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Developing Countries

Developing countries

A developing country is a country with a low income average, a relatively undeveloped infrastructure and a polopment index]] when compared to the global norm. The term has tended to edge out earlier ones, including the Cold War-defined "Third World". Development entails developing a modern infrastructure (both physical and institutional), and a move away from low value added sectors such as agriculture and natural resource extraction. Developed countries usually have economic systems based on continuous, self-sustaining economic growth. The application of the term 'developing country' to all of the world's least developed countries could be considered innappropriate in the cases of a number of poor countries, due to the fact that they are not improving their economic situation as the term implies, but have experienced prolonged periods of economic decline.

Measure of development

The term "developing country" often refers mainly to countries with low levels of economic development, but this is usually closely associated with social development, in terms of education, healthcare, life expectancy, etc. The development of a country is measured with statistical indexes such as income per capita (GDP), the rate of illiteracy, and access to water. The UN puts forth a compound indicator using these lists of statistics, to create, a "human development index" which gives a sense of how developed countries are. Developing countries are in general countries which have not achieved a significant degree of industrialization relative to their populations, and which have a low standard of living. There is a strong correlation between low income and high population growth, both within and between countries.

Nature of development

Even though a good part of the world seems to aspire to development, the term itself is criticized by those who think it is too centered on Western countries. The term implies a direction and a movement that the countries must follow; it implies an inferiority of the developing countries.Developing coutries are those which need to be sustained by foreign aid The terms utilized when discussing developing countries refer to the intent and to the constructs of those who utilize these terms. Other terms sometimes used are lesser developed countries (LDCs), less economically developed countries (LEDCs), "underdeveloped nations" or "undeveloped nations", Third World nations, the South and "non-industrialized nations". Conversely, the opposite end of the spectrum is termed developed countries, more economically developed countries (MEDCs), First World nations and "industrialized nations". The United Nations allows each nation to decide for itself whether it will be designated as "undeveloped" or "developing" (though many economists and other observers ignore the UN rule about self-designation). To moderate the euphemistic aspect of the word developing, international organisations have started to use the term least developed countries (LLDCs) for the poorest nations which can in no sense be regarded as developing. That is, LLDCs are the poorest subset of LDCs. This also moderates the naïve tendency to believe that the standard of living in Somalia or Ethiopia is comparable to that in Brazil or Mexico. The concept of the developing nation is found, under one term or another, in numerous theoretical systems having diverse orientations — for example, theories of decolonization, liberation theology, marxism, anti-imperialism, and political economy.

Sources of (under)development

According to different theories, sources of underdevelopment include:
- Low saving which may lead to low investment according to Harrod-Domar model but large amount of saving and investment still does not imply strong development
- Intrinsic attitudes and aptitudes, real or used as justification
- attitudes and culture of the people;
- aptitudes and behavior of the elites and leaders;
- High rates of fertility
- Legal structures and institutions
- a breakdown in the rule of law
- high corruption
- Extrinsic factors, real or used as justification
- geopolitical or commercial interest that it creates compared to other countries;
- place of the country in a historical and cultural system;
- inadequate reforms imposed in counterpart with financing of last resort, by multilateral organizations (like the International Monetary Fund and the World Bank) to get out of situations of deficit and indebtedness in which the country is placed (see Developing countries' debt).
- lack of interest in and comprehension for the specific dynamics of a nation, by multinational companies.

Typology and names of countries

Countries are often loosely placed into four categories of development: # Developed countries, and their dependencies (For a list of countries, see developed country.) # Countries with an economy consistently and fairly strongly developing over a longer period (China, Mexico, India, Brazil, South Africa, Turkey, the Philippines, Egypt, much of South America, Malaysia, Thailand, Possibly the former Warsaw Pact, etc.) # Countries with a patchy record of development (most countries in Africa, Central America, and the Caribbean excepting Jamaica (category 2); much of the Arab world falls in this category); also most of Southeast Asia, falls under this category excepting Singapore, Philippines, Brunei, Malaysia and Thailand (category 2). 76% of the world's nations fall under this category. # Countries with long-term civil war or large-scale breakdown of rule of law or non-development-oriented dictatorship ("failed states") (e.g. Haiti, Somalia, Sudan, Burma, perhaps North Korea) The term "developing nation" is not a label to assign a specific, similar type of problem. Designation of these nations depends on the angle at which one approaches them, and according to the solutions envisoned to solve their problems. Each one of these terms has meanings beyond its first appearance:
- Third World :The term was used for the first time by demographer Alfred Sauvy and refers to the Third Estate. The Third world does not include the nations of the liberal West ("First World") nor of the Soviet bloc ("Second World"), and to some extent were ignored because they could not throw strong support behind either. A Cold War era term which is increasingly deprecated.
- Countries of The South and The North :These terms originate from the fact that most developing countries (including many of the poorest) are in the southern hemisphere (south of the Equator), and most developed countries are in the northern hemisphere. However, the geographic distinction is not perfect — for example, Australia and New Zealand, both developed, are in the southern hemisphere, but not included in "the South". "North" and "South" are essentially euphemisms for "developed country" and "developing country", but are alternatives which are often preferred by people from the South because they avoid the loaded reference to "development".This is shown in the Brandt report.
- Rich and poor countries :These terms suggest a greater focus on income per capita. It should be noted that this statistic only reflects the statistical average wealth of a country's citizens; when income is distributed very unequally (as measured for example by the Gini coefficient) this figure may be misleading (see also kleptocracy).
- Industrialized and non-industrialized countries :Most countries that are currently being industrialized or are in advanced phases of industrialization, also have characteristics of a post-industrial economy.

External links

- [http://www.worldbank.org/data/countryclass/classgroups.htm List of developing countries according to the World Bank] Category:Country classifications Category:Development ko:개발도상국 ja:開発途上国

Infrastructure

Infrastructure, most generally, is the set of interconnected structural elements that provide the framework for supporting the entire structure. It usually applies only to structures that are artificial. The term is used differently in a variety of fields; perhaps the single most well-known usage is in economics, where it refers to physical infrastructure such as buildings and roads. The notion that a structure has an in-ternal fra-mework is popular especially in business organizations where a dependency on interconnected information technology systems has become as prevalent as a city's dependency on interconnected conveyance systems for power, people and things.

Definition disputes

The term is often used very abstractly. For instance, software engineering tools are sometimes described as part of the infrastructure of a development shop, and the term infrastructural capital in economics may be overly broad, as it includes a range from clothing to a continent-spanning canal system. This term can overlap with the notion of internal improvements and public works (see American System (economics)). In national security, the term "critical infrastructure" is also extremely broad (although it should be less inclusive as not all infrastructure should be considered critical) and includes support, e.g. for banking, and other such processes of questionable merit. One issue is the necessity of means of protection, and of accounting, in increasing value of life. Advocates of a broad definition usually argue that without these "critical" systems, the rest of the infrastructure is looted, burned, or not safe to use. Another issue is whether means of persuasion, like computer or radio or television technology, can qualify as infrastructure in any sense, as it is more belief-sustaining than life-sustaining. The arguments parallel those for means of protection, with conservatives generally asserting that belief in a common view of reality, especially in emergency services, is critical to survival.

