CONTEXT AND JUSTIFICATION

DEVELOPMENTAL ECONOMICS, originated in the post war period of reconstruction initiated by the US. In 1949, during his inaugural speech, President Harry Truman identified the development of undeveloped areas as a priority for the west:

“More than half the people of the world are livingin conditions approaching misery. Their food is inadequate, they are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history humanity possesses the knowledge and the skill to relieve the suffering of these people... I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life… What we envisage is a program of development based on the concepts of democratic fair dealing ... Greater production is the key to prosperity and peace. Andthe key to greater production is a wider and more vigorous application of modem scientific and technical knowledge."

There have been several major phases of development theory since 1945. From the 1940s to the 1960s the state played a large role in promoting industrialization in developing countries, following

the idea of modernization theory. This period was followed by a brief period of basic needs developmentfocusing on human capital development and redistribution in the 1970s. Neo-liberalism emerged in the 1980s pushing an agenda of free trade and Import Substitution Industrialization.

In economics, the study of economic development was borne out of an extension to traditional economics that focused entirely on national product, or the aggregate output of goods and services. Economic development was concerned in the expansion of people’s entitlements and their corresponding capabilities, morbidity, nourishment, literacy, education, and other socio-economic indicators.Borne out of the backdrop of Keynesian, advocating government intervention, and neoclassical economics, stressing reduced intervention, with rise of high-growth countries (Singapore, South Korea, HongKong ) andplanned governments (Argentina, Chile, Sudan, Uganda), economic development, more generally development economics, emerged amidst these mid-20th century theoretical interpretations of how economies prosper .Also, economist Alber O. Hirschman, a majorcontributor to development economics, asserted that economic development grew to concentrate on the poor regions of the world, primarily in Africa, Asia and Latin America yet on the outpouring of fundamental ideas and models.It has also been argued, notably by Asian and European proponents of infrastructure-based

development, that systematic, long-term government investments in transportation, housing, education, and healthcare are necessary to ensure sustainable economic growth in emerging countries. The emergence of development studies as an academic discipline in the second half of the twentieth century is in large part due to increasing concern about economic prospects for the third world after decolonisation. In the immediate post-war period, development economics, a branch of economics, arose out of previous studies in colonial economics. By the 1960s,an increasing number of development economists felt that economics alone could not fully address issues such as political effectiveness and educational provision. Development studies arose as a result of this, initially aiming to integrate ideas of politicsand economics. Since then, it has become an increasingly inter- and multi-disciplinary subject, encompassing a variety of social scientific fields.Inrecent years the use of political economy analysis- the application of the analytical techniques of economics- to try and assess and explain political and social factors that either enhance or limit development has become increasingly widespread as a way of explaining the success or failure of reform processes. The era of modern development is commonly deemed to have commenced with the inauguration speechof Harry S. Truman in 1949. In Point Four of his speech, with reference to Latin America and other

poor nations, he said that "for the first time in history, humanity possessed the knowledge and skill to relieve the suffering of these people." But development studies has since also taken an interest in lessons of past development experiences of Westerncountries.

More recently, the emergence of human security – a new, people-oriented approach to understanding and addressing global security threats – has led to a growing recognition of a relationship between security and development. Human security argues thatinequalities and insecurity in one state or region have consequences for global security and that it isthus in the interest of all states to address underlying development issues. This relationship with studies of human security is but one example ofthe interdisciplinary nature of development studies.The emergence of development studies as an academic discipline in the second half of the twentieth century is in large part due to increasing concern about economic prospects for the third world after decolonisation. In the immediate post-war period, development economics, a branch of economics, arose out of previous studies in colonial economics. By the 1960s, an increasing number of development economists felt that economics alone could not fullyaddress issues such as political effectiveness and educational provision. Development studies arose as a result of this, initially aiming to integrate

ideas of politics and economics. Since then, it has become an increasingly inter- and multi-disciplinarysubject, encompassing a variety of social scientificfields. In recent years the use of political economyanalysis- the application of the analytical techniques of economics- to try and assess and explain political and social factors that either enhance or limit development has become increasinglywidespread as a way of explaining the success or failure of reform processes. The era of modern development is commonly deemed to have commenced with the inauguration speech of Harry S. Truman in 1949. In Point Four of his speech, with reference toLatin America and other poor nations, he said that "for the first time in history, humanity possess theknowledge and skill to relieve the suffering of these people.". But development studies has since also taken an interest in lessons of past development experiences of Western countries. Developmental economics is branch of economics that focuseson improving the economies of developing countries. Development economics considers how to promote economic growth in such countries by improving factors like health, education, working conditions, domestic and international policies and market conditions. It examines both macroeconomic and microeconomic factors relating to the structure of a developing economy and how that economy can create effective domestic and international growth. Development economics seeks to determine how poor countries can be transformed into prosperous ones. Strategies for transforming a developing economy tend to be unique, because

the social and political background of countries can vary dramatically. Some prominent development economists include Jeffrey Sachs, Hernando de Soto Polar, and Nobel laureates Simon Kuznets, Amartya Sen and Joseph Stiglitz

objectives

how can we increase the growth rate of country that can permits to ameliorate the living standard of the entire population ,. Howcan will alleviate poverty at the local level. Development Economics, a subject that studies the economics of the developing world, has made excellent use of economic theory,econometric methods, sociology, anthropology, political science, biology and demography and has burgeoned into one of the liveliest areas of research in all the social sciences.

Questioning.

Why are some countries poor while others are rich? What explainsthe success stories of economic development, and how can we learnfrom the failures? How do we make sense of the enormous inequalities that we see,both within and across questions? These, among others, are the“bigQuestions” of economic development. It is fair to say thatthe model of economic growth pioneered by Robert Solow (1956) hashad a fundamental results in development economics.

Literature review

the literature review is based on examining the various theories of growth and development. All development theories have some limited applicability to this relatively advanced stage. Neoclassical theories that stress open-economy growth, tariff and subsidy reductions,more uniform tariffs and less generalized bias towards imports, have substantial validity for this stage with an important proviso: selective targeting and protection for the buildup of industries which are either skill or capital-intensive or a combination of both. Selective subsidies, protection, and credit and foreign exchange targeting are needed if the economy is not to be locked into static comparative advantage that blocks further development. Chicago school theories centering on the buildup of human capital and knowledge are also appropriate to this stage, especially if they are reinterpreted to include the buildup of the necessary institutional capital required for human capital and knowledge to be translated into increasing economies of scale (thereby becoming non-endogenous growth theories), and if they are made multisectoral. Also important are thedevelopment theories formulated by the pioneers that stress the importance of governments for increasing the productivity of private resource-use by undertaking steps

aimed at generating externalities, especially if greater stress is placed on building the economic-institutional infrastructure for externality-creation and rather less ondirect government investment. The workhorse model of traditional neoclassical growth theory is that due to Solow (1956). The general properties of this model are well known so the discussion here is quite limited . The major innovation introduced by Solow was to allow for factor substitutability so that stable equilibrium growth could be obtained. This model is consistent with a number of stylized facts related to economic growth such as the relative constancy over time of the capital-output ratio and factor income shares. Romer (1986) resolved this difficulty by adopting Arrow's (1962) learning by-doing framework. The argument is that knowledge generation may be positively related to the scale of economic activity which is assumed to be proportional to capital accumulation. In order to have sustained growth there mustbi at least constant returns to reproducible factors. Thisimplies increasing returns overall which would violate a condition for competitive behavior. Romer posits that there may be spillovers so that an individual firm faces constant returns (diminishing returns to capital) but there are increasing returns overall. Another model which introduces endogenous technical change is a Schumpeterian

model of growth through creative destruction by Aghion andHowitt (1989). They allow for learning-by-doing and the fact that now innovations may make old ones obsolete. Whereas in the Romer model the private equilibrium will generally havy too little research there may be too much research in the Aghion and Howitt model. This approach canalso be extended to account for copying of existing technologies by firms in developing countries.

