Aye ATAN 1

13-11-11

ECONOMIC DEVELOPMENT FINAL

1. Explain Solow equations.

Y=A.K@.L1-@ Income in a country change with technology,capital and labor. Income

depends on A,K,L.
y=k@ GDP per capita depends on physical capital stock. If physical capital stok increases,
gdp per capita increases.
k*=sY-(n+d)k

Equilibrium point A is called steady state, where savings-investment equals investment

required by population growth and depreciation.
Any point before reaching A is when actual investment exceeds investment required by
population growth. The opposite is true for any point beyond A.
At steady state A, economy is still growing in total terms (Y), but not in per capita terms
(y).

(in middle income trap gdp per capita stuck, but gdp is growing. The middle-income trap is the
situation in which a countrys growth slows after reaching middle income levels. The transition to
high-income levels then seemingly becomes unattainable. )

2. What is the different between Horrod-Domar (Keynes) Model and Solow Growth Model
(Neoclassic)?
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In the Harrod-Domar model an increase in the savings rate increases the growth rate. However, in
the Solow model, an increase in the savings rate increases the per capita income but it does not
result in a permanent increase in the growth rate. The neoclassical growth model (Solow) explains
that the sole determinant of long-run growth in per capita income is the exogenously determined
technology.

3. Why countries trapped at middle-income level?

low investment ratios
slow manufacturing growth
limited industrial diversification
poor labor market conditions

4. What is poverty trap?

Poverty trap is a spiraling mechanism which forces people to remain poor. It is so binding in itself
that it doesn't allow the poor people to escape it. Poverty trap generally happens in developing and
under-developing countries, and is caused by a lack of capital and credit to people.

5. Why is it important technological development for the development of a country? (Solow

Model)

Because the country could fall into the middle income trap. Countries trapped at middle-income level
due to low investment ratios, slow manufacturing growth, limited industrial diversification and poor
labor market conditions.

6. What is the relationship between saving-investment gap and current account?

The current account measures the net value of exports + net investment incomes from abroad. Then
current account also equals domestic saving domestic investment.
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For a firm to invest, it needs saving to be able to finance the investment. If domestic saving are lower
than domestic investment, we will see a current account. Because, a fall saving means people are
spending more (higher consumption) therefore, we buy goods and services from abroad.

If domestic investment is higher than domestic saving, it needs to be financed by capital inflows from
abroad. So, there is a surplus on the capital account and a deficit on the current account.

7. Solow Modelinde Trkiyeyi son 10 yl iin deerlendirin.

Solow kalknmann ilk dnemlerinde istediin kadar fiziki sermaye yatrmlar yap ama sonra ne
yapacaksn fiziki sermaye yatrm yapabilmen iin tasarruflarn olacak ama belli bir yerden sonra
taklacaksn ondan sonra teknolojik gelime yap diyor. Trkiyenin tasarruflar yatrmlarndan daha
dktr. Tasarruf ve yatrmlar arasnda GSYHnn %6s kadar bir fark vardr. Buda Solow Modeli
asndan bir sorun tekil etmektedir. Bunun finansmannda ise yurtdndan sermaye girdileri
kullanlmaktadr. Bu da cari ak (current account) zerinde olumsuz bir etki yaratmaktadr. Solow
asndan ise middle income trap a gelmi durumdayz. Bunun iin artk beeri sermeyeye, bilgi
sermayesine daha fazla nem verilmelidir. Tm bunlar toplam faktr verimliliinde arta neden
olmakta ve sonucunda byme gereklemektedir.

8. What is TFP? How increase it to technological developments?

TFP is a variable which accounts for effects in total output growth relative to the growth in
traditionally measured inputs of labor and capital.

9. What is Sustainable Human Development?

Sustainable development has been defined as development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.

10. How does climate change relate to sustainable development?

Climate change is already impacting public health, food and water security, migration, peace
and security. Climate change, left unchecked, will roll back the development gains we have
made over the last decades and will make further gains impossible.
Investments in sustainable development will help address climate change by reducing
greenhouse gas emissions and building climate resilience.
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Conversely, action on climate change will drive sustainable development.

Tackling climate change and fostering sustainable development are two mutually reinforcing
sides of the same coin; sustainable development cannot be achieved without climate action.
Conversely, many of the SDGs are addressing the core drivers of climate change.

11. How are the Sustainable Development Goals different from the MDGs?
The 17 Sustainable Development Goals (SDGs) with 169 targets are broader in scope and go
further than the MDGs by addressing the root causes of poverty and the universal need for
development that works for all people. The goals cover the three dimensions of sustainable
development: economic growth, social inclusion and environmental protection.
Building on the success and momentum of the MDGs, the new global goals cover more
ground, with ambitions to address inequalities, economic growth, decent jobs, cities and
human settlements, industrialization, oceans, ecosystems, energy, climate change,
sustainable consumption and production, peace and justice.
The new Goals are universal and apply to all countries, whereas the MDGs were intended
for action in developing countries only.
A core feature of the SDGs is their strong focus on means of implementationthe
mobilization of financial resourcescapacity-building and technology, as well as data and
institutions.
The new Goals recognize that tackling climate change is essential for sustainable
development and poverty eradication. SDG 13 aims to promote urgent action to combat
climate change and its impacts.