Urban planning usage

The fantastic term is used most often in an urban planning context to denote the facilities that support specific land uses and built environment. This article focuses on these urban infrastructure concerns to avoid the more political issues above. See also public infrastructure, municipal infrastructure and rural infrastructure. Typically, infrastructure in the urban context denotes two general groups of support systems: transportation modalities (roads, rail, etc.) and utilities. These typically compose both public and private systems, and some ambiguously held in common. Infrastructure may also refer to necessary municipal or public services, whether provided by the government or by private companies. If provided by nature, e.g. the flow of a river, they are called nature's services and are defined (at least in economics) as the product of natural capital. This may be augmented or directed by infrastructural capital, e.g. a dam or canal or irrigation ditch. In general what is called infrastructure tends to be very embedded in the natural landscape and cannot be moved from place to place. Even municipal services rely necessarily on fixed locations, e.g. fire stations in central positions in a city, radio towers on tall buildings, etc.. Infrastructure (in the civic sense) includes:
- Transport
- Roads
- Highways
- Railroads
- Public transport
- Airports
- Ship transport such as ferry and barge
- Bike paths
- Sidewalks
- Public utilities
- Electricity
- Natural gas
- Coal delivery
- Water supply
- Sewers
- Telephone service
- Radio and television bandwidth allocation
- Cable television service
- Public services
- Fire service or fire department
- Flood protection
- Police protection
- Waste management
- National Services
- Defense
- Monetary systems or currency, including the minting of coins, and printing and backing of banknotes.
- Postal system
- "Soft Infrastructure" is a term that denotes institutions that maintain the health and cultural standards of the population. Principally, this refers to
- Public education
- Public health systems including public hospitals
- Public libraries
- Social welfare

Third World

:For the Jamaican reggae band, see Third World (band). Third World (band) Third World was a term first coined by Jawaharlal Nehru (First Prime Minister of India), originally to distinguish nations that aligned with neither the West or with the East during the Cold War, including many members of the Non-Aligned Movement. Today, however, the term is used to denote nations with a low UN Human Development Index (HDI), independent of their political status. Many "Third World" countries are located in Africa, Latin America, and Asia. They are often nations that were colonized by another nation in the past. Third world countries are generally very poor but with high populations and birth rates. In general they are not as industrialized or technologically advanced as OECD countries. The majority of the countries in the world fit this classification. These countries are also known as the Global South, developing countries, least developed countries and the Majority World in academic circles. Development workers also call them the two-thirds world (because 2/3rds of the world is underdeveloped) and The South. Some dislike the term developing countries as it may imply that economic development (industrialisation) is the only way forward, while they believe it is not necessarily the most beneficial. The term Third World is also disliked as it may imply the false notion that those countries are not a part of the global economic system. Some note that the underdevelopment of Africa, Asia and South America during the Cold War was influenced, or even caused by the Cold War economic, political, and military maneuverings of the most powerful nations of the time. The term Fourth World is used by some writers to describe the poorest Third World countries, those which lack industrial infrastructure and the means to build it. More commonly, however, the term is used to describe either indigenous peoples or other oppressed minority groups within any country.

History of the term

Fourth World Perhaps the earliest use of such a ranking system to describe the peoples of Earth appears in studies of 'race' during the classic period of European imperialism. James M. Hobson, in his "The Eastern Origins of Western Civilization" (2004) discusses the 'civilizational league table' (employing categories such as 'racial colour', 'temperament', and 'climactic character'), and connects it to the work of Robert Knox, Benjamin Kidd, and the Comte de Gobineau (amongst others). Such discourse typically divided the world into three races - the 'advanced' First World of Europe, inhabited by Whites; the 'barbaric' second World of the Yellows; and the 'savage' Black Third World. A quite different use of the term "Third World" is found in the work of economist Alfred Sauvy in an article in the French magazine L'Observateur of August 14, 1952. It was a deliberate reference to the "Third Estate" of the French Revolution. Tiers monde means Third World in French, but in the sense of "one-third" -- it does not mean "third in rank" (which would be troisième monde). The term gained widespread popularity during the Cold War when many poorer nations adopted the category to describe themselves as neither being aligned with NATO or the Warsaw Pact, but instead composing a non-aligned "third world" (in this context, the term "First World" was generally understood to mean the United States and its allies in the Cold War, which would have made the East bloc the "Second World" by default; however, the latter term was very seldom actually used). Leading members of this original "third world" movement were Yugoslavia, India, and Egypt. Many third world countries believed they could successfully court both the communist and capitalist nations of the world, and develop key economic partnerships without necessarily falling under their direct influence. In practice, this plan did not work out quite so well; many third world nations were exploited or undermined by the two superpowers who feared these supposedly neutral nations were in danger of falling into alignment with the enemy. After World War II, the First and Second Worlds struggled to expand their respective spheres of influence to the Third World. The militaries and intelligence services of the United States and the Soviet Union worked both secretly and overtly to influence Third World governments, with mixed success. During the Cold War there were a number of countries which did not fit comfortably into the neat definition of First, Second, and Third Worlds. These included Switzerland, Sweden, and the Republic of Ireland, which chose to be neutral. India was under the Soviet Union's sphere of influence but was not communist, nor was it a member of the Warsaw Pact. Austria was under the United States' sphere of influence, but in 1955, when the country again became a fully independent republic, it did so under the condition that it remained neutral. None of these countries would have been defined as Third World despite their non (or marginally) aligned status. With the 1991 collapse of the Soviet Union, the term Second World largely fell out of use and the meaning of First World was extended to include all developed countries. By the end of the Cold War, the term Third World had shifted in English from its original meaning and had become a synonym for infrastructure-poor countries. The term "Fourth World" has come to denote especially poor and powerless groups, such as many indigenous peoples, living in either Third or First World countries. It is also sometimes used to describe extremely poor countries with almost no industrial infrastructure to speak of or as a synonym for "least developed countries". Heavily industrialized states that were formerly communist are simply called "former communist countries.It must be realized that enormous diversity exists within the third world and the term is increasing being obsolete becuse it is archaic and describes an international power structure that existed after the second world war. It should be noted that the conception that the third world lacks an industrial infrastructure (while generally true) is not always correct. Certainly China is far more technologicaly advanced than many first world countries; and also oil rich gulf states while having brutal regimes are richer than some "first world" countries. In retrospect the term should be use with caution as classyifying countries into one homogenous lump often inhibits an objective perspective

Dependency theory

The dependency theory suggests that multinational corporations and organizations such as the IMF and World Bank have contributed to making Third World countries dependent on first world countries for economic survival. The theory states that this dependence is self-maintaining because the economic systems tend to benefit first world countries and corporations. Scholars also question whether the idea of development is biased in favor of Western thought. They debate whether population growth is a main source of problems in the third world or if the problems are more complex and thorny than that. Policy makers disagree on how much involvement first world countries should have in the Third World and whether Third World debts should be canceled. The issues are complicated by the stereotypes of what Third World and first world countries are like. People in the first world, for example, often describe Third World countries as underdeveloped, overpopulated, and oppressed. Third World people are sometimes portrayed as uneducated, helpless, or backwards. Modern scholarship has taken steps to make academic discourse more conscious of the differences not only between the First World and the Third World, but also among the countries and people of each category.