Adam Smith viewed the growth process as strictly endogenous placing special emphasis on the impact of capital accumulation on labour productivity. He began his inquiry into nature andcauses of the Wealth of Nations by stating that income per capital must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgment with which its labour is generally applied; and Secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed. According to Smith there is no upper limit to labour productivity. This is why Smith maintained that an investigation of the growth of income per capita is first and foremost an inquiry into ‘The causes of this improvement, in the productive powers of labour, and the order, according to which its produce is naturally distributed among the different ranks and

conditions of men in the society’ .Smith’s attention focused accordingly on the factors determining the growth of labour productivity, thatis, the factors affecting ‘the state of the skill, dexterity, and judgment with which labour is applied in any nation’At this point the accumulation of capital enters into the picture, because of Smith’s conviction that the key to the growth of labour productivity is the division of labour

Economic Development Theories1-Classical economics Based on critique of Mercantilism General belief on economic development through free market (i.e. trade without barriers) Adam Smith’Wealth of Nations (1776) marks the beginning Self-interest as economic drive Limitedgovernment intervention—free trade; self regulating markets [contrast: mercantile protectionism] Market prices limited bycompetition Invisible hand of self-regulating markets transform self interest into public virtue Division of labor (i.e.specialization) enhances production [distinctively industrial orientation]

2- Malthus’s Essay on Population (1798) earned economiststhe label ‘’’dismal science’’ . According tohim,Human progress limited by human passionpopulation outgrows food production While population

increases in geometric progression(2,4,8,16,…), foodincreases in arithmetic progression (2,4,6,8,10,…)

3- David Ricardo’s Principles of Political Economy and Taxation (1817) Economic development is gotten through the principles of Comparative Advantage: Countries gain when they trade productsin which they have greatestcomparative advantage and as such this will increase the GDP of that country and then leads to growth and development

4-Keynesian Economics ,they criticize the Classical economics; gained credence after the 1929 Depression Keynes’The General Theory of Employment,

Interest, and Money [1936]. According to him Markets are not self-adjusting Long-run equilibrium are untenable [In the long run, we are all dead] Economic uncertainty Savings=investment matter for economic growth Macro-level behavior Aggregate demand (country level) as driver of economic Growth Active fiscal policy to control markets (planned economies) Economic growth can be accelerated by changing the saving rate

5- Harrod Domar model (1946)Inspired by Keynesian economics GDP growth rate(g) [warranted rate of growth] depends directly on the national saving ratio (s) and inversely on the national capital/output ratio (k) (adjusted for depreciation (d)) [g = (s/k)-d] Need for capital formation (i.e. investment) for economic growth National savings as a source for capital International aid as supplement (financinggap) for savings for economic growth Government regulation ofinterest rate

6- Trickle down economics,No specific economist associated with this; yet, many governmentshave implicitly or explicitlysubscribed to this Overall economic growth benefits the poor, since benefits will ultimately trickle down the economic ladder. Tax benefits to businesses will benefit the poor since businesses will then expand, and absorb more labor(thus creating jobs) Critique: Overall economic growth does not imply that benefits are shared by all in the economy (there could be dualistic economy). Redistribution is not automatic Despite it being derided, it manages to survive in many circles.

7-international Dependencial theory (Raul Prebisch). According to this theory , the low development of LEDCS is due to their total dependency to western countries. Contrary to classical and neo-classical position that trade is necessarily beneficial Countries in the center (Europe/ N America) gain over weaker peripheral countries in trade . Benefits of industrial goods exchange are more than primary goods for exchange; while Center trades in the former, peripheral countries trade in the later. 8-Rostow’s five stages of growth [1960] Stage 1: Traditionalsociety (subsistence agriculture, barter economy, hierarchical structure, low social mobility) Stage 2: Pre-conditioning (agricultural modernization, transition to industrial economy; infrastructure growth;centralization) Stage 3: Take off (increase in industrialization, high investment, steady economic growth) Stage 4: Drive to maturity (economic and technical progress; diversification)

Stage 5: Maturity (social prosperity; mass consumption, service sector dominance)

Definations of notions .

According to Simon Kuznets, economic growth is a constant increase over a long period of time of production per head, national wealth[GDP] or other macro economic indicators

According to HIGGINS, economic development is increase that is manifested in the total and average revenue per head that is diffused amongst occupational and income group which can stay for atleast two generation and it is always cumulative

For KINDLEBERGER, economic growth signifiesproduction and a change in the technical andinstitutional changes in the economy over a longperiod of time

For Francois perroux, economic development is the combinasion of mental and social changes of a population which makes her to durably and cumulatively increase her real global product. Development is growth plus transformation of economics structure and the society as a whole

Economic development is a sustain and irrevisible increase in a country real revenue. Real because its takes into account the inflation rate

ECONOMIE DE DEVELOPMENT

INTRODUCTION

At the moment when further studies were carried on

economic development of developing countries, we

generally distinguish economics with high income from

economies with low income which are separated by a

high gulf. Many expressions were the used to design

the first category of countries; third world

countries, poor countries, developing countries, etc.

we realize that these expressions have lose their

vigor and their patience since the countries

considered in the 50s and 60s to be poor countries

have realized or witness remarkable progress in terms

of economic growth, development of education, health

systems, amelioration of nutrition and coupled with

more or less solid industrial base. However according

to COLLIER (2008), THE BOTTOM BILLION 80% of the

worlds population live in countries that are

developing in a breath taking rhythm and we even talk

more and more of emergent countries. Some of these

countries are: Brazil, Russia, India, China, South

Africa and the Dragons of south East Asia (BRICS).

It is worth noting that individuals in countries

with low income countries equally have extremely low

standard of living (access to portable water,

electricity………..). Their living conditions remains

degraded by illness, illiteracy, malnutrition and

misery. These conditions of miserable life are such

that individuals are often found with the possibility

of realizing potential genetics that each individual

disposes from birth (Hagen, 1982). We can therefore

affirm that their third world is narrowed nowadays to

concern only billion of individuals who live in the

21st century under the condition of the of the 14th

century. These individuals that COLLIER calls “the

bottom of low” live in countries having the tendency

to shrink or fall back and which are at times

destroyed or troubled by civil wars, ignorance,

inertia, corruption, etc.

These different or diverse calamities often

results from the irresponsibility of their political

class. The principal challenge of development is the

existence of these countries which are especially

concentrated in Africa and Central Asia at the

beginning of millennium beside countries which

prosper or advance rapidly towards prosperity.

Some of these countries have registered

interrupted growth which has fundamentally changed

the existence of their people (Perkins and al, 2008).

In other countries of the world, evolution was

minimum and their standard of living has remained

more or less static from one generation to another.

A third group of countries have witnessed a

fundamental passage from one economic system to

another enshrined with a significant impact on

wellbeing. All the countries being considered today

as developing countries, the principal objective of

developmental economics is to understand the

mechanisms which led some of the countries into

growth path, economic and social development.

In effect economic science is concentrated with

the priority of efficient allocation of scarce

resources. It is equally interested in the optimal

growth of these resources in the course of time, with

the goal of producing a variety of goods and

services.

Meanwhile, political economies go beyond this

egoistic conception of economic agents. Political

economics integrates social and institutional

processes through which some elected policy makers

influence the allocation of scarce resources in favor

of either their personal interest or those of the

majority population. In other words political

economics is interested in the relation existing

between economics and politics by politically

emphasizing the role of power in taking economic

decisions. (TONADO, 2000)

Development economies has an imperious or greater contribution because integrates the classical school (rationality, allocation of scarce resources) and political economics. In effect, development economicstries to analyze with the goal of understanding the economic, sociopolitical, institutional and public mechanism necessary for development and amelioration of general well-being and standard of living of the poor population. With respect to this, this discipline is supposed to be preoccupied with economic, cultural and political conditions that affect the structural and institutional transformation of the entire society. This objective is to petition the fruits from economic growth and progress to all the samples (echelon) of the society.Development economics is essentially synthetic since it tries to combine concepts and theories of traditional economics analyze with new models and multidisciplinary approaches derived from historical and contemporary studies of concrete developmental experiences.

In other words, the ultimate purpose of

developmental economics remains constant; helping us

to better understand the economies of less developed

countries in other to contribute in the amelioration

of material life of poor individuals.

At the end of this subject, a serious and hard

working student will be in a measure of better

understanding some of the critical problems faced by

nations of developing economies. With respect to

this, we are going to analyze;

The concept of development

The concept and structure of economic development

The factors of growth

Strategies of growth and development

Development theories

BIBLIOGRAPHY

Perkins and al (2009) , Economie du development

Paul collier, The Bottom Billions

North Douglas, Institutions, Institutional change and

economic performance

Maurice Kamto, l’urgence de la pensee

CHAPTER 1:

THE CONCEPT OF DEVELOPEMENT

The French dictionary ‘LAROUSSE,

(2008)’ defines development as an action to develop,

of moving towards the peak, and towards expansion,

hence the concept of development is associated to the

notion of prosperity. With respect to this, we can

say that development is a movement which is

characterized by periods of progression and

regression within an economy. An increased in

literacy rate also accompanies economic development.

In space, we realize that some

countries are more developed and advanced than

others. In fact, the concept of development is closer

to the notion of growth; it is a continuous process

in which economic, political, cultural, and social

variables are modified. Numerous structural changes

intervene in the course of a development process.

Furthermore, an important problem emerges; that of

indicators of development and growth. We shall see

that there exist different methods which permit to

define and measure economic development. From the

preceding, we are going to examine the notion of

human development indices and the millennium

development goals (MDGs).