12. Economic Growth used to help in the past in eliminating Poverty (MDGs). However it
doesnt seem to have impact on SDG goals. Why? (Ekonomik byme gemite (MDGs)
yoksulluu ortadan kaldrmak iin kullanld. Ancak SDG hedefleri zerinde etkisi
grnmemektedir. Neden?)
We are moving on to harder problems.
Economic growth has got its own costs and
It is not helping us to improve our well being at social, economic, political and environmental
fronts.

13. What is Social Progress Index?

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The Social Progress Index basically asks three fundamental questions about a society. First of all, does
everyone have the basic needs of survival: food, water, shelter, safety? Secondly, does everyone
have the building blocks of a better life: education, information, health and a sustainable
environment? And does everyone have the opportunity to improve their lives, through rights,
freedom of choice, freedom from discrimination, and access to the world's most advanced
knowledge? (Sosyal Geliim Endeksi bir toplumla ilgili temel soru soruyor. lk olarak, herkes yaam
iin gerekli temel ihtiyalara sahip mi: yemek, su, barnak, gvenlik? kincisi, herkesin daha iyi bir
hayat iin temel yap talarna ulam var m: eitim, bilgi, salk ve srdrlebilir bir evre? Herkesin
haklar, seim zgrl, ayrmclktan uzak bir ekilde ve dnyann en ileri bilgileri
araclyla hayatlarn gelitirme imkan var m?)

The Social Progress Index sums all this together using 52 indicators to create an aggregate score on a
scale of 0 to 100. And what we find is that there's a wide diversity of performance in the world today.
The highest performing country, Norway, scores 88. The lowest performing country, Central African
Republic, scores 31. And we can add up all the countries together, weighting for the different
population sizes, and that global score is 61. In concrete terms, that means that the average human
being is living on a level of social progress about the same of Cuba or Kazakhstan today. (Sosyal
Geliim ndeksi bu verileri 52 gsterge kullanarak bir araya topluyor, ve 0 ile 100 arasnda bir puan
oluturuyor. Ve bugn dnyada byk bir performans fark olduunu gryoruz. En yksek
performansl lke olan Norve'in skoru 88. En dk skorlu lke ise 31 puanla Orta Afrika
Cumhuriyeti. Tm lkeleri bir araya toplayp farkl nfuslara farkl arlk vererek elde edilene kresel
skor ise 61. Bunun somut anlam u: dnyada ortalama bir insan, bugn Kba ve Kazakistan'daki bir
insanla ayn sosyal geliim seviyesinde yayor.)

14. How Turkey performs in Social Progress Index?

Turkeys social progress index score is 66,24. In the Basic Human Needs Dimension, Turkey performs
best on Nutrition and Basic Medical Care and has most opportunity to improve on the Personal
Safety component. In the Foundations of Wellbeing Dimension, Turkey scores highest on Access to
Basic Knowledge but lags on the Ecosystem Sustainability component. In the Opportunity Dimension,
Turkey is strongest on Personal Freedom and Choice and has the most room to improve on Tolerance
and Inclusion.

15. What is the link between Economic Growth and Social Progress Index?
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On the vertical axis, is social progress, the stuff the Global Goals are trying to achieve. Higher is
better. And then on the horizontal axis, is GDP per capita. Further to the right means richer. Dots
represent countries in the world. Regression line that shows the average relationship. This tells us is
that as we get richer, social progress does tend to improve. However, as we get richer, each extra
dollar of GDP is buying us less and less social progress. We have countries that are underperforming
on social progress, relative to their wealth. Such as; Russia, China, India. on the other hand, we have
countries that are overperforming on social progress relative to their GDP. Costa Rica has prioritized
education, health and environmental sustainability, and as a result, it's achieving a very high level of
social progress, despite only having a rather modest GDP. And Costa Rica's not alone. From poor
countries like Rwanda to richer countries like New Zealand, we see that it's possible to get lots of
social progress, even if your GDP is not so great.
So, Economic growth seems to have really helped in the fight against poverty, but it doesn't seem to
be having much impact on trying to get to the Global Goals. We know that economic growth comes
with costs as well as benefits. There are costs to the environment, costs from new health problems
like obesity.

16. To achieve SDGs by 2030

Business as usual doesnt help Economically: because it doesnt generate enough

Jobs and raises the wealth of the super wealthy and
leaves the rest behing.

Socially: because it generates negative externalities

of social exclusion nad inequalities.
Current Economic growth path
is not sustainabily Environmentally: because it is based on Brown
Energy with rising ecological foot print and climate
change.
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17. What is Paris Aggreement?

The agreement provides a pathway forward to limit temperature rise to well below 2 degrees, maybe
even 1.5. The agreement provides a mechanism to increase the level of ambition.
It will serve as an important tool in mobilizing finance technological support and capacity building for
developing countries. And it will also help to scale up global efforts to address and minimize loss and
damage from climate change.