Countries

The countries considered Third World are usually the whole of South and Central America (everything south of the United States), the whole of Africa (with the possible exception of South Africa), the Middle East (except for Israel and possibly Turkey), South and Southeast Asia (except for South Korea, Taiwan, Japan and Singapore), and the Pacific Islands (except for New Zealand). While the former communist countries of the world were historically part of the Second World, their current classification is often uncertain. Some former-Communist countries, such as Slovenia, currently have high-income economies and a high human development index, and may therefore be considered First World. Others are classified as "transition economies" and are neither classified as First World or as Third World. The countries of Central Asia, as well as the People's Republic of China, North Korea, India and Vietnam, are nearly always considered Third World. The status of the People's Republic of China and India as Third World countries is, however, uncertain, since these countries are currently developing at a very fast pace and approaching middle-income status.

Development

__NOTOC__ Development has meaning in several contexts:

Science and Engineering

- Biological development of embryos in the context of developmental biology
- Child development (physical emphasis) or post-natal human development (pediatrics, etc)
- Software engineering, the methodology and process of development of computer software
- Technology development in industry, as in Software development
- New product development in business and engineering.

Social sciences

- Economic development in economics and international relations
- International development, the process of economic and social development in poor countries.
- Child development (psychological emphasis), part of the larger area of human development (psychology) or developmental psychology
- Social development in sociology, the process involved with the evolution of societies
- Urban development in urban planning

Photography and film

- The development process in movie making, aimed at getting a project greenlit
- Film developing is revealing the latent image in a photographic material

The arts and popular culture

- Arrested Development is a television show based upon a company and a family.
- Arrested Development, a hip hop group popular in the early 1990s.
- Development is also a nu-metal album by musical group Nonpoint.
- Musical development

Culture

- cultural development
- social development

Business

- Corporate development i.e., fund-raising
- Employee development in business and industry
- Land development or Housing development, also Real estate developer

Other

- Personal development (New Age self improvement!)

Value added

Value added refers to the additional value created at a particular stage of production or through image and marketing. In modern neoclassical economics, especially in macroeconomics, it refers to the contribution of the factors of production, i.e., land, labor, and capital goods, to raising the value of a product and corresponds to the incomes received by the owners of these factors. The factors of production provide "services" which raise the unit price of a product (X) relative to the cost per unit of raw materials and intermediate goods used up in the production of X. For example, making apples into apple juice increases the value or price beyond that of the unprocessed apples. Organic produce has more value or price than produce that is not produced organically. In this case, value is added because the identity of the product is preserved--it is not simply an apple, it is an organic apple. Another example of value added in this way is fair-trade coffee. There can also be a value added to a product when the market for the product increases, giving the producer an added value for the product due to the greater demand. Renewable energy produced on farmland is another source of added value, such as converting manure to methane for fuel.

Method of calculation

Economists use the value-added method as a way to avoid double-counting, i.e., the counting of the same input twice. The sum of the value added in each of the different stages of production equals the value of the final product, the product that drops out of the production process and is thus not incorporated in some new product. Final products include consumer goods and fixed capital equipment. A numerical example further explains this concept below.

Example calculation

To understand the concept of value added, take the example of three simple stages of production: # 1000 Yen of miso soup is produced by a chef using pots, pans, and a stove, converting 500 Yen tofu and other ingredients. The chef and his or her tools are the "factors of production," while the tofu (and the other ingredients, ignored here) are the intermediate goods used up and converted into part of the soup. # The tofu used was converted using 200 Yen of soy beans. The soy beans are the raw material used up and converted into the tofu. # The soy beans were grown and harvested during the year. Assume, for simplicity, that the 200 Yen measures the value added in that sector. These beans are thus assumed to be simply results of the services of the factors of production. If we simply add up the results of the three stages, we get a total of 1700 Yen. But this counts the tofu twice, first by itself and then as part of the miso soup. The soy beans are counted three times, in all three stages. This is double counting. On the other hand, we can get an accurate estimate of the final product by using the value-added method: # The value added in the first process is 1000 Yen (the soup) minus 500 Yen (the tofu), equalling 500 Yen. # the value-added in the second process is 500 Yen (the tofu) minus 200 Yen (the soy beans), equalling 300 Yen. # the value added in the third process is, by assumption, 200 Yen. The sum of these three is 1000 Yen, which is the same as the value of the final product, the miso soup.

National Accounts

In national accounts such as the United Nations System of National Accounts (UNSNA) or the NIPA's, gross value added is obtained by deducting intermediate consumption from gross output. Thus gross value added is equal to net output. Net value added is obtained by deducting consumption of fixed capital (or depreciation charges) from gross value added. Net value added therefore equals gross wages, pre-tax profits net of depreciation, and indirect taxes less subsidies.

Marxian interpretation

Karl Marx's concept of the value product is similar to the national accounting concept of net national product, or net value added. It is equal to the sum of labor-compensation (variable capital) and surplus-value (pre-tax profit income). The argument is that the labour force produces a new value equivalent to its own wage-cost, plus a surplus-value. Neoclassical economics regards the incomes constituting added value as the reward for services rendered. In his critique of political economy Marx saw them as results of production under conditions of capitalist exploitation. A difference between Marxian theory and conventional national accounts concerns the interpretation of the distinction between new value created, transfers of value and conserved value, and of the definition of "production". For example, Marxian theory regards the "imputed rental value of owner-occupied housing" which is included in GDP as a fictitious entry; if the housing is owner-occupied, this housing cannot also yield income from its market-based rental value at the same time. In the 1993 manual of the United Nations System of National Accounts (UNSNA), the concept of "imputed rental value of owner occupied housing" is explained as follows: "6.89. Heads of household who own the dwellings which the households occupy are formally treated as owners of unincorporated enterprises that produce housing services consumed by those same households. As well-organized markets for rented housing exist in most countries, the output of own-account housing services can be valued using the prices of the same kinds of services sold on the market in line with the general valuation rules adopted for goods or services produced on own account. In other words, the output of the housing services produced by owner-occupiers is valued at the estimated rental that a tenant would pay for the same accommodation, taking into account factors such as location, neighbourhood amenities, etc. as well as the size and quality of the dwelling itself. The same figure is recorded under household final consumption expenditures." Marxian economists object to this accounting procedure on the ground that the monetary imputation made refers to a flow of income which does not exist. It does not exist, because most home owners do not rent out their homes if they are living in them. Of course, it is possible that (1) some owner-occupiers may rent part of their house to tenants or that (2) informal prostitution occurs within households, but even so, no argument has yet been given that this income constitutes part of the value of production or of value-added, rather than being a transfer of revenue. If, for example, it is argued that "the moon is made of green cheese" then this statement might be true in a poetic sense, but in fact the moon is not made of green cheese. Similarly, if house X is really owned and occupied by person Y, Y cannot be said to rent out X, except within some theoretical re-interpretation. At most one might be able to prove, that X has a mortgage, and pays interest to a financial institution on the loan. The issue has some significance in modern times because of the large capital gains made in the housing sector. Thus, the argument is made that, although capital gains should not be taxed, house owners should nevertheless be taxed on the basis of an imputed market-based rental value of their homes. This could then possibly influence home owners to put more money in corporate stocks, as an alternative investment, adding to the buoyancy of capital markets.

