PART B A) HUMAN DEVELOPMENT INDEX. The Human Development Index (HDI) is a summary measure of human development.

It measures the average achievements in a country in three basic dimensions of human development: a long and healthy life (health), access to knowledge (education) and a decent standard of living (income). Data availability determines HDI country coverage. To enable cross-country comparisons, the HDI is, to the extent possible, calculated based on data from leading international data agencies and other credible data sources available at the time of writing.1 The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone. The HDI can also be used to question national policy choices, asking how two countries with the same level of GNI per capita can end up with such different human development outcomes. For example, the Bahamas and New Zealand have similar levels of income per person, but life expectancy and expected years of schooling differ greatly between the two countries, resulting in New Zealand having a much higher HDI value than the Bahamas. These striking contrasts can stimulate debate about government policy priorities.

New method for 2011 data onwards

In its 2010 Human Development Report, the UNDP began using a new method of calculating the HDI. The following three indices are used:

1. Life Expectancy Index (LEI)

2. Education Index (EI)

2.1 Mean Years of Schooling Index (MYSI) 2.2 Expected Years of Schooling Index (EYSI)

[4]

[5]

3. Income Index (II) Finally, the HDI is the geometric mean of the previous three normalized indices:

http://hdr.undp.org/en/statistics/hdi/

LE: Life expectancy at birth MYS: Mean years of schooling (Years that a 25-year-old person or older has spent in schools) EYS: Expected years of schooling (Years that a 5-year-old child will spend with his education in his whole life) GNIpc: Gross national income at purchasing power parity per capita 2

B) The Middle Income Trap The middle income trap is a situation where a country which attains a certain income (due to given advantages) will get stuck at that level. As wages rise manufacturers often find themselves unable to compete in export markets with lower-cost producers elsewhere; yet they still find themselves behind the advanced economies in higher-value products. This is the middle-income trap which saw, for example, South Africa and Brazil languish for decades in what the World Bank call the middle income range (about $1,000 to $12,000 gross national income per person measured in 2010 money).3 Similarly, if a country has a large population and limited natural resources, it will stay at low income countries. This is called a poverty trap. A country with a small population and lots of oil will automatically attain high income. And if a country has an average amount of advantages, it will be caught in middle income. So, a middle income trap is a special case of more general developmental traps. Typically, countries trapped at middle-income level have: (1) low investment ratios; (2) slow manufacturing growth; (3) limited industrial diversification; and (4) poor labor market conditions.

Avoiding the Middle Income Trap

The Middle Income Trap occurs when a country's growth plateaus and eventually stagnates after reaching middle income levels. The problem usually arises when developing economies find themselves stuck in the middle, with rising wages and declining cost competitiveness, unable to compete with advanced economies in high-skill innovations, or with low income, low wage economies in the cheap production of manufactured goods. Avoiding the Middle Income Trap entails identifying strategies to introduce new processes and find new markets to maintain export growth. Ramping up domestic demand is also important -an expanding middle class can use its increasing purchasing power to buy high-quality, innovative products and help drive growth. The biggest challenge is moving from resource-driven growth that is dependent on cheap labor and capital to growth based on high productivity and innovation. This requires investments in infrastructure and education. As the Republic of Korea has proven, building a high-quality education system which encourages creativity and supports breakthroughs in science and technology is key.

2 3

http://en.wikipedia.org/wiki/Human_Development_Index http://en.wikipedia.org/wiki/Middle_Income_Trap

C) Demographic Transition;
The Demographic Transition Model literally means 'Population Change Model'. This is a very useful model, showing how dynamic (subject to change) population is. Population change is shown in two ways here. The first is change over SPACE: a number of countries at the same time can exhibit the population characteristics of different stages. Second is change over TIME: a country will theoretically progress through the stages. It has been a long time since this model was developed, and some countries have begun to exhibit characteristics beyond stage 4. This page looks at the structure of the model, the reasons for the differences in population between stages, some examples of countries over time and space and a short look at a possible extra stage. This model can be directly compared to the Population Pyramid Model which shows the same information, using population pyramids instead of a line graph. There is a comparison chart at the end of this page.

Souce:United nations world population prospectus,The 1998 revision

The Stages of the DTM

Each of the stages of the DTM exhibit specific characteristics. The following A - E? show what

characteristics you can expect for each stage and possible reasons for the changes between stages.