A. DEVELOPMENT AND ANNEX CONCEPT

As already highlighted in the 70s by

HOLT and TURNER ‘research in development underscores

the importance of conceptual framework which is

derived from economic science, sociology,

anthropology, psychology, history and political

sciences’ we can therefore say that development is a

multi dimensional phenomenon and each of these

disciplines analyses a particular aspect which

correlates to master and concept the factors of

development.

1. Development : A multidimensional concept

According to FRANK HOZELITZ (1971),

Les aspect sociologigue de la croissance, ‘as from

the end of the second of the second world war, the

domain of economic science which have witnessed the

greatest plurality is that of development analysis in

the long run’. This author and many others use

differently the expression of economic development

and growth in designing or illustrating the same

reality.

For example, SIMON KUZNET affirms

that for an economy to witness growth, it requires

that production per labour should increase at a

constant rate, which is often accompanied by

population growth, growth in habitude, and

significant structural modification i.e.

transformation of socio-economic institution or

customs. Hence, development processes are social

processes which take place within a given territorial

space. The principal changes which intervened at

least since the industrial revolution in 1960s are

- Decline in agricultural sector in favor of industrial

and service sector.

- Redistribution of population between rural and urban

zones (urbanization).

- Social mobility.

- Independence in national economies.

It results that economic growth and development are

closely related.

Development and growth are related in such a

way that we can not talk of the concept of growth is

always accompanied by an amelioration of standards of

living and wellbeing. Development goes beyond the

simple increase in production and income of a nation

over a long period of time to target with GALBRAITH

(1997) called the best society.

In general, growth and development implies

secularism, equality, and nationalism.

a. Secularism

Secularism implies extending the

preponderance accorded to life on earth; a system of

value which reserves an important place within an

acceptable structure of institutions. Hence,

secularism is contrary to system of values in which

life on earth is just considered as a brief

transitory phase meriting little attention to the

collectivity.

b. Equality

Equality signifies negations of all

types of discriminations and all innate difference

between human beings; to the conception of those

resulting from human activities. Equality renders

each human being to be of equal value to the

collectivity. Mankind is considered as human

conscious of the fact that all resemblance are

endowed with freedom of expression in any language,

free and enjoying the same rights and obligations,

aspiring for happiness, a human who admits knows, and

is convinced that an American, a Cameroonian, a

French, a Liberian, a Chadian………, is equally a human

being NOUMBA(2008), page 76.

In the same manner, GALBRAITH writes

that ‘all human beings remain human irrespective of

the place where they are living’

c. Nationalism

Nationalism is the affirmation of a community of

sentiment based on common historical and cultural

patrimony. It is in this sense that the French

revolution (1789-1799) , chooses a plan of which the

three names had a nationalist significance.

Freedom (liberte): It consist here of liberation from

internal traditional oppression, liberation from

national or foreign tyranny

Equality: It signifies equality of all human beings

of the Nation State.

Fraternity: It is a situation in which the members of

a community behave like brothers and accord a

particular strong allegiance to this collectivity,

(ref: SIMEON KUNET, 1973, croissance Economique

Moderne)

As aforementioned, development is

assimilated to growth, comprises of pertinent

sociological or socio-anthropological aspects

especially in the study of countries with low income.

In effect, as supported by FRANK HOZELITH

(1971). In les Aspects sociologiques de la

croissance, there exist a relation between social

structure and economic growth, since from experience;

we observe that development is accompanied by socio-

political transformation. There exist a necessary

link between economic growth and the political and

cultural conditions that prevail in the course of

transformation process of the society.

In the course of development process, social

factors can hinder some individuals from realizing

their ambition. Amongst the factors that can

hinder development, we can have;

- Family structure and household conflicts.

- Unemployment and social exclusion

- Some traditions and customs which lead to some

negative discrimination.

- Level of literacy and health

- Alcoholism

In effect according to some authors, it is

economic distress in the 20s and 30s that favored the

coming to power of Nazism in Germany, and Fascism in

Italy, and extremists…… In all the cases, crises and

social disorder are at the same time causes and

consequences of poverty and a perverse social

structure.

Furthermore, institutionalists (such as

DOUGLAS NORTH) support the view that institutional

and political variables influence economic activity.

We equally talk of politico-economic cycles; for

example HOLT and TURNER (1970) formulated the

hypothesis according to which a centralized structure

can have a mitigating effect on economic growth. In

effect, in a centralized structure; it requires

longer time duration for information to reach the

decision taker.

Perkins et al (2008) affirms that the

relation between political evolution and economic

development process is an innate relation. In effect,

the more an economy is enshrined with good

governance, the more it benefits a high degree of

human development.

We can conclude that history, culture,

politics…….. are factors that can hinder economic

development. The consideration of these facets of

development led to emergence of new concepts which

reflects the degree of development of a country. It

results from here the fixation of objectives (MDGs)

by international community to be attained by poor

countries in other to come out of misery.

2. DEVELOPMENT INDICATORS.

These are indicators that we can use to

measure and quantify the economic performance of a

nation. We can equally use these indicators in

classification of countries. In general, there are

five principal aggregates i.e. synthetic grandeurs

which measure the results of institutional sectors;

they are called aggregates.

PIB (GDP) at market prices

National income or revenue at market or current

prices

National revenue of factors

Disposal national income at market prices of current

prices

Capacity or need of financing of the economy

(savings)

The PIB (Gross Domestic Product: GDP) and

PNB (Gross National Product: GNP) are those are often

used. The PIB is the total of goods and services; the

value of good and services produced by a nation in a

year. It excludes intermediary goods that were used

in the production of other goods such as steel used

in the production of auto mobiles, the puce (Sims)

integrated in computers, wood in fabrication of

houses……….

The PIB incorporates the production of

citizens of a country including those produced by

citizens of nation not living in the national

territory

PNB= PIB+ income received- income paid

It constitutes on the aggregates that is often

used in national accounting, meanwhile some

institution such as the World Bank, the I M F uses

RIB (Gross Domestic Income) or RNB (Gross National

Income).

The second indicator that is often used is the

PIB; it is close to the PNB when only production

realized within the economy is registered. By

dividing the PNB or PIB by the total population, we

obtain per capita income or individual income. For

some years now the UNDP (United Nation Development

Programme) have tried to calculate the Human

Development Index (HDI). Human development is a

process which aim has the objective of enlarging the

choice of human beings. In effect, at all the levels,

man is faced with the following essential choices:

Living a long and healthy life

Acquired knowledge

Have access to resources required for attaining a

decent level or standard of living. Meanwhile human

development goes beyond this conception by

integrating other aspects of life in a society such

as: political, economic and social freedom, the

concretization of a creative and productive will, the

enjoyment and respect the rights of man and other

rights guaranteed by the society. Human development

comprises two violets.

The formation of potentialities of persons through

the amelioration of health, the acquisition of

knowledge and competence

The second violet is the respect to the exploitation

of personal potentialities for leisure, realizing

productive objectives, artistic, cultural, political

or social activity

The HDI equally takes into account, life

expectancy from birth, adult literacy, gross

enrolment rate in primary, secondary and higher

establishments. It as well integrates PIB per capita.

This indicator is said to be composite.

Development indicators and HDI permits the

classification of countries in the world. In 2003,

the classification using the PIB per capita led to

the distinction of four categories of countries;

1) Countries with low income (countries with their

per capita income converted to the US dollar is less

than 765$)

2) Intermediary or middle countries; lower or

inferior tail (per capital income between 765USD and

3035USD)

3) Intermediary or middle income countries; upper or

superior tail (per capital income between 3035USD and

9385USD)

4) Countries with high income (more than 9385USD)

Remark: most of the countries in ‘Black Africa’

belong to the first category.

B. THE MILLINUM DEVELOPMENT GOALS (MDGs)

In September 2009, 199 countries adopted a

document of a set of objectives to be attained at a

time horizon of 2015 (look for the objectives) it

consist of the millennium declaration of countries 1

which these countries engage in ‘making the right to

development a reality for all and putting the entire

humanity under the shelter of their needs’ it is in

this frame work that this declaration that was made

of eight objectives was fixed. These objectives were

proposed by the UNO.

