ECO2117 Assignment 1
1. In defining development to include more than just growth of per capita income, there is an implicit assumption that such growth alone is not sufficient to guarantee the reduction of poverty and the growth of self-esteem. Is it possible for per capita income to grow without achieving these other objectives?
Per capita GDP is the most commonly used indicator of economic growth; however, it does not measure inequality or other measures of well being such as self-esteem. Hence, it is possible for per capita income to grow without reducing extreme poverty (measured by number of people living under 1 US dollar a day in developing countries) even if income inequality, measured by Gini coefficient, remains high. This is relevant as growth in GDP can result from growth of income from the top percentile – it would translate to growth in per capita for the entire population even if there were highly unequal distribution of income. For example, in Brazil, the top 10% made 43.0% of income shares in 2007, whereas the lowest 20% received only 3.0%.
Real GDP growth does not necessarily lead to growth in self-esteem. Recognizing the limitations of real GDP as an indicator of human development (linked to self-esteem), the UN Human Development Index measures a weighted average of the levels of literacy and health as well as income per capita. Again growth in income could occur without the same level of increase in education and health outcomes. This is evident in the differences in rankings of countries by real GDP per capita and by UN Human Development Index. For instance, China ranks as number 1 on projected GDP ranking (2016) by the International Monetary Fund (IMF), but ranks #90 on the HDI (2015), whereas Norway ranks number 1 on the HDI, but ranks #30 on the projected GDP ranking.
2. What are the most important characteristics that have shaped Brazil’s economic and social progress during the last three decades?
According to the case study Progress in the Struggle for More Meaningful Development: Brazil, Brazil has experienced some economic growth without an equal growth in social development. Despite huge inequities, Brazil has made economic and social progress, and the most important characteristics that have shaped Brazil’s economic and social progress during the last three decades are:
Since the end of the colonial era in the late 19th century, Brazil experienced two long periods of dictatorship from 1930-45 and 1964-85, ending in 1989 when Brazil became a democracy again; political...