18. The measures agreed include in Paris Aggreement. (Anlalan tedbirler)

To peak greenhouse gas emissions as soon as possible and achieve a balance between
sources and sinks of greenhouse gases in the second half of this century.
To keep global temperature increase "well below" 2C and to pursue efforts to limit it to
1.5C (2.7 Fahrenheit) over pre-industrial levels by the end of the 21st century.
To review progress every five years.
US$100bn a year in climate finance for developing countries by 2020, with a commitment to
further finance in the future.

19. How are climate change and the Paris Agreement linked with the Sustainable Development
Goals?
A strong climate agreement backed by action on the ground will help us achieve the Sustainable
Development Goals to end poverty, build stronger economies and safer, healthier, and more liveable
societies everywhere. There are 12 of the 17 Sustainable Development Goals that directly involve
taking action on climate change in addition to climate change having its own goal.

20. Facts and Figures on Climate Change.

From 1880 to 2012, average global temperature increased by 0.85C.
Oceans have warmed, the amounts of snow and ice have diminished and sea level has risen.
Global emissions of carbon dioxide (CO2) have increased by almost 50 per cent since 1990
Emissions grew more quickly between 2000 and 2010 than in each of the three previous
decades

21. Causes And Reasons of Climate Change

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Natural Causes: The Earth's climate can be affected by natural factors that are external to
the climate system, such as changes in volcanic activity, solar output, and the Earth's orbit
around the Sun.
Human Causes: Climate change can also be caused by human activities, such as the burning
of fossil fuels and the conversion of land for forestry and agriculture. Since the beginning of
the Industrial Revolution, these human influences on the climate system have increased
substantially.
Carbon dioxide is the main cause of human-induced climate change. It has been emitted in vast
quantities from the burning of fossil fuels and it is a very long-lived gas, which means it continues
to affect the climate system during its long residence time in the atmosphere. However, fossil
fuel combustion, industrial processes, agriculture, and forestry-related activities emit other
substances that also act as climate forcers. Some, such as nitrous oxide, are long-lived
greenhouse gases like carbon dioxide, and so contribute to long-term climate change.

22. The Poriority Thematic Areas on Cliame Change

Transport
Carbon capture use and storage
Non-CO2 greenhouse gases

23. What is C40 cities?

C40 is a network of the worlds megacities committed tackling climate change and driving urban
action that reduces greenhouse gas emissions, while increasing the health, wellbeing and economic
opportunities of urban citizens.
Example: Air quality : LONDON - New Taxi for London, Clean Energy: SEOUL - Make Seoul a City of
Sunlight

24. How is culture and tourism related to sustainable?

Sustainable tourism is the concept of visiting a place as a tourist and trying to make only a positive
impact on the environment, society and economy.
A strong link between tourism and culture can be fostered to help places become more attractive to
tourists, as well as increasing their competitiveness as locations to live, visit, work and invest in. For
example; Art galleries, theater and museums, historic sites, communities or landmarks.
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25. What is different between Mass Tourism and Sustainable Tourism?

Mass tourism is a form of tourism that involves tens of thousands of people going to the same
resort often at the same time of year. It is the most popular form of tourism as it is often the
cheapest way to holiday, and is often sold as a PACKAGE DEAL.

But with mass tourism, Jobs can be seasonal - especially in beach and skiing based resorts.
People can therefore find themselves out of work in the close season, Tourists introduce new
values and cultures - this causes cultural pollution, Tourists consume huge amounts of resources
including food and water - this type of tourism is particularly UNSUSTAINABLE in this manner.

26. What is main objectives of sustainable tourism?

Economic Viability
Employment Quality
Social Equit
Cultural Richness
Biological Diversity
Environmental Purity: To minimize the pollution of air, water and land

27. Basic main aim to achieve futures sustainable tourism? Provide examples.
Interest in local economy: create the new jobs, income and local people
Inequality decrease
Social welfare
Cultural tourism: special routs

For example;

Traditional Seferihisar Cuisine: The project aimed to make diverse local flavours in
Seferihisar region of Izmir into brands, promote them all over Turkey, thus enable the local
culture to contribute to the development of tourism in the region.
Explore Your Own Butterfly: The project will help Saimbeyli publicize both to our country
and the world her unblemished natural beauty and rich biological diversity (Adana).
Lavender Scented Village: The project aims to stimulate rural tourism in Isparta which
produces major part of the national lavender output.
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28. What is Green Economy?

A Green Economy is dependent on sustainable development which means growing our economies
in ways that benefit, not sacrifice, social justice and equity as well as the environment. The idea is to
serve the needs of the present without threatening the quality of life of future generations.

29. What is Green Jobs/Sectors?

Buildings: A home or business energy audit can reduce your building's climate footprint and
lead to significant savings in energy costs.
Agriculture: Grow your own veggies, eat in-season, and shop local farmers' markets
Tourism: Know before you go: What hotels and travel agencies support ecotourism? How can
I limit my impact on sensitive habitats?
Transport: Walking or riding a bike for short trips is good for your health - and the
environment's, too!
Manufacturing & Indusutry: Be a wise consumer - support businesses that have sustainability
plans, use ecolabels, and invest in renewable energy.