 CPI is calculated by finding how the cost of purchasing a fixed basket of goods changes over time Problems to be aware of include Substitution bias (If relative prices change the composition of the basket shifts) Quality changes How do we compare GDP between different countries with different currencies? Exchange rates How much one currency trades for another Determined by the supply and demand for currency which depends on traded goods only Fluctuate daily Many goods, like Big Macs are not traded between countries. Services like haircuts, rents etc, These tend to be much cheaper in poor countries than developed countries Purchasing Power Parity If exchange rates are used to compare the size if these countries to developed c