A - Stage 1
Both high birth rates and death rates fluctuate in the first stage of the population model giving a small population growth (shown by the small total population graph). There are many reasons for this: little access to birth control many children die in infancy (high infant mortality) so parents tend to have more children to compensate in the hopes that more will live

children are needed to work on the land to grow food for the family

children are regarded as a sign of virility in some cultures religious beliefs (e.g. Roman Catholics and Hindus) encourage large families high death rates, especially among children because of disease, famine, poor diet, poor hygiene, little medical science.

B - Stage 2
Birth rates remain high, but death rates fall rapidly causing a high population growth (as shown by the total population graph). The reasons for this could be: improvements in medical care - hosppitals, medicines, etc. improvements in sanitation and water supply quality and quantity of food produced rises transport and communications improve the movements of food and medical supplies decrease in infant mortality.

C - Stage 3
Birth rates now fall rapidly while death rates continue to fall. The total population begins to

peak and the population increase slows to a constant. The reasons for this could be: increased access to contraception lower infant mortality rate means there is less need to have a bigger family industrialisation and mechanisation means fewer labourers are required the desire for material possessions takes over the desire for large families as wealth increases equality for women means that they are able to follow a career path rather than feeling obligated to have a family.

D - Stage 4
Both birth rates and death rates remain low, fluctuating with 'baby booms' and epidemics of illnesses and disease. This results in a steady population.

E- Stage 5?
A stage 5 was not originally thought of as part of the DTM, but some northern countries are now reaching the stage where total population is declining where birth rates have dropped below death rates. One such country is Germany, which has taken in foreign workers to fill jobs. The UK's population is expected to start declining by 2021.

Examples Population changes over time and space and the DTM can show both of these. Examples for both of these are shown below. Firstly, examples of countries that can be classed as exhibiting the population traits now are shown as an example of how population can change over space. Secondly, the dates the UK passed through each stage are indicated as an example of how population in one country can change over time.
Stage 1 Ethiopia / Bangladesh UK: pre-1780 Stage 3 Uruguay / China UK: 1880 - 1940 Stage 2 Sri Lanka / Brazil UK: 1780 - 1880 Stage 4 Canada / Japan UK: post-194

c)The Microeconomic Theory of Fertility;

The Microeconomic Theory of Fertility attempts to explain the falling birthrates associated with stage III of the demographic transition. It is suggested that people choose how many children to "consume" as part of their utility maximization problem. Budget constraint indifference curve analysis is presented. Children in LDCs can be thought of as investment goods. Reasons are offered for why families in LDCs are having more children, such as the lower opportunity cost of time and a lack of job and education opportunities for women. The microeconomic theory of fertility is useful here because it asks the question why a family would decide to rear children in the first place. The economics of the family asks what kinds of incentives are involved. After all, the decisions being made are often not based on societys natural capital, or local wage levels. Family decisions are often made at the microeconomic rather than the macroeconomic level. These are salient microeconomic behaviors based on things like private prices, tastes and preferences, incomes, and especially the expected marginal benefit from having children and so on. To frame this discussion, children in regions of high-income (correlated with low fertility) often are considered consumption goods, whereas in regions with low-income (correlated with high fertility) they are often considered investment goods. The difference will be clear in a moment. It is often assumed that the reason why families in developing countries have so many children is due to the lack of education. This seems to be a blatant myth, and the microeconomic theory spells this out in terms of the rational decision-making that a family goes through. In non-welfare states, families often prefer to invest in children as a form of old-age security and insurance rather than rely on money savings or social security programs that provide these benefits in other societies. 4 D) Urbanisation Urbanisation, urbanization or urban drift is the physical growth of urban areas as a result of rural migration and even suburban concentration into cities, particularly the very largest ones. The United Nations projected that half of the world's population would live in urban areas at the end of 2008.[1] It closely linked to modernization, industrialization, and the sociological process of rationalization. Urbanization can describe a specific condition at a set time, i.e. the proportion of total population or area in cities or towns, or the term can describe the increase of this proportion over time. So the term urbanization can represent the level of urban relative to overall population, or it can represent the rate at which the urban proportion is increasing5 Urbanization usually occurs when people move from villages to cities to settle, in hope of a higher standard of living. This usually takes place in developing countries. In rural areas, people become
4 5