References

Edgar Z. Palmer, The meaning and measurement of the national income, and of other social accounting aggregates. M. Yanovsky, Anatomy of Social Accounting Systems. Anwar Shaikh & Ahmet Ertugrul Tonak, Measuring the Wealth of Nations. CUP.

Agriculture

working the land in the traditional way, with horse and plough]] Agriculture is the process of producing food, feed, fiber and other desired products by the cultivation of certain plants and the raising of domesticated animals (livestock). The practice of agriculture is also known as "farming", while scientists, inventors and others devoted to improving farming methods and implements are also said to be engaged in agriculture. More people in the world are involved in agriculture as their primary economic activity than in any other, yet it only accounts for four percent of the world's GDP.

Overview

GDP, Indonesia]] Agriculture can refer to subsistence agriculture, the production of enough food to meet just the needs of the farmer/agriculturalist and his/her family. It may also refer to industrial agriculture, (often referred to as factory farming) long prevalent in "developed" nations and increasingly so elsewhere, which consists of obtaining financial income from the cultivation of land to yield produce, the commercial raising of animals (animal husbandry), or both. Agriculture is also short for the study of the practice of agriculture—more formally known as agricultural science. Agricultural students are known (sometimes derisively) as "Aggies". Increasingly, in addition to food for humans and animal feeds, agriculture produces goods such as cut flowers, ornamental and nursery plants, timber or lumber, fertilizers, animal hides, leather, industrial chemicals (starch, sugar, ethanol, alcohols and plastics), fibers (cotton, wool, hemp, and flax), fuels (methane from biomass, biodiesel) and both legal and illegal drugs (biopharmaceuticals, tobacco, marijuana, opium, cocaine). Genetically engineered plants and animals produce specialty drugs. In the Western world, the use of gene manipulation, better management of soil nutrients, and improved weed control have greatly increased yields per unit area. At the same time, the use of mechanization has decreased labour requirements. The developing world generally produces lower yields, having less of the latest science, capital, and technology base. Modern agriculture depends heavily on engineering and technology and on the biological and physical sciences. Irrigation, drainage, conservation and sanitary engineering, each of which is important in successful farming, are some of the fields requiring the specialized knowledge of agricultural engineers. Agricultural chemistry deals with other vital farming concerns, such as the application of fertilizer, insecticides (see Pest control), and fungicides, soil makeup, analysis of agricultural products, and nutritional needs of farm animals.Plant breeding and genetics contribute additionally to farm productivity. Advanced seed engineering has allowed strains of seed to become perfect in every farming situation. Seeds can now germinate faster and adapt to shorter growing seasons in different climates. Present-day seed can resist the spraying of pesticides that kill all green-leaf plants. Hydroponics, a method of soilless gardening in which plants are grown in chemical nutrient solutions, may help meet the need for greater food production as the world's population increases. The packing, processing, and marketing of agricultural products are closely related activities also influenced by science. Methods of quick-freezing and dehydration have increased the markets for farm products (see Food preservation; Meat packing industry). Mechanization, the outstanding characteristic of late 19th and 20th century agricultural evolution, has eased much of the backbreaking toil of the farmer. More significantly, mechanization has enormously increased farm efficiency and productivity (see Agricultural machinery). Animals, including horses, mules, oxen, camels, llamas, alpacas, and dogs; however, are still used to cultivate fields, harvest crops and transport farm products to markets in many parts of the world. Airplanes, helicopters, trucks and tractors are used in agriculture for seeding, spraying operations for insect and disease control, Aerial topdressing, transporting perishable products, and fighting forest fires. Radio and television disseminate vital weather reports and other information such as market reports that concern farmers. Computers have become an essential tool for farm management. Aerial topdressing] According to the National Academy of Engineering in the US, agricultural mechanization is one of the 20 greatest engineering achievements of the 20th century. Early in the century, it took one American farmer to produce food for 2.5 people, where today, due to engineering technology (also, plant breeding and agrichemicals), a single farmer can feed over 130 people [http://www.greatachievements.org/greatachievements/ga_7_2.html]. This comes at a cost, however, of large amounts of energy input, from unsustainable, mostly fossil fuel, sources. Animal husbandry means breeding and raising animals for meat or to harvest animal products (like milk, eggs, or wool) on a continual basis. In recent years some aspects of industrial intensive agriculture have been the subject of increasing discussion. The widening sphere of influence held by large seed and chemical companies, meat packers and food processors has been a source of concern both within the farming community and for the general public. There has been increased activity of some people against some farming practices, raising chickens for food being one example. Another issue is the type of feedgiven to some animals that can cause Bovine Spongiform Encephalopathy in cattle. There has also been concern because of the disastrous effect that intensive agriculture has on the environment. In the US, for example, fertilizer has been running off into the Mississippi for years and has caused a dead spot in the Gulf of Mexico, where the Mississippi empties. Intensive agriculture also depletes the fertility of the land over time and the end effect is that which happened in the Middle East, were some of the most fertile farmland in the world was turned into a desert by intensive agriculture. The patent protection given to companies that develop new types of seed using genetic engineering has allowed seed to be licensed to farmers in much the same way that computer software is licensed to users. This has changed the balance of power in favor of the seed companies, allowing them to dictate terms and conditions previously unheard of. Some argue these companies are guilty of biopiracy. Soil conservation and nutrient management have been important concerns since the 1950s, with the best farmers taking a stewardship role with the land they operate. However, increasing contamination of waterways and wetlands by nutrients like nitrogen and phosphorus are of concern in many countries. Increasing consumer awareness of agricultural issues has led to the rise of community-supported agriculture, local food movement, slow food, and commercial organic farming, though these yet remain fledgling industries.

