Assignment # 1

Development Economics
Fall 2024
Semester 5th

Name: Syed Babar Ali

Roll no: 22FA-010-BA

Course Instructor: Syed Muhammad Yasir

Note: Assignment should be submitted on Thursday 7th November, 2024 in the class. The

assignment based on chapter 6, 7 and 8 of Development Economics by Michael P.

Todaro.

Q.1 Explain the causes of high fertility in developing countries: the Malthusian and household models?

Ans) High fertility in developing countries can be explained by two key models: the Malthusian model
and the household model.

1. Malthusian Model

 Population-Resource Imbalance: Malthus argued that populations grow faster than resources
(e.g., food), leading to poverty, famine, and disease, which act as "positive checks" on
population.

 High Fertility as a Strategy: In developing countries, high fertility may be a response to resource
scarcity, with families having more children to ensure labor for agriculture or survival, especially
in areas with high infant mortality rates.

 Limited Birth Control: Limited access to contraception or family planning keeps birth rates high,
as preventive checks (e.g., delayed marriage or fertility control) are less common.

2. Household Model

 Children as Economic Assets: In many developing countries, children are seen as economic
assets, helping with farm labor or household chores. This encourages larger families.

 Low Opportunity Costs: In rural economies, the opportunity cost of having children (e.g., losing
potential income from work) is lower, so families are more likely to have many children.

 Social Norms: Cultural and social factors also influence fertility, with large families often seen as
desirable for social status or support in old age.

Q.2 Describe the demographic structure and the demographic transition?

Ans) Demographic structure refers to the characteristics of a population, such as age, sex, and ethnicity,
which help understand societal trends and challenges.

Demographic transition is a model that describes how populations change over time through different
stages:

1. Stage 1: High birth and death rates; stable population.

2. Stage 2: Death rates drop due to better healthcare; population grows.

3. Stage 3: Birth rates decline; slower population growth.

4. Stage 4: Low birth and death rates; stable or slowly growing population.
Some models also include a fifth stage, where populations may decline. This transition is important for
planning in areas like healthcare and education.

Q.3 Briefly define the political economy of urban giants?

Ans) The political economy of urban giants examines the economic, political, and social dynamics of
large, rapidly growing cities. These cities drive economic growth through industries like finance and
technology, attracting investment and talent, but they also face challenges like inequality and housing
shortages. Politically, urban giants wield significant influence, shaping policies on infrastructure,
housing, and labor. They are also key players in global networks, impacting and being impacted by
international trade, migration, and capital flows. In essence, the political economy of urban giants
explores how these cities’ economic activities, political decisions, and social structures interact with
broader national and global forces.

Q.4 Write a short note on Policies for the Urban Informal Sector?

Ans) Policies for the Urban Informal Sector aim to improve the conditions of workers and businesses
outside the formal economy in cities. These policies include legal recognition to provide rights and
protections, access to credit through microfinance or tailored loans, and skill development programs to
boost productivity. Governments can improve infrastructure and public services in informal settlements,
expand social security for informal workers, and offer tax incentives to encourage formalization. The
goal is to integrate informal workers into the formal economy, improve their working conditions, and
provide economic and social support.

Q.5 How education and health as joint investments for development?

Ans) Education and health as joint investments for development are crucial for building human capital
and promoting sustainable growth. Healthy individuals are more productive and better able to learn,
while educated people tend to adopt healthier lifestyles and access healthcare more effectively.
Together, these sectors improve productivity, reduce poverty, and create intergenerational benefits, as
educated and healthy parents invest in their children's well-being. Prioritizing both education and health
helps reduce inequality, particularly among marginalized groups, and supports long-term development
goals. Overall, combined investments in education and health strengthen societies, fostering economic
growth, social equity, and improved quality of life.

Q.6 Explain the benefit of investing in education and health: the human capital approach?

Ans) The human capital approach highlights the benefits of investing in education and health to enhance
the skills, productivity, and well-being of individuals. Healthy and educated people are more productive,
leading to higher earnings and economic growth. These investments also improve social outcomes, such
as longer life expectancy and reduced poverty. Educated and healthy parents are more likely to invest in
their children's future, creating a positive cycle of development. Additionally, such investments drive
innovation, reduce inequality, and strengthen a country’s overall economic competitiveness. Ultimately,
investing in education and health fosters sustainable growth and improves quality of life.