http://aeconomics.blogspot.com/2007/10/microeconomics-of-fertility.html

victims of unpredictable weather conditions such as drought and floods, which can adversely affect their livelihood. Consequently many farmers move to cities in search of a better life. Cities in contrast, offer opportunities of high living and are known to be places where wealth and money are centralized. Most industries and educational institutions are located in cities whereas there are limited opportunities within rural areas. This further contributes to migration to cities. It has the following effects Slums They are urban areas that are heavily populated with substandard housing and very poor living conditions. As a result several problems arise. Land insecurity - Slums are usually located on land, which are not owned by the slum dwellers. They can be evicted at any time by the landowners. Poor living conditions - Crowding and lack of sanitation are main problems. This contributes to outbreak of diseases. Utilities such as water, electricity and sewage disposal are also scarce. Unemployment - Since the number of people competing for jobs is more than jobs available, unemployment is an inevitable problem. Crime - Slum conditions make maintenance of law and order difficult. Patrolling of slums is not a priority of law enforcing officers. Unemployment and poverty force people into anti-social activities. Slums become a breeding ground for criminal activities. Environmental impacts of urbanization Temperature - Due to factors such as paving over formerly vegetated land, increasing number of residences and high-rise apartments and industries, temperature increases drastically. Air pollution - Factories and automobiles are symbols of urbanization. Due to harmful emissions of gases and smoke from factories and vehicles, air pollution occurs. Current research shows high amount of suspended particulate matter in air, particularly in cities, which contributes to allergies and respiratory problems thereby becoming a huge health hazard. Water issues - When urbanization takes place, water cycle changes as cities have more precipitation than surrounding areas. Due to dumping of sewage from factories in water a body, water pollution occurs which can lead to outbreaks of epidemics. Though urbanization has drawbacks, it has its benefits. Efficiency - Cities are extremely efficient. Less effort is needed to supply basic amenities such as fresh water and electricity. Research and recycling programs are possible only in cities. In most cities flats are in vogue today. Many people can be accommodated within a small land area. Convenience - Access to education, health, social services and cultural activities is readily available

to people in cities than in villages. Life in cities is much more advanced, sophisticated and comfortable, compared to life in villages. Cities have advanced communication and transport networks. Concentration of resources - Since major human settlements were established near natural resources from ancient times, a lot of resources are available in and around cities. A lot of facilities to exploit these resources also exist only in cities. Educational facilities - Schools, colleges and universities are established in cities to develop human resources. A variety of educational courses and fields are available offering students a wide choice for their future careers. Social integration - People of many castes and religions live and work together in cities, which creates better understanding and harmony and helps breakdown social and cultural barriers. Improvements in economy - High-tech industries earn valuable foreign exchange and lot of money for a country in the stock markets D) Rural Urban Migration Migration is the movement of people from one geographical location to another, involving permanent or temporary settlement. The region where people are leaving is referred to as the source region whereas the region to which people are entering is known as destination region. While rural-urban migration is the movement of people from rural areas (villages) to urban centres (cities). One noticeable aspect in the society today is the rate at which people migrate from the rural to the urban centres. While the urban centres are increasing in population, the rural areas are decreasing in population. The migration literature has come to regard rural-urban migration as the major contributing factor to the ubiquitous phenomenon of urban surplus labour and as a force which continues to exacerbate already serious urban unemployment problems6 The major causes of rural-urban migration is identified as; search for better wages, education, political and social stability, better technologies, employment and business opportunities. Others are poverty, unemployment, crop failures and famine, inadequate social amenities and facilities in the rural areas such as pipe borne water, electricity, good roads, hospitals, schools, vocational centres. As more and more people arrive in the urban centre, there will be insufficient jobs for them and the unemployment rate will increase there will be more workers chasing too few jobs this will lead to straining the resources of the government. Rural-urban migration brings pressure on urban housing and the environment as migrants arrive from rural areas they live on the streets and makeshift substandard accommodation before establishing themselves. The high rate of population growth in the urban centres also lessens the quality of life because it: destroys resources, such as water and forests, needed for sustenance. Rural-urban migration leads to overpopulation of the urban centres thus

McTodaro, 1976).

encouraging and raising the rate of crime in the society. Rural-urban migration also slows down the pace of development of the rural areas.7

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