History

organic farming Archaeobotanists have traced the selection and cultivation of specific food plant characteristics, such as a semi-tough rachis and larger seeds, to just after the Younger Dryas (about 9,500 BC) in the early Holocene in the Levant region of the Fertile Crescent. Limited anthropological and archaeological evidence both indicate a grain-grinding culture farming along the Nile in the 10th millennium BC using the world's earliest known type of sickle blades. There is even earlier evidence for conscious cultivation and seasonal harvest: grains of rye with domestic traits have been recovered from Epi-Palaeolithic (10,000+ BC) contexts at Abu Hureyra in Syria, but this appears to be a localised phenomenon resulting from cultivation of stands of wild rye, rather than a definitive step towards domestication. It is not until ca. 8,500 BC, in middle-Eastern cultures referred to as Pre-Pottery Neolithic B (PPNB), where there is the first definite evidence for the emergence of a widespread subsistence economy that was dependent on domesticated plants and animals. In these contexts lie the origins of the eight so-called founder crops of agriculture: firstly emmer wheat, einkorn wheat, then hulled barley, pea, lentil, bitter vetch, chick pea and flax. These eight crops occur more or less simultaneously on PPNB sites in this region, although the consensus is that wheat was the first to be sown and harvested on a significant scale. There are many sites that date to between ca. 8,500 BC and 7,500 BC where the systematic farming of these crops contributed the major part of the inhabitants' diet. From the Fertile Crescent agriculture spread eastwards to Central Asia and westwards into Cyprus, Anatolia and, by 7,000 BC, Greece. Farming, principally of emmer and einkorn, reached northwestern Europe via southeastern and central Europe by ca. 4,800 BC (see, among others, Price, D. [ed.] 2000. Europe's First Farmers. Cambridge University Press; Harris, D. [ed.] 1996 The Origins and Spread of Agriculture in Eurasia. UCL Press). Europeing an alfalfa field]] The reasons for the earliest introduction of farming may have included climate change, but possibly there were also social reasons (e.g. accumulation of food surplus for competitive gift-giving). Most certainly there was a gradual transition from hunter-gatherer to agricultural economies after a lengthy period when some crops were deliberately planted and other foods were gathered from the wild. Although localised climate change is the favoured explanation for the origins of agriculture in the Levant, the fact that farming was 'invented' at least three times, possibly more, suggests that social reasons may have been instrumental. In addition to emergence of farming in the Fertile Crescent, agriculture appeared by at least 6,800 BC in East Asia (rice) and, later, in Central and South America (maize, squash). Small scale agriculture also likely arose independently in early Neolithic contexts in India (rice) and Southeast Asia (taro). Southeast Asia. Baked clay. Field Museum]] Full dependency on domestic crops and animals (i.e. when wild resources contributed a nutritionally insignificant component to the diet) was not until the Bronze Age. If the operative definition of agriculture includes large scale intensive cultivation of land, mono-cropping, organised irrigation, and use of a specialized labour force, the title "inventors of agriculture" would fall to the Sumerians, starting ca. 5,500 BC. Intensive farming allows a much greater density of population than can be supported by hunting and gathering and allows for the accumulation of excess product to keep for winter use or to sell for profit. The ability of farmers to feed large numbers of people whose activities have nothing to do with material production was the crucial factor in the rise of standing armies. The agriculturalism of the Sumerians allowed them to embark on an unprecedented territorial expansion, making them the first empire builders. Not long after, the Egyptians, powered by effective farming of the Nile valley, achieved a population density from which enough warriors could be drawn for a territorial expansion more than tripling the Sumerian empire in area. The invention of a three field system of crop rotation during the Middle Ages vastly improved agricultural efficiency. After 1492 the world's agricultural patterns were shuffled in the widespread exchange of plants and animals known as the Columbian Exchange. Crops and animals that were previously only known in the Old World were now transplanted to the New and vice versa. Perhaps most notably, the tomato became a favorite in European cuisine, while certain wheat strains quickly took to western hemisphere soils and became a dietary staple even for native North, Central and South Americans. By the early 1800s agricultural practices, particularly careful selection of hardy strains and cultivars, had so improved that yield per land unit was many times that seen in the Middle Ages and before, especially in the largely virgin lands of North and South America. With the rapid rise of mechanization in the 20th century, especially in the form of the tractor, the demanding tasks of sowing, harvesting and threshing could be performed with a speed and on a scale barely imaginable before. These advances have led to efficiencies enabling certain modern farms in the United States, Argentina, Israel, Germany and a few other nations to output volumes of high quality produce per land unit at what may be the practical limit.

Crops

Seed Testing

Seeds are tested for various qualities to ensure a high quality harvest, and to limit or prevent the spread of undesirable and invasive species. Seed test types Descriptions of various tests done on seed Seed related databases ISTA, the International Seed Testing Association, maintains a list of links to Seed Organizations worldwide:
- http://www.seedtest.org/en/content---1--1014--329.html

World production of major crops in 2004

In millions of metric tons, based on FAO estimates[http://faostat.fao.org/faostat/form?collection=Production.Crops.Primary&Domain=Production&servlet=1&hasbulk=0&version=ext&language=EN]: By crop types :Cereals 2,264 :Vegetables and melons 866 :Roots and Tubers 715 :Milk 619 :Fruit 503 :Meat 259 :Oilcrops 133 :Fish 130 (2001 estimate) :Eggs 63 :Pulses 60 :Vegetable Fiber 30 By individual crops :Sugar Cane 1,324 :Maize 721 :Wheat 627 :Rice 605 :Potatoes 328 :Sugar Beet 249 :Soybean 204 :Oil Palm Fruit 162 :Barley 154 :Tomato 120

Crop improvement

Tomato Tomato
- See main article on Plant breeding Domestication of plants is done in order to increase yield, improve disease resistance and drought tolerance, ease harvest and to improve the taste and nutritional value and many other characteristics. Centuries of careful selection and breeding have had enormous effects on the characteristics of crop plants. Plant breeders use greenhouses and other techniques to get as many as three generations of plants per year so that they can make improvements all the more quickly. Plant selection and breeding in the 1920s and '30s improved pasture (grasses and clover) in New Zealand. Extensive radiation mutagenesis efforts (i.e. primitive genetic engineering) during the 1950s produced the modern commercial varieties of grains such as wheat, corn and barley. For example, average yields of corn (maize) in the USA have increased from around 2.5 tons per hectare (40 bushels per acre) in 1900 to about 9.4 t/ha (150 bushels per acre) in 2001, primarily due to improvements in genetics. Similarly, worldwide average wheat yields have increased from less than 1 t/ha in 1900 to more than 2.5 t/ha in 1990. South American average wheat yields are around 2 t/ha, African under 1 t/ha, Egypt and Arabia up to 3.5 to 4 t/ha with irrigation. In contrast, the average wheat yield in countries such as France is over 8 t/ha. Higher yields are due to improvements in genetics, as well as use of intensive farming techniques (use of fertilizers, chemical pest control, growth control to avoid lodging). [Conversion note: 1 bushel of wheat = 60 pounds (lb) ≈ 27.215 kg. 1 bushel of corn = 56 pounds ≈ 25.401 kg] In industrialized agriculture, crop "improvement" has often reduced nutritional and other qualities of food plants to serve the interests of producers. After mechanical tomato-harvesters were developed in the early 1960s, agricultural scientists bred tomatoes that were harder and less nutritious (Friedland and Barton 1975). In fact, a major longitudinal study of nutrient levels in numerous vegetables showed significant declines in the last 50 years; garden vegetables in the U.S. today contain on average 38 percent less vitamin B2 and 15 percent less vitamin C (Davis and Riordan 2004). Very recently, genetic engineering has begun to be employed in some parts of the world to speed up the selection and breeding process. The most widely used modification is a herbicide resistance gene that allows plants to tolerate exposure to glyphosate, which is used to control weeds in the crop. A less frequently used but more controversial modification causes the plant to produce a toxin to reduce damage from insects (c.f. Starlink). There are specialty producers who raise less common types of livestock or plants. Aquaculture, the farming of fish, shrimp, and algae, is closely associated with agriculture. Apiculture, the culture of bees, traditionally for honey—increasingly for crop pollination. See also : botany, List of domesticated plants, List of vegetables, List of herbs, List of fruit

Environmental problems

Agriculture may often cause environmental problems because it changes natural environments and produces harmful by-products. Some of the negative effects are:
- Nitrogen and phosphorus surplus in rivers and lakes.
- Detrimental effects of herbicides, fungicides, insecticides, and other biocides.
- Conversion of natural ecosystems of all types into arable land.
- Consolidation of diverse biomass into a few species.
- Erosion
- Depletion of minerals in the soil
- Particulate matter, including ammonia and ammonium off-gasing from animal waste contributing to air pollution
- Weeds - feral plants and animals
- Odor from agricultural waste
- Soil salination in dry areas.

