TEST BANK Economic Development 13/E Michael Todaro
Chapter 1: Introducing Economic
Development: A Global Perspective
Key Concepts
As curious as students who register to take Development Economics may be, their knowledge and
experience of the developing world will vary widely. The first main point of Chapter 1 is to
emphasise how different life in the developing world is. New in the 13th edition is a systematic
description of four stylised strata of living standards from extreme poverty to rich based on Rosling,
Rosling, and Rosling Ronnlund’s book Factfulness. This is followed by a discussion of the World
Bank’s classification of economies by ranges of average national income using gross national
income (GNI) statistics.
The second point is to provide an overview of the nature of development economics as a field. A
defense of development economics as a distinct field, rather than an agglomeration of other
economics subfields, is offered. A major theme of the book, that development economics must
encompass the study of institutional and social, as well as economic, mechanisms for modernising
an economy while eliminating absolute poverty, is introduced.
Sections 1.5 and 1.6 looks deeper into the meaning of development and a view of development that is
multidimensional. Amartya Sen’s “Capabilities” approach is discussed in Section 1.5. In Section 1.6,
data collected in a Gallup World Poll on the relationship between happiness (as measured by Gallup’s
life satisfaction “ladder” question and real per capita income) and other research on happiness/life
satisfaction is discussed. The level of happiness is not only related to level of income but to other
factors such as democratic freedoms and the quality of social relationships. The role of normative
values in development economics—a subject dealing with human misery and human potential, with
equity as well as efficiency, with cultural change that causes losses as well as gains, and with transfer
as well as creation of wealth—is also stressed.
The conclusion is that development is both a physical reality and a state of mind. The meaning and
objectives of development include the provision of basic needs, reducing inequality, raising living
standards through appropriate economic growth, improving self-esteem in relation to the developed
countries, and expanding freedom of choice in the market and beyond.
Section 1.7 presents an in depth examination of the UN’s Sustainable Development Goals (SDGs).
This includes a more comprehensive list of the goals themselves (appearing in Table 1.1) and a
discussion of the shortcomings of the SDGs. In Section 1.8, the plan of the book is introduced
through 32 critical questions of development economics. Depending on the amount of material
covered by the instructor, students should be able to intelligently address most of these questions by
the end of the course. Finally, a comparative case study of Pakistan and Bangladesh is presented.
, Todaro and Smith, Economic Development, 13e, Instructor’s Manual
Lecture Suggestions
It might be best to begin with a discussion of the immense scale of transformation in the world
economy. The late Hans Rosling’s video “200 countries, 200 years, 4 minutes” (readily available on
YouTube) can be used to confirm this point in an entertaining way. It might also be helpful to
highlight that real gross world product per capita has almost tripled between 1960 and 2018
(implying growth per year of 1.85%) and is 33% higher than it was at the turn of this century
(implying annual growth of 1.56% from 2000 to 2018). This data can be found on the Saint Louis
Federal Reserve’s website in the Federal Reserve Economic Database (or FRED).
Despite such advances, tremendous disparities continue to exist. In terms of easily accessible
statistics the PEW Research Centre’s “World Population by Income” provides an interactive map
showing the share of economies’ population who are economically poor, low income, middle
income, upper middle income, and high income. While regrettably the data provided is for 2011, it
echoes what Todaro and Smith point out in the text, that more than 75% of the world’s population
live on $15 or less a day (or about $5,500 per person per year). Several excellent books attempt to
give some idea of the range of living standards found throughout the world. For example, The
Material World by Peter Menzell. This book presents photographic profiles of typical families
around the world with all of their possessions placed in front of their homes. As one goes from one
family to the next the instructor has the opportunity to highlight the important differences between
nations and regions and to touch on key issues of growth and development.
One of the key strengths of this chapter is that it does not focus solely on the hard numbers that
supposedly measure development. The discussion of Sen’s Capabilities approach and the far less
than perfect relationship between income and happiness are well worth spending a fair amount of
class time exploring. Class time should also be spent discussing the 32 critical questions listed on
pages 21–23 of the text and then asking students to identify 3 or 4 questions that they are
particularly interested in exploring. Asking each student to list what they consider to be “critically”
critical questions on a sheet of paper, collecting their responses, and then trying to direct the rest of
the term to addressing the most commonly mentioned critical questions for that class will be helpful
in further drawing students in and holding their attention throughout the term.
At this same point, the instructor might also wish to get some idea of students’ experiences
traveling to developing countries and, in as subtle a way as is possible, determine how shaky their
understanding of the wider world is. The instructor perhaps could draw on his or her own
experiences and give some background as to how he or she first became interested in Development
Economics. This may – through the kinds of questions asked – help the instructor further gauge
students’ level of sophistication in this area. This is not something that should be or, can, be settled
in the first one or two classes and will develop over the course of the term.
