University of Puthisastra

Economics Development Class

(Week 11)
Review Week 10

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Economics and the Environment
• Environmental issues affect, and are affected by,
economic development

• Poverty and ignorance may lead to non-

• Environmental (decay) deterioration and global

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Causes of Environmental Decay
• Poverty
• Rapid population growth
• Rapid urbanization
• Affluence & excess consumption
• Industrial production
• Use of chemical inputs
• Relaxed environmental laws and weak law
enforcements

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 Poverty and Environment
• Poverty and lack of development policies
would force the people to overuse natural
resources:
– Cultivate the land without fertilization
– Cut the trees for fuel
– Contaminate the water
– Pollute the air

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 Population Growth and Environment

• Rapid population growth also put pressure on

– Clean air
– Arable land
– Safe drinking water
– Forests
– Mineral deposits

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Environment and Development: The Basic
Issues
• Sustainable development and environmental
accounting
• Population, resources, and the environment
• Poverty and the environment
• Growth versus the environment
• Rural development and the environment

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 Environmental Policies, LDCs
LDCs must improve the environment:
• Proper resource pricing to include externalities:
impose pollution taxes and standards

• Community involvement: education, recycling

• Private property rights and resource ownership

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 Environmental Policies, LDCs
LDCs must improve the environment:
• Programs to improve alternatives to the poor

• Improve the economic status of women

• Establish industrial emission abetment policies

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 Environmental Policies
MDCs must help LDCs improve the environment:

• Trade policies, reducing trade barriers

• Debt relief to reduce the financial burden

• Development assistance to improve the

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 Environmental Policies
MDCs must help improve the global environment:
• Emission control

• Research and development

• Import restrictions

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Week 11

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 Chapter 11
Development Policymaking and the
Roles of Market, State, and Civil Society
 11.1 A Question of Balance
• Roles and Limitations of State, Market, and
the Citizen Sector/NGOs in Achieving
Economic Development and Poverty
Reduction.
• So what are the role and their limitation in
ED?

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 11.1 Development Planning: Concepts and
Rationality
• The nature of development planning resource
mobilization for public investment:
– Economic policy to control private economic activity
according to social objectives formulated by government
• So what private sector can do in ED?
• Private sector in this mixed economies comprises:
– The subsistence sector
– Small scale businesses
– Medium size enterprises
– Larger domestic firms
– Large joint or foreign owned enterprises

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 11.2 Development Planning: Concepts and
Rationality
• The Rationality for Development Planning:
– Market failure
– Resource mobilization and allocation
– Attitudinal or psychological impact
– Requirement to receive foreign aids

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 Market Failure
• Market failures can occur when social costs or benefits differ
from private costs or benefits of firms or consumers.
• Public goods: free riders cannot be excluded except possibly at
high cost.
• Externalities: agents do not have to pay all costs of their
activities, or are unable to receive all the benefits.
• Prisoners’ Dilemmas occur when agents better off if others
cooperate but individual agents better off “defecting”.
• Coordination failures can occur when coordination is costly;
e.g. with Big Push
• Capital markets are particularly prone to failure.

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 Market and Government Failure:
Broader Arguments
• Government failure: in many cases, politicians and
bureaucrats can be considered utility maximizers, not
public interest maximizers.
• So can’t jump to conclusion that if economic theory
says policy can fix market failures that it will do so in
practice.
• Analysis of incentives for government failure guides
reform, e.g. civil service reform, constitution design.
• Developing countries tend to have both high market
failure and high government failures.
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11.4 Government Failure and Preferences
for Markets over Planning
Problems of Plan Implementation and Plan Failure of
government resulting from:
• Theory versus practice,
• Deficiencies in the plans and their implementation,
• Insufficient and or unreliable data,
• Unanticipated economic disturbances, external and
internal,
• Institutional weaknesses,
• Lack of political will,
• Conflict, post-conflict, and fragile states.

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 11.5 The Market Economy
• Well functioning market economy requires:
– Clear property rights
– Laws and courts
– Freedom to establish business
– Stable currency
– Public supervision of natural monopolies
– Provision of adequate information
– Autonomous tastes
– Public management of externalities
– Stable monetary and fiscal policy instruments
– Safety nets
– Encouragement of innovation.

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11.8 Development Roles of NGOs and the
Broader Citizen Sector
• NGO has potentially important roles in:
1. Common property resource management
2. Local public goods
3. Economic and productive ideas
• Possibly other activities that are either:
– Excludable but not rival
– Rival but not excludable
– Partly excludable and partly rival

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Figure 11.2 Typology of Goods

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11.8 Development Roles of NGOs and the
Broader Citizen Sector
• Other potential comparative advantages of
NGOs:
– Innovative design and implementation
– Program flexibility
– Specialized technical knowledge
– Provision of targeted local public goods
– Common-property resource management design
and implementation
– Trust and Credibility
– Representation and advocacy
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11.9 Trends in Governance and Reform

• Tackling the problem of corruption

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11.9 Trends in Governance and Reform

New trend in governance and reform on:

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Preliminary Case 6: Rural-Urban
Migration and Urbanization in
Developing Countries: India and
Botswana
Page 347-350

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 Group Homework
• This is your final group work. You are suppose to form group
of 2 and then research on the following cases. Your group
research has to have at least these items (background,
Issues, and a proposal to solve this development issue (goal,
objectives, strategies, activities, expected results and budget
planning).
• Please choose one of these topics and present it next week as
group (make a slide presentation, you do not have to make
paper).
1. Beok Kork Land Dispute Cases
2. Areng Hydro Electric Power Cases
3. 7&G Cases Building
4. Borey Keyla Cases
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 Q & A session!

THANKS YOU!
សូមអរគុណ!

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