TT. W. Schultz, 1979 Nobel Lecture Virginia Tech.pptVIP

If development is good…… Why is there also pain with development? Some industries shrink while others grow Urban areas grow creating new challenges Cultural disruptions Environmental challenges can increase, at least in short run Is average per capita income a good measure of development? Why or why not? Level of living and income highly correlated, but distributional element missing Fails to capture changes in natural resource stock Omits certain goods and services Differences in cost of living Per Capita Income by Country Income distribution within countries In general, income is more unequally distributed in developing countries than in developed countries Income distribution tends to become more unequal as development proceeds up to $8000 GDP/capita, and then more equal Conclusion: distribution may affect ability of country to move from middle income to upper income country Why is the labor force in developing countries heavily in agriculture? People have to eat and if productivity low, must farm to feed themselves Provides employment Why does economic development require expansion of the non-agricultural sector? Capacity of agriculture to continue to employ everyone is limited People want to consume more than food and fiber as income grows Why is agricultural development particularly important to LDC’s? Provide food Free up resources such as labor Generate capital Create market demand Improve rural welfare Trade issues Why countries trade and why trade might be helpful to developing and developed countries Interrelationships among poverty, population, environment, and trade How macroeconomic and trade policies are interrelated Trade issues continued How developed country policies help or hurt developing countries (and vice versa) Effects of global trade agreements on agriculture in developing and developed countries Why capital movements have become as important as trade in goods and services Summary Still a great deal of poverty and hunger Hunge