MDG 1: Reduce extreme poverty and hunger:

MDG 2: Ensure education for all:

MDG 3: promote gender equality and women’s

empowerment:

MDG 4: Reduce child mortality:

MDG 5: Improve maternal health:

MDG 6: Combat HIV, Malaria, and other illnesses:

MDG 7: Ensure environmental sustainability:

MDG 8: Establish a global development partnership:

The deepness of these objectives has led to an 18

target for each indicator

Objective 1: reduce by half 1980-2015, the proportion

of population were revenue is inferior to 1dollar per

day

CHAPER 2:

GROWTH CONCEPTS AND SCHEMES

Let’s recall that we often use concepts of

economic growth and development interchangeable,

whereas their signification is not identical. When we

talk of economic growth, the idea that emerges is

that of an increase in production, measured by PIB

per capita, or per capital income of a

country.Consequently, economic growth makes reference

to a variable such as essential quantitative, while

development makes reference to qualitative aspects eg

standard of living,poverty. furthermore it is

important to retain the PIB or PNB are not two

identical aggregates. A fraction of income from

domestic production can be paid to abroad. Economic

growth improves people’s standard of living, and vice

versa improvement of people’s standard of living has

positive impacts on economic development. Economic

development involves the transformation of a country

from an agricultural based economy to an industrial-

service based economy.The expression economic

development complimentary aspects:

First of all we have economic development to design

economic growth to which is added the amelioration of

material wellbeing (nutrition, health, education,

drop in mortality)

Finally, in a purely technical plan, economic

development designs all the transformation in sets of

socio-economic complexes i.e. the constellation of

factors of which their installation forms a system:

economic systems (ref: FURTADO, 1976: Development

Economique). It integrates all the external aspects

(effects) of growth which is desirable or not,

beneficial, prejudiciary of neutral. these

transformation are notably realized on:

The type of goods produced

The method of production

The structure of employment

The environmental milieu

The reinforcement of economic quality

Political freedom

The realization is that economic growth is a

normative concept and its apprehension is not easily

done through the index, unique measure. However, we

cannot talk of development without talking of

economic growth. “Without economic growth, it is

impossible to have durable development and to reduce

poverty” (Perkins and all)

In this chapter, we are going to successively

examine the structure of economic growth and

characteristics of high income countries

1 STRUCTURE OF ECONOMIC GROWTH

The observation of economic development over

time and in space generally puts in evidence

divergent futures (structures) which are notably

translated by the difference in which economic growth

rates.

In 1960, Thailand and Zambia had an average per

capita income close to 1100$ and 1200$ respectively,

from this time, Thailand had registered a rapid

economic growth rate resolves around 4,5% (per capita

growth) in 2003, the per capita PNB was about 7100$.

In the same sense, in 2002, the average real income

in Thailand was six times greater than that 40years

ago.

Today Thailand can benefit a higher consumption

with equally high quality, a decent inhabitant has

access to health care and durable goods. Likewise,

life expectancy from birth has moved from 53 to 69

years. Infant mortality felt from 103 per thousand to

24 per thousand. Adult literacy (proportion of adults

which can read and write) increase from 80% in 1970

to 93% in 2002)

The history of Zambians and Zambia shows a

different perspective. Average revenue instead felt

by 0,6% per year up to an amount close to 900$ giving

a fall of 20% using the base of 1960. Life expectancy

from birth felt from 42 to 37 years. Infant mortality

ameliorated from 136 to 102 per thousand. Likewise,

adult literacy increased from 48% to 80%.

Nevertheless that infant mortality and adult literacy

as ameliorated; we can say that the living standards

of Zambian have deteriorated as compared to 1960.

This differentiated feature of economic growth is

reflected in many countries with low income. We

therefore have four categories of countries

First category: countries that the revenue decreases,

i.e. countries that register a negative growth; the

case of Zambia

Second category: countries that their growth rate was

slow, low rate of growth, the case of Rwanda, Kenya,

RSA.

Third category: countries that registered a growth

rate

Forth category: industrialized countries; the case

of Japan, Indonesia, South Korea etc

The growth of china is a veritable event marking the

20th century. In effects its development took place in

a highly rapid manner, in such a way that people are

thinking that china will become the leading country

or economy in the world in the closet future.

Countries with the most rapid growth rates are

found in south Asia; meanwhile, countries with low

growth rate are found in Africa (Botswana, Mauricio’s

island). Hence, it is legitimate and logical to think

of the factors that are in relation or induced these

different futures.

I. CHARACTERISTICS OF COUNTRIES WITH RAPID GROWTH RATE

Here, what is of the interest are

the characteristics that differentiate that grow

rapidly from countries that grow at slow rate. From

the work of BARRO (1991), Economic Growth in a cross

section of countries quarterly; many empirical

findings have been concentrated on determining the

determinants of economic growth or variables that are

susceptible to influence growth. These variables are:

the level of education, the choice of policies, the

endowment of resources, the geographical

characteristics, the political system etc

Despite the problems posed by these findings, in

theoretical and statistical plans, we can underline

five major characteristics which reparation countries

with respect to their growth rates

1) MACRO ECONOMIC AND POLITICAL STABILITY

We confirm that stability is

generally good for economic growth. They permit

entrepreneurs to undertake investment decisions with

a certain degree of assurance. Political and macro

economic stability is a source of disincentive for

investment, hence hindering or slowing down growth

and development. Example, Chad, DRC, Cameroon

If we take example of DRC (Democratic

republic of Congo), we will realize that this country

witnesses hyperinflation of which the average rate

was 2800% per year in 1990 and 2002. This country

equally had civil wars and frontier conflicts in

which neighboring countries and foreigners were

involved.

It is not surprising that, the results of

this country with respect economic growth and

development was one of the deterring or was amongst

the worse countries of the world; a negative growth

rate of (-7.2% per year), life expectancy from birth

of 45%, infant mortality rate of 139 per thousand.

2) INVESTMENT IN EDUCATION AND HEALTH

Empirical observation permits us to realize

that countries having good health delivery systems

are having high life expectancy and a high or rapid

growth rate. In effect people in good health have

higher chances of investing in education to acquire

further or new knowhow which will permit them earn

higher income. Like wise, Long life expectancy

translates general amelioration which intervenes in

health delivery system and consequently, an active

population which is healthier and more productive.

Same, a higher level and quantity of education is

translated generally by the best qualification of the

active population and an increase in productivity. In

effect a comparative active population has to be in

measure work more rapidly by making little errors.

3) GOOD GOVERNANCE AND EFFECTIVE INSTITUTIONS

It is worth recalling that the principal

approaches of the concept of governance are based on

the idea of a capable, competent, and accountable

state in the view of the citizens. According to

kufmann and kraay (2008), it consist of a state which

leadership respects the role of collaboration,

cooperation and interdependence of the different

branches of power, here governance and institution go

together and are synonyms.

In effect, from the World Bank (2002),

governance designs the set of public institutions

which can in some measures at the same time

facilitate the functioning of markets, the

cooperation between the different operations linked

or related by the different types of contract and

finally ameliorate the socio economic performance of

a nation

Credible institutions are that which has good

governance. It creates favorable environment for the

private. More so, element with relation to good or

bad governance has reinforced geographical approach

of development

The role of governance and of

institutions in economic growth and development

gained or drew at attention only as from 1990s due to

the influence of findings of Douglas North

(Institutions). His finding led to conclusion

according to which the reinforcement of governance

and institutions contributes significantly in

ameliorating the conditions of investment and

reducing risk and increasing profitability. Empirical

studies put in evidence the positive relation between

economic growth and the force of state of law, the

degree of corruption, property right, and the quality

of public administration etc. for example investors

will be incited to carry long term investment

implantation if they are assured or if they estimate

that property right is stable and that their

factories, machines or land will not be seized

(example: Zimbabwe)

Like wise, low levels of corruption contributes

in reducing the cost of investment and increasing

productivity since managers will concentrate their

attention on production instead of seeking to

influence decision makers.

The most effective public power are those which

have established a governance system based on

facilitating and not hindering economic management

putting in place efficient social programmes, solid

private sector, nevertheless, there equally exist

other elements that characterizes countries with

rapid growth rate:

4 AN ENABLING AND FAVORITE ENVIRONMENT FOR THE

PRIVATE SECTOR:

In effect, we estimate that the growth of the

Chinese agricultural production amplified when the

authorities of this countries privatized that public

section; permitting farmers to sell their products in

the market.

4) A FAVOURABLE GEOGRAPHY:

It is worth realizing that greater

fractions of industrialized or developed countries

are found between the arctic and tropic of cancer. In

other words, with the exception of Singapore and few

countries (Libya...), all the countries with low

income are found between the tropics of cancer and

Capricorn

CHAPTER 3

FACTORS OF GROWTH

In his book titled; monnaie, servitude, et

liberte: la reflection monetaire de I’Afrique, prof

TCHUNDJUANG P. J. Affirms “ I think that actual

economic and social problems in Africa are monetary

problems” in other words, according to the author,

money appears as a very important development factor

in African countries. This importance was equally

observed in all developing countries by HAGEN (1982)

who distinguishes many categories of factors of

growth.