Policy

Agricultural policy focuses on the goals and methods of agricultural production. At the policy level, common goals of agriculture include:
- Food safety: Ensuring that the food supply is free of contamination.
- Food security: Ensuring that the food supply meets the population's needs.
- Food quality: Ensuring that the food supply is of a consistent and known quality.
- Conservation
- Environmental impact
- Economic stability

Methods

There are various methods of agricultural production:
- aeroponics
- aerial topdressing
- agricultural machinery
- animal husbandry
- aquaculture
- beekeeping
- crop rotation
- Concentrated Animal Feeding Operation (CAFO, factory farming)
- composting
- dairy farming
- detasseling
- domestication
- fencing
- fertilizers
- greenhouse
- harvest
- heliciculture
- hybrid seed
- hydroponics
- Integrated Pest Management (IPM)
- irrigation
- livestock
- market gardening
- monoculture
- no-till farming
- organic farming
- plant breeding
- pollination management
- precision farming
- ranching
- season extension
- seed saving
- shepherding
- subsistence farming
- succession planting
- sustainable agriculture
- terracing
- vegetable farming
- tillage
- weed control

References

- Wells, Spencer: The Journey of Man : A Genetic Odyssey. Princeton University Press, 2003. ISBN: 069111532X
- Crosby, Alfred W.: The Columbian Exchange : Biological and Cultural Consequences of 1492. Praeger Publishers, 2003 (30th Anniversary Edition). ISBN: 0275980731
- Collinson, M. (editor): A History of Farming Systems Research. CABI Publishing, 2000. ISBN: 0851994059
- Davis, Donald R., and Hugh D. Riordan (2004) Changes in USDA Food Composition Data for 43 Garden Crops, 1950 to 1999. Journal of the American College of Nutrition, Vol. 23, No. 6, 669-682.
- Friedland, William H. and Amy Barton (1975) Destalking the Wily Tomato: A Case Study of Social Consequences in California Agricultural Research. Univ. California at Sta. Cruz, Research Monograph 15.·

External links

- [http://www.fao.org www.fao.org] — Food and Agriculture Organization of the United Nations World Agricultural Information Centre
- [http://www.fao.org/waicent/portal/statistics_en.asp www.fao.org] — The UN Statistical Databases
- [http://www.fao.org/ag/ FAO Agriculture Department] and its [http://www.fao.org/docrep/006/y5160e/y5160e00.HTM State of Food and Agriculture 2003-2004] with a focus on the impact of biotechnology
- [http://www.greenfacts.org/gmo/index.htm GM Crops in Agriculture] – A summary for non-specialists of the above FAO report by GreenFacts.
-
- [http://imperium.lenin.ru/~kaledin/tmp/agricltr.txt Agriculture: Demon Engine of Civilization] by John Zerzan
- [http://www.livinghistoryfarm.org/index.html History of farming in Nebraska, USA]

Specific countries

- [http://www.agr.gc.ca/ www.agr.gc.ca] — Agriculture & Agri-Food Canada
- [http://www.nationalpak.com www.nationalpak.com] — Agriculture of Pakistan
- [http://www.nationalacademies.org/agriculture/ www.nationalacademies.org] — Agriculture at the United States National Academies
- [http://www.usda.gov/ www.usda.gov] — United States Department of Agriculture
- [http://www.fas.usda.gov/currwmt.html Current World Production, Market and Trade Reports] from the Foreign Agricultural Service
- [http://www.ers.usda.gov/ USDA's main source of economic information and research] from the Economic Research Service
- [http://www.ars.usda.gov/ In-house Research Arm] from the Agricultural Research Service
- [http://www.nal.usda.gov/ National Agricultural Library]
- [http://www.trader-china.com/Agriculture/index.html Agriculture Directory] ko:농업 ja:農業 nb:Landbruk simple:Agriculture

Developed country

A developed country is a nation that enjoys a relatively high standard of living through a strong high-technology diversified economy. Most countries with a high per capita gross domestic product (GDP) are considered developed countries. Some countries, however, have achieved a (usually temporarily) high GDP through natural resource exploitation (e.g., Nauru through phosphate extraction) without developing the diverse industrial and service-based economy necessary for "developed" status. Synonyms include industrialised countries, more economically developed countries (MEDC) and the First World. Other terms sometimes used to describe the developed/developing country dichotomy are first world/third world (the term second world referred to communist states during the Cold War); North/South; and industrialized countries/non-industrialized countries. The term Western countries has a similar meaning, but its connotations restrict its usage, especially in Asia. Different observers and theorists often see different reasons for why certain countries (and not others) enjoy a high level of economic development. Many argue that economic development requires some combination of representative government (or democracy), a free market economic model, and a general lack of corruption. Some hold that rich countries grew wealthy by exploitation of poorer countries in the past, through imperialism and colonialism, or in the present, through the process of globalization. According to the United Nations Statistics Division: :In the United Nations system there is no established convention for the designation of "developed" and "developing" countries or areas. In common practice, Japan in Asia, Canada and the United States in North America, Australia and New Zealand in Oceania, and Europe are considered "developed" regions or areas. In international trade statistics, the Southern African Customs Union is also treated as a developed region and Israel as a developed country; and countries of eastern Europe and the former U.S.S.R. countries in Europe are not included under either developed or developing regions. The UN HDI is a statistical measure that gauges a country's level of human development. Countries with an HDI of 0.8 or more — largely corresponding to what the conventional definition of being a 'developed' country is — exhibit high development, and those with an HDI between 0.6 and 0.8 (including many of the former Soviet and Eastern Bloc states) exhibit moderate development.

Developed countries

Organizations such as the World Bank, the International Monetary Fund (IMF) and the Central Intelligence Agency, generally agree that the group of developed countries include: The following European Union member states: The following non-EU European countries: The following non-European countries:

Other cases

- Some organizations consider the remaining countries of the European Union — those added in 2004, especially Cyprus, Malta, and Slovenia — among the developed countries, but these mostly former-Communist countries are rather newly industrialized nations and some of them (such as Latvia, Lithuania and Poland) remain significantly less affluent than EU-15 countries. All European Union members, however, have a GDP per capita greater than the global average.
- South Korea, another relatively newly industrialized country, does not consider itself as developed. This has led to accusations that it prefers to avoid the obligations placed upon developed nations, and some organizations do not consider it developed.
- Singapore similarly meets most benchmarks of a developed country, but its authorities have consistently resisted being classified as such, citing its lack of development outside the economic and physical infrastructural fields. Like South Korea, this has also led to speculation that the young country is reluctant in playing a bigger role in international humanitarian efforts expected of developed countries.
- Taiwan, Hong Kong and Macau are considered developed by some organizations; however, the People's Republic of China, a developing country, claims the land of the first, and exercises sovereignty over the latter two.
- South Africa and Turkey are considered developed by some sources; however their GDP per capita clearly places them among the developing countries.
- Despite their high per capita GDP, Brunei and the Middle Eastern countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates are generally not considered developed countries because their economies depend overwhelmingly on oil production and export. Some of these countries, especially Bahrain, have begun to diversify their economies and democratize. Similarly, the Bahamas, Barbados, Antigua and Barbuda, Trinidad and Tobago, and Saint Kitts and Nevis enjoy a high per capita GDP, but these economies depend overwhelmingly on the tourist industry.

