Chapter 1

Q.1. Economics is critical since development in any country is based upon various economic factors. Many problems associated with development, emanate from lack of money. Economics is all about money hence making the two inter-related. Development problems include not having sufficient money which leads to high unemployment rates and poverty. Such issues are critical in the study of economics.

Q.3. There are several things that I hope to gain from development economics. They include, gaining knowledge of various economic institutions, and the way that they shape problems of under-development. I also aim to finding mechanisms that would help reduce the gap between the poor and the rich. Understanding sources of international and national economic growth will also be helpful since they play a critical role in economic development.

Q.6.  It is inadequate since economic definition of development entails the growth of GDP or GNI. Economic development on its part is concerned with the overall improvement of living standards. Using a strictly economic perspective would mean that some immeasurable aspects such as quality of education, health conditions and security among others will not be considered (Nafziger, 2012).

Economic development is a qualitative and quantitative progress in an economy which results to transition from agriculture to industry based economy, improvements in living standards and adoption of new technologies.

An example is a situation where the gap between the rich and the poor it too large. The rich have the ability of producing goods to be sold for exports which will improve a country’s GDP hence result to economic development. There is still under-development in the country since the living standards of the poor do not change in any way.

Chapter 2

Q.1. Less-developed countries usually have common problems that include poor governance, inadequate education and high illiteracy levels, poverty, low life expectancy, high population, reliance on aids and donations, gender inequality, poor health conditions and rampant corruption among others.

Q.5.  Yes, there is a direct relationship among the three elements. A healthy individual increases his or her labour productivity, which in the long-run increases the income levels.

Q.6. This means that the relations developing countries have with rich countries are not mutually beneficial nor based on equality grounds.

A good example is that developing nations have various natural resources, but do not have the ability to exploit them. As a result, they depend on the rich countries for loans and grants in order to execute such processes. The aspect of dominance comes in where these developing countries derive the raw materials e.g copper, and sell it at low prices to the rich countries. The rich countries later process the copper into circuit diagrams, wiring cables etc and sell it at exorbitant prices to the very same developing countries. Vulnerability comes in, where the developing countries must agree to the trading policies that have been established or stand to lose various grants, loans and aids (Nafziger, 2012).

Chapter 3

Q.4. It is an economic theory that emphasizes the beneficial role of open economies, free markets and privatisation of wasteful and inefficient public enterprises.

The principle arguments are that under-development emanates from excessive state intervention, and poor resource allocation resulting from incorrect pricing policies. The arguments might be valid to some extent since excessive government intervention tends to discourage direct foreign investment. Initiating an essence of free markets also tends to mitigate corruption prospects of various government officials.

Q.5.  No. There cannot be a single unified theory of development because there is no existence of universally accepted paradigm or doctrine. The only thing that is possible is having evolving patterns of understanding and insights, which provide the basis of enhancing economic development together (Todaro & Smith, 2011).

Q.6. These theories are not no necessarily incompatible. Using the appropriate framework might help them work together. Governments in developing countries should be allowed minimal intervention in the market where it is extremely necessary. This is because markets in various developing countries are imperfect, and the government should create favourable environment by participating selectively in areas where the market is inefficient. This way, there will be compatibility between neoclassical, free market and dependence theory.

References

Nafziger, E. W., 2012, Economic development . Cambridge University Press, Cambridge.

Todaro M. & Smith S., 2011, Economic Development, 11^th Ed.,

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