Land

Man power (labor)

Physical capita

Scale of production

Technical progress

Entrepreneurs

Institutions

1) LAND

Land represents the set of all resources

endowments of a country. But land is not a homogenous

factor. From this, we distinguish: deserts, dry land

and semi dry lands which occupy up to 43% of the

total land total land surface of the planet earth. A

fraction of this land is occupied by towns,

communication infrastructure such as roads, railway

lines, etc

In a general manner, land or the territory

supplies space, facility and minerals destined for

production. Hence, we can say that development has a

certain spatial dimension since an enterprise can

benefit from external effects due to geographical

position, its localization (proximity to raw

materials, market etc).

However, the factor land does always play a

determinant role in the process of economic

development as shown by the examples of countries

like Japan, Sweden, Israel, Netherlands etc.

Land as a space, agricultural resources and

minerals can be considered as human creation

(irrigation, drainage etc)

2) MAN POWER (LABOUR)

Man power is equally represented by abundant labour of work force in most developing countries (countrieswith low income ). Man power is related to the population which JEAN BORDIN (16th century). Considered as the unique source of wealth of nations.In effect it is human who valorizes and put in place all the other factors of production. But as affirmed by MC NAMARA (1973). “Excessive demographic growth constitutes a major obstacle to economic and social progress of majority of inhabitants of underdevelopedcountries” the fear of worries of MAC MAMARA seem to be justice in measure where at the end of the year

2005, 5 to 6.5 billion of the world population lives in countries with low income or intermediary income countries. In all the cases, a poorly mastered demographic growth can aggravate the problem of access to basic social services (education, health, portable water, etc). The greatest worry is the riskof famine and aggravation of poverty. As economies develop, the division and specialization of labor increase in response to the size of the market _..

3) PHYSICAL CAPITAL

Accumulation of physical capital through

investment is growth and development factor. The

formation of physical capital is effectuated on all

the objects done or fabricated by the hand of man.

The factor is used in production process.

In a strict sense, when we talk of capital, we are

making reference to durable goods that are used in

the production process and very durable consumer

goods such as houses and development in land. The

formation of capital verifies three functions:

It replaces absolute capital

It supplies capital necessary for augmentation of

man power or diminution

It increases the capital labor ratio (k/l)

Investment which is a source of accumulation of

physical capital produces multiplier effects (change

in Y=k change in L)

4) THE SCALE OF PRODUCTION

As affirmed by HAGEN, “As from ADAM SMITH,

economist were interested on the theories of

economies of scale”.

These are economies of scales when an increase in

quantity produced is realized at a lesser unite cost.

That is, production increase is realized as a less

unite production cost. That is, production increased

is realized as a less unite production cost. We

observe that the technological progress was marked by

invention of machines which permits to increase

production. Meanwhile, this material is profitable if

production is realized in large quantities.

When the material is profitable, massive production

for high consumption will led to commercial extension

and auto maintained production will led to the

process of economic growth

5) TECNOLOGICAL PROGRESS

We acknowledge that technological progress of a

country is perused for a sufficient long duration,

the country will probably attain a stage where in all

the areas or in all domains or the other, she will

elaborate techniques which will either be equal or

surpass those witnessed in advanced countries. This

transfer or transmission of technology from advanced

economies. This transfer or transmission of

technology contributes in increasing the productivity

of factors and total production

However, in the growth in production, there will be

an element which does not explain growth in factors.

According to some authors, technical progress is in

totality a product of investment in education,

research, and physical capital which are determinant

factors for growth and development.

According to D. W. SCHULTZ (1964), in his book:

Transformation Traditional Agriculture. “progress in

knowhow and in new factors depending in this knowhow,

are often deviated as if does not consist of

production of means of production but simply event

that are produced due to the passage of time. This

conception is implicit in the notion of technical

progress…… what is hidden in technical progress are

new factors that are particular or individual factors

of production which are not adopted and employed

because it is profitable to be done by the

enterprise. These new factors are the new factors of

production that are produced”.

Finally, numerous empirical finding have put in

place annual in place annual increase in total

productivity of factors which are greater than

increase due to all combined factors. In other words,

not all increase in production is not due to the

unique fact of increase in factors of production but

due to all combined factors of production but due to

tehnical progress or technology in the process of

growth. This increase which is not explained by

increase in factors was 1.1% in USA, 1.8% in Canada,

4% in South Korea and 4.5% in Japan between 1960 and

1973.

The inverse seems to be close and nowadays, we

generally accept the technical progress is not

autonomous factor of production

6) ENTREPRENURS

Entrepreneur are at the origin of the process of

growth and technical growth. They influence the

employment of the other factors of production. It is

worth remarking that we generally distinguish

entrepreneur from managers. The latter represents

what GALBRAITH calls techno-structure; meanwhile,

entrepreneurs are proprietors who take risk by

investing their capital and their energy.

We observe that in all the major American society,

the president of the board of directors (PBOD) plays

the role of an entrepreneur and a Director General

subordinated to the PBOD is occupied with management.

The entrepreneur renders functioning the firm with a

certain quantity of factors of production with which

comprises capacities of management. They seek to

maximize the firm’s profit in the short run and long

run by increasing or enlarging the size of the firm

and by conquering an increasing market share.

Entrepreneur equally realize innovation by

introducing novice (new) procedures of products in

their knowhow which finally increase the productivity

of other factors of production are neither systematic

nor substitutable because the innovation resulting

from the action of entrepreneur effectuates a

transformation in the relation between the other form

the action of the entrepreneur effectuates a

transformation in the relation between the relation

between the other factors of production.

In summary, by taking risk through investment and

expansion of the activities of enterprise,

entrepreneurs contribute to the growth and

development of a nation.

SHUMPETER affirms in the capitalism, socialism, and

democracy that: “the role of the entrepreneur

consists of reforming the routine of production by

exploiting an invention or more generally novice

technical possibility (production or exploitation of

a new source of raw material, new outlet, or

reorganization of an industrial branch)”

7-INSTITUTIONS

We can remark that in countries where growth is more

rapid, public management have mutated starting from

a high great efficacy (Botswana or Singapore) to a

highly mitigated action (Thailand, Indonesia). But

the latter was better than in countries where growth

is slow. The institutions which worth analyzing can

be classified into five categories:

Market generating institutions:

These institutions protect property right, ensure

the respect of contracts, minimizing corruption and

in a general manner, they enable to put in place the

state of law. In the absence of these institutions,

markets will risk not to exist or will malfunction.

Contrary, their reinforcement contributes in favoring

investment and entrepreneurial spirit. For example,

an independent judicial power, an effective police

and applicable contracts are necessary for a good

market in a society as a whole.

Market regulating institution:

These institutions take care of market failures

(imperfection of information, economies of scale,

externalities………). It consists of institutions which

limit monopoly power and participate in the

establishments of the bases on which made the

construction and management of public goods (routes,

irrigation system……..). Example: public utilities

regulation agencies.

Market stabilization institutions:

This category of institutions control the

evolution of prices in order to guarantee a moderate

inflation, limit macro economic instability, assure

fiscal instability and evict financial crises. For

example: central banks, exchange rates systems,

fiscal and monetary regulations; belongs to the set

of market stabilization institutions.

Market legitimating institutions:

They assure the protection, social assurance and

participate in the redistribution of incomes. Their

role consists of protecting individuals and the

society against unfavorable market stabilization

institutions or results. For example, retirement

schemes, unemployment assurance etc are examples of

institutions that enable to legitimate the market.

REVISION QUESTIONS :

Question 1:

As affirmed by MC NAMARA, demographic growth

constitutes a major obstacle to the social and

economic development of inhabitance in a country. In

your opinion, how is this demographic growth an

obstacle to growth?

Question 2:

As affirmed by MC NAMARA, “excessive demographic

growth constitutes a major obstacle to even

development and social progress in under developing

countries” Discuss

Question 3:

Is man power a source of growth?

CHAPTER 1V

THEORIES OF ECONOMIC GROWTH

The theories of economic growth are based on

explaining the factors which can increase production

and increase economic growth (SIMON KUZNET). These

factors are labor and capital. The analysis of growth

is based in the long run and as such it studies the

role played in the accumulation of different forms of

factors. Growth can be possible thanks to the

innovation of capital which have direct effect not

only on the agents which realized it but also on the

environment. In this chapter, we distinguish the old

growth theories and endogenous growth theories

A) OLD GROWTH THEORIES

We can regrouped these theories in 2 categories; the

model from Keynesian inspiration ( post Keynesian)

and the Neo-classicals models. Our question here is

to know whether durable growth is possible and if yes

in what conditions

1) Disequilibrium Growth of the Post-Keynesians

Four authors are at the origin of disequilibrium

The Harrod and Domar Growth theory

The Kaldor and Robinson model

a) The Harrod and Domar growth theory

In this theory, savings plays an important role in

the growth process. It is in 1948 that Roy Forbes

Harrod (1900-1978) formulated the first post-

kynesians growth model. Being inspired from the

Keynesian analysis, he envisaged a possible of

unemployment in the growth process. He consider three

growth rates:

Effective growth rate (g):

It corresponds to the growth rate which is

effectively realize in the economy in a given period

of time.

g = Yt – Yt-1 x 100 = change in Y =

Yt-1 - Yt

Yt-1

Y Yt

Guarantee growth rate :

It is that growth rate which assures equilibrium

between savings and investment. Here investment

depense on the anticipation of entrepreures. But it

is difficult for savings to corresponds to investment

because savings depense on revenue. Savings thus have

little chance to lead to guarantor growth rate which

can assure macro- economic equilibrium such as full-

employment of factors of production.