In many universities, the economic development course will be filled with students who are not
majoring in economics. These students may come from different colleges with majors such as
anthropology, sociology, or political science or business (management, finance, etc.). They may
have had as little as one semester of introductory economics. Given that you are teaching an
economics class, you may wish to remind the students of this fact and offer whatever help you can.
Given video capture software, you might consider recording some primers that then could be made
available to students through course management software such as Blackboard or Moodle. You
, Todaro and Smith, Economic Development, 13e, Instructor’s Manual
certainly should use the first class or two to set the stage for the approach you will take, whether it
will be more interdisciplinary, more economic, more mathematical and quantitative, more
historical, or some combination.
Emphasise that development economics is an exciting subject to study and teach because it does
not focus just on one country, but on all less-developed countries. Further emphasise that you will
try to teach key concepts and ideas which can be applied to the experiences of many developing
countries. These concepts and ideas are important for understanding where the developing
countries are today, as well as what their options are for the future. You might also wish to
emphasise that there arguably is no other area of economics that is more relevant to the majority
of the world’s people.
As already mentioned, the 32 critical questions can be used to motivate student interest in the
subject as well as present an overview of what the class is all about. It can be emphasised that there
is no one answer to the general question of why some countries are more developed than others.
There are as many different opinions on what a less-developed country should do to become more
developed. A good approach is to present differing viewpoints throughout the course and let the
students make up their minds on their own.
Discussion Topics
Encouraging class participation is a good way to motivate the students and make them feel involved
in the learning process. The first few weeks of class in particular are conducive to this sort of
exercise. Two ideas for discussions at this stage are:
What is the meaning of economic development? Why do we not see a stronger relationship
between income and happiness, especially once income has risen above $20,000 a year per person?
Is it possible for the whole world to be developed? This can be an interesting question to ask at the
beginning of the course, once environment and development have been covered (Chapter 10), and
then again at the end of the course.
Sample Questions
Short Answer
1. Provide a definition of development economics. Justify your choice carefully.
Answer: See Section 4 (pages 8–10) for some ideas about how the students might answer this
question. They should in some way say that development economics is more than
just growth in GDP.
2. In defining development to include more than just the growth of per capita income, there is an
implicit assumption that the growth of per capita income alone is not sufficient to guarantee
the reduction of poverty and the growth of self-esteem. Is it possible that there could be growth
of per capita income without the achievement of these other objectives?
, Todaro and Smith, Economic Development, 13e, Instructor’s Manual
Answer: Per capita income can show growth even when that growth does not touch vast
portions of the population. This point is clearly made in Chapter 5 and is suggested in
the comparative case study of Pakistan and Bangladesh. The growth may be centered
in one area or sector of the economy, for example. Also, most developed countries
have, at some time in their histories, introduced policies emphasising equality.
3. In what way is development economics greater in scope than traditional economics?
Answer: Development economics must encompass the study of institutional, political, and
social as well as economic mechanisms for modernising an economy while
eliminating absolute poverty and transforming states of mind as well as physical
conditions. More details found in the chapter.
4. Make a case that development economics might be merely a combination of all the other
subfields of economics, only applied to low-income countries.
Answer: See Question 3 above.
5. What do you think are the most serious obstacles to further progress in the developing world?
Answer: The main point here is to ensure that students are thinking carefully about the issues
raised in the text. You may also wish to draw from the critical questions on pages
21–23.
6. In reviewing discussions of life in developing countries, what is it about lifestyles in the low-
income countries compared with lifestyles in the high-income countries that most strikes you?
Why?
Answer: This is an open-ended question to stimulate reflection.
7. Do you think it is in the material interests of high-income countries to help low-income
countries improve their economic performance? Why or why not?
Answer: Answers might touch on increasing the market for products in which high-income
countries have a comparative advantage, reducing the dangers of regional war and
terrorism, reducing international transmission of disease, and curbing international
migration.
8. How is happiness related to development?
Answer: Answers should make reference to the correlation between happiness and income
level as well as touch on the connection between happiness and social relationships,
personal and democratic freedoms, religious beliefs, and health, among other factors
listed on page 12. Further, answers should include a discussion on happiness as
being a part of Amartya Sen’s concept of functionings.
9. Compare and contrast the UN’s Millennium Development Goals (MDGs) 2000–2015 with the
Sustainable Development Goals (SDGs) put forward in 2015? What do you consider to be the
most important of either set of goals and why?
Answer: The answer should stress that both sets of goals cover a broad range of objectives
both economic and social. These were put forward so that developing countries
would have numerical targets against which their progress could be judged and,
where warranted, appropriate assistance offered.