References

- [http://www.worldbank.org/data/countryclass/classgroups.htm#High_income World Bank]
- [http://www.cia.gov/cia/publications/factbook/appendix/appendix-b.html The World Factbook]
- [http://unstats.un.org/unsd/cdb/cdb_dict_xrxx.asp?def_code=491 United Nations Statistics Division] (definition)
- [http://unstats.un.org/unsd/mi/developed_new.htm United Nations Statistics Division] (developed regions)
- [http://www.imf.org/external/pubs/ft/weo/2005/01/data/groups.htm#1 IMF]

Economic growth

Economic growth is the increase in the value of goods and services produced by an economy. Generally called as an increase in the wealth of a nation. It is conventionally measured as the percent rate of increase in real gross domestic product, or GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced. In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment," rather than growth of aggregate demand.

Origins of the concept of Economic Growth

In the early modern period, some people in Western European nations began conceiving of the idea that economies could "grow", that is, produce a greater economic surplus which could be expended on something other than religious or governmental projects (such as war). The previous view was that only increasing either population or tax rates could generate more surplus money for the Crown or country. During much of the "Mercantilist" period, growth was seen as involving an increase in the total amount of specie, that is circulating medium such as silver and gold, under the control of the state. This "Bullionist" theory led to policies to force trade through a particular state, the acquisition of colonies to supply cheaper raw materials which could then be manufactured and sold. Later, such trade policies were justified instead simply in terms of promoting domestic trade and industry. The post-Bullionist insight that it was the increasing capability of manufacturing which led to policies in the 1700's to encourage manufacturing in itself, and the formula of importing raw materials and exporting finished goods. Under this system high tariffs were erected to allow manufacturers to establish "factories". (The word comes from "factor", the term for someone who carried goods from one stage of production to the next.) Local markets would then pay the fixed costs of capital growth, and then allow them to export abroad, undercutting the prices of manufactured goods elsewhere. Once competition from abroad was removed, prices could then be increased to recoup the costs of establishing the business. Under this theory of growth, the road to increased national wealth was to grant monopolies, which would give an incentive for an individual to exploit a market or resource, confident that he would make all of the profits when all other extra-national competitors were driven out of business. The "Dutch East India company" and the "British East India company" were examples of such state-granted trade monopolies. It should be stressed that Mercantilism was not simply a matter of restricting trade. Within a country, it often meant breaking down trade barriers, building new roads, and abolishing local toll booths, all of which expanded markets. This corresponded to the centralization of power in the hands of the Crown (or "Absolutism"). This process helped produce the modern nation-state in Western Europe. Internationally, Mercantilism led to a contradiction: growth was gained through trade, but to trade with other nations on equal terms was disadvantageous. This – along with the rise of nation-states –encouraged several major wars. The modern conception of economic growth began with the critique of Mercantilism, especially by the physiocrats and with the Scottish Enlightenment thinkers such as David Hume and Adam Smith, and the foundation of the discipline of modern political economy. The theory of the physiocrats was that productive capacity, itself, allowed for growth, and the improving and increasing capital to allow that capacity was "the wealth of nations". Whereas they stressed the importance of agriculture and saw urban industry as "sterile", Smith extended the notion that manufacturing was central to the entire economy. David Ricardo would then argue that trade was a benefit to a country, because if one could buy a good more cheaply from abroad, it meant that there was more profitable work to be done here. This theory of "comparative advantage" would be the central basis for arguments in favor of free trade as an essential component of growth. This notion of growth as increased stocks of capital goods (means of production) was codified as the Solow-Swann Growth Model, which involved a series of equations which showed the relationship between labor-time, capital goods, output, and investment. In this modern view, the role of technological change became crucial, even more important than the accumulation of capital. The late 20th century, with its global economy of a few very wealthy nations, and many very poor nations, led to the study of how the transition from subsistence and resource-based economies, to production and consumption based economies occurred, leading to the field of Development economics, including the work of Amartya Sen and Joseph Stiglitz.

The Question of Growth

The real GDP per capita of an economy is often used as an indicator of the average standard of living of individuals in that country, and economic growth is therefore often seen as indicating an increase in the average standard of living. However, there are some problems in using growth in GDP per capita to measure increasing well-being. These include:
- expenditure to offset the adverse environmental effects of economic growth such as pollution. (These are called defensive expenditure.)
- economic 'bads' such as commuting costs.
- measurement of non-marketed output such as housework. (If an individual hires a cleaner instead of cleaning their house themselves, it adds to GDP. The time spent cleaning the house before was not counted as part of GDP, while it is counted now. The house may or may not be cleaner.)
- GDP doesn’t reflect the underground or parallel economy
- Doesn’t reflect DIY activities
- some good output may not be included in GDP e.g. parents doing childcare, friends helping with home improvements, do-it-yourself, and volunteer work.
- property income unrelated to production is excluded from GDP.
- inequality (the uneven distribution of income). (If we assume diminishing marginal utility of income, extra income yields less utility for those with already-high incomes than for those with low incomes, so an increase in GDP may increase utility by different amounts depending upon individual's place in distribution. In particular, economic growth which yields savings not passed down to customers may disproportionately benefit stockholders, who are likely already wealthy) Other measures of national income, such as the Index of Sustainable Economic Welfare or the Genuine Progress Indicator, have been developed in an attempt to give a more complete picture of the level of well-being, but there is no consensus as to which, if any, is a better measure than GDP. GDP still remains by far the most often-used measure, especially since, all else equal, a rise in real GDP is correlated with an increase in the availability of jobs, which are necessary to most individuals' survival. The short-run variation of economic growth is termed the business cycle, and almost all economies experience periodic recessions. The cycle can be a misnomer as the fluctuations are not always regular. Explaining these fluctuations is one of the main focuses of macroeconomics. There are different schools of thought as to the causes of recessions but some consensus- see Keynesianism, Monetarism, New classical economics and New Keynesian economics. Oil shocks, war and harvest failure are obvious causes of recession. Short-run variation in growth has generally dampened in higher income countries since the early 90s and this has been attributed, in part, to better macroeconomic management. The long-run path of economic growth is one of the central questions of economics; despite the caveats given above, an increase in GDP of a country is generally taken as an increase in the standard of living of its inhabitants. Over long periods of time, even small rates of annual growth can have large effects through compounding. A growth rate of 2.5% per annum will lead to a doubling of GDP within 30 years, whilst a growth rate of 8% per annum (experienced by some East Asian Tigers) will lead to a doubling of GDP within 10 years. The neo-classical growth model, developed by Robert Solow in the 1950s, was the first attempt to model long-run growth analytically. This model assumes that countries use their resources efficiently and that there are diminishing returns to capital and labor increases. From these two premises, the neo-classical model makes three important predictions. First, increasing capital relative to labor creates economic growth, since people can be more productive given more capital. Second, poor countries with less capital per person will grow faster because each investment in capital will produce a higher return than rich countries with ample capital. Third, because of diminishing returns to capital, economies will eventually reach a point at which no new increase in capital will create economic growth. This point is called a "steady state." The model also notes that countries can overcome this steady state and continue growing by inventing new technology that allows production with fewer resources, but the model assumes technological progress, "exogenizing" technology from the model. Unsatisfied with Solow's explanation, economists worked to "endogenize" technology in the 1980s. They developed the endogenous growth theory that includes a mathematical explanation of technological advancement. This model also incorporated a new concept of human capital, the skills and knowledge that make workers productive. Unlike physical capital, human capital has increasing rates of return. Therefore, overall there are constant returns to capital, and economies never reach a steady state. Growth does not slow as capital accumulates, but the rate of growth depends on the types of capital a country invests in. Research done in this area has focussed on what increases human capital (e.g. education) or technological change (e.g. innovation). Analysis of recent economic success shows a close correlation between growth and climate, though the actual linkage between the two--and possible causal mechanisms--remains a topic of hot debate. Cold states like Sweden are much more successful economically than warm countries like Nigeria. In early human history, economic as well as cultural development was concentrated in warmer parts of the world, like Egypt. Today, however, cold, Northern states have much higher GDP per capita compared to the hot, tropical states. This aspect of economics (economic geography)--and its influence on human migration and political structures--was extensively studied by Ellsworth Huntington, a professor of Economics at Yale University in the early 20th century.