Natural growth rate:

It is full employment growth rate. It can result from

an increase in population and technical progress are

considered to be exogenous data i.e. consider to be

external from the real sphere or no mechanism does

not influence natural growth rate for it to assure

full employment An ideal Growth rate is that which

can integrate the three growth rates seen above

EUSEY DOMAR presented a fundamental model based on

the Keynesian theory of effective demand. He shows

the difficulties in realizing an equilibrium growth

in a real economy. To him, investment induces 2

effects

- Demand effect

- Capacity effect

The Demand effect of investment comes from the

multiplier. The multiplier total demand to induce

investment in which total supply depends on the

marginal propensity to consume either in a closed

economy or in an open economy where we have

importation rate. In the close economy, the

multiplier is given as

Change in Y = K change in I implies K

= Change in Y or K = 1

Change in I 1-c

While in an open economy, it is given as

K = 1

1-c +m

The capacity effect of investment is also called ex-

post. It permits to increase the capacity of

investment and productivity. The investment capacity

depends on technical coefficient or the productivity

of capital. Growth is equilibrated when the demand

effect and the capacity effect are at equilibrium

i.e. when demand evolves, in the same rhythm with

production capacity.

b) Kaldor and Robinson Model

The works of Nicolas Kaldor (1908-1986) and Joan

Robinson (1903-1985), published from the middle of

1950, brings out a solution to the problem of

instability brought by Harod- Dormar models.

According to Kaldor, the Marginal propensity to save

(MPS) to entrepreneurs is more than that of the wage

earners. According to him, savings is not an

independent parameters having weak probability in

order to equalized the amount of investment and

assure guarantir investment and to assure guarantir

growth rate. It is thus an adjustable variable which

will depend not only on global level of revenue but

also on the distribution of global revenue.

According to kaldor, we can deduce that investment

and saving are function of the part of profit in

global revenue. Also, if the savings rate is

insufficient to cover the investment expenditure of

the enterprise, the economy will be in a situation of

excess demand over supply. This excess demand will

increase prices if and if nominal salary remains

unchanged, this will lead to excessive profit

realized by the entrepreneur. This phenomenon leads

to a modification of the distribution of revenue

which may have an influence over investment

Robinson considers that investment is interacting

with profit in a more or less harmonious way.

Accumulation in investment leads to profit which is

the principal means of financing and motivating

investment. But profit depends on past investment. It

is the interaction between these 2 variables i.e.

profits and investment which permits to define an

equilibrium growth path, the effects of profits on

investment have to be compactable with the effects of

investment on profits i.e. the profit rate gotten

from investment have to in turn increase the profit

rate. As such, the model of Kaldor and Robinson that

it is the distribution of profit and the investment

effects that have to assure equilibrated growth rate.

2) THE NEO CLASSICAL EQUILIBRATED GROWTH RATE:

It is Solow (1956) who brought out the neo-

classical equilibrated growth model. This model is

based on the neo-classical production function which

permits us to better understand the Harod and Domar

equilibrated growth. According to solow, we have

equilibrated growth when the flexibility of prices

permits to assure full employment. Also an excess in

the supply of labor will leads to a fall in salary

which will induced enterprises to hire more workers

and thus adopt a less capitalistic production

combination. It results that it is the substitution

of capital for labour which will permit the economy

to realized full-employment. The utilization of the

private function based on substitutable factors (K

for L) gives a demonstration which is contrary to the

Domar-Harod model which stimulated that growth can be

natural or automatically equilibrated. Solow thus saw

the necessity to take into account residual factors

in the growth theory. He represented this residual

factor in the form of technical progress.

B) ENDOGENOUSE GROWTH THEORIES

This theory appeared in the middle of the 80 notably

with the worker of Romer and Lucas (1988).

Endogenous growth theories explains the evolution of

GDP per head from the accumulation process without

using external factors called exogenous factors. At

the origin of this, we will see 2 contestation

- Most countries have experienced or are still to

experience long term growth with low population

growth.

- Growth rate of GDP per head vary from one country to

another

For the theoreticians of endogenous growth theories

who are inspired from the method of the neo-

classicals, have contradicted the solow model. Their

methodology consist of modifying certain hypothesis

of the solow model

- Firstly production function have an increasing

returns to scale

- Secondly, the marginal productivity of capital

decreases and even tends to zero.

In these situation, capital accumulation increases

production but at a lower rate because the quantity

of labor is constant.

By allowing the based hypothesis, we will have the

AK model which plays an important role in the

exogenous growth theories. In effect this AK model,

describes a path where productivity increases at a

constant rate as capital. According to the AK model,

identical economies can have different evolutions.

Endogenous growth theory accord an important place

to the external effect. This can be seen in the

analysis of Schumpeter in his book “Capitalism,

Socialism and Democracy”. The residual factors in

this theory are considered as endogenous element.

According to him, growth provoked the accumulation

of residual factor which on its turn led to growth.

From this analysis, Schumpeter brought out the idea

that innovation leds to growth and vise versa.

Progressive innovation results from the accumulation

of proceeding innovations. Definitely, there exist 4

endogenous source of growth.

PAUL ROMER: He affirm that the engine of economic

growth comes essentially from the accumulation of

Knowledge such as formal and informal education

LUCAS: Privileges the accumulation of human capital.

ROMER: Also study the accumulation of technological

capital due to innovation and Research/ Development.

BARRO: Who analysis the role of public expenditure on

growth

From the above theories, we can see that the main

theory is that of BARRO because public expenditure is

directly productive and will thus stimulate one of

the production factors.

ConclusionEconomic growth has been at best stalled for the

overwhelming majority of developing countries since 1981. But there is hope. The last decade and a half has been one of substantial institutional restructuring in a large numberof LDCs and the beginnings of restructuring of the global trading environment. It is hoped that there will be a resumption of economic growth and development in LDCs in thenear future. Such resumption will require: (1) a better understanding of the need to tailor institutions and policies appropriately to the particular country's moment inhistory. Situational relativism must become commonly accepted by academic development economists as well as by policy makers, both within developing countries and in the international development-policy community; (2) the restructuring of the global trading regime and internationalpayments system so they become more appropriate to the development and growth needs of all countries, developed or developing; and (3) an acceleration of economic growth in the OECD countries.

Maladie Hollandaise (Dutch Disease) is the apparent

relationship between an increase in the exploitation

of natural resources and a decline in the

maurfacturing sector. An increase in revenue from

natural resources (inflow) of foreign currency will

lead to the revaluation of the currency compared to

that of the foreign currency. This revaluation will

lead to an increase in the price of exported goods to

be less competitative due to an increase in price

Cameroon economy overview .

For quarter of a century following independence, Cameroon was one of the most prosperous countries in Africa. The drop in commodity prices for its principal exports —petroleum, cocoa, coffee, and cotton — in the mid-1980s, combined with an overvalued currencyand economic mismanagement, led to a decade-long recession. Real per capita GDP fell by more than 60% from 1986 to 1994. The current account and fiscal deficit s widened, and foreign debt grew. Yet because of its oil reserves and favorable agricultural conditions,Cameroon still has one of the best-endowed primary commodity economies in sub-Saharan

Africa. The government embarked upon a series of economic reform programs supported by the World Bank and International Monetary Fund (IMF) beginning in the late 1980s. Many of these measures have been painful; the government slashed civil service salaries by 65% in 1993. The CFA franc — the common currency of Cameroon and 13 other African states — was devalued by 50% in January 1994. The government failed to meet the conditions ofthe first four IMF programs. Recent signs, however, are encouraging. As of March 1998, Cameroon's fifth IMF program — a 3-year enhanced structural adjustment program approvedin August 1997 — is on track. Cameroon has rescheduled its Paris Club debt at favorable terms. GDP has grown by about 5% a year beginning in 1995. There is cautious optimism that Cameroon is emerging from its long period of economic hardship. Despite a difficult global context marked by lower commodity pricesand deteriorating terms of trade, domestic economic activity has remained solid. Domestic demand has continued to grow, driven by major infrastructure projects and measures to revive production in several sectors. In 2013,

Cameroon produced a medium-term budgetary framework in line with a directive issued by the Economic and Monetary Community of Central Africa (CAEMC) on programm budgets. The framework is in line with the growth and employment strategy paper for 2010-20 (Documentde stratégie pour la croissance et l’emploi, DSCE), emphasising growth and employment and focusing action on developing infrastructure through major energy, transport and telecommunications projects. In addition to these actions to reduce production-factor costs, measures have been taken to support the modernisation of Cameroon’s production equipment, especially in the agricultural sector (tractor assembly plant in Ebolowa), andto support the development of manufacturing industries (leasing).