The limits to growth

The 'limits to growth' debate, much of it prompted by the 1972 Club of Rome study Limits to Growth, considers the ecological impact of growth and wealth creation. Many of the activities required for economic growth use non-renewable resources. Many researchers feel these sustained environmental effects can have an effect on the whole ecosystem. They claim the accumulated effects on the ecosystem put a theoretical limit on growth. Some draw on archaeology to cite examples of cultures they claim have disappeared because they grew beyond the ability of their ecosystems to support them. The claim is that the limits to growth will eventually make growth in resource consumption impossible. Others are more optimistic and believe that, although localized environmental effects may occur, large scale ecological effects are minor. The optimists claim that if these global-scale ecological effects exist, human ingenuity will find ways of adapting to them. The rate or type of economic growth may have important consequences for the environment (the climate and natural capital of ecologies). Concerns about possible negative effects of growth on the environment and society led some to advocate lower levels of growth, from which comes the idea of uneconomic growth, and Green parties which argue that economies are part of a global society and a global ecology and cannot outstrip their natural growth without damaging them. Canadian scientist David Suzuki stated in the 1990s that ecologies can only sustain typically about 1.5-3% new growth per year, and thus any requirement for greater returns from agriculture or forestry will necessarily cannibalize the natural capital of soil or forest. Some think this argument can be applied even to more developed economies. Mainstream economists would argue that economies are driven by new technology — for instance, we have faster computers today than a year ago, but not necessarily physically more computers. We may have been able to break free from physical limitations by relying on more knowledge rather than more physical production. A concern for promoting economic growth over and above all less measurable considerations is a symptom of productivism--usually a pejorative term.

External links

- [http://www.gwagner.net/work/green_accounting.html Green Accounting Bibliography] contains a discussion and related material on green or environmental accounting, an effort to create more comprehensive measures of conventional national income statistics.
- [http://www.stanford.edu/~promer/policyop.htm Beyond Classical and Keynesian Macroeconomic Policy] is Paul Romer's plain-English explaination of Endogenous Growth Theory. Category:Macroeconomics Category:Economic indicators

Economic development

Economic development is the development of economic wealth of countries or regions for the well-being of their inhabitants. The study of economic development is known as development economics. Public policy generally aims at continuous and sustained economic growth and expansion of national economies so that 'developing countries' become 'developed countries'. The economic development process supposes that legal and institutional adjustments are made to give incentives for innovation and for investments so as to develop an efficient production and distribution system for goods and service.

Overview

Development economics emerged as a branch of economics because economists - after World War Two - become concerned about the low standard of living in so many countries of Latin America, Africa, and Asia. The first approaches to development economics assumed that the economies of the less developed countries (LDCs), were so different from the developed countries that basic economics could not explain the behavior of LDC economies. Such approaches produced some interesting and even elegant economic models, but these models failed to explain the patterns of no growth, slow growth, or growth and retrogression found in the LDCs. Slowly the field swung back towards more acceptancance that the opportunity cost, supply & demand, etc. apply to the LDCs also. However, this only cleared the ground for better approaches. Straight economics still couldn't explain the weak and failed growth patterns. What was required to explain poor growth were influences beyond firms and individual preferrences and endowments. These influences were found in institutions: political institutions, ideological beliefs, etc. Institutions have been able to explain the poor growth patterns much better than the market failure theories did. However, there is no generally accepted institutional theory of economic development that a large share of development economists agree upon. There is not even agreement on as fundamental an issue as, "How much do political institutions explain?"

Models of economic development

The three building blocks of most growth models are: (1) the production function, (2) the saving function, and (3) the labor supply function (related to population growth). Together with a saving function, growth rate equals s/ß (s is the saving rate, and β is the capital-output ratio). Assuming that the capital-output ratio is fixed by technology and does not change in the short run, growth rate is solely determined by the saving rate on the basis of whatever is saved will be invested.

Harrod-Domar Model

The Harrod-Domar Model delineates a functional economic relationship in which the growth rate of gross domestic product (g) depends directly on the national saving ratio (s) and inversely on the national capital/output ratio (k) so that it is written a g = s / k. The equation takes its name from a synthesis of analyses of growth process by two economists (Sir Roy Harrod of Britain and E.V. Domar of the USA). The Harrod-Domar model in the early postwar times was commonly used by developing countries in economic planning. With a target growth rate, the required saving rate is known. If the country is not capable of generating that level of saving, a justification or an excuse for borrowing from international agencies can be established. An example in the Asian context is to ascertain the relationship between high growth rates and high saving rates in the cases of Japan and China. It is more difficult to introduce the third building block of a growth model, the labor and population element. In the long run, growth rate is constrained by population growth and also by the rate of technological change.

Exogenous growth model

The exogenous growth model (or neoclassical growth model) of Robert Solow and others places emphasis on the role of technological change. Unlike the Harrod-Domar model, the saving rate will only determine the level of income but not the rate of growth. The sources-of-growth measurement obtained from this model highlights the relative importance of capital accumulation (as in the Harrod-Domar model) and technological change (as in the Neoclassical model) in economic growth. The original Solow (1957) study showed that technological change accounted for almost 90 percent of U.S. economic growth in the late 19th and early 20th centuries. Empirical studies on developing countries have shown different results (see Chen, E.K.Y.[1979] Hyper-growth in Asian Economies). Also see, Krugman (1994), who maintained that economic growth in East Asia was based on perspiration (use of more inputs) and not on inspiration (innovations) (Krugman, P., [1994] The Myth of Asia’s Miracle, Foreign Affairs, 73).

Surplus labor

The Lewis-Ranis-Fei (LRF) Model of Surplus Labor (LRF) is an economic development model and not a economic growth model. Economic models such as Big Push, Unbalanced Growth, Take-off, and so forth, are only partial theories of economic growth that ad