A prominent feature in Cameroon's economic development strategy was the development of an Industrial Free Zone (IFZ), which covers the entire country. Manufacturing and service industries authorized to operate under the program pay no duties on imported inputs,

require no licenses, and are exempt from customs control

The average observed economic growth rate from 2010 to 2013 is a mere four percent, one percentage point below the ‘Vision 2035’ targets. Achieving the official objectives set for 2020 would require Cameroon to move to double digit annual growth rates over the 2014–2020 period, compared to the 4.8 to 5.4 percentprojected by the World Bank. This calls for renewed attention to the sources of growth in Cameroon to identify policy areas that can help“muster all our energy to champion this cause and summon all our strength to ensure growth”, as emphatically expressed by President Biya in his end of year 2013 address. Better access toimproved infrastructure services is an important engine for economic growth. The poor state of infrastructure is a key bottleneck to growth in African countries, and Cameroon is noexception. In spite of a sluggish global economy, preliminary information suggests that economic growth in Cameroon could reach about 4.6 percent in 2013 (compared to 4.6 percent in2012). The economy grew by 2.9 and 3.8 percent

in the first two quarters, respectively (over the same quarter in the previous year,

As in recent years, the tertiary sector is the maindriver of economic growth (telecommunications and transport being particularly dynamic. In the primary sector, industrial and export-oriented agriculture has driven growth. Rubber and cotton exports have continued to rise while cocoa exportshave reversed their downward trend due to better prices (Coffee exports however have fallen by about 50 percent, due to a combination of factors:the slowdown in production due to aging plants anda gradual retreat from the sector, was compounded with exporters building up coffee stocks because of low international prices. Despite a difficult global context marked by lower commodity prices and deteriorating terms of trade, domestic economic activity has remained solid. Domestic demand has continued to grow, driven by major infrastructure projects and measures to revive production in several sectors. Growth recorded in 2012 was consolidated in 2013, although it was slightly lower than forecast. This growth was driven mainly by the tertiary sector, which accounted for 47.8% of gross domestic product

(GDP), one percentage point higher than in 2012, thanks to strong performances by the transport, telecommunications, trade and hotel and catering industries. Growth was also supported by a recovery in certain branches of the secondary sector, with strong performances by the construction and extractive industries (oil and gas) and investments in basic infrastructure. Thisgrowth trend is forecast to continue in 2014 and 2015. In 2013, Cameroon produced a medium-term budgetary framework in line with a directive issued by the Economic and Monetary Community of Central Africa (CAEMC) on programme budgets. The framework is in line with the growth and employment strategy paper for 2010-20 (Document de stratégie pour la croissance et l’emploi, DSCE), emphasising growth and employment and focusing action on developing infrastructure through major energy, transport and telecommunications projects. In addition to these actions to reduce production-factor costs, measures have been taken to support the modernisation of Cameroon’s production equipment, especially in the agricultural sector (tractor assembly plant in Ebolowa), and to support the development of manufacturing industries (leasing). The aim is to ensure that

natural resources are exploited judiciously – especially in the agriculture, forestry and livestock and fisheries sectors – by growing the value chain of promising sectors (cotton, textile and clothing; timber;cocoa; rubber; etc.) through the promotion of agri-business. This strategy contributes to fiscal sustainability by reducing the country’s strong dependence on export revenue and oil prices. The strategy also aims to strengthen competitiveness by incorporating a larger market share into intra-regional trade. Achieving this objective will be helped by additional roads leading to the main sub-regional markets in CAEMC countries and Nigeria. Parliamentary and local elections ran smoothly, bolstering socio-political stability in a region plagued by political and security crises. These elections redistributed the roles of the president’s ruling party and the opposition, but the president still holds a comfortable parliamentary majority allowing his party to legislate without risk.

Cameroon’s economic freedom score is 52.6, making its economy the 136th freest in the 2014Index. Its overall score is 0.3 point better than last year, reflecting gains in trade

freedom and fiscal freedom. Cameroon is ranked 29th out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the regional average. Over the 20-year history of the Index, Cameroon’s economic freedom has been stagnant near the lower boundary of the“mostly unfree” category, and its overall score has improved only 1.3 points.Deteriorations in half of the 10 economic freedoms, including property rights, investmentfreedom, and monetary freedom, have counterbalanced notable improvements in trade freedom and fiscal freedom.Substantial challenges remain in the struggle to promote stable long-term economic development, and lingering institutional weaknesses call for much greater commitment to reform, particularlyin two areas. Cameroon continues to score belowthe world average in freedom from corruption and the protection of property rights, and marginal reforms in these critical areas have failed to generate much improvement.

BACKGROUND: President Paul Biya has held officesince 1982 and was re-elected in October 2011. Though he claimed 78 percent of the vote, the election was marred by irregularities. Relativestability has allowed Cameroon to develop limited infrastructure to support its emerging oil sector. Although the government claims to maintain strong civil-rights laws, charges of discrimination and abuse of human rights are abundant.In 2012, Cameroon tightened its bordersecurity with Nigeria after attacks by the Nigerian terrorist group Boko Haram.Cameroon’s economy, highly dependent on commodity exports and subject to burdensome regulation, has been seriously affected by the global economic slowdown. The International Monetary Fund is calling for reforms to reverse the hostile business environment and attract more infrastructure investment.

A NECESSARY CONDITION FOR CAMEROON TO REACH THE 2035 DREAM.( TAKE-OFF ECONOMY)

According to an article “ Ethnicity And TheEconomy In Cameroon” by Dieudonne (furtherexplained by Chrys), the economy of Cameroon in orderto succeed in her economic policies needs a binarycurrency system. By this the economy has twocurrencies, in which one of them is used only at thenational level and is not convertible and the other,used at the external level and is convertible toforeign currencies.

The national currency which is not convertiblesustain the purchasing power of the population at alltimes and do not face competition with the otherworld currencies. Such that if, for example thesalaries of workers are increased (in the nonconvertible currency), the demand power fornationals will be boasted and they will demand moregoods. The advantage here is that they will notdemand but foreign imports but home goods. Anincrease in demand will encourage home production orshall increase supply , bringing in an increase inemployment and consequently an increase in economicgrowth. We equally see that we can export the excesssupply, by using the convertible currency which willbring in foreign exchange earnings . It is theseforeign exchange earnings which will enable us buycapital goods from abroad and expand on our homeproduction.(investment).

So we see that a country without foreign currencywill not grow as it will lack the necessary capitalequipments which she cannot produce.

Why is it that a single currency system(which is convertible) will not attain the objectives of the economic policy?

The reason is this, For example if an expansionaryfiscal policy is applied, the incomes of householdswill increase. Their purchasing power will be boasted, but in this case the can consume both domestic andforeign goods as the currency is convertible. Peoplealways attach a certain degree of trust to foreignproducts over home products Consuming foreign goodswill discourage home production and the economy willnot grow.( this is because most households preferimports to home products.)Aside why is it that when there is a crisis in theEU , it affects us, the Cameroonians?Cameroon’s currency is fixed to the French francwhich is convertible to euro. This means we importand export in euro. At any moment there is a eurocrisis , the effect is transferred to us throughexports.(export here is a transmission mechanism)Equally, much Cameroon’s large companies are owned bythe French. We have SOCAPALM, SODECOTTON, CEMENCAM,ALLUCAM etc. Because Cameroonian banks are poor,these companies borrow funds but from the EU banks.

If there is a financial crisis within this EU , wecatch a cold because credits will be reduced and allthese companies named above will have insufficientcapital to expand. We can estimate the devastatingeffects it will have on our economy.We even see that must Cameroonians banks are owned byforeigners.(BICEC, SGBC,CBC, AFRILAND etc)ALL ECONOMIC DEVELOPMENTS IN CAMEROON ARE POSSIBLE WITH MONEY.What do we mean here? Cameroon’s economy can progressvery well just like GHANA, NIGERIA, SOUTH AFRICA etcif we have our own independent currency which is notconvertible into foreign currencies or foreignreserves or earnings. Before we go into seeing how anational or local currency can lead to thisprogress ,lets first see how , the phenomenon oftrading with foreign currency operates. If Cameroon’s 10 frs is equal to1 dollar , it means with 1 dollar in Cameroon , thecentral bank can exchange it with 10frs , so thatthe person owning it can be able to transact inCameroon( we see that with moxre dollar in oureconomy more francs CFA will be created and oureconomy will be on the advantage with this.) .Noteequally that the Francs CFA that we produce inCameroon is as a counterpart to production from:

The local source State production Export, when we sell in foreign currency.

Given that in all at the beginning we had 15000 ofthe total FRS CFA. If a Cameroonian exporter sellsabroad and has 1000dollars,then for him to buy inCameroon , he will exchange 1000 dollars with10000frs(10×1000) and the total frs in the economywill be 10000+15000 =25000frs.If foreign Companies sell in Cameroon and the sameCameroonian who had the dollar wants to buy fromthis foreign companies something say at 15000frs,the Cameroon’s central bank will only be able tohave but 1000frs as reserve. An equivalence of5000frs in dollars will be lacking . The foreigncompany will take the 15000 frs quite well but thecentral bank will need to borrow dollar worth 5000frsso as to exchange with this company’s Frs. We seethat with less foreign exchange earnings our economywill be liable to borrow and this will lead to theaccumulation of Cameroon’s debt. Again, consider a case where, Foukou’s Companywants to buy Robots from abroad. These robots aresold in dollars, and with his Frs CFA , he needs thecentral bank to convert them to the dollar. SinceCameroon’s economy has limited foreign reserve, wefind a lot of people waiting for their frs CFA to beconverted. This thus delays the projects of theseinvestors and hence retarding the level of investmentin Cameroon.

How then can the binary currency system solve the problems reiterated above. Or what are the advantagesof a binary currency system ?

Remember that we said the binary currency systeminvolves two currencies; one which is convertibleinto foreign currency and another which is notconvertible.Binary currency Reducing our chances of accumulatingour external debts.Let assume that Cameroon produces the same goodsthat we buy from abroad like telephones and otherimported goods. Assuming equally that we have ourlocal currency existing already. Understand equallythat production is boasted when demand is expressed.If the Cameroon government with its local currencycan apply an expansionary budgetarypolicy( increasing the salary of civil servants,awarding scholarships to students, etc) thispopulation will express a ready demand with the localcurrency and since this local currency is notconvertible, they can only consume but local products( the telephones produced in Cameroon as sightedabove.) These telephones companies are created inCameroon as a result of the demand expressed. If wecan sell to the local population expensive and themoney is there , they will still buy. Concerningthe exports of these same goods, we can sell cheaperso as to have a competitive advantage, after all thecost of production is covered at the internal level.

We discover that more enterprises will be created andemployment will be insured in Cameroon andconsequently Economic growth. Equally since we canconsume our home products we will not be using ourforeign reserves on exports hence economizing ourforeign exchange earnings. We will as such secure alot of foreign currency which can help our investors(with the convertible currency) buy more capitalgoods and increase on their investments. We equally see that our debts abroad drops as weconsume more of our home produce goods.To summarize the hold show , the solution proposedshould start with the putting in place of a twocurrency system. Secondly, there should be anexpansionary budgetary policy by the government andso on. The twin currency to the local currency will beexchanged by foreigners who wants to buy from us inthe dollar ( or other currencies convertible to thedollar). In a single currency system , once we have acompetitive advantage, the long run tendency is thatimports will appear cheaper to export and we willloss a lot of foreign currencies on imports. This system however will lead to many disadvantagesto countries who depend on the Cameroonian economylike France in that:

No more export of raw materials to Francs as there ishome markets.

No more increase in the French money supply when wesell abroad as our currency Frs CFA is fixed to theEuro.

There is this account called “operation account” iean account for foreign exchange. When Cameroonbuys from abroad it uses foreign currency, thisaccount is debited. When Cameroon sells abroad itreceives foreign currency which comes to credit thisaccount. A debit balance for this account leadsCameroon into borrowing when she needs to buy fromabroad. A credit balance is a good sign. In 1980, following the economic crisis thatresulted from the petroleum crisis, Cameroon couldnot realize enough foreign exchange from her exports( R M and petrol). But she was importing, makingthe debits of the operation account to be greaterthan the credits of this same account. With thisCameroon needed to borrow. Firstly ,she resorted toFrance for financing in foreign exchange , for herimportations. For 6 months France could not bearthis. Cameroon consulted the Bretton Woodinstitutions for credits. They propose for Cameroona structural adjustment program. As another solution to come out of thecrisis, France proposed that Cameroon should devalueher currency, this in order that she can boast herexports. With this Cameroon saw an amelioration in

her operation account. Thus the devaluation of 1994in FCFA was a rescue to BOP deficit.

The current China currency exchange adjustment. China sells her product everywhere in the world, suchthat it GDP is greatly made up of Exports(GDP=C+I+G+X- M). She had devalued her currency so asto increase her exports. With this devaluation theChinese exports are cheaper and her imports dearer .Devaluation causes a currency to loss it value henceresults to inflation. With the economic crisis in a US and in theEuropean union which have gone o long way to affectother continents ,China external demand has droppedand she needs to re-dynaminise her economy. In a bitto increase internal demand China increase the valueof her currency (revaluation). This will increase thepurchasing power of Chinese and internal demand willincrease. This will reduce inflation. China’sexport will appear relatively expensive now and herimports will be less expensive.

NATIONALISM

Nationalism is a belief, creed or political ideology that involves an individual identifying with, or becoming attached to, one's nation. Nationalism involves national identity, by contrast with the

related construct of patriotism, which involves the social conditioning and personal behaviors that support a state's decisions and actions. Its one of the concepts of development

From a political or sociological perspective, there are two main perspectives on the origins and basis ofnationalism. One is the primordialist perspective that describes nationalism as a reflection of the ancient and perceived evolutionary tendency of humansto organize into distinct groupings based on an affinity of birth. The other is the modernist perspective that describes nationalism as a recent phenomenon that requires the structural conditions ofmodern society in order to exist.

An alternative perspective to both of these lineages comes out of Engaged theory, and argues that while the form of nationalism is modern, the content and subjective reach of nationalism depends upon 'primordial' sentiments.

There are various definitions for what constitutes a nation, however, which leads to several different strands of nationalism. It can be a belief that citizenship in a state should be limited to one ethnic, cultural, religious, or identity group, or

that multinationality in a single state should necessarily comprise the right to express and exercise national identity even by minorities. The adoption of national identity in terms of historical development has commonly been the result of a response by influential groups unsatisfied with traditional identities due to inconsistency between their defined social order and the experience of thatsocial order by its members, resulting in a situationof anomie that nationalists seek to resolve. This anomie results in a society or societies reinterpreting identity, retaining elements that are deemed acceptable and removing elements deemed unacceptable, in order to create a unified community.This development may be the result of internal structural issues or the result of resentment by an existing group or groups towards other communities, especially foreign powers that are or are deemed to be controlling them.nationalism, ideology based on the premise that the individual’s loyalty and devotion to the nation-state surpass other individualor group interests.Nationalism is a modern movement. Throughout history people have been attached to theirnative soil, to the traditions of their parents, and to established territorial authorities; but it was

not until the end of the 18th century that nationalism began to be a generally recognized sentiment molding public and private life and one of the great, if not the greatest, single determining factors of modern history. Because of its dynamic vitality and its all-pervading character, nationalismis often thought to be very old; sometimes it is mistakenly regarded as a permanent factor in political behaviour. Actually, the American and French revolutions may be regarded as its first powerful manifestations. After penetrating the new countries of Latin America it spread in the early 19th century to central Europe and from there, towardthe middle of the century, to eastern and southeastern Europe. At the beginning of the 20th century nationalism flowered in the ancient lands of Asia and Africa. Thus the 19th century has been called the age of nationalism in Europe, while the 20th century has witnessed the rise and struggle of powerful national movements throughout Asia and Africa.

Things fall apart; the centre cannot hold;Mere anarchy is loosed upon the world,The blood-dimmed tide is loosed and everywhereThe ceremony of innocence is drowned;The best lack all conviction, while the worstAre full of passionate intensity

– W.B. Yeats – The Second Coming

‘Things fall apart, the center cannot

hold,mere anarchy is loosed upon the

world and its GOD only that can saved

us’’

By

NGWE ELVIS P

Things fall apart; gggggqqq upon the world,The blood-dimmed tide is loosed and everywhereThe ceremony of innocence is drowned;The best lack all conviction, while the worstAre full of passionate intensity

– W.B. Yeats – The Second Coming